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H. T. NEWCOMB, 
 
 LAWYER 
 ffftfywaftttiC, WASHINGTON, - O.C. 
 
I4F 
 
 IDS' 
 
 X 
 
 ^d 
 
58th C^ 
 
 TH Congress, ) HOUSE OF REPRESENTATIVES, j Report 
 
 3d Session. \ \ No. 40^3. 
 
 ■i ' 
 
 AMENDING THE INTERSTATE-COMMERCE ACT. 
 
 January 31, 1905,— Committed to the Committee of the Whole House on the state 
 of the Union and ordered to be printed. 
 
 Mr. TowNSEND, from the Committee on Interstate and Foreign Com- 
 • merce, submitted the following 
 
 REPORT. 
 
 I 
 
 [To accompany H. E. 18588.] 
 
 The Committee on Interstate and Foreign Commerce, to whom was 
 referred sundry bills to supplement and amend the act entitled "An 
 act to regulate commerce," approved February 4, 1887, having had 
 the same under consideration, beg leave to report as follows: 
 
 The committee has had under consideration the following bills: 
 H. R. 10431, H. R. 6273, H. R. 6768, H. R. 7640, H. R. 11434, H. R. 
 11394, H. R. 13778, H. R. 12767, H. R. 16301, h. R. 16977, H. R. 17099, 
 H. R. 17578, H. R. 17650, H. R. 17867, H. R. 17786, H. R. 17783, H. R. 
 17781, H. R. 14831, H. R. 18127, H. R. 18286, H. R. 18423, H. R. 18466, 
 H. R. 18043, all having for their object an amendment to the interstate- 
 commerce act giving increased powers to the Commission provided for 
 in said act, and all claiming to provide for an expeditious determinatioia 
 of the orders or rulings of said Commission and for a judicial review 
 thereof. 
 
 The subject-matter of this bill is not new. Legislation along the 
 above lines has been attempted in prior Congresses. During the Fifty- 
 seventh Congress elaborate hearings extending over a period of six 
 weeks were Bad before this committee, and the testimony of numerous 
 shippers, manufacturers, and persons engaged in transportation, as 
 well as officials of the great railroad systems of the country was taken. 
 During the present Congress this legislation was again presented 
 through bills above mentioned, and again the opportunity was afforded 
 to all parties interested to present testimony. Numerous parties have 
 taken advantage of the opportunity ^ and the time of the committee has 
 been almost entirely devoted to hearings on and considerations of this 
 subject since December last. A large amount of testimon}' has been 
 taken and printed for the benefit of the committee and the Congress. 
 
 The importance of this legislation was indicated by the President in 
 his last annual message, wherein he used the following language: 
 The Government must in increasing degree supervise and regulate the workings of 
 
2 AMENDING THE INTERSTATE-COMMERCE ACT. 
 
 the railways engaged in interstate commerce; and such increased supervision is the 
 only alternative to an increase of the present evils on the one hand or a still more 
 radical policy on the other. The most important legislative act now needed as 
 regards the regulation of corporations is this act to confer on the Interstate Commerce 
 Commission the power to revise rates and regulations, the revised rate to go at once 
 into effect and stay in effect unless and until the court of review reverses it. 
 
 Prior to 1897 the Interstate Comrnerce Commission assumed to exer- 
 cise the power to regulate rates; but by a decision of the Supreme 
 Court of that year in the maximum rate cases the court determined 
 that the interstate-commerce act did not give to the Comnjission such 
 power. Since that decision the Commission has repeatedly recom- 
 mended to Congress an amendment- of the act to give it such power. 
 In its last annual report it uses the following language: 
 
 In that branch of regulation which pertains to the correction of established rates 
 and charges, there has been no amendatory legislation conferring power over the 
 rate and making orders of the Commission effective, although we have discussed at 
 length in previous reports the weakness and inadequacy of the law, as from time to 
 time defects have been disclosed under construction of its provisions by the courts, 
 and have explained in detail the reasons for our urgent recommendations. 
 
 The Commission may find after careful and often extended investigation that a 
 rate complained against is unreasonable and order the carrier to desist from charging 
 that rate for the future, but it can not, though the evidence may and usually does 
 indicate it, find and order the reasonable rate to be substituted for that which has been 
 found to be unlawful. It results that any reduction of the wrongful charge amounts 
 to technical compliance, and frees the carrier from any legal obligation under the 
 order. The Commission can issue its order only against the rate complained of ; it 
 can condemn the wrong, but it can not prescribe the remedy. 
 
 This is illustrated by two cases decided during the present year. A rate of $80 per 
 car on peaches from New York to Boston, used as part of the through charge from 
 Georgia, having been found unreasonable, a reduction of $50 was deemed reasonable 
 by the Commission and recommended. The carrier reduced the charge to $65 per 
 car. A rate of $1.90 per ton on coal from Indian Territory to a point in Texas was 
 declared excessive by the Commission, and a rate of $1.25 was recommended as rea- 
 sonable upon the facts shown in the case. The rate was reduced to $1.50 per ton. 
 The proof in each of these cases demanded, in our opinion, reductions to the extent 
 recommended, but the tjarriers thought otherwise, and being under no compulsloH 
 to follow our recommendations they put in nmch higher charges. 
 
 These carriers could have refrained altogether from taking any action under the 
 orders issued in the cases mentioned. The); could, in the present condition of the 
 law, have stood upon their legal right to await the direction of the circuit court upon 
 a petition by the Commission and another trial of the issues in that court. In cases 
 involving important rates the carriers often do take advantage of that right. The 
 more important the case may be, the greater the benefit conferred upon shippers or 
 communities, the less likely is the order of the Commission to be obeyed. The Com- 
 mission must not only render a just decisibn, but one that is convincing to the car- 
 rier in order to afford the relief from unlawful rates which is contemplarted in the 
 statute. If the carrier is not so convinced it merely ignores the order, and the time 
 involved in enforcing the same generally covers a period of years, which amounts in 
 most cases to a denial of justice. 
 
 If a decision by the Commission is right the public is entitled to have it go into 
 effect. If it is wrong — if it would deprive the carrier of property without due process 
 of law or invade any of its other rights or privileges under the Constitution or laws 
 of the United States— its operation could be enjoined, upon showing to that effect by 
 the carrier in a suitable and summary proceeding in the Federal court. The amend- 
 ments to the statute recommended by the Commission involve no fixing of whole 
 tariffs of rates in the first instance or at any time, but simply the redressing of trans- 
 portation wrongs shown to exist after full investigation, during which all affected 
 interests have been heard, and when an order is issued against a carrier under such 
 procedure it should, by operation of law, become effective upon the date therein 
 specified. 
 
 In the fixing of rates upon all commodities for carriage in all directions and between 
 all points reached by railroads it is inevitable that much injustice, unfairness, unrea- 
 sonableness, preference, and discrimination will be practiced notwithstanding the 
 greatest care and ripest judgment may be exercised by the railway oflacials charged 
 with the duty of rate making. These errors of judgment on the part of railway ofii- 
 
AMENDING THE INTERSTATE-COMMEKCE ACT. 6 
 
 cials, many of them occurring in the hasty exercise of the rate-making function or 
 in the effort to press on to the discharge of other urgent duties, constitute the reason 
 for Federal regulation and the basis of the present widespread demand for an amend- 
 ment to the existing statute which will enable their speedy correction when the 
 results of such errors are felt by the commercial public. 
 
 It seems appropriate to allude to what seems to us persistent misrepresentation on 
 the part of many who are interested in opposing this legislation that the amend- 
 ments desired would confer upon this Commission the power to arbitrarily initiate 
 or make rates for the railways, and that it would be most dangerous to place this 
 vast authority in the hands of five men, especially five men who have had no expe- 
 rience as railway traffic managers. No such power has been asked by or is seriously 
 sought to be conferred upon the Commission. Though the popular demand may 
 eventually take that form under the stress of continued delay in remedying ascer- 
 tained defects in the present plan of regulation, the amendment heretofore and now 
 recommended by the Commission, as to authority to prescribe the reasonable rate 
 upon complaint and after hearing, would confer in substance the same power that 
 was actually exercised by the Commission from the date of its organization up to 
 May, 1897, when the United States Supreme Court held that such power was not 
 expressed in the statute. 
 
 What the Commission could do if the authority so denied .should be definitely 
 conferred by the Congress is this: After service of complaint upon the carrier or car- 
 riers, after full hearing of each carrierand shipper interested, and after careful inves- 
 tigation a report and opinion would be rendered, and if the decision should be against 
 the carrier an order would be entered directing it to cease and desist from charging 
 the rate complained of and to substitute therefore a rate found, upon the evidence 
 before the Commission, to be reasonable and just. This procedure is essentially 
 judicial in character and form and bef.rs no resemblance in any degree to the arbi- 
 trary administrative action which would result under the authority to make tariffs of 
 rates absolutely for the railways, either in the first instance or after some form of 
 hearing or investigation. 
 
 We said in our reports to Congress for 1902 and 1903 and now repeat that in view 
 of the rapid disappearance of railway competition and the maintenance of rates 
 established by combination, attended as they are by substantial advances in the 
 charges on many articles of household necessity, the Commission regards this matter 
 as increasingly grave, and desires to emphasize its conviction that the safeguards 
 required for the protection of the public will not be provided until the regulating 
 statute is thoroughly revised. 
 
 The complaints which come befop the Commission and which are discussed under 
 another heading show that the grievances alleged reach from mattera of trivial con- 
 sequence to those which involve very large sums during the course of a year's busi- 
 ness, and that the effect is not always confined to the mere amount of a given reduction 
 from a published rate, but frequently extends to the ability to carry on trade in great 
 lines of business. Though the law is extremely defective, aggrieved shippers have 
 no other recourse than to appeal to the Commission, in the hope, as was said in our 
 last report, "of some relief from conditions which they regard as intolerable." 
 
 No procedure for reparation or damages resulting from unjust rates can ever afford 
 an adequate remedy. This is so because, first, in respect of many articles of freight 
 the rate is an important factor in determining the cost thereof and in fixing the 
 limits of distribution and sale. The mere difference between the just rate and the 
 unjust one on actual shipments would seldom, if ever, apijroximate the real damage 
 to a business injuriously affected. Generally the most serious injury in such a case, 
 though potent and substantial, is not even approximately measurable. In the second 
 place, the shipper, who alone is known to the carrier in the transaction, is often a 
 dealer or middleman who has protected himself in buying and seUing on the basis of 
 the rates charged, yet he alone could maintain a suit against the carrier on account 
 of the unjust rate paid, although the hardship had fallen on the producer from whom 
 he bought or the consumer to whom he sold, or both. Jn the very nature of the 
 case adequate protection can be found alone in prevention of the wrong; hence, the 
 vital importance of just rates upon which to move traffic at the time when or before 
 it moves. 
 
 This is also true in respect of tariff rates, however strictly enforced, which operate 
 with discriminating effect as between rival localities or competing articles of trafBc. 
 The resulting disadvantage in such cases is not measured by the difference between 
 relatively equal and relatively unequal rates, but by the command of markets and 
 the ability to undersell which are secured by those who are favored by inequitable 
 rate adjustments. The injury thus inflicted is beyond calculation and can be redressed 
 only by the exercise of sufficient authority to readjust rate schedules to be observed 
 in the future on the basis of relative justice. 
 
4 AMENDING THE INTEKSTATE-COMMEKCE ACT. 
 
 It is conceded by all that it is right that rates should be reasonable and_ ju§t. It 
 is clear that when they are not so there is now no adequate means of making them, 
 such unless the carrier at fault can be convinced and persuaded to do so. The "J^^r- 
 ests of one party can not be safely relied upon to determine and protect the rights of 
 another. It must surely be possible to devise a method of procedure whereby Prac- 
 tical effect can be given to the concededly fair demands of law th.at rates shall be 
 reasonable and just without sacrifice of the rights or just interests of either party to 
 the controversy. 
 
 If authority is to be conferred upon any tribunal, upon complaint and hearmg, to 
 correct rates found to be unreasonable or unjust, there is good reason for apprehen- 
 sion that the purpose to do so could in many cases be thwarted unless there is also 
 authority to require the establishment of joint through rates over connecting and 
 continuous lines and to fix the divisions thereof in case the carriers fail or refuse to 
 do so. 
 
 As showing the widespread interest in this legislation there has been 
 filed with the committee thousands of petitions, resolutions, and tele- 
 grams from private individuals, corporations, and civic bodies demand- 
 ing that legislation along the lines suggested by the President's message 
 and the above report of the Interstate Commerce Commission be 
 enacted. Eesolutions and memorials adopted by several of the States 
 have also been presented. 
 
 To meet this great demand your committee has recommended the 
 enactment of this bill, its chief purpose being to increase the efiiciency 
 of the interstate- commerce law. 
 
 The business interests of the country demand that the law be 
 amended, and the railroad representatives at the committee hearings 
 acknowledged that Congress should regulate the railroads, but it has 
 been a difficult matter to get witnesses to agree on just what amend- 
 ments should be made to the law. Your committee, however, believe 
 that the great demands of the people are: First, that the Interstate 
 Commerce Commission shall be vested with power to determine after 
 full hearing not only what is anunjust and unreasonable rate, regula- 
 tion, or practice, but at the same time to determine and declare what is 
 just and reasonable, and that such determination shall become oper- 
 ative as soon as practicable, and second, that lawful means shall be 
 provided to expedite the business of the Commission and speed its find- 
 ings and orders to a final determination by judicial review. To these 
 ends this bill has been framed and reported. 
 
 Section 1 of the bill confers upon the Commission the right to name 
 a just and reasonable rate in place of one found to be unjust and unrea- 
 sonable, and provides that the same shall take efl'ect and become oper- 
 ative within thirty days from the date of service of the Commission's 
 order upon the party directly affected by it. No provision is made 
 for the suspension of said rate except upon reversal of the Commis- 
 sion's order by the court of review. 
 
 Section i provides for a penalty of $5,000 to be imposed upon the 
 party refusing to obey the order of the Commission for every day of 
 such refusal after the order becomes operative. 
 
 To increase the efiiciency of the Commission it is enlarged to seven 
 members and the salaries increased to $10,000. The work of the Com- 
 mission is so great that five men have failed to perform it in a reason- 
 able time, and many cases suffer for lack of time and opportunitv to 
 be heard and determined. The Commissioners' duties are so arduous 
 and of such importance that the present salary of |7,500 is believed to 
 be insufficient, and is therefore increased to $10,000. Men who are 
 fitted for the great duties of Commissioners under the law as hereby 
 
AMENDING THE INTEESTATE-COMMEECE ACT. 5 
 
 amended can command the higher salary, and none but men of very 
 highest ability and experience should be selected. 
 
 Section 7 provides for a special court of transportation to review the 
 orders of the Commission in case of appeals. It is believed that cases 
 will be greatly expedited, and that a court constituted as provided in 
 the bill will become expert in matters of interstate commerce, and that 
 a greater degree of uniformity and continuity will be found in its 
 decisions than in those of a court of less expert experience. 
 
 The Department of Justice reports that four additional circuit judges 
 are needed for the regular business of the circuits. It is thought that 
 the proposed court of transportation will not be occupied all the time 
 with interstate commerce cases and that it will therefore have time to 
 perform the extra duties required in the Federal circuits. 
 
 This court is composed of circuit judges designated by the President 
 for terras of five years, with the exception of four of the first judges 
 appointed, whose terms are respectively one, two, three, <four, and 
 five years. So constituted the court has at all times four members who 
 have had one or more years' experience on the bench. 
 
 The other sections of the bill are for the purpose of making the act 
 more complete and effective. 
 
 Your committee recommends the passage of the bill H. R. 18588. 
 
 Bill H. R. 18588 is as follows: 
 
 A BILL to supplement and amend the Act entitled "An Act to regulate commerce," approved Feb- 
 ruary fourth, eighteen hundred and eighty-seven. 
 
 Be it enacted by the Senate and House of Representatives of the United States of America 
 in Congress assembled, That whenever upon complaint duly made under section thir- 
 teen of the Act to regulate commerce the Interstate Commerce Commission shall, 
 after full hearing, make any finding or ruling, declaring any existing rate for the 
 transportation of persons or property, or any regulation or practice whatsoever affect- 
 ing the transportation of persons or property to be unreasonable or unjustly discrimi- 
 natory, the Commission shall have power, and it shall be its duty to declare and 
 order what shall be a just and reasonable rate, practice, or regulation to be charged, 
 imposed, or followed in the future in place of that found to be unreasonable or 
 unjustly discriminatory, and the order of the Commission shall, of its own force, take 
 effect and become operative thirty days after notice thereof has been given to the 
 person or persons directly affected thereby; but at any time within sixty days from 
 date of such notice any person or persons directly affected by the order of the Com- 
 mission, and deeming it 4o be contrary to l&,w, may institute proceedings in the court 
 of transportation sitting as a court of equity, to have it reviewed and its lawfulness, 
 justness, or reasonableness inquired into and determined. 
 
 Sec. 2. That when the rate substituted by the Commission as hereinbefore pro- 
 vided shall be a joint rate, and the carriers, parties thereto, fail to agree upon the 
 apportionment thereof among themselves within twenty days after notice of such 
 order, the (/Ommission may, after a full hearing, issue a supplemental order declar- 
 ing the portion of such joint rate to be received by each carrier party thereto, which 
 shall take effect of its own force as part of the original order. Such supplemental 
 order shall be subject to review by the court of transportation within the time and 
 in the manner hereinbefore provided for the review of original orders of the Com- 
 mission: Provided, That any rate, whether single or joint, which may be fixed by 
 the Commission under the provisions of this Act shall for all purposes be deemed 
 the published rate of such carrier, and subject to the provisions of an Act entitled, 
 "An Act to further regulate commerce with foreign nations and among the States," 
 approved February nineteenth, nineteen hundred and three. 
 
 Sec. 3. That in every such proceeding for review the petitions and answers filed 
 with the Commission and the Commission's findings, opinions, and order, together 
 with the evidence introduced in the hearing before the Cotnniission shall be deemed 
 a part of the record of the cause in the court of transportation, and said record shall 
 by the Commission be filed with the court of transportation within ten days after 
 notice for such review is given. 
 That in all such proceedings for review the defense shall be conducted under the 
 
6 AMEJSTDING THE INTERSTATE-COMMEKCE ACT. 
 
 divection of the Attorney-General, but the Commission, with the approval of the 
 Attorns v-General, may employ special counsel to be paid from its own appropriation. 
 
 That the Commission may at any time, whether before, or on notice to the court, 
 during the progress of a judicial review of its action by the court of transportation, 
 reopen its proceedings in any case and modify, suspend, or annul its former order, 
 ruling, or requirement. . . j^ , i 
 
 Sec. 4. That if any party bound thereby shall at any time while it is in effect refuse 
 or neglect to obey or perform any order of the Commission mentioned in sections one 
 and two of this Act the Commission may apply by petition to the court of transporta- 
 tion to enforce obedience to its order by writ of injunction or other appropriate 
 process, and in addition thereto the offending party shall, for each day of the con- 
 tinuance of such refusal or neglect from the time such order shall have become 
 operative, be subject to a penalty of five thousand dollars, which, together with costs 
 of suit, shall be recoverable by the Commission for the use of the United States in an 
 action of debt in the court of transportation. 
 
 Sec 5. That the word "person" or "persons" wherever used in this Act shall be 
 deemed to include corporations. 
 
 Sec. 6. That the Interstate Commerce Com mission is hereby increased to seven mem- 
 bers, and the salary of each shall be ten thousand dollars per annum. The President 
 shall appoint, by and with the advice and consent of the Senate, two additional 
 Interstate Commerce Commissioners. Not more than four Commissioners shall be 
 appointed from the same political party. 
 
 Sec. 7. That there is hereby established a court of record with full jurisdiction in 
 law and equity, to be called the court of transportation, which shall be composed of 
 five circuit judges of the United States, no two of whom shall be froni the same cir- 
 cuit, and three of whom shall constitute a quorum, who shall be designated by the 
 President for terms of one, two, three, four, and five years, respectively, from April 
 first, nineteen hundred and five, and as their terms expire the President shall from 
 the circuit judges appoint their successors for terms of five years each. 
 
 Sec. 8. That the court of transportation shall hold four regular sessions each year 
 at the city of Washington, beginning on the first Tuesday in March, June, Septem- 
 ber, and December, and a quorum of said judges may appoint special sessions of the 
 court to be held at other places when justice would thereby be promoted: Provided, 
 That if the business of said court of transportation will permit, the judges, or any 
 number of them, may be assigned to duty in the various circuits as now provided 
 by law, but under no circumstances shall such assignment interfere with the neces- 
 sary and expeditious performance of the duties of said court of transportation. 
 
 Sec. 9. That the President is hereby authorized to appoint, by and with the advice 
 and consent of the Senate, five additional circuit judges, no two of whom shall be 
 from the same judicial circuit, who shall receive the pay and emoluments, and exer- 
 cise the authority and powers, and perEorm the duties now or hereafter required by 
 law to be performed by judges of the circuit court of the United States. 
 
 Sec 10. That the court of transportation shall have exclusive original jurisdiction 
 of all suits and proceedings of a civil nature in law or equity brought in the name of 
 the United States or the Interstate Commerce Commission to enforce the provisions 
 of this Act, the Act entitled "An Act to regulate commerce," approved February 
 fourth, eighteen hundred and eighty-seven, and the amendments thereto, the Act 
 entitled "An Act to further regulate commerce with foreign nations and among 
 States" approved February nineteenth, nineteen hundred and three, and any 
 law that may hereafter be enacted amendatory of or supplementary to those Acts, 
 and it shall also have exclusive original jurisdiction of all suits and proceedings of a 
 civil nature in law or equity brought to enforce obedience to, or to restrain, enjoin, 
 or otherwise prevent the enforcement and operation of, any order, ruling, or require- 
 ment made aild promulgated by the Interstate Commerce Commission under the 
 authority of any power conferred upon it by either of the aforesaid Acts or by any 
 law that may hereafter be enacted amendatory thereof or supplementary thereto: 
 Provided, however, That proceedings J® enforce contumacious witnesses to attend and 
 testify or produce documentary evideiice before the Interstate Commerce Commission 
 may be brought in any court of the United States of original jurisdiction, sitting in 
 the place or district where the inquiry or hearing of the Commission is being held, 
 and in all other respects such proceedings shall follow the course prescribed in sec- 
 tion twelve of the aforesaid Act entitled "An Act to regulate commerce." 
 
 Sec. 11. That in the exercise of the jurisdiction defined and conferred upon it by 
 this Act the cour^of transportation shall possess all the powers of a circuit court of 
 the United State^ so far as the same may be applicable. 
 
 Sec. 12. That in every suit or proceeding brought in the court of transportation to 
 enforce orders/rulings, or requirements of the Interstate Commerce Commission, or 
 
AMENDING THE IWTERSTATE-COMMERCE ACT. 7 
 
 to restrain, enjoin, or otherwise prevent their enforcement and operation, the' find- 
 ings of fact made and reported by the Commission shall be received as prima facie 
 evidence of each and every fact found, and no evidence on behalf of either party 
 shall be admissible in any such suit or proceeding which was not offered, but which 
 with the exercise of proper diligence could have been offered, upon the hearing 
 before the Commission that resulted in the particular order or orders in controversy; 
 but nothing herein contained shall be construed to forbid the admission, in any such 
 suit or proceeding, of evidence not existing, or which could not, with due diligence, 
 have been known to the parties at the time of the hearing before the Commission. 
 
 Sec. 13. That the court of transportation shall have power to summon and bring 
 before it all parties named as defendants or respondents in proceedings before it in 
 whatever judicial district. Territory, or possession of the United States they may 
 reside, and subpoenas for witnesses to appear before the court of transportation may 
 run into any judicial district or any Territory or possession of the United States. 
 
 Sec. 14. That the court of transportation, as a court of equity, shall be deemed 
 always open for the purpose of filing any pleading, including any certification from 
 the Interstate Commerce Commission, of issuing and returning mesne and final proc- 
 ess, and of making and directing all interlocutory motions, orders, rules, and other 
 proceedings, including temporary restraining orders, preparatory to the hearing upon 
 their merits of all causes pending therein; and any justice of the court of transporta- 
 tion may, upon reasonable notice to the parties, make and direct and award at 
 chambers, and in vacation as well as in term, all such process, commissions, orders, 
 rules, and other proceedings, including temporary restraining orders, wherever the 
 same are grantable, as of course, according to the rules and practice of the court. 
 
 Sec. 15. That in all cases affected by this Act whef e, under the laws heretofore in 
 force, an appeal or writ of error lay from the final order, judgment, or decree of any 
 circuit court of the United States to the Supreme Court, an appeal or writ of error 
 shall lie from the final order, judgment, or decree of the court of transportation to 
 the Supreme Court and that court only, and must be taken within thirty days from 
 the date of entry thereof; and said Sujpreme Court shall give precedence to the hear- 
 ing and decision of such appeal over all other causes except criminal cases, and the 
 rules and regulations which, under existing law, govern appeals and writs of error 
 from the several circuit courts to the Supreme Court shall govern appeals and writs 
 of error from the court of transportation except as herein otherwise provided. 
 
 Sec. 16. That the court of transportation shall have power to prescribe the form 
 and style of its seal, and to prescribe from time to time and in any manner not incon- 
 sistent with any law of the United States the forms of writs and other process and 
 rules for the return thereof, the modes of framing and filing proceedings and plead- 
 ings, of taking evidence, and of drawing up, entering, and enrolling orders, judg- 
 ments, and decrees, and otherwise to regulate its practice and procedure as may be 
 necessary or convenient for the advancement of justice. 
 
 Sec. 17. That the costs and fees in the court of transportation shall be prescribed 
 by a quorum of the justices thereof and shall be expended, accounted for, and paid 
 over to the Treasury of the United States in the same manner as is now provided in 
 respect of the costs and fees in the several circuit courts. 
 
 Sec. 18. That the court of transportation shall have power to appoint a clerk, 
 a deputy clerk if necessary, a bailiff who shall act as crier, and a messenger, who 
 shall receive annual salaries, as follows, payable from the Treasury of the United 
 States: The clerk, five thousand dollars; the deputy clerk, if one shall be appointed, 
 two thousand five hundred dollars; the bailiff, two thousand dollars, and the mes- 
 senger one thousand eight hundred dollars. The clerk and deputy clerk shall sub- 
 scribe to the oaths or affirmations prescribed for clerks of the several circuit and 
 district courts of the United States, and shall each give bond in sums to be fixed and 
 with sureties to be approved by the court, conditioned faithfully to discharge the 
 duties of their office and seasonably to record the decrees, judgments, and determi- 
 nations of the court of which they are, respectively, clerk and deputy clerk. 
 
 Sec. 19. That the justices, the clerk, and the deputy clerk of the court of trans- 
 portation shall have power to administer oaths and affirmations. 
 
 Sec. 20. That the marshal of the United States for the District of Columbia, or for 
 any judicial circuit of the United States in which the court shall be sitting, shall 
 attend the sessions and shall execute the orders and processes of the court of trans- 
 portation. 
 
 Sec. 21. That all Acts or parts of Acts Inconsistent with this Act are hereby 
 repealed. 
 
 Sec. 22. That this Act shall take effect on the first day of April, nmeteen hundred 
 and five. 
 
YIEWS OF THE MINORITY. 
 
 The undersigned members of the Committee on Interstate and For- 
 eign Commerce can not give their appx'oval to all of H. Ft. 18588 as 
 the best and most eflFective legislation to be bad in oi'der to cure the 
 evils complained of b}' us, the President of the United States, and the 
 country, although we admit that it contains some wholesome points 
 and the state of legislation which would be brought about by its enact- 
 ment would be superior to present legislation. No difference of opin- 
 ion exists between us that additional legislation is required to make 
 effective the primary requirement of the "act to regulate commerce," 
 namely, "that all charges made for any service rendered or to be 
 rendered in the transportation of passengers or property, or in con- 
 nection therewith, shall be made reasonable and just." 
 
 We are not informed as to any dissent on the part of any member 
 of the committee to the necessity and advisabilit}' of the Congress 
 conferring upon the Interstate Commerce Commission the power, 
 where a given rate has been challenged and, after a full hearing, 
 found to be unreasonable and unjust, to decide, subject to judicial 
 review, what shall be a reasonable and just rate to take its place, the 
 decision or ruling of the Commission to take effect and to remain in 
 operation until or unless the ruling so made by the Commission is 
 held to be error or reversed by the proper Federal court having juris- 
 diction thereof. 
 
 We contend, and believe, that if the "Act to regulate commerce" 
 is so amended, it will afford ample remedy for existing evils and 
 abuses in the matter of unjust and unreasonable rates, alleged to 
 be charged by railroads, and give equal protection and security to 
 the rights and interests of the public and the railroads, especially if 
 provision is made, as we propose, to expedite all hearings of injunc- 
 tion to restrain and annul rates, which was omitted in the present 
 law to expedite proceedings. We contend that if the Interstate Com- 
 merce Comraission is worth}' to have this important power conferred 
 on it by the Congress, subject to review of the proper Federal Courts, 
 that it ought not, in the exercise of such power, to be hampered and 
 trammeled by a multiplicity of rules, regulations, temporary restraining 
 orders, provisions, and requirements incident to the creation of new 
 and special courts, all tending to vexatious and needless delays and the 
 defeat of the ends of justice. It is not, in our judgment, in harmony 
 with the true intent and spirit of our theory of republican government 
 or our judicial system, to signalize any special and distinct interest, 
 vocation, or employment in our own country and among our own peo- 
 ple by creating a special court to look after a special interest. 
 
 Congress can certainly be relied on not to enact hostile legislation 
 against our railroads. The President of the United States said: 
 
 The act should be amended. The railway is a public servant. Its rates should be 
 just and open to all shippers alike. The Government should see to it that, within 
 its jurisdiction, this is so, and should provide a speedy and effective remedy to that 
 
 3 
 
10 AMENDING THE INTEKSTATE-COMMERCE ACT. 
 
 end. Nothing could be more foolish than the enactment of legislation which would 
 unnecessarily interfere with the development and operation of these commercial 
 agencies. 
 
 For quite ten years after the approval of the "Act to regulate com- 
 merce" the Commission acted upon the assumption that the law con- 
 ferred the authority on the Commission to declare a given rate m lieu 
 of a rate fully investigated and found to be unreasonable and un]ust. 
 The railroads adapted themselves to that construction. 
 
 No complaints were made that the Commission used its power improvi- 
 dently. Kates, regulations, and practices were adjusted by the Com- 
 mission and the railroads. No fear of irreparable damage being done 
 by the Commission to the railroads was expressed. No special court 
 of commerce or transportation was in existence, but the railroads took 
 their chances, like all other interests, before the Federal courts as now 
 organized. Quite twenty States of the Union have by legislative acts 
 clothed their Stftte commission with the power to make rates. In many 
 of these States there were railroads subject only to State supervision. 
 Yet railroads have flourished, prospered, and multiplied in those States. 
 
 It was only after the decision of the Supreme Court of the United 
 States holding that the Interstate Commerce Commission, under" the 
 act to regulate commerce," was not given the legislative authority to 
 prescribe rates that the trouble commenced. Then railroads disre- 
 garded the authority of the Commission and exercised the arbitrary 
 and undisputed power of fixing their own rates, subject to the harm- 
 less power of the Commission to admonish them "to cease and desist" 
 from the violation of the law. 
 
 The real issue is, Shall Congress leave the rate-making power in the 
 hands of the railroads, which nas been arbitrarily used, and practically 
 without governmental supervision or judicial revision, for years past; 
 or shall we give in effective shape the simple and modified rate-making 
 power to the Interstate Commerce Commission, which the President 
 has called for in his message, and for which the Democracy contended 
 for all last session of Congress, and many of us much longer than that, 
 which the Industrial Commission advised, and which the Interstate 
 Commerce Commission requested for the more effective doing of its 
 work, safeguarded by the protection and safety that existing Federal 
 courts can give if all cases are expedited where proper? 
 
 The bill reported by the majority contains provisions wholly unnec- 
 essary and superfluous for a certain speedy and eflicient enforcement 
 of the rate declared by the Commission in lieu of a rate found to be 
 unreasonable and unjust. Where there is a plain, open, and lawful 
 mode by which evils complained of can be remedied, the country ought 
 and will condemn us if we persist in following another plan of legisla- 
 tion, however plausible, which invites litigation and guarantees in the 
 construction of its legal intricacies, pleadings, and complications, dis- 
 couraging and harmful delays and consequent postponement of the 
 case for many years. We can not differ about the principle and we 
 ought to be able to agree on such details as to make the statute real 
 and effective, and not a failure. The bill of the majority, we respect- 
 fully submit, is of that character. Why should a special court of 
 transportation be created for the special and exclusive jurisdiction of 
 railroad cases? The bill, in a qualifled way, seeks to counteract the 
 universal dislike that the people have to the creation of a special 
 privileged court, called into existence on the one idea only that the 
 conflicting interests of the people with the great railroad corporations 
 
AMENDING THE INTERSTATE-COMMERCE ACT. 11 
 
 of the country shall be adjudicated in that special court by assigning 
 the members of the court to other duties when business wifl peraiit. 
 Can it be denied that such a condition would invite and stimulate the 
 concentration of the powerful railroad influences in a manner well 
 calculated to do injury? 
 
 Does a special court provide against the delays that have been so 
 much complained of in the enforcement of the orders of the Commis- 
 sion under existing law ? Can it be denied that this special court of 
 transportation has exactlj', under the bill of the majority, the same 
 authority in passing upon the "reasonableness" of a rate, fixed by the 
 Commission, that the Interstate Commerce Commission has now under 
 the present law, the act to regulate commerced The Commission 
 now can say whether a rate is unreasonable and unjust, but it can not 
 declare what rate can take the place of the one declared unreasonable. 
 The court of transportation, provided for in the bill, will exercise the 
 same authority. It can not be clothed with authority to declare what 
 a reasonable rate is, because that is purely a legislative act. 
 
 We have an abundance of courts to meet the demands of the coun- 
 try. No complaints have been made that the Federal courts, as now 
 organized, are unable to dispatch the business with fairness, impar- 
 tiality, and abilit\^ In this connection we call attention to the pro- 
 visions of section 12 of the bill, which are worthy of support and cor- 
 dial indorsement, because it adopts the usual and established rales for 
 the ascertainment of ti-uth and the administration of justice in an appel- 
 late court. The findings of fact reported by the Commission must 
 be received as "prima facie evidence," and the usual provision for 
 newly discovered evidence is set forth in plain language, but the Com- 
 mission, and not the court, should rehear the case and pass upon the 
 newly discovered evidence. The court should deal with law, not facts. 
 We could but conclude that the court of transportation was in the 
 broadest sense strictly "an appellate court," but that delusion was 
 promptl}^ dispelled when we read the provisions of section 14 of the 
 bill. 
 
 That section contains the "railroad joker" of all the provisions of 
 the bill. It declares that "the court of transportation, etc., is always 
 open for the purpose of filing any pleading, including any certification 
 from the Interstate Commerce Commission, of issuing and returning 
 mesne and final process, and of making and directing all interlocutory 
 motions, orders, rules, and other proceedings, including temporary 
 restraining orders, preparatory to the hearing upon their merits of 
 all causes pending therein, and any justice of the court of transporta- 
 tion ma}', upon reasonable notice to the pa.rties, make and direct and 
 award at chambers, and in vacation as well as in term, all such proc- 
 ess. Commission orders, rules, and other proceedings, including tem- 
 porary restraining orders, whenever the same are not grantable," of 
 course, "according to the rules and practice of the court." 
 
 A hearing of a case "upon its merits" takes up the case anew. A 
 case taken from the Interstate Commerce Commission by appeal to the 
 court of transportation would be tried de novo if tried upon its merits. 
 What will be the effect of such a provision ? The railroads decline to 
 open up their case in full before the Commission and await the hear- 
 ing before the court of transportation. This section authorizes "all 
 restraining orders" to be issued, superseding the orders of the Com- 
 mission, "on reasonable . notice to the parties," including temporary 
 
12 AMENDING THE INTERSTATE-COMMERCE ACT. 
 
 restraining orders wherever the same are not grantable as of course. 
 Temporary restraining orders of the "of course character" are granted 
 on exparte affidavits without any notice whatever. Here you have the , 
 rate fixed by the Commission enjoined and restrained by exparte affi- 
 davits, with quite a certainty that the temporary order will be made 
 final. 
 
 It can not be concluded by the majority that it would be obnoxious 
 to the Constitution to have required that any temporary restrain- 
 ing order or other proceedings should not supersede the order of 
 the Commission until and unless notice had been given to all parties 
 and hearing had on the same. This would have been an open and fair 
 dealing with this great question. Why, we are reliably informed that 
 no less distinguished persons than the President of the United States, 
 the able and distinguished Attorney-General of the United States, and 
 Secretary of the Navy, recommended, if they did not inspire, a bill now 
 pending before the Judiciary Committee of the House requiring that 
 notice should be given and a hearing had before the issuance of a tem- 
 porary injunction against strikers. With such provisions as we find 
 in section 14 of the bill, what possible confidence can the public have 
 in the prompt and efficient enforcement of the power given by the 
 bill to the Commission to declare what a reasonable rate is. 
 
 The power is granted, but its execution is regulated by injunctions, 
 restraining orders, and other proceedings to the degree of destroying 
 its usefulness, while it ought to be a law with a remedy so easy of 
 enforcement that anyone could understand it. 
 
 The majority, in the provisions of section 3 of the bill, allow the 
 Commission to reopen the case and modify, suspend, or annul its order, 
 notwithstanding the fact that the court of transportation was then 
 judicially reviewing the order, and even engaged in trying the case on 
 its merits. It appears to us that confusion could readily arise when 
 the Commission and the transportation court, each having a like 
 authority to hear a case, should be engaged in that business at the 
 same time. As an independent. provision, section 3 would not be 
 objectionable. 
 
 In the very limited time given us to prepare this minority report, 
 we have undertaken only to point out the salient defects of the bill of 
 the majority, and show how and where, in our opinion, it will fail to 
 give the relief so earnestlj'^ demanded by the people of all sections and 
 interests of our people. 
 
 The people have the right to expect this Congress to enact legis- 
 lation that will relieve them of the unjust and oppressive burdens of 
 unreasonable railroad rates that they have suffered from so long. The 
 minority members, in view of the vast importance of this question to 
 all the people, express the earnest hope that we will be allowed the 
 opportunity of offering as a substitute for the bill of the majority the 
 bill, a copy of which is hereto attached, which substantially expresses 
 the views of the undersigned members of the committee. 
 
 The bill we recommend is restricted to such provisions as, in our 
 judgment, are necessary to give effectiveness to the "Act to regulate 
 commerce." It is not to be expected that all reforms needed can be 
 secured at once, but we should never lose sight of the controlling and 
 all-important requirement— the speedy enforcement of a rate dedared 
 by the Commission. This is the prime consideration in the plan of 
 relief proposed by our bill. 
 
AMENDING THE INTERSTATE-COMMERCE ACT. 13 
 
 We see no occasion or necessity to increase the members, terms, nor 
 the compensation of the Commissioners. We have heard no complaint 
 made of either. We have been led to believe that retrenchment is 
 IS demanded in the affairs of the Government, inasmuch as the dis- 
 bursements have for months past exceeded its receipts. The bill under 
 consideration increases the expenses without a corresponding benefit 
 to the public. The court of transportation is an additional and unnec- 
 essary expense. It makes no improvement in the present procedure 
 nor in expedition of cases. A careful scrutiny of the same discloses 
 the fact that it increases obstacles in the execution of the law. It 
 seems to us that conferring the rate-making power on the Interstate 
 Commerce Commission will tend not to increase litigation or to require 
 more courts, but, with the assurance of celerity and certainty of dis- 
 position of cases, litigation would rapidly disappear and efficiency 
 be secured. 
 
 We believe that the Interstate Commerce Commission should be 
 vested with the power, where a given rate has been challenged and 
 after full hearing found to be unreasonable, to decide, subject-to judi- 
 cial review, what shall be a reasonable rate to take its place, the rul- 
 ing of the Commission to take effect immediately, and to obtain unless 
 and until it is reversed by the court of review; and we also believe 
 that all proceedings brought in the courts to arrest, enjoin, or annul a 
 rate declared by the Commission shall be expedited in all the courts to 
 which such cases may be carried, as well as the cases arising under the 
 act to regulate commerce. 
 
 W. C. A-DAMSON, 
 
 W. H. Ryan, 
 R. C. Davet, 
 William Richardson. 
 
 !■ indorse, subject to my views set out in a report signed by me with 
 Hon. D. W. Shackleford, the provisions of the Davey bill to regulate 
 railway abuses. 
 
 W. B. Lamar. 
 
 « 
 
 A BILL to empower the Interstate Commerce Commiasion to fix transportation rates in certain con- 
 tingencies, for the enforcement of its orders, and for other purposes. 
 
 Be it enacted by the Senate and House of Representatives of_ the United States of America 
 in Congress assembled, That when, hereafter, upon complaint made, and after investi- 
 gation and hearing had, the Interstate Commerce Commission shall declare a given 
 rate, whether joint or single, or regulation or practice, for transportation of freight 
 or passengers, unreasonable, or unjustly discriminative, it shall be the duty of the 
 Commission, and it is hereby authorized to perform that duty, to declare, at the same 
 time, what would be a fair, just, and reasonable rate, or regulation, or practice in lieu 
 of the rate, regulation, or practice declared unreasonable, and the new rate, regula- 
 tion, or practice so declared shall become operative twenty days after notice: Promded, 
 That the Commission shall in no case have power to raise a rate filed and published 
 by a carrier. 
 
 Sec. 2. That whenever, in consequence of the decision of the Interstate Commerce 
 Commission, a rate, regulation, or practice has been established and declared as fair, 
 just, and reasonable, and litigation shall fensue because of such decision, the rate, 
 regulation, or practice fixed by the Interstate Commerce Commission shall continue 
 as the rate, regulation, or practice to be charged by the carrier during the pendency 
 of the litigation and until the decision of the Interstate Commerce Commission shall 
 be held to be error on a final judgment of the questions involved by the United States 
 court having proper jurisdiction, but no proceeding by any court taking jurisdiction 
 shall consider any testimony except such as is confined in the record. 
 
14 AMENDING THE INTERSTATE-COMMERCE ACT. 
 
 Sbc. 3. That when the rate substituted by the Commission as hereinbefore pro- 
 vided shall be a joint rate, and the carriers, parties thereto, fail to agree upon the 
 apportionment thereof among themselves within twenty daj^s after notice of such 
 order, the Commission may issue a supplemental order declaring the portion of such 
 joint rate to be received bv each carrier party thereto, which shall take effect of its 
 own force as part of the original order; and when the order of the Commission pre- 
 scribes the just relation of rates to or from common or competitive points on the 
 lines and between common or competitive points and the respective terminals of 
 said Unes of the several carriers parties to the proceeding, and such carriers fail to 
 notify the Commission within twenty days after notice of such order that they have 
 agreed among themselves as to the changes to be made to effect_ compliance there- 
 with, the Commission may issue a supplemental order prescribing the rates to be 
 charged to or from such common or competitive points by either or all of the parties 
 to the proceeding, which order shall take effect of its own force as part of the original 
 order, -and shall continue as the rate regulation or practice to be charged by the car- 
 rier or carriers during the pendency of litigation resulting from the order of the 
 Commission, until, or unless, the decision of the Commission shall be held to be 
 error on final judgment of the questions involved by the United States court having 
 proper jurisdiction. 
 
 Sec. 4. That in case such common carrier or carriers shall neglect, or refuse to 
 adopt, or keep in force, such tariffs of rates, fares, charges, and classifications, or reg- 
 ulations, or practice, so declared and fixed by the Commission, it shall be the duty 
 of the Commission to publish such tariffs of rates, -fares, charges, and classifications, 
 or regulations, or practice, as the Commission has declared to be reasonable and law- 
 ful, in such manner as the Commission may deem expedient. Thereafter, if any 
 such carrier or carriers shall charge, impose, or maintain a higher or lower fare, 
 charge, or classification, or shall enforce any different regulation or practice than 
 that so declared or fixed by the Commission, such common carrier or carriers shall 
 forfeit to the United States the sum of five thousand dollars for each and every day 
 it has continued to refuse or neglected to enforce and apply the said tariff regulation i 
 so published by the Commission. Each forfeiture herein provided for shall be pay- 
 able into the Treasurj; of the United States, and shall be recovered in a civil suit in 
 the name of the United States, brought in the district where the carrier has its 
 principal office, or in any district through which the road of the carrier runs. It 
 shall be the duty of the various district attorneys, under the direction of the Attorney- 
 General of the United States, to prosecute for the recovery of such forfeiture. The 
 costs and expenses of such prosecution shall be paid out of the appropriation for the 
 expenses of the courts of the United States. The Commission may, with the con- 
 sent of the Attorney-General, employ special counsel under this act, paying the 
 expenses of such employment out of its own appropriation. 
 
 Sec. 5. That all existing laws relating to the procurement of witnesses, books, 
 papers, contracts, or documents, and the enforcement of hearings in cases or pro- 
 ceedings under or connected with the act to regulate commerce shall also apply- to 
 any case or proceeding affected by this act. ^ 
 
 Sec. 6. That all cases arising under the provisions of this act and all cases in which 
 any carrier or carriers shall, by any suit or proceeding, seek to enjoin or annul, sus- 
 pend, or modify any order or ruling of the Interstate Commerce Commission shall 
 have precedence over all other cases, except criminal, in any court to which any 
 such case may be carried. 
 
 Sec. 7. That this act shall take effect from its passage. 
 
VIEWS OF MESSES. SHACKLEFOED AND 
 
 LAMAE. 
 
 It is with great reluctance that wc dissent from the expressed views 
 of other members of the committee. The overshadowing importance 
 of the subject, however, demands that we shall put forth every possi- 
 ble effort to secure for the people the full measure of relief which they 
 demand and to which they are entitled. It has been urged that it were 
 better to accept at this time partial remedies for the evils complained 
 of and trust to the future legislation for complete relief. We think 
 this would be a most grievous error. This suggestion might have force 
 if we, as representatives of the people, could at any time bring up for 
 consideration proposed legislation. We all know this can not be 
 done under the rules of the House as at present administered. Now, 
 after decades of waiting, under the stress of an intense public senti- 
 ment and the pressure of a strenuous Executive, we are permitted to 
 legislate upon this great question. What shall we do with our oppor- 
 tunity? Should we not go boldly into a full consideration of the whole 
 subject? If we do less, will the people excuse us? 
 
 Anj' legislation at this time will fall far short of the work unless it 
 shall provide: 
 
 1. Power to find a given rate unreasonable or unjust and to prescribe 
 a reasonable or just rate to be substituted. 
 
 2. Power to prescribe a joint rate. 
 
 3. Power to eliminate unjust discrimination. 
 
 4. Power to stop rebates and secret cut rates. 
 
 5. Power to regulate private cars and private car lines. 
 
 6. Power to regulate terminals and terminal facilities. 
 
 7. Power to regulate freight classifications. 
 
 8. Power to compel the furnishing of equal facilities to all. 
 
 9. The preservation of competition between carriers and markets 
 and a limitation upon the power of the Commission to raise rates or 
 presci'ibe minimum rates. 
 
 10. For facilitating a speedy conclusion of proceedings in courts 
 and limitating litigation as far as the same may be done. 
 
 With a view to securing these remedies we herewith submit a sub- 
 stitute bill which we think aniply meets the demands. The basis of 
 the substitute we offer is the Hearst bill. It contains all of the pro- 
 visions of the Davey bill, but it also goes much further in what we 
 regard as required remedial legislation. 
 All of which is respectfully submitted. 
 
 D. W. Shacklefoed. 
 W. B. Lamar. 
 
 15 
 
16 AMENDING THE INTERSTATE-COMMERCE ACT. 
 
 A BILL to increase tbe powers of the Interstate Commerce Commission and tp ?JPff"«„'5^^ 
 decision of eases arising under the act to regulate commerce by creating an interstate commi 
 court. 
 
 Be it enacted by the Senate and House of Representatives of the United Stales of Amer 
 in Congress assembled, That hereafter when the Interstate Commerce CommissJ 
 shall, m any case pending before it under the act to regulate commerce, appro\ 
 February fourth, eighteen hundred and eighty-seven, as amended and supplemem 
 by other acts of Congress, find that a rate for the transportation of freight or p 
 sengers is unreasonable or unjust, it shall determine what would be a reasonable a 
 just rate in such case, and shall order that the rate so found to be reasonable a 
 just shall be substituted for the rate so found to be unreasonable or unjust: I'romd 
 however, That in no case shall the Interstate Commerce Commission have any pov 
 to order any carrier to raise any rate which it has duly filed and published. 
 
 Sec. 2. That the provisions of the act to regulate commerce, approved iebru£ 
 fourth, eighteen hundred and eighty-seven, and acts amendatory thereof and supp 
 mental thereto, shall apply to all transportation of interstate commerce over any h 
 or lines of railroad, and also to such transportation over any part water and part x 
 route used for through shipment or through carriage. 
 
 Sec. 3. That all persons, copartnerships, joint stock companies, associations, a 
 corporations owning or operating, or both owning and operating, any private freij 
 cars or any freight cars not owned by a railroad company, used in interstate co 
 merce, are hereby declared to be common carriers and are hereby made subject 
 all the provisions, so far as they are applicable, of the act to regulate coinmer 
 approved February fourth, eighteen hundred and eighty-seven, and all acts amenc 
 tory thereof and supplemental thereto. 
 
 Sec. 4. That all terminal facilities, tracks, switches, spurs, freight depots, wa: 
 houses, and all facilities used or necessary, and all acts and services performed 
 necessary in relation to the forwarding and transportation of any interstate commei 
 and the preservation and safety of the same in transit, are hereby made subject 
 the provisions, so far as they may be applicable, of the act of Congress to reguh 
 commerce, approved February fourth, eighteen hundred and eighty-seven, and all ai 
 amendatory thereof and supplemental thereto. 
 
 Sec. 5. That when the rate fixed by the Commission is a joint rate and the carric 
 parties thereto fail to agree upon the apportionment thereof among themselves with 
 twenty days after notice of such order, the Commission may issue a supplemeni 
 order fixing the portion of such joint rate to be received by each carrier party therel 
 Sec. 6. That it shall not be lawful for any common carrier subject to any of sa 
 acts, or any company or person acting for or in the stead of such common carrier, 
 advance, reduce, or cancel any indi\idual or joint rate, fare, or charge now or hei 
 after in force over the route or line of such common carrier unless or until noti 
 thereof, plainly showing the chan};e intended to be made in such rate, fare, or charj 
 and the date when the same shall take effect, shall have been filed with the Inti 
 state Commerce Commission and posted in all depots o'r stations where passengers 
 freight are received for transportation under such rate, fare, or charge for at lei 
 thirty days prior to the date when such change is to become effective: Providt 
 however, That said Commission may, for good cause shown, upon special applicatic 
 allow a particular rate, fare, or charge to be changed upon shorter notice publish 
 and filed as aforesaid. No joint rate, fare, or charge shall become effective until i 
 carriers named as parties thereto shall have concurred therein by signing the n 
 schedule or filing general authorization or specific notice of concurrence with t 
 Commission; and any common carrier enforcing any schedule of joint rates, fares, 
 charges which shall not have been concurred in by all carriers parties thereto, or a; 
 schedule of rates, fares, or charges which shall not have been published and filed 
 required by this section, shall be subject to a forfeiture of one hundred dollars 1 
 each day such unlawful tariff shall be published or enforced. The said Commissi 
 may prescribe the form, contents, and arrangement of all schedules of rates, fan 
 and charges-, and it shall be the duty of said Commission to make orders from til 
 to time, as may be practicable, with a view of securing uniformity in freight classi 
 cation and the use of rate schedules containing concise and easily understood pi 
 visions and regulations. 
 
 Sec. 7. That when any notice of advance in rates, fares, or charges shall be fil 
 with the Commission, the said Commission shall have authority to inquire into t 
 lawfulness of such advance and make orders in respect thereof to the same effect 
 if such advanced rate, fare, or charge were actually in force. The provisions of tl 
 section shall also apply to notice of any change in classification of freight or oth 
 regulations affecting rates. . 
 
 Sec 8. That when in any investigation made by the Interstate Commerce Coi 
 mission it shall be made to appear to the satisfaction of the Commission that an 
 
AMENDING THE INTEESTATE-COMMERCE ACT. 17 
 
 thing has been done or omitted to be done by any common carrier, respondent or 
 defendant, in such proceeding in violation of the provisions of the act to regulate 
 commerce, approved February fourth, eighteen hundred and eighty-seven, or any 
 act amendatory thereof or supplemental thereto, or of the provisions of this act, it 
 shall be the duty of the said Commission forthwith to cause a copy of its report in 
 respect thereto to be delivered to such common carrier, together with an order or 
 orders directing such common carrier, its officers and agents, and any receiver or 
 trustee of its property, to wholly cease and desist from such violation, and to estab- 
 lish, put into effect, and vnaintain such individual rate, fare, charge, relation of 
 rates, fares, or charges, joint rate, fare, or charge, and division thereof, classification 
 of freight articles involved in the proceeding through and continuous carriage over 
 connecting lines or roads, including intersecting switches or connections, and regu- 
 lations concerning transportation,- including the furnishing and apportionment of 
 cars, the provision of other faciUties connected with or incidental to transportation, 
 and the receiving, forwarding, and delivery of traffic, as in the judgment of said 
 Commission may be necessary to prevent the continuance in any degree of such 
 violation. That whenever any common carrier, subject to the provisions of this act, 
 shall fail or refuse, after reasonable notice, to furnish cars to shippers for the trans- 
 portation of freight as interstate commerce, or to forward and deliver such freight 
 at destination within a reasonable time, such failure or refusal shall be deemed to 
 constitute unjust discrimination and undue and unreasonable prejudice and disad- 
 vantage, and in any case or proceeding pending before the Commission or any circuit 
 or district court of the United States based upon such failure or refusal on the part 
 of any such common carrier, proof that in the furnishing of cars or forwarding or 
 delivery of its traffic other shippers have been preferred snail not be required. 
 
 Sec. 9. That subject to the proceeding in review hereinafter provided every order 
 issued by the Interstate Commerce Commission under the authority of this act shall 
 become effective and be obeyed by the carrier or carriers mentioned in such order 
 on and after the date specified for compliance in such order: Provided, That when- 
 ever any such order requires changes in rates, fares, or charges, classification of 
 freight, or regulations affecting the compensation of any carrier, it shall not go into 
 effect until after the expiration of thirty days from the date of service thereof upon 
 the carrier. All orders of the Commission amending or modifying orders previously 
 issued, if made upon application of the carrier, shall become effective as therein pro- 
 vided. The Commission shall have authority at all times to alter, modify, add to, or 
 vacate any order it shall have issued. In case any person, company, or corporation 
 other than a carrier, who may be interested in the traffic or transportation involved; 
 shall be included as a party defendant or respondent in addition to the carrier in a 
 proceeding before the Commission, orders may issue against such additional party in 
 the same manner, to the same extent, and subject to the same provisions as are 
 authorized with respect to carriers. 
 
 Sec. 10. That there is hereby created a court to be known as "The Court of Inter- 
 state Commerce," which shall consist of three justices, of whom two shall constitute 
 a quorum. Said court shall be a court of record, with jurisdiction as hereafter 
 defined. The justices shall be appointed by the President, by and with the advice 
 and consent of the Senate, and shall, unless removed by the President for just cause, 
 hold their offices during good behavior. Tjje salary of each justice shall be seven 
 thousand five hundred dollars per year, payable in the same manner as salaries of 
 judges of other courts of the United States. The provisions of section seven hundred 
 and fourteen of the Revised Statutes of the United States relating to the retirement 
 of judges of the United States courts shall apply to the justices of the Court of Inter- 
 state Commerce. Such court shall prescribe the form and style of its seal and the 
 form of writs and other process and procedure as may be conformable to the exercise 
 of its jurisdiction. The court shall appoint a clerk, who shall perform and exercise 
 the same duties and powers in regard to all matters within its jurisdiction as are 
 now exercised and performed by the clerk and reporter of the Supreme Court of 
 the United States, so far as may be applicable. The salary of the clerk of the court 
 shall be three thousand dollars a year, payable in the same manner as the salaries of 
 the justices of said court. The court shall have power to establish all rules and reg- 
 ulations for the conduct of the business of the court within its jurisdiction as con- 
 ferred by law. The court shall have authority to appoint and fix the compensation 
 of such deputy clerks or attendants as it may find necessary to the proper perform- 
 ance of its duties. The salaries of the officers and all the expenses of the court, 
 including all necessary expenses for transportation incurred by the justices of the 
 court, or by the marshal, or clerk, or any deputy clerk, or attendant of the court, 
 upon official business in any other place than in the city of Washington, shall be 
 allowed and paid out of the appropriation for salaries and expenses of the courts of 
 
 H. Eep. 4093, 58-3 2 * 
 
18 AMENDING THE INTEESTATE-COMMEECE ACT. 
 
 the United States upon presentation of itemized vouchers therefor. The general se 
 sions of the court shall be held in the city of Washington, but whenever the convei 
 ience of the public may be promoted, or delay and expense prevented thereDy, tr 
 court may hold sessions in any part of the United States. The court shall De m. 
 nished by the Attorney-General of the United States with suitable offices and a 
 necessary office supplies. . ..... 
 
 Sec. 11. That said court of interstate commerce shall have exclusive jurisdiction 1 
 review all orders of the Interstate Commerce Commission and summarily to entorc 
 performance thereof by writs or other jjroper process. The said court shall als 
 have exclusive jurisdiction in all proceedings brought by or upon the request of tb 
 Interstate Commerce Commission under section three of an act to further regulal 
 commerce with foreign nations and among the States, approved February nm( 
 teenth, nineteen hundred and three. The said court shall also have exclusive an 
 all necessary jurisdiction to enforce, upon the petition of the United States or of th 
 Interstate Commerce Commission, the requirements of the act to regulate commerc 
 approved February fourth, eighteen hundred and eighty-seven, and actsamendator 
 thereof and supplemental thereto, in respect of the filing and publication of schec 
 ules of rates, fares, and charges of common carriers subject to the provisions of sal 
 acts. Disobedience of any order, writ, or other process of said court shall constitut 
 contempt of said court, punishable by a fine payable into the Treasury of the Unite 
 States of five thousand dollars for each offense, or by imprisonment for not mot 
 than one year, or by both such fine and such imprisonment. Every distinct viols 
 tion of any such order, writ, or other proper process of said court shall be a separat 
 offense, and each day of the continuance of such violation shall be deemed a sepi 
 rate offense. 
 
 Sec. 12. That any party to a proceeding before the Interstate Commerce Commii 
 sion aggrieved by an order of said Commission may, within thirty days after issuanc 
 of such order, file with said court a petition for review. Upon the filing of sue 
 petition it shall be the duty of the clerk of the said court to serve a copy thereof upo 
 the Interstate Commerce Commission, and after service of such copy of petition upo 
 the Interstate Commerce Commission it shall be its duty within twenty days then 
 after to cause to be filed in said court a duly certified copy of the entire record i 
 connection with the order to be reviewed, including the petition, answers, testimon) 
 report, and opinion of the Commission, its order and all other papers in connectio 
 therewith. Said court shall thereupon, as speedily as may be, proceed *to review th 
 order appealed from as to its justness, reasonableness, and lawfulness upon the sai 
 record retdrned by the Commission, and thereupon if, after hearing the parties, sai 
 court shall be of the opinion that such order is unjust, unreasonable, or unlawful, i 
 shall modify, set aside, or annul the same by appropriate decree or remand the caus 
 to the Interstate Commerce Commission for a new or further hearing; otherwise ith 
 order of said Commission shall be affirmed. Pending such review the said coui 
 may, upon application and hearing, if in its opinion the order under review is clearl 
 unjust, unreasonable, or unlawful, suspend said order. 
 
 Sec. 13. That the defense in such proceedings in review, except as to orders of th 
 Commission dismissing an application or petition, shall be undertaken by th 
 Attorney-General of the United States, and the costs and expenses of such defens 
 shall be paid out of the appropriation- for the expense of the courts of the Unite 
 States. The Commission may, with the consent of the Attorney-General, emplo 
 special counsel in any such proceeding, paying the expense of such employmei 
 out of its own appropriation. 
 
 Sec. 14. That if any party bound thereby having failed to file petition for reviei 
 within the time hereinabove specified shall refuse or neglect to obey or perform an 
 order of the Commission while same is in force, or having filed such petition fc 
 review shall refuse or neglect to obey or perform any order of the Commission £ 
 modified or affirmed by said court upon review as aforesaid, obedience and perforn 
 ance thereof shall be summarily enforced by a writ of injunction, attachment, c 
 other proper process; and it shall be lawful for such court, upon petition of sai 
 Commission, or of any party interested, accompanied by a certified copy of the ord« 
 alleged to be violated and evidence of the violation alleged, to issue a writ of injuni 
 tion, or other proper process, restraining such common carrier from further contini 
 ing such violation or disobedience of such order or requirement of said Commissio 
 and enjoining obedience to the same; and in case of any disobedience of any siic 
 writ it shallbe lawful for such court to issue writs of attachment, or any other propt 
 process, against such common carrier, and if a corporation, against one or more ( 
 the directors, officers, or agents of the same, or against any owner, lessee, trustei 
 receiver, or other persons failing to obey such writ or other proper process. 
 
 Sec. 15. That the decisions of said court shall be final, and no appeal therefroi 
 
AMENDING THE INTEESTATE-OOMMEEOE ACT. 19 
 
 shall lie unless, In the opinion of the said court, a constitutional question is involved 
 which ought to be reviewed by the Supreme Court of the United States, or unless 
 the Supreme Court of the United States, upon it appearing to its satisfaction that a 
 constitutional question is involved in said decision which ought to be reviewed in 
 the Supreme Court, issues a writ of certiorari directed to the clerlr of said court to 
 transmit the record in such case to the Supreme Court for review. In the Supreme 
 Court such case shall take precedence over all other proceedings except criminal 
 cases. During the pendency of any appeal to the Supreme Court neither the order 
 of said court nor the execution of any writ or process shall be stayed or suspended. 
 The defense in all such appeals in the Supreme Court, except appeals from orders 
 affirming an order of the Commission which dismisses an application or petition, 
 shall be undertaken by the Attorney-General of the United States, and the costs and 
 expenses of such defense shall be paid out of the appropriation for the expenses of 
 the courts ,of the United States. The Commission may, with the consent of the 
 Attorney-General, employ special counsel in any appeal to or review by the Supreme 
 Court, paying the expense of such employment out of its own appropriation. 
 
 Sec. 16. That in case of disobedience to a subpoena the Commission, or any party 
 to a proceeding before the Commission, may invoke the aid of said court of inter- 
 state commerce in requiring the attendance and testimony of witnesses and the pro- 
 duction of books, papers, and»doouments, under the provisions of the act to regulate 
 commerce and the acts amendatory thereof and supplemental thereto, and in case 
 of contumacy or refusal to obey a subpcfena issued to any common carrier subject to 
 the provisions of said acts, or other person, said court may issue an order requiring 
 such common carrier or other person to appear before said ,Commission (and pro- 
 duce books and papers if so desired) and give evidence touching the matter in ques- 
 tion; and any failure to obey such order of the court shall be punished by such 
 court as a contempt thereof in the same manner as hereinabove provided for disobe- 
 dience of other orders of said court amounting to a contempt thereof. 
 
 Sec. 17. That it shall be the duty of the Interstate Commerce Commission to pro- 
 ceed expeditiously with the trial and determination of all cases brought before it, 
 and to render a decision in each case within sixty days after the cause has been 
 finally submitted. 
 
 Sec. 18. That all acts and parts of acts in conflict with the provisions of this act 
 are hereby repealed: Provided, That such repeal shall not affect causes how pending 
 n court, and such causes shall be prosecuted to a conclusion in the manner heretofore 
 provided by law. All existing laws relative to testimony in cases or proceedings 
 under or connected with the act to regulate commerce and the acts amendatory 
 thereof or supplemental thereto shall also apply to any case or proceedings authorized 
 by this act. 
 
 Sec. 19. That this act shall take effect from the date of its passage. 
 
HEARI^TQS 
 
 BEKOHE THE 
 
 CoMMinEE ON Interstate ai Foreign Commerce 
 
 HOUSE OF REPKESENTATIVES 
 
 H. R. 10431, 6273, 6768, 7640, 10008, 11434, 11594, 
 13778, 12767, 15600, 16301, 
 
 TO AMEND THE INTEESTATE-COMMERCE LAW. 
 
 WASHINGTON: 
 
 GOVERNMENT PRINTING OFFICE. 
 1905. 
 
HEARINGS BEFORE THE COMMITTEE ON INTERSTATE AND FOR- 
 EIGN COMMERCE OF THE HOUSE OF REPRESENTATIVES ON 
 THE PROPOSED ENLARGEMENT OF THE POWERS OF THE 
 INTERSTATE COMMERCE COMMISSION. 
 
 'Friday, December 9, 1904-. 
 The committee met at 11 o'clock a. m., Hon. W. P. Hepbarn in the 
 chair. 
 
 STATEMENT OF MR. E. P. BACON. 
 
 Mr. Bacon. Mr. Chairman and gentlemen of the committee 
 
 The Chaibman. Mr. Bacon. 
 
 Mr. Bacon. 1 appear before you in behalf of the commercial organ- 
 izations of the country representing various branches of trade and of 
 industry, to the number of 424, of the committee representing which 
 I have the honor to be chairman, for the purpose of urging that the 
 legislation which has been before Congress for so long a time, the 
 amendment of the interstate-commerce act for the purpose of giving 
 it effectiveness by enlarging the powers of the Interstate Commerce 
 Commission, be expedited to the utmost possible extent. The legisla- 
 tion has now been before Congress for five years, having first come 
 through the bill known as the Cullom bill, which was introduced in 
 December, 1899, and failed of passage. That was a Senate bill and 
 was reported to the Senate adversely by a majority of 1, and failed 
 of action in that Congress. In the next Congress the committee which 
 I represent secured the introduction of a modified bill. 
 
 I will say in the first place that this committee advocated the passage 
 of the Cullom bill during that Congress, but in the next session a 
 modified bill was presented, in view of the fact that a number of the 
 provisions of the Cullom bill were seriously objected to by one and 
 another. 
 
 The Chairman. Let me interrupt you. The bill that jou referred 
 to as- the Cullom bill was the one that contained the provision author 
 izing pooling? 
 
 Mr. Bacon. That did not contain any provision authorizing pooling. 
 1 will come, very shortly, to the bill that did contain that. The 
 bill that succeeded that, which was advocated by this committee, was 
 known as the Nelson-Corliss bill, and it contained less than half of the 
 provisions previously contained. 
 
 Mr. EiCHARDSON. "The Nelson-Corliss bill? 
 
 Mr. Bacon. The Nelson-Corliss bill, introduced in the Senate by 
 Senator Nelson and by Mr. Corliss in the House, he being a member 
 of this committee at that time. That contained less than half of -the pro- 
 visions contained in the other. At the same time the Elkins bill was 
 
4 PROPOSED AMENDMENT OF INTEESTATE-COMMEKCE LAW. 
 
 introduced in the Senate. That was in 1901, the first session of the 
 Fifty-seventh Congress, that bill having been prepared directly and 
 drawn personally by the general counsel of the Pennsylvania Railroad, 
 Mr. Logan, who is now dead. That bill, together with the Nelson- 
 Corliss bill, was before the Senate at the same time, ahd a duplicate 
 of that bill was subsequently introduced in the House in the latter part 
 of the same session of Congress. That bill contained a pooling clause, 
 and it was before the Senate during that Congress, and the final result 
 was that simply one section of that bill was reported, with some modi- 
 fication, whicMi was passed, and which is known as the Elkinsact, which 
 provided extreme penalties for the violation of the prohibitions of the 
 interstate-commerce act against individual discriminations. 
 
 Mr. EscH. What kind of discriminations? 
 
 Mr. Bacon.. Individual discriminations— discriminations between in- 
 dividuals and corporations. But it had no bearing whatever upon dis- 
 criminations between localities or between difierent descriptions of 
 traffic. That portion of the bill was passed and has been productive 
 of immense good. It has been surprising, in fact, to me to what an 
 extent that bill has been complied with by the transportation coinpa- 
 nies, and in fact our committee has been unable to trace any violation 
 of that bill of any consequence. There have been some devices for 
 defeating it by the establishment of side tracks, which are called rail- 
 roads, so that on a division with the railroads they get an undue pro- 
 portion, and by that means obtaining personal discriminations, personal 
 favors, and personal advantages. But the Commission, after hearing 
 some cases in that direction, have alreadj' taken steps to prevent that 
 evasion of the law. 
 
 In the present Congress, the first session of the present Congress, 
 our committee secured the introduction of a bill based upon the Elkins 
 bill. The Elkins bill, I will say, in addition to having been framed 
 by the general counsel of the Pennsylvania Railroad, was amended at 
 the suggestion of our committee b}' the counsel and the amendment 
 approved by President Cassatt, and our committee then adopted it as 
 a substitute for the Nelson-Corliss bill and joined with the railways to 
 secure its passage. But on the failure of that bill our committee in 
 the next Congress — that is, the first session of the present Congress — 
 secured the introduction of what is known as the Quarles-Cooper bill. 
 It is simply a redraft of the revised Elkins bill, revised as I have 
 described, and eliminating the pooling section. That bill contains a 
 pooling section, drawn with great care, putting all rates fixed by pools 
 or the Traffic Association under the direct supervision of the Interstate 
 Commerce Commission. But the commercial organizations of the 
 country almost unanimously disapproved of pooling. Very few of 
 them favored it and others favored the establishment of traffic associ- 
 ations without, however, the pooling provision. But a great major- 
 ity, probably nine-tenths — more than that, in fact — are opposed to 
 pooling, and are opposed to the application of pooling in any form, 
 even in the form of traffic associations. Consequently that was con- 
 sidered in redrawing the bill and presenting it in its present form. 
 
 That is one of the bills now before this committee. Extensive hear- 
 ings were held on the Nelson-Corliss bill in April, 1902, this commit- 
 tee devoting some two or three months to its consideration, the com- 
 mercial organization side of it having been presented in about three 
 weeks, during the month of April, and hearings held open for nearly 
 
PEUPOSED AMENDMENT OF INTERSTATE-COMMEBCE LAW. 5 ■ 
 
 two months for the railway side to present their views in relation to 
 it. The best talent, probably, of the railway systems of the country 
 appeared before this committee and presented their objections to the 
 bill, through Mr. Hines, counsel for the Louisville and Nashville Rail- 
 road; Mr. Grover, counsel for the Great Northern; Mr. Blythe, coun- 
 sel for the Chicago, Burlington and Quincy, and Mr. Bird, who was 
 vice president and traffic manager of the Cfiicago, Milwaukee and St. 
 Paul Railway, and appeared in behalf of the Northwestern roads in 
 general.- So that the subject appears to have been exhaustively pre- 
 sented before the committee on both sides. 
 
 The committee which 1 represent does not desire to present anything 
 further in the case on its side but desires, on the other hand, that the 
 bill be expedited to the utmost possible extent and holds that any 
 further hearings, in its judgment, are wholly unnecessary on either 
 side. However, we do not assume to dictate to the committee as to 
 whether they are satisfied, with the hearings or not. But so far as we 
 are concerned we waive any claim to further hearings and desire to 
 aid in every way in expediting the legislation. We feel that the sub- 
 ject has been so long before Congress and we have expended so much 
 time in the advocacy of it and in the solution of the question, before 
 Congress and before the committees of Congress and before the public, 
 that it is time we reached some definite result; either that the matter 
 should be disposed of by dropping it or that it be pushed to a successful 
 issue. That is all, gentlemen, that I wish to offer this morning. 
 
 Mr. CusHMAN. What is the name of this organization that you rep- 
 resent ? 
 
 Mr. Bacon. It is the interstate-commerce law convention. 
 
 Mr. CusHMAN. When was it organized? 
 
 Mr. Bacon. The first convention was held in November, 1900, and 
 a second convention in last October. The first convention appointed 
 an executive committee, of which I had the honor to be chairman, and 
 that committee proceeded under the general instructions of that con- 
 vention during the interval between that and the second convention, a 
 period of nearlj' four years, and at the second convention the execu- 
 tive committee that had previously represented the organization was 
 reappointed, with the exception of some of the members, who were 
 excused or were dropped, and some new members appointed. 
 
 Mr. CuSHMAN. Will you state, in a general way, what the general 
 purposes of the organization are? 
 
 Mr. Bacon. The sole purposes of the organization — it is hardly 
 proper to call it an organization, because it was merely a convention 
 of representatives or delegates from the various commercial organiza- 
 tions of the country. The first one held at St. Louis in November, 
 1900, consisted of delegates from only 41 commercial organizations. 
 
 Mr. CusHMAN. What are the purposes of the organization, primarily, 
 that you represent? 
 
 Mr. Bacon. The purposes of the commercial organizations or of this 
 interstate- commerce law organization. 
 
 Mr. CusHMAN. The purposes of the convention. 
 
 Mr. Bacon. The purpose of that convention was to secure the amend- 
 ment of the interstate commerce act for the purpose of giving it greater 
 effectiveness, by means of enlarging the powers of the Interstate Com- 
 merce Commission. 
 
 Mr. CusHMAN. How many conventions have you held ? 
 
6 PK0P08ED AMENDMENT OF INTERSTATE-COMMEECE LAW. 
 
 Mr. Bacon. Only two conventions; one in 1900 and one in 1904 
 
 Mr. CusHMAN. How many attended the first convention? 
 
 Mr. Bacon. 1 think the number present at the first convention was 
 about seventy, representing about forty or forty-one commercial organi- 
 zations. 
 
 Mr. CusHMAN. And how many were present at the second conven- 
 tion? 
 
 Mr. Bacon. At the second convention there were present 306, rep- 
 resenting 170 commercial organizations. In the meantime, there has 
 been correspondence going on on the part of this committee, which 
 was appointed by the first convention, with all the various commercial 
 organizations of the country, presenting the matter for their consid- 
 eration, and one after another has joined in the movement bythe pas- 
 sage of resolutions favoring the proposed legislation and urging their 
 representatives in Congress to advocate it. 
 
 Mr. CusHMAN. Now, does the work of your convention, or your 
 delegates, your organization, consist chiefly in presenting the views of 
 commercial organizations that are sent to you ? 
 
 Mr. Bacon. That is it, exactly; yes, sir. The commercial organiza- 
 tions act through this committee. 
 
 Mr. CusHMAN. Is a part of the work of your committee to help 
 create sentiment in favor of this legislation? 
 
 Mr. Bacon. It might, perhaps, be so regarded. The effort has been 
 to ascertain the sentiment of commercial organizations, and to suggest 
 that such of them as favored this legislation join in the effort to pro- 
 mote it. 
 
 Mr. CusHMAN. I receive a good deal of literature in my mail, from 
 various organizations — independent organizations — which seems to 
 have emanated from one source. It does not seem to be always an 
 independent expression of the views of the different people, but the 
 signatures seem to be affixed to something that has been presented to 
 them for signature. 
 
 Mr. Bacon. This committee has not issued anything of that charac- 
 ter. It has suggested to the commercial organizations with which it 
 has had correspondence that if they desire this legislation they should 
 take the matter up in their own way with their respective Represen- 
 tatives in Congress, and that has been done to a very large extent. 
 
 Mr. CusHMAN. You are aware, are you not, that there are a number 
 of new members on this committee who have never been present when 
 this subject has been on for hearing before this committee? 
 
 Mr. Bacon. I am aware of that; yes, sir. I understand that there 
 are seven new members. 
 
 Mr. ICscH. Does this organization represent all parts of the coun- 
 try, geographically speaking? 
 
 Mr. Bacon. They represent every part of the country. They rep- 
 resent organizations located in 44 different States and Territories, 
 covering all branches of trade. There is not any one branch that 
 seems to be any more interested in it than another. It originated with 
 the milling interests six years ago, through the National Millers' Asso- 
 ciation, and it was followed in the first place by a convention that was 
 held at Chicago in 1899 by representatives of national commercial 
 organizations who indorsed the CuUom bill and recommended its pass- 
 age to Congress, and that convention was followed by the first inter- 
 state commerce law convention in the following year. 
 
PROPOSED AMENDMENT OP INTERSTATE-COMMERCE LAW. 7 
 
 Mr. EscH. Are these constituent bodies confined to shippers and 
 manufacturers, or have you also bodies which represent consumers 
 and the consuming class, which ultimately pay the tax? 
 
 Mr. Bacon. These organizations represent either mercantile bodies 
 or manufacturing bodies, these bodies representing manufacturing 
 organizations, but at the same time the State granges of several of the 
 States have taken independent action in relation to it, and have added 
 their influence in the effort to secure the legislation; but our organi- 
 zation represents solely the commercial interests — mercantile manufac- 
 turing interests. 
 
 _ Mr. Richardson. Have you not al^o brought under your organiza- 
 tion a number of what are commonly known as chambers of commerce? 
 Mr. Bacon. Yes, sir; those are classified among commercial organi- 
 zations. 
 
 Mr. Richardson. And they represent farmers and merchants, and 
 so you have all those kinds of men as members '( 
 
 Mr. Bacon. They generally represent only business men. In some 
 instances the chambers of commerce do represent professional men. 
 
 Mr. Richardson. They are from mercantile bodies, but they repte- 
 sent not only merchants, but they bring all classes of people together. 
 Mr. Bacon. To some extent; but they consist principally of mer- 
 chants and manufacturers. The State grangers' association, the 
 Patrons of Husbandry, you understand, of course, is a purely agri- 
 cultural organization representing farmers. They constitute a mem- 
 bership, I am informed, of about 500,000, and they have for years, 
 from year to year, taken action urging this legislation. 
 
 Mr. Richardson. You do not pretend to say that all those other 
 classes of people are not as much intei-ested in the question of unjust 
 freights ? 
 
 Mr. Bacon. I do not say they are not just as much interested. In 
 fact, I believe the consumers are more interested than any other class 
 of people. And producers, also. They are directly affected by the 
 rate of freight on their products from the points of production. The 
 consumers, of course, are interested in all that they_ consume, and, in 
 fact, commercial organizations are only indirectly interested, because 
 what they pay in freight is passed over immediately in the price of 
 their goods to those who use the goods, or, in the case of agricultural 
 products, is taken right out of the price of the product which the 
 farmer offers for sale. 
 
 Mr. Cdshman. I recently received in my mail a communication set- 
 ting forth that some number of people and institutions, 12 or 13, I 
 believe, who have heretofore approved of this legislation, now with- 
 drew from your organization and wished their names to be stricken 
 off of the petition. Do you know anything about that? 
 
 Mr. Bacon. There is only one case that has come to my knowledge, 
 and I think if there were others they would have come to my knowledge. 
 That was in reference to a purely private organization, and not in relation 
 to a commercial organization at all. A publishing organization in New 
 York was engaged in publishing a journal entitled ' ' Freight," a monthly 
 journal. In obtaining subscriptions to their journal they used the name 
 of the Merchants' Association of New York as having indorsed this legis- 
 lation, as was the case. They were among the first who advocated the 
 legislation, and among the most active. The officers of the association 
 objected to that private organization using its name in their solicitation of 
 
8 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 subscriptions, and very properly ; and the directors of that organi^atioH, 
 at the solicitation of the president of one of the railways terminatmgr 
 in New York, wrote to this publishing company, who, in connection 
 with obtaining subscriptions for their paper, also circulated a petition 
 on their own account, and without the knowledge of our organization, 
 for this legislation, which they sent around the country together with 
 their paper for signatures. These merchants in New York, who had 
 been appealed to by the president of this railway, requested the pub- 
 lishers of this paper to withdraw their signatures from the petition 
 they had signed. That petition had no connection with this association 
 or this movement. It was a purely private matter, and that effort was 
 undoubtedly made for the purpose of promoting their private enter- 
 prise. 
 
 Mr. CtJSHMAN. Are you engaged actively in any kind of business at 
 this time that does large shipping? 
 
 Mr. Bacon. I am engaged in the grain business, as 1 have been for 
 forty years, in the city of Milwaukee, in the receiving of grain on 
 commission. I am not a shipper. I receive grain on consignment 
 and sell it for the shippers, returning to them the proceeds, of course. 
 But in the payment of freight charges on that business, the great 
 injustice of freight charges attracted my attention, and naturally, for 
 my interest, with those with whom I was doing business, I took up the 
 subject, endeavoring, so far a<^ I might be able to do so, to produce a 
 rectification of these difficulties and injuries. 
 
 Mr. BxTRKE. Who issued the call for the first convention, held in 
 1900? 
 
 Mr. Bacon. The call for that convention was issued by the execu- 
 tive committee of the previous convention that I spoke of, which was 
 held in 1899, of the national commercial organizations of the country, 
 which was termed "The League of National Associations." I was 
 chairman of the executive committee of that organization. 
 
 Mr. BuKKE. That was in 1900? 
 
 Mr. Bacon. That was in 1899. 
 
 Mr. Burke. In 1899. And that convention was held on call issued 
 by you ? 
 
 Mr. Bacon. That convention was held upon call issued by the 
 National Millers' Association. The National Millers' Association had 
 been at work for a year or two endeavoring to secure legislation^ 
 owing to the discrimination between rates on wheat and flour. 
 
 Mr. Burke. What connection had you with that association? 
 
 Mr. Bacon. I had no connection with that association; but after 
 working for a year or two alone to accomplish it, they deemed it best 
 to secure the assistance, if possible, of other national organizations, 
 theirs being also a national organization. So they called a convention 
 at Chicago, which was held in November, 1899, at which 'the Cullom 
 bill was taken under consideration, before its introduction, and was 
 indorsed by that convention; and it appointed an executive committee, 
 of which I was made chairman, to press the legislation. And Mr. Barry, 
 who is here at my side, was the secretary of that convention. He was 
 previously secretary of the National Millers' Association, and this 
 convention held in Chicago in 1899 was followed by the convention 
 held in St. Louis in 1900, and that convention was called by the execu- 
 tive committee of the previous organization ; that is, the League of 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 9 
 
 National Associations, and that association went out of existence when 
 this first St. Louis convention was held; that is, it was superseded. 
 
 The St. Louis convention comprised local and State organizations as 
 well as national, which it was deemed necessary to take in for the pur- 
 pose of making this demand for legislation more general. 
 
 Mr. Burke. Have you ever had any connection yourself with any 
 railway company, in any capacity; and if so, when? 
 
 Mr. Bacon. Yes, sir. The first fourteen years of my business life 
 was spent in railroad service. 
 
 Mr. CuSHMAN. How many years? 
 
 Mr. Bacon. Fourteen years. I commenced my business career very 
 early. At 17 I obtained a position in a railway office, and remained 
 in the railway service for fourteen years, and then went into business 
 for myself. During that railway service I occupied various positions. 
 During the last nine years of that service I was in the positions, suc- 
 cessively, of general freight agent, auditor, and general ticket agent of 
 what was then the Milwaukee and Prairie du Chien Railway, now a part 
 of the Chicago, Milwaukee and St. Paul, and it was probably through 
 that experience that I became interested in these matters. I also took 
 some part in securing the passage of the present interstate commerce 
 act, arising from that interest. I was appointed one of the committee 
 of the National Board of Trade to promote the passage of that act. 
 
 Mr. Burke. When was the Elkins bill enacted ? When did it become 
 a law? 
 
 Mr. Bacon. In February, 1903. 
 
 Mr. Burke. Do I understand you to say that that bill was prepared 
 by the general counsel of the Pennsylvania road ? 
 
 "Mr. Bacon. Yes, sir. 
 
 Mr. Burke. And subsequently was amended by some provisions that 
 your committee desired in the bill ? 
 
 Mr. Bacon. Amended by the counsel of the Pennsylvania Railroad 
 at the request of our committee. 
 
 Mr. Burke. And it had your sanction when so amended? 
 
 Mr. Bacon. Yes, sir. 
 
 Mr. Burke. And it passed in that form ? 
 
 Mr. Bacon. It did not pass in that form. As I remarked a ^v hile ago, 
 the only portion of the bill that was passed was the portion prescrib- 
 ing severe penalties for the violation of the provision against individual 
 discriminations, which, as I remarked, has been very effective. 
 
 Mr. Burke. But the amendments suggested by you were not in the 
 bill when it became a law, or those to which you subscribed? 
 
 Mr. Bacon. No, sir. 
 
 Mr. Mann. The original Elkins bill ? 
 
 Mr. Bacon. The original Elkins bill was a comprehensive one, but 
 only one portion of that bill was reported and was enacted. 
 
 Mr. Richardson. Relating to what? 
 
 Mr. Bacon. Personal discriminations. 
 
 Mr. Richardson. Was that an original provision? 
 
 Mr. Bacon. Yes, sir. 
 
 Mr. Lamar. What penalty did it impose? 
 
 Mr. Bacon. A penalty of 15,000 fine for each violation. 
 
 Mr. Lamar. That was applied to the corporation and not to the 
 igent in the depot? 
 
10 PROPOSED AMENDMENT OF INTEE8TATE-C0MMEE0E LAW. 
 
 Mr. Bacon. It was applied to the corporation. 
 
 Mr. Adamson. That provision was simply taken up and put on as a 
 rider to a bill that went through? ., ., , 
 
 Mr. Mann. No; that was a separate bill. That was a matter that 
 you had been agitating for years, and had been in all the former bills 
 before this committee. 
 
 Mr. Bacon. It was. , j, ■ 
 
 Mr. Mann. And was it a matter that the general counsel ot the 
 Pennsylvania Kailroad then put in that bill? 
 
 Mr. Bacon. It was a part of that bill. 
 
 Mr. Mann. We had had discussions about that before that Congress 
 convened. It was in all these bills that had been before us, practically 
 all the same thing. j., . 
 
 Mr. Adamson. Before you arrived at that Senator Elkms did ]ust 
 bring in a separate provision, and it went through? 
 
 Mr. Bacon. It prescribed the penalty of $5,000 for the company for 
 each violation of the law, and it inflicted the penalty, which by the 
 interstate commerce act was put upon the individuals, upon the_ com- 
 panies, which had the eftect of opening their mouths and making it 
 possible to obtain convictions under the law. 
 
 Mr. Richardson. Have you heatd of any proceedings against the 
 railroads in the matter of rebates? 
 
 Mr. Bacon. I have not heard of any occasion for proceedings. It 
 has been so generally observed by the railways since its passage that 
 there has been no occasion for prosecution. 
 
 Mr. RiCHAKDSON. Railways are not opposed to stopping the rebates'! 
 
 Mr. Bacon. Not by any means. It is quite as much to their advan- 
 tage to stop them as to that of the public. 
 
 Mr. Burke. How much time was consumed in the hearings on this 
 bill in the Fifty -seventh Congress? 
 
 Mr. Bacon. The hearings were commenced on the 8th of April and 
 were concluded on the l7tn of June, a period of over two months. 
 
 Mr. Burke. Now, as I understand, you waive any further hearing? 
 
 Mr. Bacon. Any further presentation of our side. 
 
 Mr. Burke. And you expect those who are now on this committee 
 to familiarize themselves with the subject by referring to the reports 
 of those hearings ? 
 
 Mr. Bacon. They certainly have opportunitj^ of doing that. We 
 wish, however, in case of any additional arguments being presented 
 by the railway side, to have an opportunity for rebuttal. That will 
 be all we will ask for. 
 
 In referring to my having had some part in the passage of the orig- 
 inal interstate-commerce act, I was going to add that that is what led 
 me to give a good deal of study to this matter, and to read up the cases 
 and to keep close observation on the results of the operation of the 
 act, and also on the court proceedings in cases of appeals. 
 
 The Chairman. Were you at that time in favor of the legislation 
 that was enacted, or were you in favor of the other series of proposi- 
 tions that were contained in what was known as the Reagan bill? 
 
 Mr. Bacon. I favored the interstate-commerce act as it was finally 
 reported and passed. 
 
 The Chairman. Now, did you ever hear, during all of that conten- 
 tion, or in any of the speeches that were ever made in Congress, any 
 claim made that that gave to the Interstate Conjmerce Commission the 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMEECK LAW. 11 
 
 >ower to fix a rate, and is there to your knowledge anywhere in the 
 iebates or anywhere else a sentence that seems to maintain that posi- 
 ion? 
 
 Mr. Bacon. Mr. Chaii-man, the fact that the Supreme Court has 
 iecided that question it seems to me renders it wholly irrelevant. 
 
 The Chaikman. No, it does not because it is claimed by many people, 
 ,nd I think by 3'ou, that the power has been taken away from the Com- 
 uission by the Supreme Court. What I want to get at now is this: 
 )id you ever hear, can you produce a sentence, from anyone partici- 
 )ating in an3^ of those debates that seems to indicate that they believed 
 hat the power was given at that time to fix rates ? 
 
 Mr. Bacon. The time has passed so long that I do not recall at the 
 )resent moment. 
 
 The Chairman. Did you believe at that time that the power was 
 jiven 'i 
 
 Mr. Bacon. The question at the time of the passage of the act did 
 lot enter my mind. 
 
 The Chairman. No. You never thought of it, did you? 
 
 Mr. Bacon. I simply took observation of it as the Commission acted 
 n pursuance of the Iftw, that it did convey the power of changing 
 'ates. 
 
 The Chairman. In any other waj^ than the way of recommendations ? 
 
 Mr. Bacon. Yes, sir; in the way of positive orders; and those orders 
 vere recognized and acquiesced in by the railroads. 
 
 The Chairman. In how many instances ? 
 
 Mr. Bacon. Well, I can recollect. [After a pause.] I would be 
 )leased to go into that later. Mr. Cooper is here, and I know he would 
 ike to say a few words to you about the bill. 
 
 The Chairman. One other question that I want to ask you. You 
 ay that you are engaged in creating public sentiment in favor of this 
 )ill. How do you do that ? 
 
 Mr. Bacon. I do not say that. 
 
 The Chairman. You did say that, I think. 
 
 Mr. Bacon. I do not think I used the word "create." I said that 
 ay effort had been simply to ascertain the extent of the prevailing 
 )ublic sentiment and to develop it. 
 
 The Chairman. As a matter of fact, you and your colaborers, you 
 ,nd Mr. Barry particularly, do attempt to create public sentiment in 
 avor of this matter? 
 
 Mr. Bacon. That has not been the intention of our committee at all. 
 t has simply been 
 
 The Chairman. You do go to the extent of denunciation of members 
 f Congress who you think do not favor it, also? 
 
 Mr. Bacon. Our committee has never done anything of the kind, 
 r anything that could be so construed. 
 
 The Chairman. Has not anyone else? 
 
 Mr. Bacon. No, sir; not that 1 know of. 
 
 The Chairman. Has not your friend, Mr. Barry? 
 
 Mr. Bacon. Not during his employment by us. Not when he was 
 ngaged bj' the committee. 
 
 The Chairman. Has he not during the last summer, to your 
 
 nowledge? 1 . , 
 
 Mr. Bacon. He has not been employed by the committee during the 
 ist summer. With the close of the last Congress we had no need of 
 
12 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 his services. Just before the opening of this session we reengaged 
 him. In the meantime he has been in the employ of one or two 
 organization, which have been seeking the same legislation; the Inter- 
 state Cattle Growers' Association, for one. 
 
 The Chairman. How many salaried officers are there in connection 
 with this 
 
 Mr. Bacon. With this movements 
 
 The Chairman. With this movement. 
 
 Mr. Bacon. No one but Mr. Barry, who is employed as secretary. 
 
 The Chairman. What is his salary? 
 
 Mr. Bacon. His salary while employed by the committee has been 
 1260 a month. 
 
 The Chairman. And his expenses? 
 
 Mr. Bacon. His expenses in traveling^ 
 
 The Chairman. Was there not a fund raised at your last meeting 
 for the purpose of agitating this question? 
 
 Mr. Bacon. For the purpose of publishing matter relating to it, and 
 enlightening the public as to the progress in it and as to the purpose 
 of it. 
 
 The Chairman. And there is no compensation paid in any way to 
 any person save Mr. Barry ? 
 
 Mr. Bacon. Not a dollar in any wa}', shape, or manner. On the 
 contrary, the members of the committee have gone to a good deal of 
 individual expense on their own account. The members of the com- 
 mittee are scattered in various parts of the country, and each one is 
 exerting his influence, of course, in his particular section of the 
 country. 
 
 The Chairman. To what extent, to your knowledge, does the Inter- 
 state Commerce Commission or any of its officers aid in the dissemina- 
 tion of your literature? 
 
 Mr. Bacon. To no extent whatever. We have no connection with 
 the Commission in any way, shape, or manner. 
 
 The Chairman. None of its officers? 
 
 Mr. Bacon. None of its officers ? 
 
 The Chairman. Yes. 
 
 Mr. Bacon. Except occasionally we have consulted with them as to 
 the desirability of certain provisions of the bill. 
 
 The Chairman. To what extent does your committee, or do mem- 
 bers of your committee, use the offices and the employees of the Inter- 
 state Commerce Commission in the dissemination of your literature 
 or for your other purposes? 
 
 Mr. Bacon. In no way whatever, sir. [Retiring in favor of M^ 
 Cooper.] 
 
 The Chairman. I would like to pursue this matter a little further. 
 We can hear Mr. Cooper at a later period. Have you considered the 
 provisions of this bill, which is pending, in their relation to all of the 
 public interests, in your judgment? 
 
 Mr. Bacon. We have certainly sought to do so. 
 
 The Chairman. You have sought to do so ? 
 
 Mr. Bacon. Yes, sir. 
 
 The Chairman. Have you considered it in the relation that it bears, 
 or is claimed to bear, to a disturbance of the powers between the three 
 coordinate branches of the Government? 
 
PROPOSED AMENDMENT OF INTEKSTATB-COMMEEOE LAW. 13 
 
 Mr. Bacon. We have had no occasion, that 1 am aware of, to go into 
 i_e constitutional question. 1 do not know that the question of the con- 
 iitutionality of this bill has been raised by any of the opponents of the 
 ill. The several distinguished railway attorneys who appeared 
 efore the committee offered no suggestion to that effect, so far as I — 
 am sure they did not. I was going to say that so far as I observed, 
 ley did not; but I have' read their testimony over and over very care- 
 lUy, and 1 am sure that they did not. Hence I did not think it 
 ecessary to deal with it. 
 
 The Chairman. The bill you, advocate proposes to confer legislative 
 ower upon an executive branch of the Government, does it not? 
 
 Mr. Bacon. It proposes to confer a delegated legislative power upon 
 le Interstate Commerce Commission. 
 
 The Chairman. You understand that to be a part of the executive 
 ranch of the Government, do you not? 
 
 Mr. Bacon. I hardly regard it as such, Mr. Chairman. The mem- 
 ers of the Commission are appointed by the President, individually; 
 ut he has no control over them; no direct control — is not connected 
 dth any department of the Government. 
 
 The Chairman. Its duties are solely executive at the present time, 
 re they not? 
 
 Mr. Bacon. It hardly seems so to me. 
 
 The Chairman. It does not? 
 
 Mr. Bacon. It seems to me that they are, perhaps, probably, of an 
 dministrative character. Whether that would properly be termed 
 xecutive or not I can not say. 
 
 The Chairman. Have you entered into the question of whether or 
 ot there is any power of review bj* any court of any act of the Com- 
 lission, that it might perform through this grant of power to fix rates? 
 
 Mr. Bacon. The bill specifically provides for a review by the circuit 
 3urt upon application of the carrier ? 
 
 The Chairman. But for what purpose ? What question would the 
 3urt review? You are familiar with all this subject, I take it; you 
 ave been six j-ears constanth'^ engaged on it. 
 
 Mr. Bacon. The bill specifically states that the court shall review 
 
 with respect to its lawfulness. 
 
 The Chairman. With respect to the lawfulness of the rate ? 
 
 Mr. Bacon. With respect to the lawfulness of the order. It says 
 lat their orders shall be subject to the review of the court as to their 
 .wfulness, reasonableness, and justice. 
 
 The Chairman. That would involve the question as to whether 
 leir rate was a reasonable rate. 
 
 Mr. Bacon. That would be, I think, for the court to determine. 
 
 The Chairman. Have not the Supreme Court of the United States 
 jecifically refused to pass upon an}' qi^estion of the reasonableness of 
 ites ? 
 
 Mr. Bacon. The Supreme Court has decided that it has no power 
 I pass upon rates to be adopted in the future. 
 
 The Chairman. Have they not decided further, have not the Supreme 
 ourt held, that the only question in connection with rates that they 
 m pass upon is as to whether or not a given rate is an act of confisca- 
 Dn, and that they have nothing to do with whether a rate is reason- 
 »le or not? 
 
14 PROPOSED AMENDMENT OF INTEE8T4TE-COMMERCE LAW. 
 
 Mr. Bacon. I have not so understood the rulings of the court. 
 
 The Chairman. You have not? 
 
 Mr. Bacon. But the Federal courts have, as you know, at various 
 times passed upon that very point, as to whether the proposed rate, 01 
 a rate proposed by a State railway commission, was confascatory n 
 its effect, or would be confiscatory in its effect. 
 
 The Chairman. Yes. . . 
 
 Mr. Bacon. They overruled the orders of the State commissionere 
 on the ground that they were of that nature. 
 
 The Chairman. Yes; that they were confiscatory? 
 
 Mr. Bacon. Yes, sir. 
 
 The Chairman. But have they not refused to pass upon any other 
 question than that of whether the rate was confiscatory ? Deciding 
 as to the mere reasonableness or justice of a rate they hold to be a 
 legislative act, and outside of the jurisdiction of the court, do they 
 not? 
 
 Mr. Bacon. They hold that a rate for 'the future is outside of the 
 jurisdiction of the court; that it can not pass upon a rate for thefuture. 
 
 The Chairman. That is your understanding of the matter? 
 
 Mr. Bacon. That' is mj^ understanding. 
 
 The Chairman, And your advocacy of this bill is based upon that 
 idea, that the court has the power to pass upon a question of the rea- 
 sonableness of rates? 
 
 Mr. Bacon. No; I could not say that it was based upon that; it is 
 based upon the necessity, which is manifest, that some tribunal should 
 decide between the public and the companies in cases of dispute as to 
 the reasonableness of rates. 
 
 The Chairman. Y^ou would still advocate the passage of this bill, 
 even if you knew that the courts would not pass upon the action of 
 the commission in the fixing of a rate? 
 
 Mr. Bacon. I do not go as far as that, Mr. Chairman. I feel, or at 
 least I have thought, that those were matters for the court to deter- 
 mine for itself. 
 
 The Chairman. But suppose they should so hold, would you still be 
 in favor of the bill ? 
 
 Mr. Bacon. The court has held that the Commission in this case, in 
 ordering changes in rates, has gone beyond the power conferred bv 
 the present act. Now, if we confer the power for them to make such 
 changes by the present act, and the court decides that that is unconsti- 
 tutional, we would ha^.e to abide b^' the result; but we would like to 
 have the opportunity to see 
 
 The Chairman. Have you discussed those questions? 
 
 Mr. Bacon. I have not discussed the legal questions themselves 
 very much. 
 
 The Chairman. Have any of those questions been presented to this 
 committee by anybody? 
 
 Mr. Bacon. The constitutional questions 1 do not think have beer 
 specially presented to the committee. We have presented the require- 
 ments of the situation, so far as the commercial organizations are con 
 cerned. 
 
 The Chairman. For relief? 
 
 Mr. Bacon. For relief. 
 
 The Chairman. But you have Hot considered nor presented the lega 
 aspects of the remedy ? 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMEECE LAW. 15 
 
 Mr. Bacon. We do not seem to have had any occasion to do that, 
 3r the reason that the railway opponents of the bill have not suggested 
 Qy such necessity. I will say, however, that in the testimony presented 
 y the commercial organizations, several of the members — four of the 
 lembers — of the Interstate Commerce Commission, did go into the 
 uestion of the legality of this proposition, each for himself. And 
 Iso Mr. Kernan, of New York, the distinguished lawyer who was four 
 ears chairman of the State railway commission of New York, went 
 ito it quite thoroughly before this committee. 
 
 The Chairman, xou remember that Mr. Prouty stated to this com- 
 littee that he did not know whether or not this bill was a wise one, 
 o you not? 
 
 Mr. Bacon. At one time he said that he had not given it sufficient 
 budy to determine. 
 
 The Chairman. That was at the time he appeared before this com- 
 littee, was it not? 
 
 Mr. Bacon. I could not saj' specifically, in regard to that; but I know 
 tiat Judge Prouty, in his testimony, did advocate the bill very strongly, 
 nd he has since expressed his approval of it, as have also the other 
 lembers of the Commission. 
 
 The Chairman. That is all I care to ask for the present. 
 
 Thereupon the committee adjourned until Tuesday, December 13, 
 904, at 10.30 o'clock a. m. 
 
 Tuesday, December 13, 190 If,. 
 STATEMENT OF MR. E. P. BACON— Continued. 
 
 The Chairman. Mr. Bacon, are you ready to proceed ? 
 
 Mr. Bacon. Yes, sir; I am ready to answer any questions that may 
 e asked of me. 
 
 The Chairman. Did you intend, by an answer that you made the 
 ther day, to say that the Interstate Commerce Commission had not 
 iken an active part in the advocacy of your, proposition to give them 
 le power to establish railway rates? 
 
 Mr. Bacon. So far as the organization which I represent is con- 
 irned, they have not. 
 
 The Chairman. Has there been at any time an effort on the part of 
 ou or your organization to procure that result? 
 
 Mr. Bacon. Not in the least; no, sir. 
 
 The Chairman. Were you cognizant of it at the time that the rail- 
 ay commission did, in a' former meeting, instruct their secretary to 
 repare and send abroad a letter advocating, as the views of the com- 
 lission, this increase of power or grant of power? 
 
 Mr. Bacon. That I have no knowledge of. 
 
 The Chairman. You have no knowledge of it? 
 
 Mr. Bacon. I know it is not in connection with this organization 
 hich, as you understand, was formed in 1900. 
 
 irman. Well, your organization was formed in 1900? 
 
 Mr- Bacon. Yes, sir; November, 1900. 
 
 The Chairman. But there was another meeting in the year before, 
 it of which it was in part formed, was there not? 
 
16 PROPOSED AMENDMENT OF INTERSTATE-COMMEKOE LAW. 
 
 Mr. Bacon. It succeeded the organization known as the League of 
 National Associations. 
 
 The Chairman. When you speak of your organization, do you 
 exclude the prior organization ? 
 
 Mr. Bacon. I speak only for the present organization. 
 
 The Chaieman. Did you have no knowledge of the transactions of 
 the other? 
 
 Mr. Bacon. I did have some partial knowledge. 
 
 The Chairman. You did have? 
 
 Mr. Bacon. Yes, sir. 
 
 The Chairman. Did you know, or was it through your advice or 
 procurement, that on the 8th day of December, 1899, the Interstate 
 Commerce Commission made the following order: 
 
 Cooperation with certain mercantile organizations to secure the adoption of an 
 amendment to the act to regulate commerce being under consideration, it was unani- 
 mously voted to instruct the secretarjr to cooperate with the representatives of these 
 organizations for the purpose of securing the adoption of necessary amendments, and 
 particularly the passage of a bill which has been approved by such organizations at 
 a meeting held in Chicago on November 22, 1899, and to that end to give the public 
 information as to the present state of the law and the necessity of amending it by 
 distributing such reports, papers, and documents, as are designed to accomplish that 
 purpose, and to devote himself assiduously to such duties. 
 
 Did you know of the passage of that order? 
 
 Mr. Bacon. I do not think I ever saw that order. 
 
 The Chairman. Did you know of its passage? 
 
 Mr. Bacon. 1 do not recollect of knowing of it. 
 
 The Chairman. Did you aid in securing its passage? 
 
 Mr. Bacon. I did not. I knew nothing of it. 
 
 The Chairman. Did you urge in any way, as the representative of 
 your committee, this cooperation on the part of the Commission? 
 
 Mr. Bacon. I did not; no, s^ir. 
 
 The Chairman. Were you at that time active in this matter? 
 
 Mr. Bacon. I was, to some extent. 
 
 The Chairman. Were there other agents of that society then coop- 
 erating with you? 
 
 Mr. Bacon. That can hardly be called a society. It was a conven- 
 tion similar to the one that was held in 1900, composed of delegates 
 from national commercial organizations only. 
 
 The Chairman. Do you know what was the result of that action 
 which 1 have called attention to? 
 
 Mr. Bacon. It resulted in pressing for the passage of the CuUom 
 bill, which had been drawn just previouslj^ thereto. 
 
 The Chairman. Pressing by whom? 
 
 Mr. Bacon. I think by one or two members of the Commission; per- 
 haps by several. 
 
 The Chairman. What bill was drawn ? 
 
 Mr. Bacon. The bill known as the Cullom bill. 
 
 The Chairman. Yes, sir; but I am speaking more particularlv about 
 the results that followed this action that I have just read. 
 
 Mr. Bacon. Those results were simply an effort on the part of the 
 organizations associated in that effort to secure the passage of the 
 Cullom bill. 
 
 The Chairman. Do you know anything of the circular letter that 
 was prepared by Edward A. Moseley, secretary of the Interstate Com- 
 merce Commission, and disseminated generally, or extensively? 
 
PROPOSED AMJEHDMEWT OF INTERSTATE-COMM.EBCB LAW. 17 
 
 Mr. Bacon. I do not recollect any circular that was prepared bv 
 um? 
 
 The Chairman. You never saw it? 
 
 Mr. Bacon. I have no recollection of it. 1 would not say that I 
 lever saw it, positively, but I have no distinct recollection of it. 1 
 ;ould not say whether I ever saw it or not. 
 
 The Chairman. Are you familiar with that letter? 
 
 Mr. Bacon. No, sir. If I were familiar with it 1 would not say 
 hat I had no recollection in regard to it. 
 
 The Chairman. I beg your pardon. When I asked this last question 
 . had not in mind that statement. 
 
 Mr. Bacon. Mr. Chairman, if I may suggest, it seems to me that 
 whatever action was taken by that preliminary organization the pres- 
 :nt organization is not responsible for, because it was organized on 
 lifferent lines. The present organization consists of the various State 
 nd local organizations in connection with the national organizations 
 hat were associated in the original movement; but the present organ- 
 zation succeeded that and proceeded on entirely different and inde- 
 )endent lines, and although it did ask and urge the passage of the 
 Jullom bill, which was then in its second ses.sion before Congress, 
 ubsequent to that session it prepared an entirely new bill, the passage 
 if which it urged, and since that it has prepared still another, each 
 leing modified by conditions and circumstances that have arisen during 
 hat provision. 
 
 The Chairman. But the same provision, substantially, with regard 
 
 the rate-making power, was found in all those bills ? 
 Mr. Bacon. That is common to them all; yes, sir. 
 
 The Chaikman. Common to them all, and that was the feature of 
 tie bill most earnestly urged by the Interstate Commerce Commission, 
 ^as it not? 
 
 Mr. Bacon. The Interstate Commerce Commission urged the passage 
 f the CuUom bill which comprised a large number of provisions and 
 as very extensive in its range, and designed to remedy .a number of 
 irious defects that have been developed in practice under the interstate- 
 jmmerce act, and the subsequent bills were very much more limited 
 
 1 their provisions; and the final bill was confined to the particular 
 oint of conferring special power upon the Commission, together with 
 reventing discriminations. 
 
 The Chairman. You said the other day — or at least I understood 
 Du to state — that the power of the Interstate Commerce Commission 
 I make rates was conceded by everyone for ten years after its for- 
 ation. 
 
 Mr. Bacon. I think I made a statement to substantially that effect. 
 The Chairman. Do you know that within three months after the 
 Dmmission was organized, the then chairman of the Commission, Mr. 
 joley, expressly declared that no such power bad been conferred 
 3on the Commission, that it was utterly impracticable, and that that 
 ity could not be performed? Do you know that he said that in an 
 Bcial capacity? 
 
 Mr. Bacon. I do not know that he made such a statement as that. 
 The Chairman. You do not? 
 
 Mr. Bacon. I have a memorandum of what was stated by Judge 
 )oley. 
 The Chairman. Do you know that Mr. Schoonmaker, within eight 
 
 I c 1,-05 2 
 
18 PBOPOSSD AMENDMENT OF INTEKSTATE-COMMEECE LAW. 
 
 months after the organization of the Commission, substantially used 
 
 the same language? . ,, x xu j. 
 
 Mr. Bacon. No, sir. My recollection is directl}'. to the contrary. 
 
 The Chairman. To the contrary ? 
 
 Mr. Bacon. Yes, sir. ^, -^ . ^^ . ^^ 
 
 The Chairman. Do you know that repeatedly, between tliat time 
 and the decision in the maximum-rate cases, the courts declared that 
 that power did not exist ? 
 
 Mr. Bacon. The courts declared that the power to make rates pri- 
 marily did not exist in the Commission; and the decision of 1897 
 
 The Chairman. Yes, sir. 
 
 Mr. Bacojt (continuing). Declared that the Commission had no 
 power to determine what change should be made in a rate which was 
 found to be unjust or unreasonable. 
 
 The Chairman. Yes. 
 
 Mr. Bacon (continuing). And it declares that its power was limited 
 to the denunciation of the rate and limited to declaring the fact that it 
 was found to be unreasonable or discriminative, as the case might be. 
 On that point I have a paper here which I will read to the committee, 
 which will be of interest — a paper which, I may say, was drawn by the 
 secretary or the assistant secretary of the Interstate Commerce Com- 
 mission, at my request, in relation to this very point of the position of 
 Judge Cooley. 
 
 The Chairman. You can file that with the committee. 
 
 Mr. Bacon. I would like to read it. 
 
 The Chairman. I think that it will be unnecessary'. It will take up 
 too much time. 
 
 Mr. Bacon. It will take me only two or three minutes to read it, and 
 it is directly in answer to the question that you have asked me. 
 
 The Chairmajj . Very well. Who prepared that, do you say ? 
 
 Mr. Bacon. It was prepared at the ofiice of the Interstate Commerce 
 (Jommission by either the secretary or the assistant secretary. [Reading:] 
 
 I know of no case wherein Judge Cooley said that the Commission had no author- 
 ity to prescribe a reasonable rate when an existing rate had been found to be unreason- 
 able. During all of the time Judge Cooley was on the Commission 
 
 The Chairman. Whose statement is that, now, if you please? 
 
 Mr. Bacon. It is that of either the secretary or the assistant 
 secretary. 
 
 The Chairman. Well, who? Which one? 
 
 Mr. Bacon. I am not quite sure which. 
 
 Mr. Mann. It will be quite easy to ascertain, because, the secretary 
 of the Interstate Commerce Commission is here. 
 
 Mr. MoSELEY. Mr. Bacon, yesterday I got a letter from you stating 
 that a question had been asked you, and asking myself, or the Inter- 
 state Commerce Commission, to state what the facts were. I handed 
 the letter to Mr. Decker, the assistant secretary, and this is the first 
 notice that I have had that he did replj^ to it. It is not that I want to 
 shirk any responsibility, but I say that the letter was handed to Mr. 
 Decker, the assistant secretary, who has been with the Commission 
 since its organization, and if this reply was sent to you it must be the 
 reply sent you by Mr. Decker. 
 
 The Chairman. Is that paper signed by anybody ? 
 
 Mr. MosELEY. From the Interstate Commerce Commission, I sup- 
 pose, and is a memorandum bearing directlj'^ on the facts in question. 
 
PBOPOSED AMENDMENT OF INTEKSTATE-COMMEKCE LAW. 19 
 
 Mr. Lamar. Who handed that to you, Mr. Bacon? 
 
 Mr. Bacon* It was handed to me this morning. 
 
 Mr. Lamar. Who handed it to you? 
 
 Mr. Bacon. It was handed to me at the office of the Commission. 
 
 The Chairman. Is it signed -by anybody? 
 
 Mr. Bacon. It is not signed and is not addressed. It is a memoran- 
 dum handed to me. 
 
 Mr. Lamar. Handed to you by whom? 
 
 Mr. Bacon. Handed to me b3'"^the assistant secretary. I think, Mr. 
 Chairman, that in reply to your question I am entitled to present this 
 paper. I beg the privilege of reading it to the committee. 
 
 Mr. Wanger. We can adopt this as his answer. 
 
 Mr. Bacon. 1 make that a part of my statement. It is as follows: 
 
 I know of no case wherein Judge Cooley aaid the Commission had no authority 
 to prescribe a reasonable rate when an existing rate had been found to be unreason- 
 able. During all of the time Judge Cooley was on the Commission it was believed 
 that the Commission had this authority and he joined in the orders forbidding car- 
 riers not to charge more than the reasonable rate shown by the evidence in cases 
 involving that question. 
 
 A case decided by the Commission in an opinion by Commissioner Schoonmaker 
 has been cited as holding in 1887 that the Commission had no authority to prescribe 
 reasonable rates. This was the case of Thatcher against the Delaware and Hudson 
 Canal Company (1 I. C. C. Rep., 152). But that case did not involve the reason- 
 ableness of rates. The complainant shipped grain from his elevator at Schenectady, 
 N. Y., to Boston and Boston points. He desired that the rates for that service 
 should be less than those from stations on the same line nearer to destination. In 
 other words, he wanted an order compelling the roads to depart from the principle 
 of the long and short haul clause. The Commission said it might authorize the car- 
 riers upon their appUcation to depart from the rule of that clause, but that it had no 
 power to compel such departure. 
 
 The Commission further said the carriers might reduce the rate from Schenectady 
 and also from the shorter distance points and so avoid making an exception to the 
 long and short haul clause, but added that the complainant did not ask the Commis- 
 sion to compel such a reduction from the shorter distance stations, and that no evi- 
 dence had been offered which would enable it to determine what would be proper 
 and just rates from such stations. Right in this connection the Commission used the 
 language which has been sometimes referred to as disclaiming the power to prescribe 
 a reasonable rate on complaint. It said, as to rates from the shorter distance stations, 
 concerning which no complaint had been made or any evidence offered : " It is there- 
 fore impossible to fix them in this case, even if the Commission had power to make 
 rates, generally, Which it has not. Its power in respect to rates is to determine 
 whether those which the roads impose are for any reason in conflict with the statute. ' ' 
 It was impossible to fix rates from the shorter distance stations, because the Com- 
 mission had before it no complaint and no evidence, and if it had power to make 
 rates generally, that is, without complaint or evidence, it could not have done so in 
 the absence of some information upon the subject. At that time, if the rates were 
 found to be in conflict with the statute, it was believed that the Commission had 
 authority to prescribe the maximum reasonable charge. In that very case the 
 Commission said: 
 
 "If the complainant thinks the rates from Schenectady and interpiediate points to 
 Boston and Boston points are excessive, he can raise that (juestion directly and dis- 
 tinctly, and the Commission can then enter upon a full investigation of the facts 
 bearing upon it." 
 
 That case was decided in July, 1887. Six months afterwards the Commission, 
 including Judge Cooley, held, in the case of Evans against The Oregon Railway and 
 Navigation Company (1 I. 0. C. Rep., 325), that the wheat rate from Walla Walla, 
 Wash., to Portland, Oreg., .was unreasonable, and ordered it to be reduced so as not 
 to exceed 23J cents during the existing grain season, the expectations being that there 
 would be a further reduction for the next season. The decisions of the Coramision 
 in other cases showed the exercise of the authority to prescribe maximum reasonable 
 rates in cases arising on complaint up to May, 1897, when the decision of the United 
 States Supreme Court was rendered holding that the statute did not confer that 
 authority upon the Commission. 
 
20 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 The Chairman. Now, let me call your attention to this language of 
 Judge Cooley, and I will then ask you if you are familiar with it. 
 
 The Commission would be required to act as rate makers for all the roads, and 
 would be compelled to so adjust the tariffs as to meet the exigencies of business, 
 while at the same time endeavoring to protect relative rights and equities of rival 
 carriers and rival localities. This, in any considerable state, would be an enormous 
 task. In a country so large as ours, and with so vast a mileage of roads, it would 
 be superhuman. A construction of the statutes which would require its performance 
 would render the due administration of the law altogether impracticable, and that 
 fact tends strongly to show that such a construction could not have been intended. 
 
 Are you familiar with that language? 
 
 Mr. Bacon. 1 think I have seen that before; and I understand that 
 that applies to the general initiative rate-making power. 
 
 The Chairman. Yes, sir. This bill does not contemplate anything 
 of that kind ? 
 
 Mr. Bacon. It simply contemplates the making of a rate 
 
 The Chairman. Yes, sir. 
 
 Mr. Bacon (continuing). Which, upon due investigation, has been 
 found to be unreasonable and unju.st. 
 
 The Chairman. That is, the action of the Commission must be in 
 response to a complaint to the Commission? 
 
 Mr. Bacon. Yes, sir: in resj)onse to the complaint. 
 'The Chairman. Yes, sir. Then the jurisdiction of the committee 
 in this particular matter would be dependent upon the character of the 
 complaint? 
 
 Mr. Bacon. The character of the complaint, and the evidence pro- 
 duced. 
 
 The Chairman. Then if the coniplaint was enlarged so as to cover a 
 number of roads, the jurisdiction of the Commission would be corre- 
 sponding to that? 
 
 Mr. Bacon. There is no doubt, if the complaint embraced a number 
 of different complaints 
 
 The Chairman. If the complainant was authorized to make a com- 
 plaint against one rate contained in a schedule, he could with equal 
 propriety complain of all the rates in that schedule, could he not, and 
 make one complaint of it? 
 
 Mr. Bacon. He could, but 1 think the Commission would exercise 
 its discretion as to entertaining a case that involved 
 
 The Chairman. How could it exercise its discretion under this bill 
 if it was to confine its inquiry to the complaint? You have just said 
 that the complaint fixed the jurisdiction under this bill. 
 
 Mr. Bacon. I have said that the complaint could be filed. I did not 
 say that it fixed the jurisdiction. 
 
 The Chairman. I understood you to say so. That is what I asked you. 
 
 Mr. Bacon. I did not intend to say so. If 1 did, it was a mistake. 
 
 The Chairman. Is it not your opinion that under this bill a com- 
 plainant would have a right to make a complaint against all the rates 
 from all the stations named in a given schedule? 
 
 Mr. Bacon. I think if such a complaint were made 
 
 The Chairman. Will you answer that question? Under the bill 
 would ho not have that authority? 
 
 Mr. Bacon. I think I answered substantially the same question in 
 the affirmative. 
 
 The Chairman. That he would have? 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMETJOE LAW. 21 
 
 Mr. Bacon. Yes, sir. But I did say that it would be in the discre- 
 tion of the Commission whether to entertain such a broad complaint. 
 
 The Chairman. Then you think that under the provisions of this 
 bill, and in the interest of remedying present difficulties, it would be 
 in the province of the Commission to select such parts of a man's 
 complaint as it saw fit to regard as important and exclude others? 
 
 Mr. Bacon. I think it would be in its province to require that the 
 complaint should be limited to a series of rates that were dependent 
 upon one another. 
 
 The Chairman. To a series of rates '( 
 
 Mr. Bacon. Yes. Rates that had a necessary relation to one another. 
 
 The Chairman. Now, it often happens, does it not, that a particular 
 rate upon one road is largely dependent upon another rate ? 
 
 Mr. Bacon. To be sure. 
 
 The Chairman. To be sure. And it happens that a rate from one 
 locality is very often dependent upon a rate from another locality ? 
 
 Mr. Bacon. One of the principal objects of this bill is to prevent 
 discrimination between those several points that come into competition 
 for business and to establish the proper relations between roads to and 
 from competitive points. 
 
 The Chairman. Then it would be utterly impossible, in the just 
 administration of this law, for the Commission to confine itself to a 
 single rate upon one commodity from one locality, would it not? 
 
 Mr. Bacon. I would not say that it would be impossible. There 
 might be occasions and situations in which it would be essential that 
 it should be restricted. 
 
 The Chairman. Yes. But it would not suffice for them to say that 
 they would consider nothing but a single rate upon a single commodity 
 from a single shipping place ? 
 
 Mr. Bacon. If the rates which were combined in the complaint had 
 no bearing upon each other and no relation to each other, 1 think it 
 would be perfectly competent for them to require the complaint to be 
 amended. 
 
 The Chairman. Is it not true, in a certain sense, that every rate is 
 inter-dependent and is related to every other rate in the schedule? 
 
 Mr. Bacon. That is a pretty broad stateuient, Mr. Chairman. 
 
 The Chairman. Is it not true ? 
 
 Mr. Bacon. Not by any means. 
 
 The Chairman. It is not? 
 
 Mr. Bacon. Have you any idea of the number of rates in force in 
 this country? 
 
 The Chairman. I think I have. 
 
 Mr. Bacon. It would be utterly impossible to say what the rela 
 tion was. 
 
 The Chairman. You say they have no relation ? 
 
 Mr. Bacon. No, sir. 
 
 The Chairman. They have, certainly, in the contemplation of the 
 railway companies in the matter of surplus earnings, do they not, over 
 ind above the operating expenses? 
 
 Mr. Bacon. Not all the rates in the country. 
 
 The-C-HAiRMAN. The rates of that particular road? 
 
 Mr. Bacon. The rates of any particular road. 
 
 The Chairman. They do have relation to one another? 
 
22 PEOPOSED AMENDMENT OF 1NTEB8TATE-C0MMERCE LAW. 
 
 Mr. Bacon. Yes, sir; certainly. 
 
 The Chairman. And that, too, in an important sense, more or less 
 to one of the parties to the controversy, to the railroad company 
 
 namely? ^, ., , 
 
 Mr." Bacon. Not of any greater importance to the railroad companj 
 than to the public? Thev have equal interests. 
 
 The Chairman. But they do have that important relation i 
 
 Mr. Bacon. They certainly do have an important relation. 
 
 The Chairman. What is, in your judgment, the serious evil properlj 
 to be complained of relating to railway charges? 
 
 Mr. Bacon. Well, sir, 1 should say that there were two. First, 
 there is the relation of rates between competing points, and the rela 
 tion of rates between competing commodities, all of which are verj 
 important. 
 
 The Chairman. They are all in the nature of discriminations? 
 
 Mr. Bacon. They are all in the nature of discriminations, bui 
 beyond that, and of far greater importance, is the general scale oJ 
 rates throughout the country, which has been raised from year tc 
 year during the past four years to an extent that has produced, 
 according to a statement made by the Interstate Commerce Commis 
 sion, a difference in the charges for the year ending June 30, 1903, oJ 
 $155,000,000 in excess of what the rates would have been that were ir 
 force in 1899. 
 
 The Chairman. That is, including the volume of traffic? 
 
 Mr. Bacon. On the same tonnage. 
 
 The Chairman. On the same tonnage? 
 
 Mr. Bacon. The same rate per ton of 1899, applied to the traffic o1 
 1903, produced a difference of over 1155,000,000 in excess. 
 
 The Chairman. That included the increased traffic ? 
 
 Mr. Bacon. No, sir; it takes the same rate per ton"which was appliec 
 in 1899. 
 
 Mr. Cushman. The same number of tons? 
 
 Mr. Bacon. The same rate per ton that was in force in 1899, appliec 
 to the tonnage of 1903, increases the earnings by $155,000,000. Thai 
 is to say, if the tonnage of 1903 was charged at the rates in force ii 
 1899, the revenues derived by the railroads, or the charges paid by th( 
 public, were $155,000,000 greater than they would have been under th( 
 rates of 1899. That is the statement of the Interstate Commerce Com 
 mission, made to the Senate in response to a resolution of inquiry. 
 
 Mr. Cushman. Do you mean that the same rate applied in 189! 
 applied now to the same number of tons would produce this excess? 
 
 Mr. Bacon. Not quite so much. The tonnage in 1903 was a littl( 
 more, but the rate of 1903 applied to the tonnage of 1899 would pro 
 duce $155,000,000 more. 
 
 Mr. Cushman. That might be a question of increased amount of ton 
 nage. 
 
 Mr. Bacon. That has no bearing upon it. 
 
 Mr. Cushman. Then I do not understand you. 
 
 Mr. Bacon. I have endeavored to make myself plain. 
 
 Mr. MosELET. If the rate of 1899 had been in force in 1903 th 
 amount of freight paid would have been $155,000,000 less than it was 
 
 Mr. Bacon. That is it, exactly. And this is a question that concern 
 the public. One point is very often forgotten — that is, that shipper 
 have no concern as to what the actual freight rate is. Their conceri 
 
PROPOSED AMENBMEWT OF INTERSTATE-OOMMEECE LAW. 23 
 
 is that no one else shall have a lower rate than they have and that 
 other places with which they have to compete shall have, no discrimi- 
 nation in their favor against them; but the public is concerned in the 
 rate itself. Everything that is consumed, in every form, whether for 
 food or clothing, or heating or building, or for any other purpose 
 whatever, is subject to these rates of freight, and the public are the 
 ones who bear that rate. 
 
 The Chairman. Now, to get back to this matter of the character of 
 the complaints that are made. Is it not true that the great volume of 
 complaint, is with regard to some form of discrimination, either in 
 rates, or as to persons, or as to commodities, or as to localities ? 
 
 Mr. Bacon. That is the burden of the complaints, so far as shippers 
 are concerned. 
 
 The Chaikman. That is the great burden 1 
 
 Mr. Bacon. No, sir; the shippers are one class and the public are 
 another. The shippers constitute perhaps one-fiftieth part of the 
 public. 
 
 The Chairman. Yes, sir. 
 
 Mr. Bacon. And as long as their rates are equitable with regard to 
 each other and with reference to the various commodities they handle 
 they are fully satisfied; but they are the ones that make complaints 
 against this particular evil, this evil of discrimination. 
 
 The Chairman. Yes. 
 
 Mr. Bacon. That is, discrimination between localities and between 
 commodities. But the public at large is making complaint through 
 the press of the country in the most impressive manner, and has been 
 for years. Almost every paper in the countr}^ has been burdened with 
 this complaint. But the people have no organization before Congress. 
 They are left entirely to themselves and they are pleading their cause 
 in an indefinite and indirect manner. 
 
 The Chairman. You have been appearing heretofore, have you not, 
 as the representative of the shippers 'i 
 
 Mr. Bacon. I am the representative of the shippers. 
 
 The Chairman. The commercial associations ? 
 
 Mr. Bacon. Yes sir; but the shippers naturally feel that they are 
 interested 
 
 The Chairman. Let me go a little further. So that, so far as your 
 representative capacit}' is concerned, you are intereted in these dis- 
 criminations, and drawbacks, and things of that kind? 
 
 Mr. Bacon. That is true. But we shippers 
 
 The Chairman (continuing). And the people whom you represent, 
 as you have just stated, have but little care as to what the rate is if it 
 is equitable with regard to all of the shippers? 
 
 Mr. Bacon. That is it. 
 
 The Chairman. That is it. So that when you make these other 
 representations of the complaints of the populace that are voiced in 
 the newspapers, you are getting outside of your official relations to 
 this subject, are you not? 
 
 Mr. Bacon. I take exception to the term "populist," because they 
 are not embraced in any party. 
 
 The Chairman. I did not say "populist." I said "populace." 
 [Laughter.] 
 
 Mr. Bacon. I beg your pardon. While the shippers are interested 
 in the rates being properly adjusted, they naturally feel a reciprocal 
 
24 PROPOSED AMENDMENT OF INTEESTATE-COMMEBCB LAW. 
 
 interest toward those from whom they deriv^e their business, those 
 with whom the^- are doing business, and when they see that the_ rates 
 are excessive, and that their customers and clients are suffermg unjustly 
 in regard to it, they naturally feel that it is necessary for them to 
 exert their influence as far as it may be necessary to relieve that. 
 
 The Chairman. So that in representing this part of the subject 
 
 Mr. Bacon. I am speaking for the public. 
 
 The Chairman. You are speaking emotionally rather than profes- 
 sionally? [Laughter.] 
 
 Mr. Bacon. Yes. sir. ' 
 
 The Chairman. 1 would be glad, Mr. Bacon, if you would tell us 
 in what way legislation is necessary— what new legislation is neces- 
 sary — in order to remedy this vast number of complaints that are thfe 
 complaints of the shippers which you have just spoken of? 
 
 Mr. Bacon. The very legislation which is comprised in the bill 
 which has been prepared through this committee. 
 
 The Chairman. Have they not now legislation which prohibits dis- 
 criminations between persons? 
 
 Mr. Bacon. Yes, sir. 
 
 The Chairman. Do they not have legislation which prohibits dis- 
 criminations between localities ? 
 
 Mr. Bacon. We have legislation which prohibits it, but we have no 
 means of enforcing it. The Commission is absolutely 
 
 The Chairman. We will get to that after a bit. Do we not have 
 legislation with regard to discriminations as to commodities ? 
 
 Mr. Bacon. There is legislation — that is, there is a declarative state- 
 ment in an act of Congress prohibiting that. 
 
 The Chairman. Prohibiting that? 
 
 Mr. Bacon. We are not asking for legislation to prohibit it. We 
 are asking for the means of enforcing that legislation. 
 
 The Chairman. Yes, sir. Now, we have a criminal statute to aid 
 n its enforcement, have we not? 
 
 Mr. Bacon. Not in its enforcement. 
 
 The Chairman. We have not a criminal statute ? 
 
 Mr. Bacon. Only in i-egard to personal relations. 
 
 The Chairman. Have we not legislation with regard to discrimina- 
 tions, prohibiting discriminations as to commodities? 
 
 Mr. Bacon. There are no penalties. 
 
 The Chairman. There are no penalties? 
 
 Mr. Bacon. No, sir. 
 
 The Chairman. A discrimination either against the person or against 
 the locality or against a rate is forbidden by the law, is it not< 
 
 Mr. Bacon. It is forbidden that rates shall be discriminative between 
 localities or between commodities, or, as the act expresses it, between 
 different descriptions of traffic; but it ends there. 
 
 The Chairman. And between persons ? 
 
 Mr. Bacon. I left out the persons. 
 
 The Chairman. See if it ends there. I think it does not. Discritti 
 ination in either of these respects by a carrier is prohibited, you say? 
 
 Mr. Bacon. It is prohibited; yes, sir. 
 
 The Chairman. Then it is an offense, is it not, against the statute— 
 a violation of the statute ? 
 
 Mr. Bacon. It is a violation of the statute. 
 
PEOPOSED AMENDMENT OF INTEESTATE-COMMERCE LAW. 25 
 
 The Chairman. Have we not a Commission whose duty it is to 
 make inquirj- with regard to all violations of the provisions of that 
 statute '? 
 
 Mr. Bacon. We have, and they have made inquiries and have found 
 that violations do occur in many instances, and have attempted to rem- 
 edy it, without effect. 
 
 The Chaikman. Whenever they find that there is a violation of the 
 statute it is their duty, is it not, under the statute, to proceed to the 
 courts for remedies? 
 
 Mr. Bacon. 1 do not understand that it is their duty to proceed 
 through the courts. It is their duty to hear anv complaint respecting 
 such violations. 
 
 The Chairman. And when they hear that a violation of the statute 
 has occurred, you say that you have not yet known that it was their 
 duty to proceed to the courts? 
 
 Mr. Bacon. No, sir. It is their duty to investigate. 
 
 The Chairman. To investigate ? 
 
 Mr. Bacon. And report. " 
 
 The Chairman. Yes. And your understanding of the law — the 
 present law — is that whenever thej^ find that there is a violation, that 
 ends the matter, except as they may advise the discontinuance of it? 
 
 Mr. Bacon. The act states that on finding any violation of the law 
 the Commission shall notify the carrier to that effect and notify it to 
 discontinue that violation. 
 
 The Chairman. Yes. 
 
 Mr. Bacon. Those are the words the statute uses. 
 
 The Chairjvian. And in jonv judgment that ends the duty and the 
 power of the Commission. 
 
 Mr. Bacon. The Commission is authorized 
 
 The Chairman. Will you just answer that question, please? 
 
 Mr. Bacon. What is the question? Just let me have it again. 
 
 The stenographer read the question as follows: 
 
 And in your judgment that ends the duty and the power of the Commission? 
 
 The Chairman. When they have ordered the Commission to desist? 
 
 Mr. Bacon. No, sir; it does not. 
 
 The Chairman. That is, for the railroad companies to desist? 
 
 Mr. Bacon. No, sir. . It is authorized to proceed to enforce its orders 
 through the courts. 
 
 The Chairman. Yes. 
 
 Mr. Bacon. In case that is not obeyed by the railway company. But 
 let me say right here 
 
 The Chairman. Go on and answer that point. 
 
 Mr. Bacon (continuing). The extent of the power conferred by the 
 let upon the Commission in regard to a discriminative rate or an 
 ixcessive rate is to so declare it, and to notify the company to cease 
 ind desist from that violation. The result of it is that its order may 
 )e complied with by a change of 1 per cent, we will say, on the exist- 
 ng rates, when under the existing circumstances, it is plain that there 
 )ught to be a change of 10 or 20 per cent. 
 
 The Chairman. Yes. 
 
 Mr. Stevens. I wish you would file with the committee all the 
 nstances you know of that thing having been done. I think it will he 
 •f great use for us to investigate. 
 
26 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 Mr. J3ACON. It will be a pretty difficult thing to do. 
 
 Mr. Stevens. That thing has been done, I understand. 
 
 Mr. Bacon. It has been done. 
 
 Mr. Stevens. I would like to know the instances. I wish that you 
 would file that information with the committee. 
 
 Mr. Bacon. I will give you one instance right at this present 
 moment. 
 
 Mr. Stevens. If you have time, I wish that you would hie full 
 information on that with the committee. 
 
 Mr. Bacon. I will give you one instance right now, of a case in 
 which I had an important part myself, known as the Milwaukee case, 
 which was brought against seven different railroads transporting^ grain 
 from west of the Mississippi to Milwaukee on one hand and Minnea- 
 polis on the other. The rates to Milwaukee were believed to be 
 unreasonable in proportion to the rates lo Minneapolis. That case 
 was brought before the Commission, and was decided favorably to the 
 Milwaukee people, and a definite order was issued by the Commission 
 requiring that the rates to Milwaukee should not exceed the rates to 
 Minneapolis by a greater sum than the difference shown in the dis- 
 tances carried on the roads in question — the difference shown in the 
 rates carried on the roads in question for corresponding distances. 
 
 1 will say that the distances carried are applicable only to short dis- 
 tances, and are not applicable to terminal points; but the differences 
 between those short distances — the local traffic, as it is called — were 
 applied to the terminal rates, and the roads were required to change 
 those terminal rates in conformity therewith. That would have involved 
 a reduction from Milwaukee, from the points in question — two or three 
 hundred of then], probably — of from 2 to 3 cents per hundred pounds, 
 and would have equahzed the two markets. That is, it would have 
 placed the two markets upon a par for grain shipments west of the 
 Mississippi River on their way to the seaboard. But the railway com- 
 panies declined to make the change, and instead of making the change 
 required, made a change of about one-half, in most cases less than one- 
 half, of the difference required by the Commission. That, as you will 
 readily see, afforded no relief, for the reason that it required the full 
 change which the Commission found was necessary in order to put the 
 markets on an e(i[ualit5^ That is one case that I have given you. I could 
 propably cite a great many others by looking over the records, but 
 this shows the difference, clearly. 
 
 Thereupon the committee adjourned until Friday, December 16, 
 1904, at 10.30 o'clock a. m. 
 
 New Orleans, Deoemher 6, 190k- 
 Hon. John Sharp Williams, 
 
 Washington, D. C. 
 
 Dear Sir: I wish to assure you of the appreciation of the members 
 of the Central Yelow Pine Association for the interest you express 
 in your recent letter to me, in legislation to amend the interstate com- 
 merce act to the extent that the Commission, upon complaint, will have 
 the power to fix a reasonable rate after hearing. 
 
 A number of bills have been introduced into Congress, all seeking 
 to amend the law in about the same way, some, however, to a greater 
 ■extent than others. 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 27 
 
 In view of the fact that the railroad interests will oppose any kind 
 of legislation enlarging the powers of the Interstate Commission it has 
 been deemed best to try, at this time, to secure only such an amend- 
 ment as is represented by_ the Cooper bill. If any larger powers are 
 undertaken to be secured it is feared that through the opposition of the 
 friends of the railroads legislation of anj^ kind in the interest of the 
 the public will fail. 
 
 It has been suggested by some who are in favor of legislation that 
 the Cooper bill is not adequate, and that the measure is imperfect 
 and if enacted into law will afford very little if any relief, for the fol- 
 lowing reasons: 
 
 First. That the first clause of the bill does not sufficiently authorize 
 the Commission or make it its duty to find what is a reasonable and 
 lawful rate to be substituted in lieu of one found to be unreasonable 
 and unlawful; and, second, the provisions of the bill which authorize 
 the court to set aside the order of the Commission if it is found to be 
 unjust or unreasonable on the facts is, in the opinion of some who 
 have given the subject thought, fatal to the purposes of the bill. 
 
 I have asked Mr. Bacon, chairman of the executive committee of the 
 Interstate Law Association, who is in Washington at the present time, 
 in charge of the measure, to confer with you and to secure your assist- 
 ance in getting a favorable report from the House committee. 
 
 If the Cooper bill as presented is not adequate to secure small meas- 
 ure of relief contemplated, I hope through your efforts it can be, in 
 committee or after it is presented to the House, amended so that ship- 
 pers when they are unjustly treated by the railroads can be assured of 
 prompt relief upon complaint and after hearing. 
 Yours, very truly, 
 
 Geo. S. Gaedinek, 
 President Central Yellow Pine Association,. 
 
 List of c:ises decided prior to the Supreme Court decision in the Maximum Rate case May ^4, 
 1897 167 U. S., 479), in which the Commission ordered changes to be made in rates 
 fofund to be unjust or unreasonable. 
 
 Title of case. 
 
 Citation. 
 
 Evans i). O. E.&N.R.Co 
 
 Eeedi). O. E. & N. R. Co 
 
 Farrar u. E. T., V. & G. R. Co 
 
 Pyles & Sons u. E. T., V. & G. R. Co 
 
 Hurlburt v. Penn. R. Co 
 
 Hurlburt u. L. a & M. S. R. Co 
 
 Parkhurst & Co. v. Penn. R. Co 
 
 Nicolai v. Penn. R. Co 
 
 New Orleans Cotton Exchange i'. C. , N. O. & T. P. E. Co 
 
 James &Abbotti).E.T.,V.&G.R. Co 
 
 New Orleans Cotton Exchange v. 111. C. R. Co 
 
 Re Alleged Freight Rates on Food Products 
 
 Harvard Co. v. Penn. Co 
 
 CoxeBros.&Co.i'.L.V.R.Co 
 
 Boston Fruit & Produce Exchange d. N. Y. & N. E. R. Co 
 
 Delaware State Grange D.N.Y., P. &N.Ry. Co 
 
 James&MayerB.Co.ji.C.N.O.&T.P.R.Co 
 
 Florida Railroad Commission «. S. F. & W. E. Co 
 
 Lehmann, Higginson & Co. ». T. & P. E. Co 
 
 Eisingi;. S.F.&W.E.Co 
 
 Perry ti. F!C. & P. E. Co 
 
 Murphy, Wasey & Co. v. Wabash R. Co 
 
 Merchants' Union of Spokane v. No. Pac. R. Co 
 
 Independent Refiners' Assn. v. W. N. Y. & P. R. Co. (3 cases). 
 
 Troy Bd. Trade v. Ala. M. R. Co 
 
 Duncan I). A. T. & S. F. Ry. Co 
 
 Duncan i;. So. Pac. Co 
 
 Dec. 3, 1887 
 do 
 
 Feb. 15,1888 
 
 do 
 
 July 20,1888 
 
 do 
 
 July 23,1888 
 
 do 
 
 Nov. 26,1888 
 Sept. 25, 1889 
 Apr. 11,1890 
 July 19,1890 
 Oct. 23,1890 
 Mar. 13,1891 
 Mar. 19,1891 
 Apr. 13,1891 
 June 29, 1891 
 Oct. 29,1891 
 Nov. 30,1891 
 Jan. 28,1892 
 
 do 
 
 Jan. 30,1892 
 Nov. 28,1892 
 Nov. 14,1892 
 Aug. 15,1893 
 Nov. 3,1893 
 do 
 
 lI.C.C.Eep.,325. 
 lib., 325. 
 lib., 480. . 
 lib., 46.5. 
 2 lb., 130. 
 
 Do. 
 2 lb., 131. 
 
 Do. 
 
 2 lb., 375. 
 
 3 lb., 225. 
 
 3 lb., 534. 
 
 4 lb., 116. 
 4 lb., 212. 
 4 lb., 535. 
 4 lb., 664. 
 4 lb., 588. 
 
 4 lb., 744. 
 
 5 lb., 13. 
 5 lb., 44. 
 5 lb., 120. 
 5 lb. 
 5 lb. 
 5 lb. 
 
 5 lb., 415. 
 
 6 lb., 1. 
 6 lb., 85. 
 
 Do. 
 
 122. 
 478. 
 
28 PROPOSED AMENDMENT OF INTEKSTATE-COMMERCE LAW. 
 
 List of cases decided prior to the Supreme Court decision in the Mmimum Rate case May 
 
 S4, 1897, ete.— Continued. 
 
 Title of case. 
 
 Morrell v. TJn. Pac. E. Co 
 
 Newland v. No. Pac. R. Co 
 
 Pagei/.D., L. & W.R. Co 
 
 Cincinnati Freight Bureau v. C, N. O. & T. P. E. Co. 
 
 Cbioago Freight Bureau ti. L. N . A. & C. R. Co 
 
 Charleston Truck Farmers' Assn. v. N. E. R. Co 
 
 Hill&Bro. V. N. C. &St.L. E. Co 
 
 Cordele Machine Shop u. L. & N. R. Co 
 
 Colorado Fuel & Iron Co, v. So. Pac. Co 
 
 Evans v. Union Pac. E. Co 
 
 May V. McNeil, receiver, 0. R. & N. E. Co 
 
 Jerome Hill Cotton Co, ■!>. M., K. & T. R. Co , 
 
 Missouri R. R. Commission v. Eureka Springs R. Co. . 
 Milk Producers' Prot. Assn. v. D., I . & W, Ry 
 
 Dee. 22,1893 
 Jan. 31,1894 
 Mar. 23,1894 
 May 29,1894 
 do 
 
 Apr, 6, 1895 
 Oct. 19,1895 
 
 do 
 
 Nov. 25,1895 
 Feb. 8,1896 
 
 do 
 
 May 20,1896 
 Feb. 26,1897 
 Mar. 13,1897 
 
 Citation. 
 
 61. C. C.,Eep.,121, 
 6 lb., 131. 
 6 lb., 148. 
 6Ib„195. 
 
 Do. 
 6 lb., 295. 
 6 lb., 343. 
 6 lb., 361. 
 6 lb., 488. 
 6 lb., 520. 
 
 Do. 
 
 6 lb., 601. 
 
 7 lb., 69. 
 7 lb., 92. 
 
 List of cases decided subsequent to the Maximum Rate decision of the Supreme Court, May 
 S4, 1897^ {167 U. S., 479), in -which the Commission found rates complained of to hi 
 unjust or unreasonable and ordered them to be discontinued. 
 
 Title of case. 
 
 Suffem, Hunt & Co. d. I. D. & W. R, Co . 
 
 Gary v. Eureka Sprgs, R. Co 
 
 Callaway t). L. & N. R. Co 
 
 Milwaukee Chamber Commerce v. C, M. & St. P. R. Co 
 
 Cattle Raisers' Assn. ii. Ft. W. & D. C. R. Co 
 
 Phillips, Bailey & Co. 1). L. & N 
 
 Grain Shippers' Assn. of N. W. Iowa d. L. C. R. Co 
 
 Savannah Bureau, etc., v. L. & N. R. Co .' 
 
 Hampton Board of Trade w. N. C. & St. L. R. Co 
 
 Warren-Ehret Co. v. Cent. E. of N. J 
 
 McGrew v. Mo. Pac. E. Co 
 
 Hilton Lbr. Co. i;. ,W. & W. R. Co 
 
 Natl. Wholesale Lbr, Dlrs. Assn^ «. N. & W. E. Co 
 
 Wilm. Tariff Assn. i;. C. P. & V. E. Co 
 
 Johnson D. C, St. P., M. & O. R. Co 
 
 Re Proposed Advances in Freight Rates 
 
 Mayor, etc., of Wichita ?). A., T. & S. F. R. Co 
 
 Marten u. L. & N. E. Co 
 
 Georgia Peach Growers' Assn. v. Atlantic Coast Line R. Co. 
 
 Aberdeen Com, Group Assn. u, M. & 0. R. Co 
 
 N. 0. Live Stock Exch. v. T. & P. R. Co 
 
 Re Transportation of Fruit on P. M. & Mich. Cent. R. Co . . 
 
 Date. 
 
 July 1,1897 
 
 Aug. 21, 
 Dec. 31, 
 Jan. 19, 
 Jan. 20, 
 Oct. 29, 
 June 22, 
 Jan. 8, 
 Mar. 10, 
 Dee. 22, 
 Feb. 8, 
 Apr. 10, 
 Dec. 11, 
 Dec. 17, 
 May 7, 
 Apr. 1, 
 Oct, 24, 
 Nov. 21, 
 June 4, 
 June 25, 
 ....do. 
 July 27, 
 
 1897 
 1897 
 1898 
 1898 
 1898 
 1899 
 1900 
 1900 
 1900 
 1901 
 1901 
 1901 
 1901 
 1902 
 1903 
 1903 
 1903 
 1904 
 1904 
 
 1904' 
 
 Citation. 
 
 7 I. C. C. Rep., 265 
 
 (2 cases). 
 7 lb., 286. 
 7 lb., 431. 
 7 lb., 481. 
 7 lb., 513. 
 7 lb., 93. 
 
 7 lb.. 158. 
 
 8 lb., 377. 
 8 lb., 503. 
 8 lb., 598. 
 
 8 lb., 630. 
 
 9 lb., 17. 
 9 lb., 87. 
 9 lb., 118. 
 9 lb., 221. 
 9 lb., 382. 
 9 lb., 534. 
 
 9 lb., 581. 
 
 10 lb., 255. 
 10 lb,, 289. 
 10 lb., 327. 
 10 lb., 360. 
 
 Note. — The foregoing cases of the Commission involved the unrea- 
 sonableness and injustice of rates only. 
 
 Numerous other decisions of the Commission involved the reason- 
 ableness of rates considered collaterally with unjust discrimination, 
 undue preference, and violations of the long and short haul section. 
 
 Edw. a. Moseley, 
 
 Secretary. 
 
PROPOSED AMENDMENT OP INTERSTATE-COMMEECE LAW. 29 
 
 Feidat, January 6, 1905. 
 
 The committee met at 10.40 o'clock a. m., Hon. William P. Hep- 
 burn in the chair. 
 
 The Chairman. We will resume the hearings upon the interstate 
 commerce propositions. Mr. Bacon is here, and Mr. Mann, I under- 
 stand, desires to ask him some questions. 
 
 STATEMENT OF MR. E. P. BACON— Resumed. 
 
 Mr. Mann. How long have you been interested in the proposed 
 amendment or proposeS amendments to the interstate commerce law? 
 
 Mr. Bacon. I have taken an active part in the matter for five years 
 past, and have felt interested in it ever since the decision of the Su- 
 preme Court which denied the powef to the Commission to designate 
 what change should be made in a rate found to be unjust or dis- 
 criminative. 
 
 Mr. Mann. And during that time have you given very special 
 study to the subject? 
 
 Mr. Bacon. I have, so far as I could do so in connection with 
 proper attention to my business. 
 
 Mr. Mann. You are the chairman of the executive committee of 
 the so-called Interstate Commerce Law Convention? 
 
 Mr. Bacon. Yes, sir. 
 
 Mr. Mann. Do you consider yourself an expert on the subject of 
 rate making? 
 
 Mr. Bacon. I would not make such a statement: no, sir. I 
 have ^ven a good deal of study to it and feel fairly well informed in 
 regard to it, but I would not consider myself an expert, by any means. 
 
 Mr. Mann. Do you consider yourselr an expert upon the question 
 of what legislation should be enacted to give the Interstate Commerce 
 Commision power to make freight rates? 
 
 Mr. Bacon. I have definite ideas in relation to it. 
 
 Mr. Mann. Well, if you would answer my question I think we 
 would get to it easier. 
 
 Mr. Bacon. I should not say that I am an expert in legislation, for 
 I am not. 
 
 Mr. Mann. Do you consider yourself an expert on the question as 
 to whether changes should be made, and if so, to what extent, in the 
 power of the Interstate Commerce Commission? 
 
 Mr. Bacon. I must say that I do not consider myself an expert in 
 a.T\j of these matters. I have given much attention to them and have 
 reached definite conclusions in relation to them, which are mature, 
 and on which I am very clear. 
 
 Mr. Mann. Do you consider that the subject of rate making by 
 railroads is a matter requiring expert or technical knowledge, or a 
 subject which can be passed upon by the ordinary layman without 
 expert knowledge? 
 
 Mr. Bacon. Eailroad men have recently testified that the making 
 of rates is not a science. 
 
 Mr. Mann. If you will answer my question I will be very much 
 obliged to you. 
 
 Mr. Bacon. Please repeat it. 
 
30 PROPOSED AMENDMENT OF INTEESTATE-OOMMEECE LAW. 
 
 Mr. Mann. I did not ask about railroad men, but I asked for your 
 opinion. 
 
 Mr. Bacon. I answered that question by giving the opinion of rail- 
 road traffic managers, which I fully coincide in. 
 
 Mr. Mann. You agree that it does not require — you state that it 
 does not require an expert knowledge to make freight rates ? 
 
 Mr.>BAC0N. That is not exactly what I mean. 
 
 Mr. Mann. Won't you tell us just what you do mean on the 
 subject. 
 
 Mr. Bacon. The matter of making rates is largely a matter of ex- 
 periment and of development. Eates are made by traffic managers 
 with the view to testing their correctness and their practicability, and 
 as changes are found to be necessary in the workings of the business 
 they are made, one after another, until finally a rate is reached which 
 is found to be practicable and as satisfactory as circumstances will 
 permit. 
 
 Mr. Mann. If you will permit me to direct your attention to my 
 question, it was as to whetlier it requires expert knowledge in order 
 to make this, or whether freight rates can be made at random without 
 expert knowledge, in your judgment. 
 
 Mr. Bacon. They certainly can not be made at random, but I con- 
 sider that a proper study of the subject on the part of one who gives 
 his attention to it, and particularly one who is charged with the duty 
 of regulation of railroad rates, will give him sufficient knowledge on 
 the subject to determine whether the rates already existing are cor- 
 rect, are just, are reasonable, or not; an,d, if not, what should be sub- 
 stituted in their place that will be so. I do not consider that it is 
 necessarj' that a man should have had experience in the traffic de- 
 partment of a railroad in order to form a judgment in regard to the 
 determination of a question of that kind. 
 
 Mr. Mann. Of course, I did not ask you that question, although 
 the information is very valuable. What I_ wanted to know was 
 whether it required, in your judgment, expert knowledge to make 
 freight rates. 
 
 Mr. Bacon. If you mean, by expert knowledge, the knowledge of 
 the man who has given his life to the maldng of rates, I should 
 answer the question in the negative. 
 
 Mr. Mann. You think it does not require any very extended 
 knowledge to determine? 
 
 Mr. Bacon. You asked me if it required expert knowledge. 
 
 Mr Mann. I did. 
 
 Mr. Bacon. And I replied to that. 
 
 Mr. Mann. That it does not require expert knowledge to make 
 freight rates? 
 
 Mr. Bacon. That it does not require the expert knowledge acquired 
 by actual service as the traffic manager of a railroad. 
 
 Mr. Mann. You hedge your answer so that it is valueless. lu 
 your judgment, does it require expert knowledge to determine upon 
 the making of freight rates or not ? 
 
 Mr. Bacon. I think I have answered that, Mr. Mann. 
 
 Mr. Mann. I do not think you have. 
 
 Mr. Bacon. I would like to hear my answer repeated, if the sten- 
 ographer will give it to me. 
 
PROPOSED AMENDMENT OP INTERSTATE-COMMERCE LAW. 31 
 
 The stenographer read as follows: 
 
 Mr. Mann. Of course I did not ask you that question, although the Informa- 
 tion is very valuable. What I wanted to know was whether it required, in your 
 judgment, expert knowledge to make freight rates. 
 
 Mr. Bacon. If you mean by expert knowledge the knowledge of the man who 
 has given his life to the making of rates, I should answer the question in the 
 negative. 
 
 Mr. Mann. You think it does not require any very extended knowledge to 
 determine. 
 
 Mr. Bacon. You asked me if it required expert knowledge. 
 
 Mr. Mann. 1 did. 
 
 Mr. Bacon. And I replied to that. 
 
 Mr. Mann. That it does not require expert knowledge to make freight rates? 
 
 Mr. Bacon. That it does not require the expert knowledge acquired by actual 
 service as the traffic manager of a railroad. 
 
 Mr. Mann. Of course it is immaterial how the expert Iniowledge 
 is acquired. 
 
 Mr. Bacon. I will answer further, that it does require knowledge 
 from investigation of the subject and examination into the circum- 
 stances and conditions relating to the particular rate in question. 
 
 Mr. Mann. Now, to change the subject. You testified before our 
 committee that the Elkins bill was prepared by the general solicitor 
 of the Pennsylvania Railroad,, and that the Cooper-Quarles bill was 
 substantially the Elkins bill. 
 
 Mr. Bacon. As the Elkins law was amended by agreement between 
 the general counsel of the Pennsylvania Eailroad and representatives 
 of the executive committee of the Interstate Commerce I^aw Con- 
 vention. 
 
 Mr. Mann. You testified, as I remember, to this effect that " the 
 bUl now before you. No. 6273, comprises the provisions of the Elkins 
 bill, revised as above stated, with the exception of the pooling and 
 traffic association provision, which has been omitted. All the pro- 
 visions contained in the present bill were contained in each of the sev- 
 eral bills heretofore mentioned," including the Elkins bill. I tmder- 
 stand that to be your statement? 
 
 Mr. Bacon. Yes, as I understand it. I will state, however, that 
 there is one omission in the Cooper bill from the original Elkins bill, 
 which is this : The EUrins bill provides that a rate fixed by order of 
 the Commission should only be in force one year. That has been 
 omitted, and there has been submitted in its place authority for the 
 Commission to modify or change a rate that it has previously made, 
 upon full hearing of both parties, at any time. 
 
 Mr. Mann. And that was the only substantial change made ? 
 
 Mr. Bacon. That was the only change of any importance. 
 
 Mr. Mann. In other words, as you said in the testimony before this 
 committee, the Cooper-Quarles bill is simply a redraft of the revised 
 Elkins bill, eliminating the pooling section? 
 
 Mr. Bacon. Substantially so ; yes. 
 
 Mr. Mann. The EUrins bill, according to your statement, was pre- 
 pared directly and drawn personally by the general counsel of the 
 Pennsylvania Eailroad Company. 
 
 Mr. Bacon. It was so stated at the time, and I believe that to have 
 
 DPPTl trip C&SG 
 
 Mr. Mann. Well, do you not know whether it is the case? You 
 were in consultation with Mr. Logan, were you not? 
 Mr. Bacon. Yes, sir. 
 
32 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 Mr. Mann. And you knew whether he drew the bill or not? 
 
 Mr. Bacon. It was the general understanding that he drew it, 
 and in my negotiations with him it was so treated. 
 
 Mr. Mann. Did you have any statement from him as to whether he 
 drew it? 
 
 Mr. Bacon. I think that he stated to me that he drew the bill. 
 
 Mr. Mann. Who is the vice-chairman of your law convention ? 
 
 Mr. Bacon. The vice-chairman is Mr. Charles H. Seybt, of St. 
 Louis. 
 
 Mr. Mann. He is a director in the Vandalia Railroad, is he not ? 
 
 Mr. Bacon. I understand he is ; yes, sir. 
 
 Mr. Mann. That is a parfof the Pennsylvania Railroad system, is 
 it not? 
 
 Mr. Bacon. It is a part of its system ; whether it is owned or leased 
 T do not know. I think it is leased. 
 
 Mr. Mann. It is a part of the Pennsylvania system, and the Penn- 
 sylvania Railroad determines who the directors shall be ? 
 
 Mr. Bacon. That T am not certain about; but it is understood to 
 be under the control of the Pennsjdvania Railroad Company. 
 
 Mr. Mann. The secretary of your convention is Mr. Frank Barry? 
 
 Mr. Bacon. Yes, sir. 
 
 Mr. Mann. He is also the manager of the organization in Wash- 
 ington ? 
 
 Mr. Bacon. We do not style him manager ; he represents the com- 
 mittee in Washington. 
 
 Mr. Mann. Did you not elect him as manager of the organization 
 in Washington ? 
 
 Mr. Bacon. No, sir ; he was the secretary, elected as secretary, with 
 the understanding, however, that he would spend his time in Wash- 
 ington during the sessions of Congress. 
 
 Mr. Mann. The. reports of your proceedings show that you elected 
 him as manager of the organization. 
 
 Mr. Bacon. Will you please cite it ? 
 
 Mr. Mann. I will, although I do not know whether I can pick 
 it right out at this moment or not. I will call your attention to it. 
 
 Mr. Bacon. He was elected by the executive committee at a meeting 
 held) after the adjournment of the convention, and he was elected as 
 secretary. 
 
 Mr. Mann. Elected as secretary by the committee? 
 
 Mr. Bacon. By the committee; yes, sir. 
 
 Mr. Mann. I will call, your attention to that report later, so that 
 you may know what the title is that you conferred upon Mr. Barry. 
 
 Mr. Bacon. T\Tiatever he may be styled it is expected that he will 
 be in Washington during the sessions of Congress for the purpose of 
 giving any information that may be desired in relation to proposed 
 legislation. 
 
 Mr. Mann. He occupied the same position a year ago? 
 
 Mr. Bacon. Yes, sir. 
 
 Mr. Mann. And was here in Washington in charge of the move- 
 ment inaugurated by the Interstate Commerce Law Convention, 
 which you are also representing ? 
 Mr. Bacon. He was ; yes, sir. 
 
 Mr. Mann. Did you ever see the article which he wrote, or pur- 
 ported to write, published in " Freight," of April, 1904? 
 
PROPOSED AMENDMENT OF INTEHSTATE-COMMEKGE LAW. 33 
 
 Mr. Bacox. I do not now recall it. 
 
 Mr. Maxn. I will call joiiv attention to a statement in that publi- 
 cation [reading] : 
 
 Progress is being made slowly toward the enactment of . the Cooper and 
 Quarles bills to amend the act to regulate commerce, but it is satisfactory 
 withal. * * * Thus far, however, a majority of that committee has 
 refused to accord us so much as a hearing, and its chairman and several of 
 the influential, members assert that they will not consent to spend any time 
 upon the subject, being wearied with the importunities of the public during the 
 past few sessions of Congress for such legislation. This committee is so con- 
 stituted that its majority stands as a " stone wall " to prevent any enactments 
 which may be disapproved by the railroads of the country. 
 
 Did you ever see that article ? 
 
 Mr. Bacon. It seems to me that I have seen it. I have not a very 
 distinct recollection about it. But, however that may be, I will say 
 that that is a purely personal act on his part, not authorized by the 
 committee or coming under its cognizance in any way. 
 
 Mr. Mann. Do you employ a secretary who as secretary writes 
 articles for the public press which you do not approve of ? 
 
 Mr. Bacon. I hardly think it is competent for the committee to pass 
 its own opinion upon the act of the secretary outside of the duties of 
 his office. 
 
 Mr. Mann. Do you approve of an article of this sort ? 
 
 Mr. Bacon. I hardly want to express an opinion in relation to that. 
 I do not think that has any bearing upon the merits of this legislation'. 
 
 Mr. Mann. If it has no bearing upon the merits of this legislation, 
 then why do you permit your secretary to publish such a thing and' 
 why do you also publish such things ? 
 
 Mr. Bacon. We can hardly be expected to control every movement 
 and every utterance of our secretary. In regard to your allusion to 
 myself I will say that I have never published anything of that kind. 
 
 Mr. Mann. We will come to that later. 
 
 You did not want any hearings on this Cooper-Quarles bill ? 
 
 Mr. Bacon. We felt that the hearings held two years ago last 
 April were ample, and we desired to expedite legislation by waiving 
 the offering of any further testimony. We felt, however, that the 
 railways would desire hearings, and for that reason we urged the 
 setting of a time for hearings during the last session of Congress. 
 Having failed in that, we have entirely withdrawn from the offering 
 of further testimony for the purpose of expediting the legislation. 
 
 Mr. Mann. You publi^ed a pamphlet purporting to contain an 
 address delivered by you to this committee, in which you stated that 
 you did not wish further hearings, as I remember, at the last session 
 of Congress ? 
 
 Mr. Bacon. At the last session of Congress we were seekmg to 
 have hearings fixed ; but at the latter end of the session— in the last 
 two weeks of the session — we requested or at least stated that we 
 desired no hearings, and if the opposition desired them we wished 
 to have them as speedily as possible, but that in fact we saw no occa- 
 sion for further hearings on account of the previous one having been 
 
 so exhaustive. . , „ • , i -j, o 
 
 Mr. Mann. The publication " Freight " you are acquainted with? 
 Mr. Bacon. I have seen it; yes, sir. 
 Mr. Mann. You are an admirer of it, are you not? 
 
 I c L— 05 3 
 
34 PEOPOSBD AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 Mr. Bacon., I think it is a useful publication in its way. 
 
 Mr. Mann. You have warmly commended it over your signature? 
 
 Mr. Bacon. Yes, I have-. 
 
 Mr. Bacon. You spoke at first as though you had hardly heard of 
 it, and I did not know. In the publication " Freight " you wrote an 
 article in which you stated that — 
 
 " Owing to the opposition of the leading members of the Interstate Commerce 
 Committees of the two Houses to any legislation further restricting the power 
 of the carriers to make and enforce such rates as they may see fit, It has been 
 impossibe," etc. 
 
 Do you believe that statement is true? 
 
 Mr. Bacon. I think it was true at the time it was written. Don't 
 you think it was true ? _ . ' 
 
 Mr. Mann. I know it was not true. I know that it was a libel and 
 a slander. I know it was false, and I believe you know it was false. 
 
 Mr. Bacon. Well, Mr. Mann, I wish to say that I am not here to be 
 characterized as a falsifier, and I will say, further 
 
 Mr. Mann. Well, if you write articles you must take the conse- 
 quences: 
 
 Mr. Bacon (continuing). That where I am known that has been 
 the last thing that has ever been attributed to me. What I said then 
 I said conscientiously. 
 
 Mr. RicHAEDSON. I would be glad to know what statement you 
 did make on the subject. 
 
 Mr. Bacon. Mr. Mann just read a statement from a communica- 
 tion which I gave, I believe, to the publisher of " Freight." Is that 
 what it is? 
 
 Mr. Mann. That is what it is from; yes. 
 
 Mr. Bacon. I made the statement conscientiously, and I believed 
 it to be true, and now believe that it was true at the time. 
 
 Mr. Richardson. Have you examined the records of the Interstate 
 Commerce Committee and the votes of last session? 
 
 Mr. Mann. If you have not seen the records I have the records 
 here, Mr. Richardson. 
 
 It is also stated by " Freight " that in your address before the St. 
 Louis Convention that you stated " that over three-fourths of the 
 representatives in Congress owed their presence there to the influence 
 of the railroads." Did you make such a statement ? 
 
 Mr. Bacon. I saw that statement immediately after the convention, 
 and I had no recollection of uttering it. My remarks w^ere entirely 
 extemporaneous at the time, and I could not recall anything of that 
 character. 
 
 Mr. Mann. You saw that statement in the November issue of 
 " Freight," and in the December issue of " Freight " you wrote a 
 letter telling " Freight " what a valuable publication it was, but did 
 not consider it necessary to refute that statement? 
 
 Mr. Bacon. I have not been able to command time to say what I 
 should want to in relation to everything I have seen published in con- 
 nection with this legislation, and hence did not make any attempt to 
 make any refutation. I did not suppose it was of sufficient impor- 
 tance to require it. 
 
 Mr. Mann. I suppose you thought anybody in the country could 
 go out and libel a member of Congress and have no attention paid to 
 
PROPOSED AMENDMENT OF INTEESTATE-COMMERCE LAW. 35 
 
 it. It is fortunately true that people in the country generally do not 
 pay much attention to such statements. 
 
 Mr. Bacon. As I said before, I have no recollection of saying that 
 and had not at the time, although I saw it within two or three days 
 after the convention. 
 
 Mr. Mann. I sincerely hope, Mr. Bacon, that a gentleman of your 
 standing — and I do appreciate the high standing you have — ^would 
 know better than to make a statement like that, which you ought to 
 know is false. 
 
 Mr. Bacon. I did inquire of two or three persons at the convention 
 if they heard me make such a statement, and they did not recall it. 
 
 Mr. Mann. You said, however, in your address in St. Louis that 
 " four of the members of this committee have declared that they will 
 permit no action on the part of the committee upon any bill which is 
 before them until definite action is taken upon this particular bill," 
 relating to the Cooper-Quarles bill ? 
 
 Mr. Bacon. I think I did make that statement, which I did from 
 statements made to me by the gentlemen. 
 
 Mr. Mann. I do not ask who the four members are. You were 
 here this morning when we reported a number of bills without oppo- 
 sition ? 
 
 Mr. Bacon. I hardly think it would be proper for me to give the 
 names. It was stated to me in private conversation. 
 
 Mr. Mann. I am not asking for it. You probably believed that 
 statement ? 
 
 Mr. Bacon. Yes. 
 
 Mr. Mann. You made it? 
 
 Mr. Bacon. Yes. 
 
 Mr. Shackleford. Did you make that from talking with members 
 themselves ? 
 
 Mr. Bacon. I think I made it in an address. 
 
 Mr. Shacklefokd. But did you derive your information from talk- 
 ing with these four members? 
 
 Mr. Bacon. Yes, sir. 
 
 Mr. Shackleford. I desire to ask you if Mr. Shackleford, of Mis- 
 souri, was one of them ? 
 
 Mr. Bacon. No, sir ; he was not. 
 
 Mr. TowNSEND. When was that address delivered ? 
 
 Mr. Mann. In October, last fall, just before the election. Now, 
 the fafit is that the Cooper-Quarles bill was the bill drawn by the 
 attorney of the Pennsylvania Railroad Company in all of its features, 
 is it not ? 
 
 Mr. Bacon. It is, as I have said before, a redraft of the bill which 
 the late Judge Logan, general coimsel of the Pennsylvania Eailroad, 
 originally drew, with some changes and modifications. 
 
 Mr. Mann. Of not any importance, however, you say ? 
 
 Mr. Bacon. The most important one was the one which I men- 
 tioned. 
 
 Mr. Mann. The others are not of any importance? 
 
 Mr. Bacon. The others are principally verbal changes, with the 
 view of making it clearer and more specific and less liable to miscou; 
 struction. 
 
 Mr. Mann. And yet, because the members or this committee were 
 
36 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 not willing to report that bill without a hearing, a bill drawn by the 
 attorney of the principal railx'oad company of the land, you and 
 your secretary denounced this committee as railroad representatives. 
 Mr. Bacon. I never have characterized the members of this com- 
 mittee, nor the members of Congress, as railway representatives. 
 
 Mr. Mann. I have just read to you what j'ou stated. Both you 
 and your secretary characterized members of Congress as railway 
 representatives, under the influence of the railways, and opposed to 
 making any change whatsoever in the power of the railroads to fix 
 rates, because we would not report without hearing a bill drawn by 
 the general counsel of the Pennsylvania Eailroad Company. Do 
 you think that that was fair to the members of the committee ? 
 
 Mr. Bacon. That bill had been before this committee, in the bill 
 that was introduced by Mr. Wanger of the committee, after having 
 been before the Senate for some two or three months, I think, and' 
 both the Senate committee and House committee had been ^holding, 
 hearings for two months upon that, together with the otlier bills. 
 The principles contained in that bill were substantially the same as 
 those contained in the Corliss bill, which was the House bill upon the 
 same subject; but our committee upon negotiation with the Pennsyl- 
 vania Railroad Company officers accepted the Elkins bill as a substi- 
 tute for the Corliss bill, the Corliss bill having embraced several pro- 
 visions that were not embraced in the Elkins bill. We waived those 
 other provisions and acepted the Elkins bill in its place, the pro- 
 visions of the Elkins bill, I say having been already included in the 
 Corliss bill, which had been the subject of investigation. 
 
 Mr. Mann. In other words, you went over to the railroad bill, and 
 because the committee would not follow you fast enough you say that 
 we are under the influence of the railways? 
 
 Mr. Bacon. I have not said any such thing, Mr. Mann. 
 
 Mr. Mann. I am very glad if you will say you did not say that. 
 "When I read it to you a while ago you would not say that you did not 
 say it. 
 
 Mr. Bacon. The question has often been put, is not Mr. So-and-so 
 under the control of the railroads, and I have denied it. I have said 
 that they are actuated by their own views and sentiments in regard to 
 legislation, and that I believe they are doing it honestly. I have said 
 that repeated^. 
 
 Mr. Mann. I am very glad to know that. Personally I have always 
 considered you a gentleman of high standing and honor, but I must 
 say that when I saw that you and Mr. Barry had flopped over to a 
 railroad bill and then proceeded to denounce the Members of Congress 
 because they did not chase you up on the bill that I had some doubts 
 about the honesty of one of you. 
 
 Mr. Bacon. You would be surprised, and probably some of the 
 other members of the committee would be surprised, it you knew to 
 what extent I have kept back certain elements, certain interests, in 
 regard to this legislation, which I have done with as much energy as 
 I have used in bringing forward those that sought reasonable and 
 proper and suitable legislation. 
 
 Mr. Mann. Did you not during that summer after the revised 
 Elkins bill was agreed to endeavor to have that become the law ? 
 
 Mr. Bacon. I did; yes, sir. 
 
 Mr. Mann. I was invited to attend a dinner at the Union League 
 
PROPOSED AMENDMENT OP INTEE8TATE-C0MMEBCE LAW. 37 
 
 Club by the Chicago Board of Trade members of this association, who 
 insisted that I should support the revised Elkins bill. I laughed at 
 them when they read to me the pooling clause in that bill and told 
 them that it had as much chance as a snowfiake in Hades. But you 
 were in favor of it ? 
 
 Mr. Bacon. You understand — or I should explain — that in the 
 arrangement with the Pennsylvania Eailroad officials it was dis- 
 tinctly understood that our organization would stand entirely neutral 
 in relation to the pooling provision; that we would not oppose it, 
 and they could not expect us to advocate it, because our convention 
 had taken no action upon that particular subject. 
 
 Mr. Mann. And yet Mr. Chadwick and Mr. Lyons, now the treas- 
 urer of your association, at this Union League Club dinner informed 
 me that at your request they were urging me to support that bill in 
 the committee, with the pooling clause in it. Would you deny that 
 you made such a request to them ? 
 
 Mr. Bacon. I say we supported the bill, but with the distinct 
 understanding that we were not favorable to that section. 
 
 Mr. Mann. Do you think this committee wouuld have been wise to 
 have reported that bill favorably to the House simply because you 
 favored that bill— to have reported it to the House without hearing? 
 
 Mr. Bacon. I do not think the committee would be wise to report 
 any bill because I advocate it or recommend it or because any other 
 individual did so. I suppose the committee has to determine for 
 itself upon the wisdom of any bill which it has to report. 
 
 Mr. Mann. Now, that is preliminary, of course, as to what the com- 
 mittee should do. I want to direct your attention to the proposition 
 as to whether this committee should be denounced by the officers of 
 jour association, because, without hearings, they did not report a bill 
 which originally was drafted by the general counsel of a railroad 
 company. 
 
 Mr. Bacon. 'It has not been the inteiition of the association or of 
 any of its officers to denounce this committee or any committee of 
 Congress. 
 
 Mr. Mann. Well, your intentions and your acts are widely asunder. 
 
 Mr. Bacon. We have simply stated what we understood to be the 
 facts of the case. 
 
 Mr. Mann. Now the truth is Mr. Bacon, T think you will admit 
 that while your secretary was denouncing this committee for non- 
 action, we did report a bill at your request last winter, now called the 
 Elkins law. 
 
 Mr. Bacon. I do not understand the House committee reported 
 that bill. 
 
 Mr. Mann. Well, then, you are mistaken, because the House com- 
 mittee did report the bill. I reported it in the House by direction 
 of the chairman. The Elkins law 
 
 Mr. Bacon. You are speaking now of the final Elkins law that was 
 reported and passed ? 
 
 Mr. Mann. The Elkins law that was passed? 
 
 Mr. Bacon. That was simply one section of the original Elkins bill, 
 !:)ut not very materially changed. 
 
 Mr. Mann. Was that a section that you wished enacted in the law ? 
 
 Mr. Bacon. We wished that as much as we did any other section. 
 
 Mr. Mann. And we did report that bill ? 
 
38 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 Mr. Bacon. Yes. 
 
 Mr. Mann. Was that showing that we did not wish to consider any 
 proposition of this sort? 
 
 Mr. Bacon. We have given the committee great credit tor the 
 prompt reporting of that bill and its action in relation to it, as well as 
 that of the House, has been highly appreciated. _ . 
 
 Mr. Mann. I would be very glad if some time at your leisure 
 you would call the attention of this committee to any place where you 
 have ever given the committee credit for anything, except being under 
 railroad influence. 
 
 Mr. Bacon. I have done it hundreds of times, Mr. Mann. 
 
 Mr. Mann. I have read everything that I have ever received from 
 you, clear through from beginning to end, and I have never found a 
 line .or suggestion of that sort. 
 
 Mr. Bacon. I am very glad to know you have done so 
 
 Mr. Mann. I have, and I have been profoundly instructed very 
 often, too. 
 
 Mr. Bacon. But I have written and said a great deal vfhich has 
 never come to the knowledge, probably, of any of the members of the 
 committee. 
 
 Mr. Mann. I do not really see how it is possible, because we get so 
 much from j'ou. Now, if you will permit me to draw your attention 
 a moment to the real subject. In a statement before this committee 
 two years ago Mr. Knapp, the chairman of the Interstate Commerce 
 Commission, used this language : 
 
 Under the present law the carriers exercise without restraint the initiative in 
 rate making. They are free to put in just such tariffs as they see fit. They are 
 under no legal restraint whatever in that regard, and there is no proposition to 
 change the law in that respect. I do not advocate, and so far as I am aware 
 no member of the Commission has ever advocated, that the initiative in rate 
 making should be taken away from the carriers and given to the Commission 
 or any other tribunal. 
 
 And then — 
 
 Now, all that is proposed is that in such a case as I have named, in order to 
 gi^e the Commission jurisdiction at all there must be a formal complaint served 
 on the carriers, opportunity for them to answer, and a full hearing conducted, 
 with all the formality of a judicial inquiry. Then, if the Commission in such 
 case and upon the facts thus disclosed, reaches the conclusion that the rate in 
 question is wrong, it shall have authority to name the rate which it thinks 
 would be right to be put in place of the one in controversy. 
 
 I think you have also in a number of cases stated that what your 
 committee wanted was power where a-rate was found to be unreason- 
 able that the Commission should have authority to determine what 
 the rate should be to take its place. Now, I wish you would tell us 
 just what your object is. 
 
 Mr. Bacon. That is the precise thing that we want, but in the fix- 
 ing of any rate there are other rates so closely related to it that it is 
 absolutely essential that they should be considei'ed in connection with 
 it; and for that very reason the Elkins bill which read originally 
 "_ a rate " was changed and the words " rate or rates " were substituted, 
 following out the arrangement with Judge Logan, to whom I re- 
 ferred; and so the bill reads as it now stands " rate or rates." 
 
 Mr. Mann. " Freight " — your great publication, " Freight "-^ — 
 
 Mr. Bacon. Don't call that our publication, please. 
 
PROPOSED AMENDMENT OF INTERSTATE COMMERCE LAW. 39 
 
 Mr. Mann. I do, because " Freight " is the power behind the whole 
 movement at present. 
 
 Mr. Bacon. We have no interest or relation whatever to that 
 publication. 
 
 Mr. Mann. Your committee has decided that " Freight " ought to 
 be sent and referred to every person interested in the subject. 
 
 Mr. Bacon. Our committee has been asked to indorse it and it has 
 declined to do so. 
 
 Mr. Mann. You have indorsed it? 
 
 Mr. Bacon. Not as a committee. I have recommended it. 
 
 Mr. Mann. I will show you that later. 
 
 Mr. Bacon. I have recommended it being taken and read by every 
 receiver and shipper in the United States, and I hope that will be 
 the case, because it contains a great deal of valu&ble information for 
 that class of people. 
 
 Mr. Mann. I want to call your attention to what you have asked 
 for in print. In " Freight '" the editor says : 
 
 We do not advocate conferring on tbs Commission the original rate-malting 
 power, but merely the power when a rate is complained of as being unfairly 
 high or unjust, to decide what rate is fair. 
 
 That is what " Freight " says. Your secretary, Mr. Barry, the 
 manager of your association 
 
 Mr. Bacon (interrupting) . Excuse me, but does not the bill speak 
 for itself in respect to that ? 
 
 Mr. Mann. Well, we are considering the subject-matter. 
 
 Mr. Bacon. We might save a litle time by referring to citations. 
 
 Mr. Mann. I have one or two others here I would like to call your 
 attention to; — also the President's message on the same subject — 
 which are not handy but which I will call your attention to later. 
 
 In a circular of information which you have sent out recently, 
 as I recollect it, you have stated that you do not wish the power con- 
 ferred of rate making, but that when a rate on freight is found un- 
 reasonable that the Commission shall have authority to fix the rate. 
 Did you not recently prepare a synopsis of the Quarles- Cooper biU 
 and send it out through the country? 
 
 Mr. Bacon. A year ago, or thereabouts, I did; yes, sir. 
 
 Mr. Mann. And in that synopsis did you not omit any reference 
 to rates, and simply say rate? ' 
 
 Mr. Bacon. I do not recollect ; but if so it was wholly uninten- 
 tional. I can not now see the distinction between the fixing of a 
 rate and the fixing of rates, because the two must go together. It is 
 a very rare case in which a single rate is (questioned. 
 
 Mr. Mann. You do not see any distinction between conferring the 
 power to fix a rate and the power to fix rates ? 
 
 Mr. Bacon. Most cases which come up embrace more than one rate. 
 They necessarily embrace more than one rate in the case of discrimi- 
 nation in tariff rates, which is the great cause of complaints on the 
 part of commercial men. It is the two rates from a given point to 
 two different points — competing points — which constitute nine-tenths 
 of the cases that have come before the Interstate Commerce Commis- 
 sion, and if the word " a " has been used it has been used simply in 
 its generic meaning. 
 
 Mr. Mann. Well, I get a great many reciuests from i)eople m my 
 city, sent at the solicitation of your association, in which they ex- 
 
40 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 pressly say to me that they think the Interstate Commerce Commis- 
 sion ought to have the power to fix a rate, but they do not wish to 
 confer upon the Interstate Commerce Commission the power to fix 
 railroad rates generally. 
 
 Mr. Bacon. That is precisely the position of our committee. The 
 fixing of rates generally has never been advocated by the committee, 
 and I do not know that it has been advocated by any body of business 
 men. 
 
 Mr. Mann. The power to fix rates is disclaimed generally by your 
 committee ? 
 
 Mr. Bacon. Yes; emphatically. 
 
 Mr. Mann. Arid the power to fix rates is disclaimed generally by 
 the Interstate Commerce Commission? 
 
 Mr. Bacon. It is |f emphatically. 
 
 Mr. Mann. You are acquainted, of course, with the case that went 
 to the Supreme Court in which they stated that the Interstate Com- 
 merce Commission did not have the power to fix freight rates ? 
 
 Mr. Bacon. Yes. 
 
 Mr. Mann. You have read that decision frequently, I suppose ? 
 
 Mr. Bacon. Yes. 
 
 Mr. Mann. How many rates did that one decision determine? 
 
 Mr. Bacon. I could not say definitely. I have the impression 
 that it was somewhere between 200 and 300 rates, but Chairman 
 Hepburn stated that 
 
 Mr. Mann (interrupting). Do you know that that decision fixed 
 the freight rates on every class of commodity, on every article in the 
 southern classification, between Chicago and Cincinnati, and every 
 point in the South, east of the Mississippi Eiver and south of the 
 Potomac and Ohio rivers, that that one opinion and decision did that? 
 
 Mr. Bacon. I knew it fixed the rates to a large number of points in 
 the southeastern territory. Whether it fixed the rate to all points or 
 not I do not know. 
 
 Mr. Mann. Did you know it fixed the rate to every place in the 
 South, south of the Potomac and Ohio rivers ? 
 
 Mr. Bacon. No. 
 
 Mr. Mann. And upon every article of freight? 
 
 Mr. Bacon. It may have been so, and if you so state I shall not 
 question it. 
 
 Mr. Mann. Well, the decision of the Supreme Court determines 
 that question. That was under the authority which you are now 
 seeking to put upon the Commission, where in one order they fix the 
 rates to one quarter of the country, as the Supreme Court said, with- 
 out much hearing. 
 
 Mr. Bacon. Without what? 
 
 Mr. Mann. Without much hearing. 
 
 Mr. Bacon. The case was a long time before the Commission, I 
 recollect. 
 
 Mr. Mann. The Supreme Court said in that case — I never had the 
 pleasure of reading the testimony of the Commission— that there was 
 practically little evidence taken upon the subject of the rates — what 
 should be the rates ; and yet in that case the Commission, under the 
 power, which you say you want, to fix a rate, and not rates generally, 
 undertook to fix the rates to every point in the South upon every 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 41 
 
 urticle in a classification. Xo^\-, do j-ou think they ought to have 
 that power? 
 
 Mr. Bacon. I will say in reply to that, Mr. Mann, that that em- 
 braced the system of rates in effect from Cincinnati and Chicago to 
 points in the southeastern territory, upon merchandise and manu- 
 factures, which, on investigation, liad been found to be very much 
 higher for a less distance than rates on the same commodities 
 
 Mr. Mann. Oh, well, you are seeking to argue the question as to 
 what rates should go into effect 
 
 Mr. Bacon. I am not arguing; I am stating the facts. [Contin- 
 iiing] very much higher than the rates from the Atlantic seaboard to 
 the same points, and in the course of the investigation it developed 
 that those rates had been agreed upon by the several lines interested 
 as a matter of regulating the east and the west bound business with 
 the view of securing through merchandise and manufactures from 
 the East and the agricultural products, necessarily, from the West, 
 in order to afford traf&c both wayS and give them loaded cars both 
 ways, and they were fixed 
 
 Mr. Mann. So that^ — are a^oli through? 
 
 Mr. Bacon (continuing'). Thej- were fixed by means of a commis- 
 sion appointed by the several railroads in interest, and from the state- 
 ments they made it is clear that that was the sole object they had in 
 view in fixing the rates as they did, so very much higher from the 
 Avestern points to the points through the Southeast than from eastern 
 points; and that being the case, the Commission found, when it went 
 into the investigation, that they AA-ere unreasonably high compared to 
 rates from the seaboard, and consequently they could do no less than 
 to order them all changed. If. in an in\'estigation of certain rates, 
 there are 200 or 300 or 2,000 or -^,000 found to be wrong, why should 
 not CA'ery one of those rates be changed as much as one of them? 
 
 Mr. Mann. So that, as a matter oi fact, you are in favor of giving 
 to the Interstate Commerce Commission the poAver to determine the 
 rates upon every article between CA^ery point in one complaint? 
 
 Mr. Bacon. "When found upon investigation to be wrong and when 
 related to each other in such a way that they can not be separated. 
 
 Mr. Mann. That might cover the whole United States in one' 
 complaint. 
 
 Mr. Bacon. Hardly that. 
 
 Mr. Mann. Let us see whether " hardly that " or not. The ground 
 of complaint in the case we refer to, the maximum rate, case, was that 
 rates from Western points to the South were too high as compared 
 with rates from Eastern points to the South, as you have said. 
 
 Mr. Bacon. That was it. 
 
 Mr. Mann. Now, when the Interstate Commerce Commission passed 
 on rates from Western points to the South that necessarily affected 
 rates from the Eastern points to the South, did it not? 
 
 Mr. Bacon. That affected them by making them relatively equal. 
 * Mr. Mann. Oh, it affected them by compelling the railroad com- 
 panies to change them? 
 
 Mr. Bacon. To be sure. 
 
 Mr. Mann. Which would also require the Interstate Commerce 
 Commission to pass upon whether they were proper rates or not? 
 
 Mr. Bacon. That is what I mean 
 
42 PEOPOSED AMENDMENT OF INTERSTATE-COMMEECE LAW. 
 
 Mr. Mann. That would affect also the rates from New York to 
 Chicago, necessarily? 
 
 Mr. Bacon. It would have no relation to rates from New York to 
 Chicago. 
 
 Mr. Mann. I am afraid you have not studied the rates fully 
 enough, although I will admit, as you say, that you are not an expert. 
 
 Mr. Bacon. I beg your pardon ; rates from New York to Chicago 
 have no relation to rates to the Southwest. 
 
 Mr. Mann. I beg your pardon: I say they have a very strong 
 relation. What is the rate on first-class freight from New York to 
 Chicago ? 
 
 Mr. Bacon. I could not say at the moment. 
 
 Mr. Mann. I will inform you. Seventy-five cents a hundred 
 pounds. 
 
 Mr. Bacon. That was my impression, but I was not clear upon it. 
 
 Mr. Mann. The rate to every other point between New York and 
 Chicago is based on that. 
 
 Mr. Baoon. Yes; not only that but the points between the Missouri 
 River and New York. 
 
 Mr Mann. Well, you are mistaken about that, Mr. Bacon. 
 
 Mr. Bacon. Well, perhaps I am. 
 
 Mr. Mann. Eates from New York to Chicago are the basis upon 
 which they make the rates from all other points between New York 
 and a line drawn from Chicago to St. Louis, or the Mississippi River. 
 
 Mr. Bacon. Yes, sir. 
 
 Mr. Mann. That is the case. Now, if the Interstate Commerce 
 Commission endeavors to pass upon a rate from New York to Chicago 
 it must also at the same time pass upon the rate to every other point 
 within that territory, must it not ? 
 
 Mr. Bacon. That of itself would come about; that would be a 
 natural result of it. 
 
 The Chairman. Excuse me. If there is no objection, we will con- 
 tinue at half-past 10 to-morrow morning. 
 
 Mr. Shacklepoed. I would like to ask one question. You said that 
 this Quarles- Cooper bill was drafted by counsel for the Pennsylvania 
 Railroad after conference with your committee ? 
 
 Mr. Bacon. Not the Quarles-Cooper bill; the original Elkins bill, 
 of which this is a redraft. 
 
 Mr. Shackleford. This is really a redraft, substantially so? 
 
 Mr. Bacon.. Yes, sir. 
 
 Mr. Shackleford. Did the Interstate Commerce Commission enter 
 into the conference in reference to that ? 
 
 Mr. Bacon. No, sir. 
 
 Mr. Shackleford. Were they consulted about it? 
 
 Mr. Bacon. It is possible they were consulted after it was done, or 
 at least that they were advised of what was done. I think they were, 
 but they had no part in the conference. 
 
 Mr. Shackleford. They had no part in the manufacture of that 
 bill? 
 
 Mr. Bacon. No, sir ; none at all. 
 
 Mr. SHACKLEFOiiD. Were they consulted as to whether it was satis- 
 factory before it was introduced? 
 
 Mr. Bacon. I think not before it was introduced. That, however, 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 43 
 
 I am not certain about. Excuse me — I recall now the bill was previ- 
 ously introduced before this conference between representatives of 
 the Pennsylvania Railroad Company and the commercial organiza- 
 tions. Consequently any reference of it to the Commission was 
 subsequent to its introduction. 
 
 The Chairman. There is one matter I would like to have you 
 explain, if you will. You used the language, " the arrangement that 
 was made with the officials of the Pennsylvania Railroad Company." 
 What did you mean by that ? 
 
 Mr. Bacon. The individuals ? 
 
 The Chairman. " The arrangement that was made?" 
 
 Mr. Bacon. It was an understanding that was reached at the con- 
 ference which I have mentioned, a conference for the purpose 
 
 The Chairman. That you would mutually support that bill ? 
 
 Mr. Bacon. Mutually support the bill, with the distinct under- 
 standing that we would not support the pooling section, and that we 
 would not oppose it. 
 
 Mr. Shaciojbford. That is, you would not oppose it ? 
 
 Mr. Bacon. Well, we were neutral. 
 
 The Chairman. You could not be neutral when you were advocat- 
 ing the passage of a bill that contained that clause. You were advo- 
 cating the passage of the bill ? 
 
 Mr. Bacon. Yes; as a whole. 
 
 ,The Chairman. And then you were advocating, the pooling clause 
 in that bill as well as the other clauses ? 
 
 Mr. Bacon. Whenever the question was put to us as to that clause 
 we said we were neutral. 
 
 The Chairman. But you wanted it passed ? 
 
 Mr. Bacon. We did not care whether that section was passed 
 or not. 
 
 The ChairjMan. But it was in there, and to pass the bill it was 
 necessary to pass it. 
 
 Mr. Bacon. We were willing that it should be passed as a whole. 
 
 The Chairman. You were anxious that the bill should be passed as 
 a whole, were you not? 
 
 IMr- Bacon. I would not say that. We were anxious that the bill 
 should be passed. 
 
 The Chairman. You were anxious that the bill should be passed, 
 and this was a part of the bill ? 
 
 Mr. Bacon. To be sure. 
 
 The Chairman. This was a part of it, and under that situation you 
 were just as anxious to have the pooling clause as any other, as a 
 
 whole ? . -r ii • 1 T 1 1 1 
 IVIr. Bacon. I could not say that, Mr. Chairman. I think 1 should 
 say to the contrary, in fact; that the commercial organizations 
 almost unanimously dissent from the proposition of poohng, and con- 
 sequently our committee -, j.- j.-, 
 
 The Chairman. But you, as their agent, were here advocating the 
 passage of a bill that contains the pooling clause. 
 
 MrrBACON. The committee submitted it to the constituent organi- 
 zations and obtained their assent to the bill. 
 
 The Chairman. You speak of the arrangement made 
 
 Mr. Bacon. Perhaps I should have said more properly, "the 
 understanding." 
 
44 PROPOSED AMENDMENT OF INTERSTATE-COMMEBOE LAW. 
 
 The Chairman (continuing). That means something active, doea 
 
 it not? , u ■, 
 
 Mr. Bacon. Perhaps I should have used the word "understand- 
 ing," the understanding that was had between us. 
 
 Mr. Adamson. Do you say that the authorities of the Pennsylvania 
 Eailroad agreed to support the provision for rate making? 
 Mr. Bacon. The first section of the bill. 
 Mr. Adamson. And you say they agreed to it? ' 
 Mr. Bacon. Not only agreed to it, but they proposed it; they 
 originated it. That is the first section of the bill, and is also the first 
 section of the Cooper bill. 
 
 Thereupon at 11.55 the committee adjourned until Monday, Janu- 
 ary 9, 1905, at 10.30 o'clock a. m. 
 
 MoNDAT, January 9, 1905. 
 
 The committee met at 1.0.50 o'clock a. m., Hon. William P. Hepburn 
 in the chair. 
 
 Mr. LovERiNG. Mr. Chairman, I want to object to the methods and 
 manner of carrying on this examination. There is entirely too much 
 personality in it. I am here as one of the committee, to get at 
 facts, and it is a matter of very little consequence to me whether I 
 am one of four men who have been accused of holding up the bill. I 
 do not think that it amounts to anything for us to know it, or to go 
 into that part of it. As to any questions that will elicit facts, I shall 
 be very glad to join with the committee in eliciting such information, 
 but beyond that I want it to be understood that I absolutely disclaim 
 any part or parcel in the manner of questioning that we underwent — 
 that was followed out at the last session. That is all I have to say. 
 
 Mr. Richardson. I did not hear distinctly all of your remarks, Mr. 
 Levering. You were too far from me for me to hear distinctly. I 
 caught the drift of it, I believe, that you thought that there was alto- 
 gether too much personality and too little reference to the bill in these 
 examinations. 
 
 Mi?. LovEEiNG. That was the gist of it. 
 
 Mr. Richardson. I am disposed to agree with you. 
 
 Mr. Bacon. I would like to say that a gentleman is here- this morn- 
 ing from Boston, Mr. George F. Mead, who is an officer of one of the 
 important commercial organizations, who has got to go away at 11 
 o'clock this morning, and if the committee will be pleased to hear him 
 for a few minutes I will give way to him. 
 
 Mr. Mann. I think that he ought to be heard. We have heard Mr. 
 Mead before, and we would be very glad to hear him again, so far as 
 I am concerned. 
 
 Mr. Richardson. Just one suggestion, if you please, along that 
 line. I would like to know, as a member of the committee, whether 
 to-day is going to be the only time that we will have for the further 
 examination of Mr. Bacon. I am very anxious to ask Mr. Bacon 
 some questions myself, and an intimation was given at the last ad- 
 journment of the committee that Mr. Bacon would be here only 
 to-day. 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 45 
 
 Mr. Bacon. That is a mistake, Mr. Richardson. I intend to re- 
 main here a week or ten days yet. ' 
 
 Mr. RiciiAEDSo^-. Very well; then that is all right. 
 
 'i'he Chaiemax. If there is no objection the committee will hear 
 briefly from Mr. Mead. 
 
 STATEMENT OF MR. GEORGE F. MEAD, OF BOSTON, MASS. 
 
 Mr. Mead. . I thank you for your courtesy. I represent the National 
 League of Commission Merchants, and also the Boston Fruit and Pro- 
 duce Exchange, a body which, at their annual meeting on Saturday 
 last, passed resolutions in favor of the Cooper-Quarles bill, and re- 
 affirmed their former action. 
 
 Mr. Chairman, I appeared here three or four years ago in behalf 
 of the Nelson-Corliss bill. At that time I gave some testimony rela- 
 tive to the inroads made upon our business by the private car lines, 
 and the chairman of the committee was anxious to get some informa- 
 tion at that time. I think that the events since that time have con- 
 firmed my statements, namely, that Armour & Co., and those inter- 
 ests, have gone into the lines of business in which the fruit and pro- 
 duce men are engaged to such an extent that at the present time the 
 car-line compa,ny known as "Armour & Co." controls the price of the 
 perishable fruit products of this country ; and perhaps no other men 
 have suffered more, and no other business has suffered as ours has, 
 from the exactions and abuses of these private car lines. I take it 
 that whatever bill your committee would see fit to report, if your com- 
 mittee should report a bill, should include a remedy for those abuses. 
 In 1900 — and this was all brought out at the hearing in Chicago 
 in June and in October — these facts were proven. Our fruit is 
 brought from Michigan at one tariff charge, and there was a tariff of 
 $20 a car for icing. In 1893 Armour came upon the field with an 
 exclusive contract, and at the present time, as appears from the testi- 
 mony, they will not put their cars upon any railroad without an 
 exclusive contract with that railroad, and instead of having in vogue 
 a rental of $55 for a car, that enables thein with the mileage they 
 receive to charge $70 a car from Michigan to Boston. At the same 
 time that Armour was engaged in the fruit and produce business he 
 was engaged also extensively in handling pineapples and deciduous 
 fruits, potatoes, apples, and, in fact, almost any kind of fruit in 
 which he thought there was a possibility of making a dollar, so that 
 we have this situation confronting us: Mr. Armour can go into 
 Michigan and buy a carload of potatoes at the same price that I pay 
 there and bring it on to Boston, and the tariff being $70 a car, he can 
 sell it in Boston and make a profit of $35, and I would lose $35 on my 
 carload. 
 
 But one of the worst features of that contract' was this, that the 
 railroad with which he makes an exclusive contract binds itself to fur- 
 nish to him full information in regard to every other car on the line. 
 So if I have a car of fruit on the line they telegraph to Armour when 
 that car was shipped, who shipped it, to whom it was going, when it 
 left and when it is due in Boston, and the contents and value of the 
 car, which practically makes the railroads of the country trustees of 
 our business ; and it has come to such a pass that the business inter- 
 ests are demanding some relief. It can not go on any longer. We 
 
46 PROPOSED AMENDMENT OF USTTEKSTATE-OOMMEEOE LAW. 
 
 have either to go out of business or else giye up our business to Messrs. 
 Armour & Co. 
 
 The Chairman. Will you explain, now, to the committee how this 
 legislation that you are asking for would relieve this situation that 
 you have spoken of ? 
 
 Mr. Mead. It would relieve it in this respect, that other refrigera- 
 tor cars might be put upon those lines where Armour & Co. 
 
 The Chairman. But I am asking you now where, under the pro- 
 visions of this bill, you would get the relief that you seek ? 
 
 Mr. Mead. You mean under the provisions of the Cooper-Quarles 
 
 bill? 
 
 The Chairman. Yes. I understand you to say that your associa- 
 tion on Saturday expressed their approval of the Cooper-Quarles 
 bill? 
 
 Mr. Mead. Yes, sir. 
 
 The Chairman. Now, if you will explain to this committee how 
 relief would come to you from the provisions of this bill the commit- 
 tee would be glad to have that information. 
 
 Mr. Mead. I will not read the resolution, because it is the same as 
 we have passed in previous years. 
 
 The Chairman. It is just like a great many of those things we 
 receive from gentlemen who evidently have great interest in this 
 matter and who ask us to vote for this bill. They complain of 
 rebates, and they complain of preferences, and they complain oi 
 discriminations, and ask us to vote for this bill that relates solely 
 to rate making. Now, explain to us, if you please, any relation that 
 the provisions in this bill have that would ameliorate the situation 
 that you have complained of. 
 
 Mr. Mead. There is a clause in this resolution, Mr. Chairman, 
 which I will read, as it is very brief : 
 
 This exchange also urges that the jurisdiction of the Interstate Commerce Com- 
 mission be extended to Include all charges or practices of refrigerator car lines 
 of other companies or agencies having contracts with railroad companies in 
 respect to care and transportation of freight, vegetables, and farm products; 
 Therefore, be it 
 
 Besolvefi, That this exchange hereby respectfully petitions Congress for th« 
 passage of the Cooper-Quarles bill or to indicate such legislation as will, ii 
 its judgment, accomplish the purpose indicated above. 
 
 The Chairman. Now, you have asked us to pass the Cooper bill 
 as a means of relief, in the alternative of something else, and yoi 
 have taken an interest in this matter — this is the second time thai 
 you have been before the committee — and you have undotibtedlj 
 studied this question and ought to know, and we ask you now to in 
 form us how this bill will in any way relieve the situation of whicl 
 you complain ? 
 
 Mr. ]V&;ad. The a'buse of the private car lines is but one feature o: 
 it. We believe that the Cooper-Quarles bill might be amended in th( 
 manner to which I have referred. 
 
 The Chairman. Yes. 
 
 Mr. Mead. And that would give adequate relief by making then 
 common carriers, and then they would come under the jurisdiction o: 
 the Interstate Commerce Commission. At the meeting in Chicag( 
 and at the one recently held there was one of the most flagrant in 
 stances of this abuse brought out. There was a charge on a carloac 
 
PROPOSED AMENDMENT OF INTEESTATE-COMMERCE LAW. 47 
 
 of freight of $35, and the Armour Company charged under an ex- 
 clusive contract $45 to ice and refrigerate that car. The shipper 
 refused to pay it, and they have sued him for it. Now, we claim that 
 the railroad companies should undertake to transport what we give 
 them for shipment in safety. 
 
 The Chairman. There is no doubt about that. No one here will 
 dispute that. Is there not a discrimination there against you and in 
 favor of Armour & Co., and is that not prohibited by law to-day ? 
 
 Mr. Mead. Yes, sir. 
 
 The Chairman. And can you not go to-day before the Interstate 
 Commerce Commission and compel them to act? 
 
 Mr. Mead. I do not so understand it. And I want to say this, that 
 the ordinary business man to-day does not propose to spend his time 
 nnd money in the preparation of a case and take it before the Inter- 
 state Commerce Commission when, after everything has been decided 
 in his favor, he has got to go to the courts to have the order of the 
 Commission enforced, as the average time to put a case through the 
 courts after it has been decided favorably bj' the Interstate Commerce 
 Commission is four years. In the meantime the railroads hold us up 
 and we are subjected to delay and expense; so that at the present 
 time, under the present conditions, we do not feel like bringing a case 
 to take before the Commission. 
 
 The Chairman. Dq you expect to get a self -operating law ? 
 
 Mr. Mead. No, sir ; we ask for this power 
 
 The Chairman. Are you not asking for such a law as that when 
 you advocate such a law as this will be ? 
 
 Mr. Mead. I do not so understand it. 
 
 The Chairman. Every law has to be invoked. 
 
 Mr. Mead. Yes, sir ; but may I cite a concrete example of the work- 
 ing of this ? 
 
 Last summer a session of the Interstate Commerce Commission was 
 held in Boston. We complained of an unfair rate of one of the rail- 
 roads there from Harlem Eiver to Boston. They charged $80 on a 
 carload there, and on the same train they brought a carload of beef 
 for $30. They prorated on the beef and not on the peaches. It did 
 not take the Commission long to determine that that was an unrea- 
 sonable and unjust rate. They suggested that $50 would be a just 
 rate. This power that we are asking to have given to the Interstate 
 Commerce Commission is, as I understand, the power to revise an 
 unfair rate, and when the Commission says that $50 would be a fair 
 rate for a carload of peaches between those two points, that that rate 
 should stand until it has been passed upon by the courts. 
 
 The Chairman. Now, you are talking about an entirely different 
 subject. I can see that this argument is entirely pertinent to your 
 purpose. But you were talking a minute ago about these discrimi- 
 nations in rates, and about the discriminating contracts that were 
 made, and asking us, inferentially at least, to pass this bill as a 
 
 remedy for that. « ,, ^ ■ -n ^ ^ n i 
 
 Mr. Mead. One of the reasons for asking for that is illustrated by 
 the statement of Armour's attorney in Chicago. When asked about 
 the rates of the Central Traffic Association Armour said : " We are 
 not amenable to the interstate-commerce law. We send a check to the 
 railroad company to pay the freight, and they take out what they see 
 
48 PROPOSED AMENDMENT OF INTERSTATE COMMERCE LAW. 
 
 fit and turn over the balance to Armour & Co., and we have nothing 
 to say in this matter." 
 
 I am simply saying, Mr. Chairman, that something might be added 
 to this bill to cover the private car lines, which constitute the greatest 
 abuse we have and suffer from. Of course, we all recognize the ne- 
 cessity of taking some action as to railroad rates, because we believe 
 unless something is done the business interests of this country will 
 rise up and demand more drastic legislation than is contained in the 
 Cooper-Quarles bill. ^Vithin a week I have heard a railroad presi- 
 dent in Massachusetts go before a meeting and ask this question: 
 " Do you want the railroad rates all over this country fixed by five 
 men who know nothing about it ? " That is not the question at all. 
 That is not what we ask for. T^'Tiat we ask is simply the power to 
 revise an unfair rate, and pending the decision of the court that that 
 rate shall stand; and we feel that circumstances are such that some 
 relief is necessary at once. »The interests of the country which we 
 represent are large and great. That is the feeling that we have, that 
 something must be done, and some great relief must be given. We do 
 not feel that this is an unfair bill to the railroads. We have suffered 
 this injustice since 1897, and if all these terrible consequences are 
 going to ensue, such as the railroads claim will ensue, and the mere 
 agitation of this bill is going to bring such results to the railroads, 
 why have they not shown some sympathy for the business men, who 
 have been suffering from this since 1897? We feel that we are 
 entitled to relief, and that at once. 
 Now I shall be glad to answer any questions. 
 Mr. EicHARDSON. Did you not read the President's message, and 
 did he not make some reference there to the trouble that you complain 
 of — ^private cars? 
 
 Mr. Mead. Yes, sir ; I think he sees the absolute necessity of action 
 along that line. 
 
 The Chabrman. Have you read the bill introduced a few days agO' 
 by Mr. Stevens, of Minnesota ? 
 
 Mr. Mead. I did not read it carefully. , I read it through, but not 
 carefully. I think I know, in a superficial way, what it is. 
 
 The Chaieman. Does that meet your approval, so far as you have 
 judgment on the subject? 
 
 Mr. Mead. No, sir ; I would rather, at the present, see the Cooper- 
 Quarles bill pass, and then see more time taken for a comprehensive 
 bill that would embrace whatever the situation demanded. But the- 
 business interests of the country at the present time almost entirely 
 demand some relief now. We feel that at the present time Armour 
 & Co. are under no regulation whatever. I can not imagine how the 
 railroads of the country have a right to license Armour & Co. to prey 
 upon us, and to transfer the functions of a common carrier to a pri- 
 vate individual, practically allowing them to hold us up by the throat 
 and demand what they see fit. 
 
 Mr. Mann. Has not the Interstate Commerce Commission held 
 that under the present law it had authoritjr to dispose of that evil? 
 
 Mr. Mead. Ithink not. I asked Commissioner Prouty at the end 
 of our hearing in Chicago in June as to what relief he could give. 
 He stated that he questioned whether the Interstate Commerce Com- 
 mission had the power. But the revelations there were so startling 
 
PROPOSED AMENDMENT OP INTERSTATE-COMMEECK LAW. 49 
 
 that Congress, he said, could not help but give us relief. The revela- 
 tions made there and the showing made in that investigation were so 
 startling that he said Congress could not help but give us relief. 
 
 Mr. Mann. Did not they hold in that Michigan peach growers' 
 case that they had jurisdiction to continue the case to see whether the 
 railroad companies and the shippers would adjust their differences? 
 
 Mr. Mead. In answer to that I can say the hearing was adjourned 
 from June. The hearing pertained only to Michigan, was limited to 
 Michigan, and the Commission stated at that time, " If you will put 
 in another petition we will open this whole broad question all over the 
 country." They did that, and the second hearing was held in Octo- 
 ber. The final result of the June hearing was that they would give 
 Armour & Co. until October or November 1, 1 think, and then if that 
 practice was not discontinued they would take some other action ; but 
 no action has been taken up to the present time. 
 
 I do believe that the Interstate Commerce Commission have more 
 power than they hav€ exercised. I believe if they had been more 
 aggressive in exercising some of the power that they have it would 
 have afforded us some measure of relief. 
 
 Mr. Adamson. Armour & Co. use their own cars exclusively to ship 
 over all railroads? 
 
 Mr. Mead. They use their own cars exclusively under these ex- 
 clusive contracts. 
 
 Mr. J^DAMSON. The railroads mvist take their cars and then further 
 their business all the time in the use of them 
 
 Mr. Mead. And if they do not do that they induce the withdrawal 
 of that traffic. They have been able to make some exclusive contracts, 
 as in the case of the Marquette Railroad, for their beef shipments, and 
 whenever they find a weak sister among the railroads they make an ex- 
 clusive contract with them. In the case of the Marquette Railroad it 
 wa^ shown that they made a low contract over that railroad, though 
 is was not so direct, so as to be able to get their beef in 
 
 Mr. Adamson. How far do you think Congress should go in con- 
 ferring power upon the Interstate Commerce Commission to make 
 or fix rates? 
 
 Mr. Mead. The Interstate Commerce Commission are supposed 
 to represent the public and the shippers ; and I understand that when 
 the interstate commerce act was passed it was supposed that they were 
 to pass upon the railroads and the interstate commerce of the country. 
 The President has paid a great tribute to the Massachusetts corpora- 
 tion laws in his desire to extend them to interstate commerce. 
 
 Mr. Mann. The Massachusetts laws are not the only thing from 
 your State that the President pays a great tribute to. 
 
 Mr. Mead. Thank you, sir. I understand this, that the Commis- 
 sion has poAver over interstate traffic. They have now the power to 
 say what is a fair rate, after investigation, and after all interests have 
 been heard, and I do not believe in giving the Commission the power 
 to fix initial rates. 
 
 The Chaikman. What do you mean by " initial rates? " 
 
 Mr. Mead. I believe that the railroad companies of the country 
 should fix their rates, as they do at the present time. The traffic man- 
 agers of the railroads have that in their power to-day, to fix rates, and 
 no one shall supervise them. They can make them as unfair and as 
 
 I c L— 05 4 
 
50 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 unjust and as extortionate as they see fit. They can break men and 
 firms and States and localities by those rates. 
 
 The Chairman. What I wanted to attract your attention to was 
 the question as to how far you think Congress ought to go in con- 
 ferring power on the Interstate Commerce Commission to make rates. 
 You say that you do not believe in allowing the Interstate Commerce 
 Commission to initiate rates ? 
 
 Mr. Mead. Yes, sir. 
 
 The Chairman. I mean the rates as initiated already in this country 
 to-day ? 
 
 Mr. Mead. Yes, sir. 
 
 The Chairman. And that is an absurdity, to talk about initiating 
 rates, in the ordinary sense of the words ? 
 
 Mr. Mead. Yes, sir ; of course. 
 
 The Chairman. Now, you say to fix rates — you said a while ago 
 " to fix a rate " — ^Iiow far should the Interstate Commerce Commis- 
 sion have the power to go ? Should they fix rates in a certain section, 
 or should they have the power to fix the rates in the whole United 
 States in one order ? , 
 
 Mr. Mead. No, sir; poAver to make a rate after a rate has been 
 shown to be unfair, unjust, and unreasonable ; to fix a rate and have it 
 put in force and maintained until the railroads have gone to the 
 Supreme Court and that rate has been upset. 
 
 The Chairman. Now, do you mean that they should have the right 
 to fix a rate upon the moving of a quantity of merchandise or property 
 at one time from one point to another point — one transaction ? That 
 is what you mean, is it ? 
 
 Mr. Mead. Yes, sir; and only after a -complaint has been entered 
 and a full hearing has been held upon that. 
 
 The Chairman. Yes. 
 
 Mr. Mead. And just as a sample of that, take the case of the Harlem 
 Eiver and Boston rate. They claimed that $50 was a fair rate, and 
 $50 was a much larger proportion of the whole than the other roads 
 received from the peach fields to the Harlem River. Pending a deci- 
 sion of the court, the $50 rate should stand until it was shown that it 
 was unjust to the railroads. It would be simply reversing the situa- 
 tion of to-day, under which we have been suffering since 1897. 
 
 Mr. Mann. Let me put this case to you. There is a dispute in the 
 country as to what should be the relative charges on carload rates 
 and less than carload rates. It is to the interest, say, of the larger 
 cities to have carload rates very much less than rates on smaller 
 quantities — that is, on carload quantities. It is to the interest, say, 
 of the hamlets to have the same rates for carloads and for less than 
 carloads. Now, would you have the power conferred upon the Inter- 
 state Commerce Commission, if a dozen or three or more merchants in 
 a hamlet should organize an association of retail merchants, to give 
 theni authority to file a complaint with the Interstate Commerce Com- 
 mission asking the Commission, first, to revise the classification, so 
 that carload rates and less than carload rates should be put in the 
 same class, and then to fix the rates on those all over the United 
 States on that one complaint? 
 
 Mr. Mead. No, sir. It seems to me that your premise is wrong 
 there. I do not think that 10 or 12 little iamlets would form a 
 national organization. 
 
PROPOSED AMENDMENT OF INTEBSTATE-OOMMEECE LAW. 51 
 
 Mr. Mann. Oh, one man often forms a national organization. 
 
 Mr. Mead. He might be such in name, but not in fact. 
 
 Mr. Mann. It is not restricted. Any organization under the 
 Cooper-Quarles bill, any association, or anyone can bring a complaint 
 before the Interstate Commerce Commission, and under the Cooper- 
 Quarles bill the Conamission could extend its jurisdiction to that, and, 
 pending hearing, could enter an order upon the case which I have 
 stated to you.. Do you think that power ought to be given to the 
 Interstate Commerce Commission ? 
 
 Mr. Mead. I do not thinlc any such power is asked for as you have 
 stated. As to a specific case and an investigation, the merits, of 
 course, of the larger cities and smaller towns being taken into con- 
 sideration and a finding made upon that complaint, that is all right. 
 1 do not think that an effort would be made to fix rates all over the 
 country upon that basis. 
 
 Mr. Mann. Are you in favor of the bill, which covers the power 
 which I have just suggested, which confers that power to fix the rates, 
 to make them higher or to lower them, anywhere the people choose to 
 complain, including in that order the entire United States ? 
 
 Mr. Mead. I should say no. If you mean that after complaint has 
 been heard, that, of course, was confined to the locality. 
 
 Mr. Mann. Oh, well 
 
 Mr. Mead. It would not be pertinent for that Commission to make 
 a finding there that would apply all over the country. 
 
 Mr. Mann. You are familiar, of course, with the fact that on one 
 complaint taken before the Interstate Commerce Commission, and 
 afterwards decided by the Supreme Court of the United States, the 
 New York Board of Trade and the Philadelphia board which corre- 
 sponds with it and the San Francisco board which corresponds with 
 it filed complaints under which the Interstate Commerce Commission 
 was asked to enter orders affecting the rates on every railroad in the 
 United States that touches at the seaboard ? 
 
 Mr. Mead. You mean differential rates ? 
 
 Mr. Mann. No, sir; I do not mean differential rates at all. I 
 mean actual rates. And you know, do you not, that they entertained 
 jurisdiction of the case ? 
 
 Mr. Mead. Yes. 
 
 Mr. Mann. Well, now, do you thinlc that they ought to have that 
 power, and, if you do, do you call that revising rates or initiating 
 rates? 
 
 Mr. Mead. I suppose that would be revision of rates, if they sub- 
 stituted for one in vogue, fixed by the traffic managers, another fixed 
 by themselves. I should call that revision of rates. 
 
 Mr. Mann. That is what I say. So that it is impossible for the 
 Interstate Commerce Commission to, initiate rates now. Kates are 
 already in existence, and a change of the existing rates would be 
 merely a revision of rates. 
 
 Mr. Mead. I think so. 
 
 Mr. Mann. It was a disclaimer I desired. 
 
 Mr. Mead. I do not see how the railroad commission, however 
 knowing they may be, would have sufficient knowledge to fix such 
 
 rsitGs. 
 
 Mr. TowNSEND. Do I understand you to say that the only object of 
 this Cooper-Quarles bill, as you understand it^— that is, the only 
 
52 PKOPOSED AMENDMENT OF INTERSTATE-COMMliRCE LAW. 
 
 object of the shippers and others interested in the bill— is that the 
 Commission should have power to fix rates in cases where complamts 
 have been made? 
 
 Mr. Mead. Yes, sir ; I so understand it, that they have power to. 
 make rates after a full investigation has been had, and that pending 
 a review bv the circuit court the interests of the railroad are still pre- 
 served, and the rate that the Commission says is a fair one is in effect 
 and shall be in vogue until it has been upset by the court. 
 
 Mr. ToAVNSEND. Would that affect_ any other rate except the par- 
 ticular rate about which you are talking ? 
 
 Mr. Mead. I should say not. 
 
 Mr. ToWNSEND. There is no case suggested to your mind that 
 might depend upon this particular rate about which there was a com- 
 plaint ? 
 
 Mr. Mead. That would be a specific case for them to investigate 
 and pass upon, and if the rate was found unreasonable, to make a 
 rate to take its place. 
 
 The Chairman. Now, one other question. In a case where the rate 
 complained of that you want the Commission to have the power to 
 revise is a rate from a terminal, one of the termini of a railroad, and 
 they reduce that rate upon a complaint simply with regard to one 
 rate and one transaction, in cases where the long and short haul is 
 enforced, would not a change in that rate necessarily, under the law, 
 effect a change in the rate from every other station on that line ? 
 
 Mr. Mead. I should want to consider that question. I should not 
 want to answer that offhand. I should want to give that question 
 some consideration. 
 
 The Chairman. After what you have said in reference to confining 
 the Commission to a particular rate and a particular transaction, 
 would you desire to give the Commission the power to so change all 
 intermediate rates ? 
 
 Mr. Mead. In one sense, I think the Commission ought to have 
 the power to revise that rate in the interests of the public, if the pub- 
 lic interests demand it, because they stand to represent the pubhc 
 in this case. The railroads can take care of themselves. To-day the 
 traffic manager of the railroad can put any rate that he sees fit in 
 vogue, and there is no one to pass upon the reasonableness of. that rate 
 now except that it can be touched upon by a recommendation of the 
 Commission and taken into the courts. 
 
 Mr. Bacon. I believe that I can clear the chairman's mind on that. 
 
 The Chairman. I am trying to get the idea, not of what the con- 
 dition is, but the idea of the petitioners for this relief, as to what the 
 relief should be, as they are represented by Mr. Mead. 
 
 Mr. Mead. I have staited our views of the commercial interests in 
 Boston and of the National Leftgue of Commission Merchants, organ- 
 ized and represented now in 27 cities of the country — r27 of the largest 
 cities. 
 
 Mr. Eichardson. Is it not a fact that in reference to the relative 
 rates, a reasonable, common-sense solution of it is found in the fact 
 that there are different classifications of rates by railroads — first, sec- 
 ond, third, fourth, fifth, and sixth? Now, take it for granted that 
 the railroads should raise the charges in the third classification, does 
 it not affect all the rates through that entire territory ? Is there not 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMEECE LAW. 53 
 
 an increase in the third class, and from that throughout the entire 
 province that the railroads occupy ? 
 
 Mr. Mead. Yes, sir. 
 
 Mr. Richardson. Then, if the Interstate Commerce Commission 
 were passing upon a complaint that related to freights of the third 
 class, would it not be right and proper, relatively speaking, that it 
 should affect all the rates within that railroad province? Would you 
 SOT that it shoiild pick out one single rate, one single charge, and 
 affect that, and not affect those that related to that class of freight ? 
 Would you not expect the Interstate Commerce Commission to be 
 common sense 
 
 Mr. Mead. Sure. 
 
 Mr. Richaedson (continuing). And businesslike, and would you 
 not expect them to apply it from a common-sense business standpoint? 
 If the Commission found that all the freights related to class 3 related 
 to each other and depended upon each other would it be right, for 
 instance, to take just one axe or a lot of axes that were in that rate 
 and affected each other and not allow it to the general trade matters, 
 that would have to enter into their finding? At the present time, 
 when they change the classification they change it from the fourth to 
 the third class, and that raises or lowers the railroad charges, as the 
 case may be. 
 
 Mr. Mead. They change it so as to raise the rates tremendously at 
 times. 
 
 Mr. Richardson. For instance, you take the rate from New York 
 to Atlanta. It is $1.14 per 100 pounds, and second class is 96 cents, 
 and the third class is 83 cents, and the fourth class is 74 cents or 75 
 cents, and then come the fifth and the sixth class. It comes on 
 down gradually. Now, do you not believe that when the railroad 
 classified that freight thev classified the freights that related to each 
 other? 
 
 Mr. Mead. Without doubt. 
 
 Mr. Richardson. Without doubt. Now, if a complaint was filed 
 before the Interstate Commerce Commission under this bill we are 
 considering now and the Commission were to find that there were 
 rates or that there were charges — or the petition included rates — that 
 were not relevant to other rates, do you not think that they would 
 allow an amendment to that bill and knock out the charges that were 
 not related to the things in the complaint, being sensible, practical 
 men ? 
 
 Mr. Mead. Certainly. We have to trust somebody. At the pres- 
 ent time we simply trust the railroads and the traffic managers, with- 
 out any supervision whatever. 
 
 Mr. Richardson. And the Commission under this bill, as I under- 
 stand it — and I want to get your idea about it and to get at the merits 
 of this bill — ^has first the right to have an investigation, and after 
 having challenged certain rates and finding them to be unreasonable 
 and unjust and unfair, you think that the Commission ought to have 
 a right then to say what is a just and a reasonable rate ? 
 
 M-. Mead. Yes, sir. 
 
 Mr. Richardson. And that rate which they fix is subject to revision 
 by the courts, after thirty days' notice, and so on? 
 
 Mr. Mead. Yes, sir. 
 
54 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 Mr. Richardson. And if within sixty days an appeal is taken from 
 the district or the circuit court to the "Supreme Court of the United 
 States your rate still goes on, the rate which the Commission has fixed 
 still goes on, and remains in effect? 
 
 Mr. Mead. Yes, sir. i ■ , , 
 
 Mr. EicHAEDSON. Now, right then and there, do you not think that 
 the objection that has been so universally made throughout the coun- 
 try, that the Supreme Court refused to pass upon a rate for the fu- 
 ture—that is the objection, and that is the only objection that the Su- 
 jireme Court of the United States refuses to pass upon a rate, for the 
 future— that that question is met right there where this Cooper- 
 Quarles bill gives the Commission the right to fix a rate temporarily 
 until the Supreme Court of the United States passes upon it, and 
 when the Supreme Court passes upon it the Supreme Court finds a 
 ]-ate already fixed, and it is not passing upon a rate for the future? 
 Do you not think that that avoids the trouble ? 
 
 Mr. Mead. That is what we desire to accomplish under this Cooper- 
 Qua rles bill. 
 
 jMr. Mann. Did I understand you to say in answer to Mr. Richard- 
 son that jou believe that if the Interstate Commerce Commission 
 should fix a rate from New York to Atlanta on one commodity it 
 would be necessary, or that they would have the right, under the 
 ?ame complaint, to fix the rates not only from New York to Atlanta, 
 but from New York to all other points in the South ? 
 
 Mr. Mead. Oh, no, sir. They would have to consider only what was 
 complained of in that specific complaint. There might be, of course, 
 other things to be taken into consideration. 
 
 Mr. Mann. Oh, yes. Let me see if I do not get your view. T 
 think your views are nearly in accord with what my views are on 
 this question. Ybu will pardon me if I seek to elucidate the point. 
 I take it from what you say that you are in favor of giving this 
 power to the Interstate Commerce Commission to permit a complaint 
 to be filed by some person who is interested, say, and let the freight 
 rate on some commodity or certain commodities between certain 
 points named be unreasonably high, and you would permit the Inter- 
 state Commerce Commission to decide what shall be the reasonable 
 rate on that commodity or that class of commodities between those 
 points named, of course taking into consideration in the hearing what 
 rates are the basis, but simply entering an order as to what the rates 
 shall be according to the petition in that regard. 
 
 Mr. Mead. Yes, sir. 
 
 Mr. Mann. That would not give to the Interstate Commerce Com- 
 mission the power, upon a complaint, to revise — using the term "to 
 revise " in place of " initiate " — rates generally ? 
 
 Mr. Mead. That would be a very disturbing factor, I should say, 
 if they had that power. 
 
 Mr. Mann. Are you aware that the Cooper-Quarles bill would 
 confer upon the Interstate Commerce Commission the power to fix 
 rates generally on one petition anywhere; that the Cooper-Quarles 
 bill would permit one petition to be filed by any person or associa- 
 tion in the United States, alleging that all the rates in the United 
 States or one part of the United States were too high and asking 
 the Interstate Commerce Commission to fix the rates, and that under 
 
PROPOSED AMENDMENT OF INTEESTATE-COMMEROE LAW. 55 
 
 the Cooper-Quarles bill the Interstate Commerce Commission would 
 have the power to revise the classifications, fixing the rates generally, 
 and put them into operation, and that they would have to remain in 
 operation without any authority of the railroad companies to change 
 them unless permitted to do so upon further hearing, by the Inter- 
 state Commerce Commission? 
 
 Mr. Mead. I did not suppose that they had the power to do that 
 under one complaint. 
 
 Mr. Manx. That is the power that is proposed to be conferred 
 upon the Commission. 
 
 Mr. Mead. I did not suppose that the committee would be con- 
 sidering a bill embodying such a power. 
 
 Mr. ManjSt. That is the Cooper-Quarles bill. 
 
 Mr. Mead. I am not a railroad lawyer, but simply a plain busi- 
 ness man, and knowing the past and knowing the conditions to which 
 we have been subject for some years past. 
 
 Mr. Richardson. Do you not understand the Cooper-Quarles bill 
 to go one step further and to provide that after the Interstate Com- 
 merce Commission has investigated a rate and found it unreasonable 
 and has fixed another rate, and the case has gone up to the district 
 court, then either party, as soon as it goes to that court, has the 
 right to send for witnesses in order to investigate to see whether 
 the Commission has fixed, a just rate? 
 
 Mr. Mead. Yes, sir; I understand it so. 
 
 Mr. EiCHAEDSON. After that they call witnesses and bring them 
 around and they investigate in the court and have, the testimony 
 of the witnesses as to whether the Commission has fixed a fair and 
 reasonable rate? 
 
 Mr. Mead. Yes, sir; I so understand it. It seems to me what 
 we desire to ask for is this, that the present conditions be reversed, 
 so that pending the review of the case we shall not be svibjected to 
 the old rates, but the railroads shall be unable to keep these rates 
 in effect from three to six years after the passage of an grder. and 
 so that the further time which it takes to get one of these cases 
 through the courts and define what is right shall not be spent 
 under the old conditions. The ordinary business man can not afford 
 to prepare a case and have it held up that length of time. During 
 that time we should have relief. We are asking simply that the 
 conditions be reversed, and if the railroads then want to keep their 
 cases in the court four or five years, all right. They will find a means 
 of reaching the cases quicker than that. 
 
 Mr. Mann. Are you aware that under the Cooper-Quarles bill 
 the Interstate Commerce Commission could of itself, on its own 
 initiative, cause an investigation to be made of all the classifications 
 of rates, and of all the rates in the United States, and enter an 
 order which would have to remain in force until passed upon by 
 the Supreme Court of the United States, unless some circuit court 
 should decide upon the face of it that it was plainly or clearly 
 unlawful or unreasonable? 
 
 Mr. Mead. I do not know what the powers of the Interstate Com- 
 merce Commission are at the present time regarding their own initia- 
 tive, instituting proceedings under their own initiative. I under- 
 stand that what we are asking by this bill is that this shall be done 
 upon a complaint. 
 
56 PKOPOSED AMENDMENT OF INTERSTATE-COMMEKCE LAW. 
 
 Mr. Mann. This bill says "complaint;" but the interstate-com- 
 merce law says that the Interstate Commerce Commission shall have 
 the same power to have an inquiry made on its own motion as it 
 would have if a complaint were filed. ,i.- .•„ 
 
 Mr. Mead. I suppose that if there was a conflict between 'this bill 
 and the interstate-commerce act it would modify it. 
 
 Mr. Bacon. May I ask you a question in that connection? 
 
 Mr. Mann. Certainly. 
 
 Mr. Bacon. Do you understand that this power m the present act, 
 given the Interstate Commerce Commission, to institute an action on 
 its own motion, would apply under a case brought under the Cooper- 
 Quarles bill, which confines the Commission to a complaint in its 
 action ? 
 
 Mr. Mann. No, sir; I do not understand that at all. 
 
 Mr. Bacon. I inferred that from your question. 
 
 Mr. Mann. This bill says "complaint." Referring to section 13 
 of the interstate-commerce act, we find section 13 of the interstate- 
 commerce act says that the Commission shall have the same power on 
 its own motion as it would have when a complaint was filed ; so that 
 the Interstate Commerce Commission under the two laws together, if 
 this be made into a law, would have the same power on its own motion 
 as it has on a complaint. 
 
 Mr. Bacon. Not by any means. 
 
 Mr. Mann. Well 
 
 Mr. Bacon. The Cooper-Quarles bill limits the power of the Com- 
 mission in changing a rate to a case in which there is a complaint and 
 limits it to the complaint made, and it can not go out of that com- 
 plaint in determining the question. 
 
 Mr. Mann. I have not the slightest doubt what the decision of the 
 court would be under the circumstances; that the court would hold 
 that under the two bills the Interstate Commerce Commission had the 
 same power under its own initiative as it had in cases where a com- 
 plaint was filed, because the law specifically says so. This bill refers 
 to the provisions of section 13 of the interstate-commerce act. 
 
 Mr. Bacon. The court says, under the present act the Commission 
 has no power to change a rate. Now, this bill confers the power to 
 make a rate. Do you think that they could go further, in the exercise 
 of that power, when the Cooper-Quarles bill does not confer the 
 power to change rates, except upon complaint ? 
 
 Mr. IMann. The Cooper-Quarles bill says that when a complaint is 
 made, under section 13 of the interstate commerce act, that the power 
 shall be enforced. It confers the power indirectly. 
 
 Mr. Bacon. But only to the extent that the complaint goes. 
 
 Mr. Mann. Not at all. You use the word " complaint " in relation 
 to section 13, and a part of section 13 is this clause, that the inquiry 
 by the Commission shall be exactly the same upon its own initiative 
 as upon a complaint. 
 
 Mr. Bacon. But the Supreme Court says that the power is limited 
 to declaring whether the existing rate is unreasonable or not, and that 
 it can not go further and say what is unreasonable or not. 
 
 The Chairman. Suppose a complaint should be made under the 
 Cooper-Quarles bill that a rate is unreasonably low, is it your under- 
 standing that under this law the Commission would have the power 
 
PROPOSED AMENDMENT OV INTEB8TATE-C0MMEBCE LAW. 57 
 
 to investigate that matter, and in case they found that it was unrea- 
 sonably low to raise it? 
 
 Mr. Mead. I think that if such a case as that should occur— I can 
 hardly conceive of it, but I think if it should occur— it would be only 
 3^stice to the railroad to make a fair rate. I do not see why they 
 should not have the right, under the construction of the statute given 
 by Mr. Mann, to change a rate under their own initiative. The 
 statute says that the rate must be unreasonable. That is all the busi- 
 ness man wants. This question has come to such a pass that we find 
 that relief must be given somewhere. We are looking to this com- 
 mittee to pass a bill that shall not be in conflict with the interstate 
 commerce act. The railroads absolutely hold to-day the power to 
 make or break localities or men without any supervision whatever 
 being given over their rates. We hold that it is an unfair thing to 
 the public, and the Interstate Commerce Commission should represent 
 the interests of the public and of the business community on this ques- 
 tion. 
 
 Mr. Mann. Do I understand you that the business interests of the 
 country are on the point of ruin? 
 
 Mr. Mead. Many men have been ruined. 
 
 Mr. Mann. That is Boston, or generally ? 
 
 Mr. Mead. I can cite you to specific instances of the way the thing 
 works. 
 
 Mr. Mann. I am talking of business interests generally. 
 
 Mr. Mead. In our business; yes, sir. The Armour Company sent 
 out a notice, dated August 22, that after the 1st of September no 
 goods carried in their cars should be owned by the Armour interests 
 or people. He testified in Chicago that he loaned a man $400,000 to 
 go into business. He may go into our line of business to-morrow, and 
 cut our throats. He has the power to do it. He has the power to 
 raise or lower these rates absolutely in his own hands. Take, for in- 
 stance, some shipments to the city of Worcester. Armour & Co. had all 
 the information about those shipments, they knew the time they were 
 shipped and when they were due, and they knew the cost of the car 
 when it was bought in the open market, and if that carload of freight 
 was due on Wednesday, they would put a carload -of freight in there 
 on Tuesday and fill the market, and when the carload of freight got 
 in there on Wednesday they found the market cut from underneath 
 them. 
 
 Mr. Mann. The tribunal to which you ought to go is not the legis- 
 lature, but the Executive branch of the Government, because all those 
 things which you have suggested are positively prohibited by law, 
 now under heavy penalties. 
 
 Mr. LovERiNG. Would the railroads welcome a change regarding 
 the contracts with regard to the refrigerating cars? 
 
 Mr. Mead. I am not, of course, empowered to speak for the rail- 
 roads. I do know this, that the largest railroads in this country 
 absolutely refused to make an exclusive contract with Armour & Co. 
 They have used all kinds of persuasion and threats with the Pennsyl- 
 vania and the New York Central railroads. They say "We abso- 
 lutely refuse to make a contract with you. We believe that we should 
 haul any car or any refrigerator car tendered to us." I have no 
 right to speak for the railroads, but personally I believe that the rail- 
 
58 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 roads of the country would welcome such a change and a chance to 
 escape from the domination of Armour & Co. Armour & Co. hold 
 over those railroads to-day the threat of the loss of their busmess. 
 They say " You" must make an exclusive contract with us or you will 
 lose so many carloads a week of freight." Eailroads have made 
 exclusive contracts with Armour & Co. under such a threat as that. 
 If the railroad is a comparatively weak one the traffic manager of 
 the road has to have freight or he loses his position. The president 
 of the road has to show results or he loses his position. At the hear- 
 ing in Chicago the Atchison Railroad put a man on the stand who 
 actually swore that they paid a rebate of 25 cents. 
 
 Mr. Adamson. You think that they need protection against Armour 
 &Co.? , . 
 
 Mr. Mead. I think that Mr. Armour uses his immense business to 
 force the railroads into these exclusive contracts. 
 
 Mr. Adamson. It seems to me that they might, while they are mak- 
 ing so many contracts and agreements among themselves, combine 
 against the robber to protect themselves. 
 
 The Chairman. Now, you have spoken a number of times of " ex- 
 clusive contracts." Do you understand them to be numerous? Are 
 there many of those contracts ? 
 
 Mr. Mead. Yes, sir; more than we have any knowledge of. We 
 know of the instance of the Marquette and Michigan Eailroad. 
 Those contracts were produced at the hearing in Chicago. 
 
 The Chairman. Do you know of any other exclusive contracts ? 
 
 Mr. Mead. Yes, sir. 
 
 The Chairman. Where are they ? 
 
 Mr. Mead. In Georgia. There are other refrigerator cars that do 
 the work at less cost to the producer and also with a less consumption 
 of ice. They do work that the Armour Company cars can not do; 
 and yet the shipper can not use those cars because the Armour Com- 
 pany has an exclusive contract. I wrote to the railroad commission 
 of Georgia and asked them if they would furnish me with the names 
 of the roads which had exclusive contracts, and I found that" they had 
 exclusive contracts with every railroad bringing peaches out of 
 Georgia. The shippers of Georgia are prevented from getting a 
 better rate and a better car simply because Armour uses no cars but 
 his own. 
 
 Mr. Adamson. Have you that letter from the railroad commission 
 of Georgia ? 
 
 Mr. Mead. That letter is filed with the Interstate Commerce Com- 
 mission in Chicago. 
 
 Mr. Adamson. We would like to have a copy of it here. 
 
 Mr. Mead. You can have a copy of it. I have had several letters 
 from them. I had a letter from the secretary of the railroad commis- 
 sion of Georgia, and in one or two instances he simply sent me the let- 
 ter which he had received in reply from those railroads that had ex- 
 clusive contracts. 
 
 Mr. Adamson. If you have a copy of that, I would like to have that 
 filed here. 
 
 Mr. Mead. I will have to send that to you. 
 
 Mr. LovERiNG. Are these contracts for private cars entirely for re- 
 frigerating cars — these exclusive contracts ? 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 59 
 
 Mr. Mead. Practically so. Armour & Co. some years ago saw the 
 possibilities of getting practically an absolute control of the refrig- 
 erator-car service of the country, and Armour to-day practically con- 
 trols it. He can give us cars or not, as he sees fit. He has it in his 
 power to ruin the shippers of Georgia, so far as their peach business 
 is concerned. He can refuse to-day, under one pretext or another, to 
 put his cars into Georgia. 
 
 Mr. LovERiNG. And ruin the railroads too? 
 
 Mr. Mead. Yes; and the railroads would have no way to transport 
 that freight to-day from Georgia — that is, in a safe way. They could 
 go back to their box cars, or whatever equipment they might have, 
 and get ready for the service ; but there were this last year in Georgia 
 thousands of baskets of peaches which lay on the ground and rotted 
 because the Armour equipment was not there to take care of them. 
 That is, according to their statements. Armour, if he wanted to do 
 so, could go into the market next year and buy up their peaches and 
 shut out those producers. He did that in Michigan. He bought up 
 all the potatoes there. He had the shippers at his mercy, and he could 
 buy the potatoes at his own price simply because they could not get 
 the cars to ship them out except from him. 
 
 Mr. TowNSEND. Are you talking about the testimony given at the 
 hearing up there ? 
 
 Mr. Mead. That particular part of it was given there. 
 
 Mr. TowNSEND. Where do you get that particular information ? 
 
 Mr. Mead. From potato shippers and from men in the potato busi- 
 ness who are unable to get cars. That has all been published in our 
 trade papers, columns and columns of it. 
 
 Mr. Richardson. Do you know what would be the freight from 
 Georgia if Armour did not have these contracts? What is the differ- 
 ence between those charges that Armour makes on those refrigerator 
 cars and what w6uld exist if he did not have the contracts ? Do the 
 producers suffer ? 
 
 Mr. Mead. Of course. The refrigerator car gives them the facil- 
 ity for getting their freight to distant markets, and to get that facil- 
 ity we are willing to pay a fair price. I myself paid $100 for icing 
 a car from Michigan to Boston. In addition to what Armour got on 
 that he received a mileage of $25, so that for that one car he received 
 $125. We claim that that is an exorbitant charge. 
 
 Here is another instance. The railroad companies of the country 
 have put all icing facilities into the charge of Armour & Co. Up to 
 within two months Armour & Co. had absolute charge of all icmg, by 
 reason of the cars, at Jersey City. It was in the power of Armour to 
 ice a car for me there or not, as he saw fit. He charged me, an out- 
 sider, $5 a ton for icing a car, and he charged the Pennsylvania Rail- 
 road $2 50 a ton. After this hearing this last year the Pennsylvania 
 Railroad saw the injustice of that. There the icmg of the produce 
 in every car at Jersey City was in the hands of Armour, and it was a 
 very easy matter for him to forget to ice my car, if he chose to do so, 
 and to send it through in bad condition. tt j ^i, . * 
 
 Mr Mann Let us do justice even to Armour. Under the contract 
 with the railroad company was he not required to ice that car? You 
 say that he could ice it or not, as he chose. . tt r. a 
 
 Mr. Mead. You can call it a requirement or a privilege.. He had 
 
60 PROPOSED AMENDMENT OP INTERSTATE-COMMERCE LAW. 
 
 the privilege of charging every other man a dollar and a half a ton 
 on his ice. 
 
 Mr. Manst. Was it not in the contract with the railroad company, 
 was there not a requirement that he should ice those cars when they 
 needed to be iced ? 
 
 Mr. Mead. I have no doubt of that. 
 
 Mr. Mann. He could not do as he pleased about it ? 
 
 Mr. Mead. Absolutely as he pleased. 
 
 Mr. Mann. By breaking his contract? 
 
 Mr. Mead. He would not have to break the contract. It is very 
 easy for him to forget and let a car go through without being iced. 
 It has been done by competitors, and the car would go to its destina- 
 tion in a worthless condition. 
 
 Mr. RiOHAEDSON. From your statement about the matter is it not 
 manifest that Armour & Co. were carrying that freight from Georgia 
 cheaper than other railroad freights were carried ? If not, why did 
 they not go and seek the other railroads which were- not under con- 
 tract with Armour ? 
 
 Mr. Mead. There are no other railroads going out of there. 
 
 Mr. Richardson. He has got them all ? 
 
 Mr. Mead. Yes, sir; Armour & Co. have exclusive contracts with 
 every railroad bringing peaches out of Georgia. 
 
 Mr. Richardson. You mean that the railroads go and agree upon a 
 price, and then they bring those peaches out all for the same charge? 
 
 Mr. Mead. The railroads have nothing to do with Armour's charge. 
 
 Mr. Richardson. He has got all the railroads? 
 
 Mr. Mead. All of the railroads bringing the peaches out of 
 Georgia; but they have nothing to do with the Armour charge 
 whatever. 
 
 Mr. Richardson. He pays the railroads whatever he pleases and 
 fixes the charge? 
 
 Mr. Mead. I do not think you understand the working of it. 
 
 Mr. Richardson. I think I do. 
 
 Mr. Mead. Possibly you do. 
 
 Mr. Richardson. Yes. 
 
 Mr. Mead. MHiien we receive a carload of peaches, coming from 
 Georgia, our freight bill is rendered to us, $90, $80, $50, $60, $70, 
 making in all an aggregate of $350. When I send my check to the 
 Boston and Albany Railroad they take out their part and pass over 
 to Armour the balance. I have no means of knowing what Armour's 
 charge was. As a matter of fact, on this carload that I spoke of, 
 there -was an overcharge of $3.50 on that car. They rendered me an 
 extra bill afterwards of $5. They said : " Mr. Mead, this extra $5 is 
 because the car was diverted." Finally Armour admitted that that 
 was wrong, and they remitted $5 to me. 
 
 What we complain of is that we have no way of knowing the 
 charge. Armour files no price list and no tariff with the Interstate 
 Commerce Commission, and I do not believe that since the Elkins 
 bill was passed these charges have been legally collected. I do not 
 believe that they can charge any more than the tariff filed with the 
 Interstate Commerce Commission. I believe that we can collect 
 those charges. 
 
 But the freight charge from Georgia is one question and the 
 Armour bill is another thing entirelv. We do not know how much 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 61 
 
 the charge will be on an Armour, car. The rate to Boston is $60, and 
 that is added to the freight charge, and they could overcharge me 
 $25 if they saw fit. When my check goes to the railroad company 
 that is taken out and passed over to Armour. 
 
 Mr. EicHAEDSON. Do you mean to say that you can not protest 
 against that bill ? 
 
 Mr. Mead. No, sir. Armour says, " You pav that bill as it is ; " and 
 they order the railroad to collect it for them ; and this case in Chicago 
 shows this, that an Armour charge was put on a car of $25 for icing 
 a car, and the freight was $35, and Armour went to the party and 
 said, " Unless you pay that freight charge you will not be allowed to 
 have credit with the Illinois Central Railroad any longer." The man 
 had paid all that he owed to the Illinois Central. He had paid that 
 bill. He said to him, " I will have you taken off the list of snippers." 
 
 Mr. TowNSEND. Unless he paid the ice bill? 
 
 Mr. Mead. Yes, sir. 
 
 Mr. Mann. And did they do it? 
 
 Mr. Mead. Yes, sir; the Illinois Central sent them a letter telling 
 them that they would be taken off of the credit list if they did not, 
 but when they found that Cohen would make a fight they changed 
 that and allowed them to pay the freight bill separately. 
 
 The Chairman. You have spoken of $100 for icing. What would 
 have been a legitimate charge for that service? 
 
 Mr. Mead. Of course that would require a knowledge of the 
 number of time the car was reiced en route from IMissouri to Boston. 
 If you mean the actual charge, that is one thing, and if you mean 
 the charge made by Armour of $4 a ton or $2.50 a ton, it would of 
 course make a difference. I should say that $35 or $40— $30 or $35 
 ought to cover the cost of icing that car. 
 
 The Chairman. And the rest was extortion? 
 
 Mr. Mead. Yes, sir. 
 
 Mr. Adamson. I want to understand your statement. As I under- 
 stand it, you said in effect that you had a statement from the railroad 
 commission of Georgia ? 
 
 Mr. Mead. Yes, sir. 
 
 Mr. Adasison. Stating that every railroad in and out of Geor- 
 
 gia 
 
 Mr. Mead. Not every railroad. 
 
 Mr. Adamson. All those that handle peaches? 
 
 Mr. Mead. Yes, sir; four railroads handle the peaches from 
 
 Georgia. . , . « <-■ 
 
 Mr. Adamson. Stating that they had contracts with Armour & Co. 
 guaranteeing the exclusive privilege to use their cars furnished by 
 tiiem for hauling peaches out of Georgia? 
 
 Mr. Mead. Yes; and another reads this way: No other cars will 
 be allowed upon our line." Those railroads are the Southern Eail- 
 road, the Central Eailroad of Georgia, the Seaboard Air Line, and 
 the C)oast Line. Those are the four lines. -, ,, -r, 
 
 Mr. Adamson. In your associations, such as you and Mr. Bacon 
 represent, do you have any lawyers among them? 
 
 Mr. M^ad. Do we have lawyers ? 
 
 Mr. Adamson. Yes, sir. 
 
 Mr. Mead. Not among our men of business. 
 
62 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 Mr. Adamson. Do your associations employ lawyers ? 
 Mr. Mead. Yes, sir; the National League of Commission Mer- 
 chants had one employed in Chicago. We nad one employed on the 
 June case, and also for the October case. 
 
 Mr. Adamson. Do you not think that if you would employ as good 
 lawyers as the railroads do to look after your interests you would 
 make better progress in forcing existing interests to do what is right 
 than you do ? 
 
 Mr. Mead. We find it pretty hard to make headway. Of course 
 the railroads have legal talent employed by the year, and they have 
 the best lawyers that they can get. 
 
 Mr. Adamson. They employ lawyers and ^6 to the courts, and you 
 demand of the Government to do your litigation? 
 
 Mr. Mead. Not that. But if we have an Interstate Commerce 
 /Commission, supposed to represent the shippers and the public, we 
 want that Commission to represent them and guard our interests. 
 
 Mr. Mann. You think that the Interstate Commerce Commission 
 ought to be a very active prosecuting body, and also should be the 
 judges of what should be done at the end or their prosecution? 
 
 Mr. Mead. I do not kno^ that the Cooper-Quarles bill embodies 
 that, because the right is given the circuit court to revise. They can 
 simply say, " Pending the situation as it is to-day " 
 
 Mr. Mann. What right is given the circuit court under the 
 Cooper-Quarles bill? 
 
 Mr. Mead. The right to pass on the fairness of a rate. I do not 
 understand that that gives, any right to the railroads, under that. 
 
 Mr. Mann. The rate goes into effect before the circuit court has 
 a chance to pass upon it? 
 
 Mr. Mead. Yes, sir ; they can upset that rate if there is any in- 
 justice being done a railroad. They can change it. 
 
 Mr. Mann. After a hearing? 
 
 Mr. Mead. Yes, sir. 
 
 Mr. Mann. But the rate is in effect already. 
 
 Mr. Mead. Yes, sir. Why should we suffer for four or five years 
 the way we have been doing 
 
 Mr. Bacon. The rate is not in effect, as you will recall. 
 
 Mr. Mann. I mean that the rate is in effect at least sixty days 
 after the order is promulgated. 
 
 Mr. Bacon. Thirty days is allowed for review. If no applica- 
 tion is made for review, the order is in effect. If application is 
 made for review, then sixty days are allowed. If in the meantime 
 the circuit court reverses the order, that ends it. 
 
 Mr. Mann. Of course we all understand very well that the cir- 
 cuit courts of the United States, or any other courts, do not pass 
 upon these great questions which may involve the fixing of rates 
 over a whole territory, in sixty days' time. You say that it takes 
 four years' time to settle one of these cases. Meanwhile a rate 
 would be in effect. So that practically there is no appeal 
 
 Mr. Mead. I say that the average case, after it has been passed 
 upon favorably by the Commission and taken to the courts for the 
 finding to be enforced— the average time to get a case through the 
 courts is four years. 
 
 Mr. EicHAEDsoN. Eight there; is it not a fact that the object 
 that you have in view, and which these associations which you 
 
PROPOSED AMENDMENT OP INTERSTATE-COMMERCE LAW. 63 
 
 •represent have in view, is to give effectiveness , to legislation now 
 existing ? 
 
 Mr. Mead. Sure. That is the main object. 
 
 Mr. RiGHAEDSON. That is your object? 
 
 Mr. Mead. Yes. We are not trying to upset any 
 
 Mr. Mann. Just one question. The rate on first-class freight 
 from Chicago to New York or from Chicago to Boston is the same, 
 or what is the difference? 
 
 Mr. Mead. I can not tell you. 
 
 Mr. Mann. It is the same. It is a little less to Philadelphia and 
 a little less to Baltimore and a little less to Newport News, which 
 are the great seaboard shipping points. Now, do you think that 
 when a man brings a complaint in respect to the rate from New 
 York to Chicago or from Chicago to New York that the Interstate 
 Commerce Commission on that complaint not only ought to have the 
 power to fix the rate from Chicago to New York, but at the same 
 time to fix an increased rate from Chicago to Boston and a decreased 
 rate from Chicago to Philadelphia and from Chicago to Balitmore 
 and from Chicago to Newport News on all classes of freight? 
 
 Mr. Mead. I do not know that the passage of this bill would 
 change things in that regard. That is a question of differentials 
 between those cities. I do not know that this affects their powers in 
 that regard. That is an indirect matter and a matter upon which I 
 am not very well posted. 
 
 Mr. Mann. Do you believe that the Interstate Commerce Com- 
 mission, on a complaint in reference to rates from Chicago to New 
 York, ought to have the power to increase the railroad rate from 
 Chicago to Boston and make the railroads charge a higher rate 
 from Chicago to Boston than they do from Chicago to New York? 
 
 Mr. Mead. I think if they did, if that bill was passed, they would 
 soon find a complaint made to reduce it. 
 
 Mr. Mann. I asked a very simple question and I would like you 
 to answer it. I think it is very important. 
 
 Mr. Mead. It is an easy matter, of course, for the lawyers of this 
 committee to frame these hypothetical questions and put them to us 
 business men, and upon the" spur of the moment we can not consider 
 them in all their bearings. 
 
 Mr. Mann. I do not wish to embarrass you. 
 
 Mr. Mead. I am not a railroad man or a railroad attorney, of 
 course, and I am very careful about answering those hypothetical 
 questions. They may be designed to draw a special line of an- 
 swers 
 
 Mr. Mann. That is designed for getting information from a man 
 who has studied the subject. I would like to have your opinion. If 
 you have not an opinion, I do not wish to press you. I would like 
 to have your opinion as to whether the Interstate Commerce Commis- 
 sion, on a complaint concerning rates from Chicago to New York, 
 should have the right on that complaint to say that the rate from 
 Chicago to Boston is too low and to increase the rate from Chicago 
 
 to Boston? , , , ., .,. 
 
 Mr. Mead. I do not see how they would have the power, on a specific 
 complaint regarding rates from Chicago to New York, to do that. 
 
 Mr. Mann. There is no doubt whatever that they would have the 
 
64 PROPOSED AMENDMENT OF INTERSTATE-COMMEKCE LAW. 
 
 power under the Cooper-Quarles bill. The question is whether they 
 ought to have the power. • 
 
 Mr. Mead. It seems to me that would be a specihc complaint as 
 to the rate between Chicago and New York, and not as between 
 Chicago and Boston. 
 
 Mr. Bacox. The Commission certainly could not go outside of the 
 complaint under the Cooper-Quarles bill. 
 
 Mr. Mead. I do not see how they could. 
 
 Mr. Mann. I have studied the Cooper-Quarles bill until I think I 
 know as much about it as anybody else 
 
 Mr. Bacon. Could they go outside of the complaint? 
 
 Mr. Mann. It would permit anybody to intervene. 
 
 Mr. TowNSEND. Would they not haA^e to make a complaint and have 
 hearings on that particular point you speak of? 
 
 Mr. Mead. Yes, sir. 
 
 The Chairman. It is 12 o'clock. Mr. Dunnigan is here represent- 
 ing Mr. Hearst, and he has a request to make on his behalf. 
 
 Mr. Dunnigan. Mr. Hearst has a bill pending before the com- 
 mittee and' wishes to appear before .the committee and briefly present 
 some original information on this, and also to have called some few 
 people who wish to be heard on that bill and on the subject generally. 
 He asks the committee if they will fix a time for that hearing. 
 
 Mr. Richardson. We are looking into the whole subject, are we not? 
 
 The Chairman. Yes, sir ; certainly. 
 
 Mr. Dunnigan. Then can you intimate when Mr. Hearst can 
 appear and have his witnesses appear ? ^ 
 
 The Chairman. I have just learned that Mr. Spencer, who was to 
 be here to-morrow, can not be here. Mr. Hearst would like to be 
 heard before next week, if possible, when he has something else on 
 his hands ; and if the time is not limited he would like to begin next 
 week. 
 
 Mr. Faulkner. Mr. Spencer asked me to come down and state to 
 the committee, Mr. Chairman, that -he has been sick in bed for several 
 days, and he said that he would report here this morning. He said 
 that he would come, if it was the wish of the committee, to-morrow, 
 and if it suited their convenience better ; but he said that he was very 
 weak and felt that he would hardly do himself justice, having just 
 gotten out of bed, and if the time could be fixed on Thursday or 
 Friday or any day thereafter, so that it would suit the convenience of 
 the committee, he would prefer to appear then. 
 
 Mr. Mann. I do not laiow how far the committee will indulge me, 
 
 but with the committee's consent I have quite a number of inquiries 
 
 concerning the terms of this bill which I would like to have elucidated 
 
 ■ bv Mr. Bacon, who I think is the best-posted man in this country on 
 
 the bill. 
 
 The Chairman. We will go on, then, with this to-morrow, and if 
 there is no objection the Chair would say in response to Mr. Hearst's 
 suggestion that a week from to-day — Monday — ^we would be glad to 
 hear him. And I would suggest that we hear Mr. Spencer on 
 Wednesday. 
 
 Mr. Lamah. The chairman of the State railroad commission of 
 Georgia has written me a letter, which I received a short time ago, 
 saying that a committee appointed by a commission that met at 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 65 
 
 Birmingham some months ago desires to appear before this committee 
 in reference to legislation pending to increase the po\Yer of the Inter- 
 state Commerce Commission. 
 
 The Chairman. Then I would say that on the Tuesday of next 
 week we would hear them. 
 
 Mr. DxjNNiGAN. I would like to ask if Mr. Hearst can present the 
 subject-matter that he has, and the arguments of attorneys to follow 
 right after? 
 
 The Chairman. The committee will give a week from to-day to 
 Mr. Hearst — give the day's session of the committee to him. 
 
 Mr. Richardson. It has been suggested that Mr. Spencer shall be 
 heard on Thursday instead of Wednesday. 
 
 Thereupon the connnittee adjourned until to-morrow, Tuesday, 
 January 10, 1905, at 10.30 o'clock a. m. 
 
 Original. 
 
 Committee on Interstate and Foreign Commerce, 
 
 House of Representatives, 
 
 Tuesday, January 10, 1906. 
 The committee met at 10.30 o'clock a. m., Hon. William P. Hepburn 
 in the chair. 
 
 STATEMENT OF MR. E. P. BACON— Resumed. 
 
 Mr. Mann. Before I proceed to ask you about the merits of the bill 
 I wish to confirm the st2.tement I made the other day as to there being 
 a report that Mr. Barry was elected manager of the organization. Or 
 course I have no means of knowing about that, and you have, but the 
 November copy of Freight, which purports to contain a very full ac- 
 count of the proceedings, ^akes that statement. I do not know 
 whether that has been called to your attention or not. 
 
 Mr. Bacon. As I stated the other day, Mr. Barr}"^ was elected by the 
 executive committee after the adjournment of the convention, and 
 there was no reporter present. Mr. Barry was elected secretary. 
 
 Mr. Mann. And the report in Freight says, after stating that Mr. 
 Barry was elected secretary : 
 
 Mr. Barry was also elected manager of the organization at Washington. 
 
 Mr. Bacon. There was no election that termed him manager. 
 There was no other election than that which I mentioned. 
 
 Mr. Mann. That is an erroneous statement by the reporter in 
 Freight? 
 
 Mr. Bacon. Yes. It was expected, as I said before, that he would 
 be present at Washington and look after legislation in behalf of the 
 executive committee. 
 
 Mr. Mann. In order that you may set yourself right before the 
 committee in reference to the other statement in Freight, I read to 
 you from the same report in Freight — referring to the statement thai 
 you were credited with saying that three-fourths of the Representa- 
 tives in Congress owed their presence there to the influence of thi 
 
 I c L— 05 5 
 
66 ■ PROPOSED AMENDMENT OF INTEE8TATE-C0MMERCE LAW. 
 
 railroads — what purports to be a direct quotation of your words on 
 
 this subject: 
 
 These Representatives are there to represent the raUrbads, and that is what 
 we have to contend with in advocating reform legislation. 
 
 They put that in your mouth, using quotation marks, in this same 
 report. If you care to say anything on that subject, I would be glad 
 to hear it. 
 
 Mr. Bacon. Those remarks having been AvhoUy extemporaneous, 
 I have no means of confirming or denying that statement. 
 
 Mr. Mann. You may have made that statement? 
 
 Mr. Bacon. My recollection is not distinct in reference to it. 
 
 Mr. Mann. You do not wish to deny that you made the statement? 
 
 Mr. Bacon. I have stated exactly the position in which it lies in 
 my mind. If I had a distinct recollection in regard to it I would be 
 very glad to give it to you in full. Anything I say I am prepared to 
 stand by, but whether I said that or not I caii not now say. 
 
 Mr. Mann. Now, do you believe that that is true — ^that that is a 
 fact, I mean ? 
 
 Mr. Bacon. I do not, to speak candidly; I do not think I made 
 such a remark. And I will say further that I have not had such an 
 idea ; I have not been possessed with such an idea. 
 
 Mr. Mann. I am frank to say to you that I was very much sur- 
 prised that such a remark shduld be credited to you, because I have 
 never found that you were in the habit of making statements of that 
 sort. 
 
 Mr. Bacon. You know how fond reporters are of changing what is 
 said into something sensational, giving it a sensational effect, and I 
 attribute this to that tendency. 
 
 Mr. Mann. Of course we all know tha,t a reporter never misses an 
 opportunity of changing language if the change will make a sen- 
 sation. 
 
 Mr. Bacon. That is what I refer to. 
 
 Mr. Mann. That is a part of their business. 
 
 Mr. Bacon. I hope the reporters will pardon the allusion. They 
 doubtless recognize the fact of it. 
 
 Mr. Mann. In the testimony which Mr. Kernan gave to this com- 
 mittee two years ago he made a statement like this : That there was 
 no intention to ask that the Interstate Commerce Commission should 
 have any authority over rates " except when its intervention is sought 
 to pass upon a rate. already made by the carrier and challenged by ; 
 formal complaint." That, I understand, is still your position in a 
 way? 
 
 Mr. Bacon. That expression is used often in referring to this le^e- 
 lation and the word is used in its generic sense. I have often used it 
 myself. The President used it in his message — a rate, " a rate that 
 is challenged." But we all understand that when any rate is chal- 
 lenged there are liable to be rates so related to it that they must be 
 combined with it. 
 
 Mr. Mann. The New York Board of Trade and Transportation, if 
 I remember rightly, originally passed a resolution in favor of the 
 Cooper-Quarles bill, or something of that sort. 
 
 Mr. Bacon. No, sir ; they never have. 
 
 Mr. Mann. At any rate, they adopted a report adverse to it and 1 
 thought that they had reversed their opinion. 
 
PROPOSED AMENDMENT OP INTERSTATE-COMMBECE LAW. 67 
 
 Mr. Bacon. They adopted a report at a meeting about ten days ago, 
 lit which I had the honor of being present, criticising the Cooper- 
 Quarles bill on account of certain language used in it which was not 
 satisfactory to them. If you wish me to go into the details of that I 
 will do. so ; but it seems to me to be a waste of time. But they did not 
 declare against the bill as a whole. 
 
 Mr. Mann. "What I wish to get at is this — and I consider you the 
 ablest man upon the subject in the country 
 
 Mr. Bacon. I disclaim anything of that kind, Mr. Mann. 
 
 Mr. Mann. I want to get at the distinction between what the ship- 
 pers are asking for and the powers which would actually be conferred 
 by the language of the Cooper-Quarles bill, in the hope that with your 
 assistance and with your knowledge we may be able to work out a 
 measure in proper language which will fulfill the expressed wish of 
 the shipping public. 
 
 Mr. Bacon. I will be very glad to cooperate in that effort. 
 
 Mr. Mann. Now, the editor of Freight, I assume, speaks for the 
 shippers, or at least he admits that he does. In referring to the action 
 of the New York Board of Trade and Transportation he made this 
 remark : 
 
 The objection raised against the proposed bill to amend the interstate-com- 
 merce act, as introduced by Cooper, of Wisconsin, is frivolous, in that it recites, 
 incorrectly, that such legislation would confer the rate-making power on the 
 Commission. 
 
 Mr. Bacon. Mr. Mann, I beg to say that our committee is not in 
 any way responsible for utterances in Freight or communications 
 made to that publication. 
 
 Mr. Mann. I am not holding you responsible for anything there. 
 "What I want to find out is what the fact is. They say that the objec- 
 tion is frivolous, that it does confer the rate-making power on the 
 Interstate Commerce Commission. Now, I understand from your 
 language that you are not in favor of conferring generally upon the 
 Interstate Commerce Commission the rate-making power. 
 
 Mr. Bacon. The primary rate-making power, no. And I know 
 very few men in the country that are in favor of it. 
 
 Mr. EscH. That is, you do not want to give the Commission the 
 initiative ? 
 
 Mr. Bacon. The initiative of making rates, no. I do not think 
 there are ten men in this country, at least there are not ten men in 
 this country within my acquaintance that desire anything of that 
 kind. They simply desire that the power to correct the rate when 
 it is questioned shall be vested in some competent body, and that the 
 correction when found necessary can be immediately put into effect — 
 that is, within a reasonable time. 
 
 Mr. Mann. The chamber of commerce of the city of Milwaukee 
 has filed with this committee a copy of a resolution passed by it oa 
 this subject. One resolution reads as follows: 
 
 Resolved. That the chamber of commerce of the city of Milwaukee herwsw 
 petitions Congress to enact legislation empowering the Interstate Comment 
 Commission to determine, upon full hearing of all parties in interest, whai 
 change shall be made in a rate or practice found to be discriminative or unrea- 
 sonable. 
 
 "With the committee also is a very large number of resolutions 
 passed by various organizations throughout the country, all in identi- 
 
68 PB0P08ED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 cally the same language, asking that the power be conferred upon the 
 Commission to change, upon full hearing, a rate or practice. Now, 
 do you understand that that means the power to change rates, gener- 
 ally? 
 
 Mr. Bacon. It means the power to change a rate complained of, 
 and if more than one rate is included in the same complaint, neces- 
 sarily that it shall pass upon those. 
 
 Mr. Mann. The President in his message to Congress made this 
 statement : 
 
 I do believe that as a fair security to shippers the Commission should be 
 vested with the power where a given rate has been challenged and after a full 
 hearing found to be unreasonable, to decide, subject to judicial review, what 
 shall be a reasonable rate to take its place. 
 
 Do you understand from that language that the President means 
 that the Interstate Commerce Commission shall have the power to 
 change any number of rates upon one petition which the petition 
 chooses to allege are unreasonable? 
 
 Mr. Bacon. Mr. Mann, it necessarily follows that a number of 
 rates involved in a particular rate complained of can be embraced 
 and will be embraced in the same complaint, and if embraced in a 
 complaint that the Commission can act upon and change them all. 
 Everybody understands that. The commercial organizations have 
 a;t least that idea and that expectation — that desire. 
 
 Mr. Mann. Do you think the President understood that when he 
 said " to change a given rate and fix what shall be a reasonable rate 
 to take its place," that he meant any number of rates, from 1 to 
 10,000? 
 
 Mr. Bacon. I think the President had the same idea which I have 
 stated to be the idea of commercial organizations; and I will say 
 m that connection that I have had a number of interviews with 
 the President during the last three years, probably not less than 
 a dozen, and I think I know his mind very well. 
 
 Mr. Richardson. Do you not think a fair and reasonable construe- - 
 tion of that would be " rates related to each other? " 
 
 Mr. Bacon. I think the Interstate Commerce Commission would 
 not entertain a complaint that combined rates that had no relation 
 to each other. I think if such a complaint were made it would be 
 referred back for correction. 
 
 Mr. Mann. You sent out, I believe — you or the secretary — a 
 synopsis of the Quarles-Cooper bill to various organizations — ship- 
 ing organizations, freight organizations, mercantile organizations, 
 etc. — throughout the country. Is not that the case? 
 
 Mr. Bacon. We did ; yes, sir. 
 
 Mr. Mann. Do J'OU know whether this is a copy, an original copy, 
 or a copy they printed of your synopsis? [Handing a paper to 
 Mr. Bacon.] 
 
 Mr. Bacon (after examination of paper). I do not. 
 
 Mr. Mann. That came from the Illinois Manufacturers' Asso- 
 ciation. 
 
 Mr. Bacon. I could not say whether it corresponds with the one 
 that was issued by the committee or not. 
 
 Mr. Mann. I may say I do not know whether it does or not, but 
 the Illinqis Manufacturers' Association sent to me for the Cooper- 
 Quarles bill after they published this synopsis or sent it out, and I 
 
PBOPOSED AMENDMENT OF INTERSTATE-COMMEBCE LAW. 69 
 
 presume they must have gotten the synopsis from some other source 
 than the bill itself. 
 
 Mr. TowNSEND. Is there not a Avay to get that synopsis, a true copy 
 of it, if it is material? 
 
 Mr. MAiirN. I do not know that it is material at all. I simply 
 ^Yish to know whether this was what was sent out. 
 
 Mr. Adamson. I think we may assume it. 
 
 Mr. Ma>cn. In the Cooper bill itself it says " rate or rates " in refer- 
 ring to the power of the Commission. The synopsis which was sent 
 out gives to the Interstate Commerce Commission authority in this 
 language : 
 
 Declaring any existing rate or regulation or practice affecting such rate com- 
 plained of, and declaring what rate, regulation, or practice would be just and 
 reasonable. 
 
 Now, in sending out a synopsis of the bill of that sort, would there 
 be any special reason for cutting out the word " rates " and conveying 
 the impression to an ordinary grammarian that you only intended 
 to fix a special rate, and not confer power to fix rates generally ? 
 
 Mr. Bacon. I can not say whether this cori'esponds to the synopsis 
 prepared by the committee or not, but if it does I should say that the 
 common use of the term " correcting a rate " would be the reason for 
 using that term in a synopsis. Whether it was done or not I don't 
 knbw. If it was done it was not done, I should say,' with any inten- 
 tion to mislead or with any expectation that there would be any mis- 
 apprehension in regard to it. 
 
 Mr. Mann. You think it would not be misleading at all, as a matter 
 of fact? 
 
 Mr. Bacon. No, sir. 
 
 Mr. Mann. But still in the bill you take care to put in the word 
 " rates " for fear it would mislead the courts? 
 
 Mr. Bacon. When you prepare a bill you have to be careful to put 
 in every word to avoid any misconstruction. When you prepare a 
 synopsis you make it as short as possible. 
 
 Mr. Mann. The synopsis covers all that the bill covers in this 
 respect, except you leave out the plural. Otherwise the synopsis in 
 those provisions is as long as the bill. 
 
 Mr. Bacon. It was intended to convey an exactly correct idea of 
 every provision of the bill, and if the omission of the pluralizing of 
 the word " rate " was made it was done without any thought that by 
 any possibility anybody would have any misconception as to the 
 meaning. Shippers and. receivers everywhere use rate commonly to 
 express rates in general. 
 
 Mr. Barry suggests to me that I wrote the synopsis, which was 
 issued by the comimittee, myself. 
 
 Mr. Mann. With all due respect to you, that would not aifect the 
 question as to whether it would, in fact, convey a wrong impression, 
 leaving out the very important and vital thing in the bill as to whether 
 the power to fix rates should cover rates generally or whether ii 
 should cover the special rate complained of. Can not you see a' vast 
 difference between the authority to fix a rate and the authority to 
 fix rates generally? 
 
 Mr. Bacon. I can not see a particle of difference, because the power 
 to fix a rate invoh^es the power to fix rates brought before the Com- 
 mission for consideration, related to the rate complained of. 
 
70 PROPOSED AMENDMENT OF INTEBSTATE-OOMMEECE LAW. 
 
 Mr. Mann. In your statement two years ago before the Senate com- 
 mittee the question was raised as to the extent of the order to be made 
 by the Commission under the Nelson- Corliss bill, and this question 
 was asked you and you made this answer [reading] : 
 
 Senator Dollivbb. Does the order of the CommisisioD contemplated here apply 
 to the individual only or to the classification? 
 
 Mr. Bacon. Simply to the individual complaint. The complaint m£Ly, how- 
 ever, be in relation to an unjust and unreasonable rate or to an unjust and un- 
 reasonable classification. 
 
 The Commission talies into consideration the relation of that rate to other 
 rates and determines largely upon that relation as to the reasonableness or un- 
 reasonableness. It has no power to order a general reduction. It can only 
 order a change in a particular rate complained of in each individual case. The 
 Commission can go no further than to change the rate in the particular instance 
 where complaint has been made. 
 
 Mr. Mann. Now, did you intend to convey the impression by that 
 testimony that the Interstate Commerce Commission should have au- 
 thority to lower a whole lot of rates ? 
 
 Mr. Bacon. I had no distinction in my mind whatever between the 
 w6rds •' a rate'" and " rates." 
 
 Mr. Mann. When you say in your testimony " authority to change 
 the particular rate complamed of " you mean by that authority to 
 change all the rates which may be named in the petition ? 
 
 Mr. Bacon. In the complaint ; yes, sir. 
 
 Mr. Mann. Without regard to the number? 
 
 Mr. Bacon. Without regard to the number; yes, sir. Subject to 
 the discretion of the Commission, whether they have a definite rela- 
 tion to each other, and should be considered together. 
 
 Mr. Mann. By what authority does the Commission determine the 
 discretion ? 
 
 Mr. Bacon. The law fixes the scope of complaint. 
 
 Mr. Mann. That is not discretionary with the Commission — as to 
 what jurisdiction each shall maintain? 
 
 Mr. Bacon. It is discretionary with the Commission whether it 
 shall take up a complaint or not. 
 
 Mr. Mann. Where do you find that in the law ? 
 
 Mr. Bacon. In the original act. 
 
 Mr. Mann. In what way is it discretionary? The original act 
 gives a shipper absolute authority to file a petition. The Commission 
 has no discretion as to whether it shall maintain jurisdiction over 
 that. 
 
 Mr. Bacon. In section 13 of the act it does provide, if in the judg- 
 ment of the Commission it is thought best to investigate the matter — 
 some language to that effect. 
 
 Mr. Mann. That is an investigation on the Commission's own 
 motion. 
 
 Mr. Bacon. I think it relates to the whole thing. 
 
 Mr. Mann. I think when you read it you will change your mind, 
 because it only relates to an investigation on the Commission's own 
 motion. There is no discretion given to the Commission as to 
 whether it shall entertain a petition filed by a shipper, or an associa- 
 tion or an organization or anybody else, almost. 
 
 Mr. Bacon. I would like to have section 13 of the act read. 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 71 
 
 Mr. Mann (reading) : 
 
 That any person, firm, corporation, or association, or any mercantile, agri- 
 cultural, or manufacturing society, or any body politic or municipal organiza- 
 tion, complaining of anything done or omitted to be done by any common carrier 
 subject to the provisions of this act in contravention of the provisions thereof, 
 may apply to said Commission by petition, which shall briefly state the facts ; 
 whereupon a statement of the charges thus made shall be forwarded by the 
 Commission to such common carrier, who shall be called upon to satisfy the 
 complaint or to answer the same in writing within a reasonable time, to be 
 specified by the Commission. If such common carrier, within the time speci- 
 fied, shall malie reparation for the injury alleged to have been done, said car- 
 rier shall be relieved of liability to the complainant only for the particular 
 violation of law thus complained of. If such carrier shall not satisfy the com- 
 plaint within the time specified, or there shall appear to be any reasonable 
 ground for investigating said complaint, it shall be the duty of the Commission 
 to investigate the matters complained of in such manner and by such means as 
 it shall deem proper. 
 
 Said Commission shall in lil^e manner investigate any complaint forwarded 
 by the railroad commissioner or railroad commission of any State or Territory 
 at the request of such commissioner or commission, and may institute any 
 inquiry on its own motion in the same manner and to the same effect as 
 though complaint had been made. 
 
 Mr. Bacon. Does not that clause which says that they may conduct, 
 the investigation in such manner as they deem best give them dis- 
 cretion ? 
 
 Mr. Mann. As to whether they shall conduct an investigation 
 at all? 
 
 Mr< Bacon. Yes. 
 
 Mr. Mann. It certainly does not, Mr. Bacon. 
 
 Mr. Bacon. Is not the discretion vested in a court iri relation to a 
 complaint sufficient to warrant the Commission in doing the same 
 thing? 
 
 Mr. Mann. The court has no discretion as to whether it shall hear 
 a lawsuit or not. 
 
 Mr. Bacon. But it often requires a complaint to be amended. 
 
 Mr. Mann. It permits a complaint to be amended, but the com- 
 plaint must show upon its face, otherwise the Commission is not re- 
 quired to proceed. But when the complaint shows an evil on its face, 
 within the provisions of the law, it is made the duty of the Commis- 
 sion to investigate. 
 
 Mr. Bacon. I think that same discretion would give the Commis- 
 sion authority^ if it deemed th« complaint unduly extensive and con- 
 taining points that did not properly relate to each other, to refer it 
 back for amendment. I think the discretion vested in the Commis- 
 sion in relation to investigations is broad enough to admit of their 
 doing that. 
 
 Mp. Townsend. Mr. Mann, what does that sentence mean there — ■ 
 
 If such carrier shall not satisfy the complaint within the time specified, or 
 there shall appear to be any reasojiable ground for investigating said com- 
 plaint, etc. 
 
 Who is to judge whether there is any reasonable ground? 
 
 Mr. Mann. That is a matter to be decided on the face of the com- 
 plaint as to whether a v.iolation of the law is made out upon the face 
 of the complaint. 
 
 Mr. Adamson. Whether it states the. case ? 
 
 Mr. Mann. Yes ; or if at any time on the proof it should appear 
 that there was no case they could abandon it if they wished to. But 
 
72 PEOPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 certainly nobody iDroposes to confer on anybody the absolute authority 
 to determine for itself whether it shall favor one shipper and refuse 
 to hear the case of another shipper. 
 
 Mr. Bacon. No ; but it may enter into the details of the complaint, 
 and if it regards it as inconsistent or unreasonable it can certainly 
 refer it back and require it to be amended. 
 
 Mr. Mann. Undoubtedly there is no question about the power to 
 amend. 
 
 Mr. Bacon. The Interstate Commerce Commission is supposed to be 
 a body of discretion and judgment, and it is not likely that it would 
 entertain any such ridiculous complaint as would involve rates that 
 had no relation to each other. 
 
 Mr. Mann. That would bring up the question — which I do not 
 wish to take up just now — as to whether all rates do not have some 
 relation to each other. In your judgment the Interstate Commerce 
 Commission also uses the singular where it means the plural — because 
 in their last report they say that what they want is authority to cor- 
 rect the rate, " upon proof that a particular charge is greater than 
 should in reason be exacted." You think by that that they mean the 
 power to fix rates generally and not confine themselves to the par- 
 ticular charge? 
 
 Mr. Bacon. I think they use it in the generic sense, the same as I 
 have referred to; but the Commission can not entertain any rate not 
 included in the complaint, and it can not make a change in the rate 
 of its own volition, but simply upon the testimony that is produced, 
 which indicates the necessity of making the change. 
 
 Mr. Mann. The Interstate Commerce Commission in its last report 
 also uses this language in another place, stating what authority they 
 want: 
 
 The Commission may find after careful and. often, extended investigation that 
 a rate complained against is unreasonable and order the carrier to desist from 
 charging that rate for the future, etc. 
 
 You think that language means not a rate or the rate, but rates 
 generally? 
 
 Mr. Bacon. I think it is necessarily implied, Mr. Mann, that if a 
 rate is susceptible of correction that any rate is, or any number of 
 rates are that may be properly embraced in the case. 
 
 Mr. Mann. They also say in their last report that they ought to 
 have authority to direct a railroad company to cease and desist from 
 charging the rate complained of, and to substitute therefbr q, rate. 
 Yovi think that also refers 
 
 Mr. Bacon. Has the same meaning exactly. 
 
 Mr. Mann. It seems to be very unfortunate that these officers of the 
 Government have not studied the use of the English language. ^ 
 
 Mr. Bacon. It is the common use of the term between shippers and 
 railroad men and members of the Commission and everybody that 
 has anything to do with it. 
 
 Mr. EscH. As a mattet of practice in the decisions of the interstate 
 commerce court heretofore 
 
 Mr. Bacon. You mean the Interstate Commerce Commission? 
 
 Mr. EscH. Yes. When the rate was complained of before have 
 they gone into a decision of schedules or have they confined them- 
 selves practically to the rate complained of ? 
 
 Mr. Bacon. They have confined themselves to the complaint. 
 
PROPOSED AMENDMENT OF INTEBSTATE-COMMERCE LAW. 73 
 
 Mr. Lamar. What M'ould be the difference between filing one peti- 
 tion complaining of 50 rates and filing 50 petitions complaining of 50 
 rates ? Why not challenge them in one petition ? 
 
 Mr. Bacon. There would be no difference, but it would be a great 
 deal more sensible 
 
 Mr. Lamar. I ask this in view of the objection raised by Mr. Mann. 
 Would not the power of the Commission be as comprehensive in one 
 case as in the other ? Whsit would be the difference between filing one 
 'petition containing 50 complaints and filing 50 petitions containing 
 50 complaints? 
 
 Mr. Bacon. There Avould be no difference, but I have no idea of 
 having rates treated in that way. 
 
 Mr. Shackleford. Under the power of the Commission, would the 
 Commission have a right, if this bill became a law. to raise a given 
 rate in order to equalize the rates between cities or communities and 
 railroads ? 
 
 Mr. Bacon. I could not pass upon that guestion, but I doubt very 
 much whether they would ever feel justified 
 
 Mr. SHACKLEroRD. Not would they feel justified in doing it, but 
 would they have authority to do it ? Under the authority proposed, 
 would the Commission have the right to raise rates on one line in 
 order to equalize it with other lines? 
 
 Mr. Bacon. I can only say in relation to that that the practice 
 
 Mr. Shackleford. I don't care for the practice; I only want to 
 loaow what power they would have under this law. Would the power 
 be there to do that ? 
 
 Mr. Bacon. It might be inferred. "When two rates have been com- 
 plained of as unjust^- — 
 
 Mr. Shackleford. We are trying to get some light on this in order 
 to know how to vote on the bill. I would like to know whether this 
 power conferred on the Commission that is sought here would give 
 the Commission a right under certain circumstances to raise rates. 
 
 Mr. Bacon. I would say in reply to that that the only parties au- 
 thorized to bring complaints 
 
 Mr. Shackleford. I am not talking about who are authorized to 
 bring complaints, but what authority 
 
 Mr. Bacon. Please hear me through. 
 
 Mr. Shackleford. What power the Commission would have. 
 
 Mr. Bacon. The only parties authorized to bring complaints are 
 individuals, corporations and associations, and other organizations 
 of that kind, and those complaints will always be for the reduction 
 of rates. There is no authority given in the act for the railway com- 
 pany to come in and complain that a rate is not high enough and ask 
 the Commission to raise it. 
 
 Mr. Shackleford. Suppose it should be complained that the rate 
 on lumber from Eau Claire to some given point was too low as com- 
 pared with the rate from La Crosse. Under that woiild the Commis- 
 sion have the right, under the power sought to be given it, to raise 
 the rate from one point to equalize it with the other? 
 
 Mr. Bacon. I would say tha;t in the Eau Claire case the Commis- 
 sion ordered the adjustment of those rates by the lowering of the 
 higher rate. 
 
 Mr. Shackleford. In that case the higher rate w as lowered ? 
 
74 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 Mr. Bacon. Yes, sir. 
 
 Mr. Shacklefoed. But in the case that one rate was complained of 
 as being too low, how would the Commission remedy a condition of 
 that sort ? 
 
 Mr. Bacon. That is provided under this bill that is proposed. 
 They can not under the present law. 
 
 Mr. Shacbxefoed. How would they do it ? 
 
 Mr. Bacon. We can only judge how they would do it by what they_ 
 have done. They have always done it by reducing the higher rate. ' 
 This bill provides that the Commission shall declare what the rates 
 shall be from each point in question, not declaring the difference — or, 
 rather, it does provide that after it declares the difference if it be- 
 comes necessary to fix it absolutely from each of the points in ques- 
 tion it is authorized to do that. 
 
 Mr. Shacklefoed. Then would a railroad that lowered that rate 
 infract the law ? 
 
 Mr. Bacon. It certainly ,would. 
 
 Mr. Shacklefoed. It confers power, then, on the Commission to 
 raise rates above what the railroads put them at? 
 
 Mr. Bacon. Not by any means. I would like you to repeat that 
 last remark. 
 
 Mr. Shacklefoed. The question I asked was whether this power 
 conferred upon the Interstate Commerce Commission would give it 
 the right to raise rates in a case, or to forbid the railroads from lower- 
 ing its rates — -in the Eau Claire and La Crosse case, for instance. 
 
 Mr. Bacon. After it has fixed the proper relation of rates from two 
 points — — 
 
 Mr. Shacklefoed. I mean in order to preserve what they determine 
 to be a fair adjustment, Avould they say to one railroad, " You bring 
 your rate down to this point," and to the other railroad, " You bring 
 your rate up to this point " — would they have authority to do that 
 under this bill ? 
 
 Mr. Bacon. They would have authority under this bill to fix the 
 two rates and to require those two rates to be observed. And if after 
 fixing those rates one of the railroads should go below it it Would 
 have to come before the Commission again. 
 
 Mr. Shacklefoed. Then if the Eau Claire rate was as low as it 
 ought to be and the La Crosse rate was still lower, what would the 
 Commission do to adjust that? 
 
 Mr. Bacon. It would require the observance of the rate it had 
 previously fixed. 
 
 Mr. Shacklefoed. If the rate was lower than that rate they would 
 compel it to come Up to it then ? 
 
 Mr. Bacon. I don't think so. They never have done that. 
 
 Mr. Shackleford. How would they get out of that situation, then? 
 
 Mr. Bacon. I have reference to that. Eau Claire case; I have 
 studied that. 
 
 Mr. Shacklefoed. I would like to get at that— where a rate is 
 fixed and the railroad fixes a still lower rate, how would' you preserve 
 that ad'justment ? 
 
 Mr. Bacon. By observing the rate the Commission has fixed. 
 
 Mr. Shacklefoed. Supposing the rate is below that, how would 
 you adjust it ? 
 
PROPOSED AMENDMENT OF INTEKSTATE-COMMEKCE LAW. 75 
 
 Mr. Bacon. If they are required to observe the rate which the Com- 
 mission fixes it can not be made lower. 
 
 Mr. ShackI/Efoed. Suppose they do make it lower ? 
 
 Mr. Bacon. Then they would be disobeying the law. 
 
 Mr. Richardson. You are talking about the difference in " rate " 
 and " rates." Is it not a fact that you have some precedent estab- 
 lished by the Interstate Commerce Commission prior to the maximum- 
 rate decision in 1897 that throws some light on this ? 
 
 Mr. Bacon. Yas, sir. 
 
 Mr. KicHAEDSON. Did not Judge Cooley and other members of the 
 Interstate Commerce Commission, before that maximum-rate case 
 was decided, hold or give orders directing what rates should be main- 
 tained ? 
 
 Mr. Bacon. There were some cases in which they did that ; yes, sir. 
 
 Mr. Richardson. And did they have any regard to what the tech- 
 nical difference is between " rate " and " rates?" 
 
 Mr. Bacon. I never heard the question raised in any discussion on 
 the subject. 
 
 Mr. Richardson. By Mr. Cooley or Mr. Schoonmaker or any of 
 those men? 
 . Mr. Bacon. Never. 
 
 Mr. Richardson. Where a rate had been inquired into and they 
 had held it to be unreasonable and unjust and unfair, they directed 
 what the rate should be, and no question was ever raised as to the 
 technical difference between " rate " and " rates?" 
 
 Mr. Bacon. I never heard it raised before anywhere. 
 
 Mr. Richardson. And those directions made by Cooley and Schoon- 
 maker and others had reference to the relation or dependence of rates 
 upon each other ? 
 
 Mr. Bacon. Yes, sir. 
 
 Mr. Richardson. It was not as to a single rate, but as to whether it 
 related to all the rates that involved that particular one on that 
 railroad ? 
 
 Mr. Bacon. In one of the other cases when Judge Cooley was 
 Commissioner, relating to rates from points in Minnesota, variously 
 30, 40, or 50 miles from the Mississippi River, the Commission made 
 an order that the rates on that whole line of road to Milwaukee and 
 Chicago should not be more than 2^ cents higher than rates from 
 points on the river which it paralleled, and it involved a reduction 
 of 5 or 6 cents a hundred in some cases, and it included 50 or more 
 rates. 
 
 Mr. Richardson. And the opinion that you have given in answer 
 to Mr. Mann's technical questions as to the difference between 
 " rate " and " rates " is based upon the knowledge that you acquired 
 from those orders made at that time ? 
 
 Mr. Bacon. Those are included in my mind ; yes, sir. 
 
 Mr. Stevens. I would like to return to the question brought up by 
 Mr. Shackleford for a moment. You recall the statement made by 
 Judge Prouty, as I remember it, that there existed a certain condi- 
 tion in the oil traffic between Cleveland, Ohio, and New Orleans and 
 Chicago, IlL, amd New Orleans. In Cleveland there are quite a num- 
 ber of independent refiners. In Chicago the refinery is owned by the 
 Standard Oil Company. The rate from Cleveland to New Orleans, 
 as I recall it, was, say, 26 cents a hundred, which was a fair and rea- 
 
76 PROPOSED AMENDMENT OE INTERSTATE-COMMERCE LAW. 
 
 sonable rate. The rate from Chicago to New Orleans was 24 cents, 
 which was an unduly low rate. The freight on other articles of 
 about the same class was at the same rate between Chicago and New 
 Orleans and Cleveland and New Orleans. As I recall what Mr. 
 Prouty said, he instanced that as one of the cases where the schedule 
 discriminated in favor of the location of the Standard Oil Company 
 and against the location of the independent oil refiners. He stated, as 
 I remember, that that rate of the independents between Cleveland and 
 New Orleans was a fair, reasonable, and just rate, and that the other 
 was too low a rate. What would you think ought to be done or could 
 be done under this bill in. that sort of a case ? 
 Mr. Bacon. That is a pretty difficult question to decide. 
 Mr. Stevens. I am giving you the statement that Judge Prouty 
 makes. Now, I would like to have your opinion of what could be 
 done in that hard case under this bill. 
 
 '^Ix. Bacon. I think what would be done would be the reduction of 
 the higher rate. 
 
 Mr. Stevens. But he stated that that rate of 2G cents between Cleve- 
 land and New Orleans was a just, fair, and reasonable rate. Now, is 
 there any authority under this bill to reduce a fair, just, and reason- 
 able rate ? 
 
 Mr. Bacon. There is authority to adjust relative rates, making 
 them relatively just. 
 
 Mr. Stevens. I am asking you how it could be done. Here is a rate 
 that is a fair, just, reasonable rate, a rate of 26 cents. Now, that rate 
 is guaranteed to that carrier under the Constitution, is it not ? He is 
 entitled to a just, fair, and reasonable rate under this bill or any other, 
 is he not ? 
 
 Mr. Bacon. The Commission is absolutely clear about that point. 
 Mr. Stevens. I am stating what Judge Prouty said — ^that that was 
 a fair, just, and reasonable rate. Assuming that, the carrier is enti- 
 tled to it, is he not ? 
 
 Mr. Bacon. Unless injustice is done by it to some other locality. 
 Mr. Stevens. Is not the carrier entitled to a just, fair, and reason- 
 able rate as a fair compensation for the work that it does '? 
 
 Mr. Bacon. It is as a whole; but one rate taken out of a dozen 
 rates, the change of one rate by 1 cent or 2 cents per hundred pounds 
 would be likely to divest the carrier of a reasonable profit. 
 
 Mr. Stevens. Now I am asking you here about two rates. One is 
 stated by the Commission to be, in its opinion, just, fair, and reason- 
 able, ancl the carrier is entitled to it. The other is unduly low and 
 unreasonable, whereby the preference is given to a particular com- 
 munity and a particular part of the country. Now, how would that 
 be decided under the bill under consideration ? 
 
 Mr. Bacon. I think that it would' be, unquestionably, decided by the 
 reduction of the higher rate. 
 
 Mr. Stevens. Even though the higher rate was fair, just, and rea- 
 sonable, and such action would take away the compensation of the 
 carrier without just compensation? 
 
 Mr. Bacon. No. It is not supposable that the change of one rate 
 out of a dozen will divest the carrier of its proper return on its invest- 
 ment; and if injustice is effected by the continuance of that rate, it is 
 certainly within the power of the Commission to reduce that rate. 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 77 
 
 Mr. Stevens. The tariff on oil was 26 cents, which was just, fair, 
 and reasonable, in the opinion of the Commission. You would ad- 
 just that, and take off 2 cents, for instance, and put that on other 
 commodities which are also paying a fair, just, and reasonable rate? 
 
 Mr. Bacon. I can hardly conceive of a case where it would be nec- 
 essary to do that. 
 
 Mr. Stevens. If a carrier is receiving fair, just, and reasonable 
 rates, and you reduce one rate,- that reduction has got to be made up 
 by an addition being made to some other rate, has it not, in order to 
 insure to the carrier a just, fair, and reasonable compensation? 
 
 Mr. Bacon. Unless there is suiScient margin in its profits to admit 
 of that reduction. 
 
 Mr. Stevens. But suppose that a rate is fair, just, and reasonable, 
 and you should reduce it, you would place the amount of the reduction 
 somewhere else, would you not, in order to insure that carrier just, 
 fair, and reasonable rates ? 
 
 Mr. Bacon. I do not thinli it would be necessary. 
 
 Mr. Stevens. In other words, you are not willing to admit that 
 there is any power given under this section 1 of the Cooper bill to 
 raise rates, even though a rate is unjust, unduly low, and discrim- 
 inatory, because it is too low ? 
 
 Mr. Bacon. Whether the power exists -I can not say, but as I have 
 said before, I am not clear. But I am clear in the opinion that it 
 would never be exercised. 
 
 Mr. Stevens. Even in a case like this I have cited ? 
 
 Mr. Bacon. No, sir. 
 
 Mr. Adamson. Do you think that a rate is ever found too low ? 
 
 Mr. Bacon. It never has been ascertained yet how low freight can 
 be carried and still give a fair profit to the carrier. That is one of 
 the unknown things. 
 
 Mr. Ctjshman. Referring to the matter that Mr. Stevens has spoken 
 of, the rate of 26 cents being a just and reasonable rate, and assuming 
 the rate of 24 cents to be too low, it is your opinion, as I understand, 
 that the Commission in a case of that kind would lower the higher 
 rate of 26 cents to 24 cents. Did I correctly understand you ? 
 
 Mr. Bacon. I think that would be the probable result. 
 
 Mr. Ctjshman. If that were done, and the railroad companies 
 then lowered that 24 cent rate from Chicago to 22 cents, leaving'the 
 difference existing as it did before, what would then be done in that 
 case? 
 
 Mr. Bacon. That could not be done, because the Commission would 
 issue an order fixing the two rates, and requiring that each of the 
 parties involved should adhere to those rates under this bill. 
 
 Mr. Shackleford. In the case supposed by Mr. Stevens, the Cleve- 
 land rate being a reasonable and fair rate, and the Commission reduc- 
 ing it below what was reasonable and fair, and an appeal being taken 
 to the courts, what would the courts do with that decision of the 
 Cftnmission, it being conceded that they had reduced the rate below 
 what was reasonable and fair, what would be done in that case ? 
 
 Mr. Bacon. If the courts found that that was an unfair rate 
 
 Mr. Shacklefoed. It being conceded, you know, that the rate was 
 reasonable and fair. 
 
 Mr. Bacon. If the court should find that the result of that reduc- 
 
78 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 tion was to prevent the corporation from having a proper return 
 on its capital invested it would undoubtedly nullify it. 
 
 Mr. Stevens. Just one more question. If a corporation was mak- 
 ing a just, fair, and reasonable rate in competition with a corporation 
 that was making an undue and discriminatory rate, you would 
 punish the company that was obeying the law instead of the corpora- 
 tion that was violating the law ? 
 
 Mr. Bacon. I do not conceive "that, such a result is likely to occur. 
 I hold that railway companies, doing a public service, are in duty 
 bound to see that no injustice is done in the operation of their rates 
 with reference to any particular point or any particular commodity. 
 Now, I have argued in the matter of the flour and wheat differential 
 that even if the railroad company can not carry flour as cheaply as 
 it can wheat, if it interferes unjustly with a manufacturing industry, 
 an important manufacturing industry of this country, the company 
 should submit to the equalization of the rates on the ground of its 
 being possessed of valuable franchises which it has received from 
 the public and on the ground that it is performing a public service, 
 and that that service must be done not only without injustice be- 
 tween individuals and localities, but without injustice to commerical 
 and manufacturing interests of the country. 
 
 The Chairman. Even though it imposes an injustice on the car- 
 rier ? 
 
 Mr. Bacon. Though it imposes a hardship in a single instance. 
 You must take the average result, the average return, and action 
 should not be based on one or two exceptional cases. 
 
 Thereupon the committee adjourned until to-morrow, Wednesday, 
 January 11, 1905, at 10.30 o'clock a. m. 
 
 Wednesday, Jamiary 11, 1905. 
 The committee met at 10.30 o'clock a. m., Hon. William P. Hep- 
 burn in the chair. 
 
 STATEMENT OF MR. FRANCIS B. THURBER, PRESIDENT OF THE 
 UNITED STATES EXPORT ASSOCIATION. 
 
 Mr. Thurbeb. I would state, Mr. Chairman and gentlemen, that I 
 represent directly merchants and manufacturers who are members of 
 the United States Export Association, some 220 in number, and situ- 
 ated in 34 States, that differ with Mr. Bacon and other supporters of 
 the Cooper bill (H. R. 6273), and in order that I may not waste your 
 time 1 have boiled down on paper a statement which Iwill read to you, 
 because it may suggest some questions that members of the committee 
 would like to ask me. 
 
 I represent directly merchants and manufacturers who are members 
 of the United States Export Association, and indirectly the ^eat 
 majority of shippers in the United States, who, while opposed to unjust 
 discriminations by railroads, are not prepared to adopt the remedy 
 proposed by the advocates of this bill. 
 
 Mr. Bacon. May 1 interrupt you to ask a question — because it will, 
 perhaps, save time. 1 would like to know by what authority Mr. 
 
PROPOSED AMENDMENT OK INTERSTATE-COMMERCE LAW. 79 
 
 Thurber assumes to represent the shippers of the United States 
 generally. 
 
 Mr. Thurber. I say indirectly. 
 
 Mr. Bacon. In what manner indirectly ? 
 
 Mr. Thurber. Based upon my knowledge of the situation. 
 
 Mr. Bacon. And it is your individual assumption? 
 
 Mr. Thurber. Yes; it is an assumption on my part, so far as I say 
 that I represent the shippers. I represent them indirectly. 
 
 Mr. Mann. You do not pretend to be their authorized representative t 
 
 Mr. Thurber. No, sir. 
 
 Mr. Mann. The authorized representative of any commercial 
 agencies or bodies or anything of that sort, do j'ou ? 
 
 Mr. Thurber. Excepting 
 
 Mr. Mann. Except the, United States Export Association? 
 
 Mr. Thurber. That is all, sir; and them I represent by resolution, 
 which appears in this paper, and also I quote from the expressions of 
 other commercial bodies that sustain my view. 
 
 I doubt if 10 per cent of its friends have given any serious thought 
 as to whether there is any better way to remedy the evils which ex;ist. 
 They have simply followed the lead of Mr. Bacon, an earnest, honest 
 man, who has embarked on a "Peter, the Hermit" crusade, and they 
 have adopted his cure-all for a very complicated disease. 
 
 For thirty years I have been a student of the transportation ques- 
 tion from a shipper's point of view, and an advocate of reasonable 
 control of railways. I think I may say without egotism that I had 
 more to do with creating a railroad commission, and defining its pow- 
 ers in New York State, than any other man; and with the exception 
 of Hon. John H. Reagan, its father, I had as much to do with creating 
 and defining the powers of the Interstate Commerce Commission. 
 
 The Chairman. Let me interrupt you there a moment. Do you 
 give John H. Reagan the credit of the system that we have now? 
 
 Mr. Thurber. Mr. Reagan was the father of the interstate com- 
 merce bill. 
 
 The Chairman. This bill that is now a law ? 
 
 Mr. Thurber. Yes, sir. 
 
 The Chairman. You are entirely mistaken. He was the undevia- 
 ting opponent of this bill. He had his own bill, an entirely different 
 proposition, instituting an entirely diflferent method of control, and as 
 distinct from this as it is possible to imagine. 
 
 Mr. Thurber. Mr. Chairman, I should not expect 
 
 The Chairman. I was then a member of the House and a member 
 of this committee at the time of the passage of that bill. You will 
 remember — and, if not, let me remind you — that the House committee 
 refused to report Mr. Reagan's bill. It adopted the bill that was then 
 known as the Cullom bill. The House reversed that action and 
 attached the Reagan bill Co the Senate bill as an amendment, and in 
 the conference, after Mr. Reagan had become United States Senator, 
 the conference committee, of which he was a member, consented to the 
 report of the House, receding from its amendment, and adopted the 
 Senate bill. 
 
 Ml-. Thurber. I know that there were several bills pending and that 
 Mr. Reagan was, you might say, the advocate of regulation 
 
 The Chairman. Of control, yes. 
 
 Mr. Thurber. But I cooperated with him very earnestly, I remem- 
 
80 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 ber, in prohibiting- poolinj^' in that bill, and that afterwards we both 
 concluded that under proper restrictions pooling was desirable, 
 because it was necessary to prevent unjust discriminations. 
 
 Both of these laws were founded on a Massachusetts railwaj' com- 
 mission law, which confers full powers of investigation upon the 
 Commission, with power to appeal to the courts, or to the legislature, 
 to enjoin abuses and fix rates; and in both Massachusetts and New 
 York this has been found sufficient to protect the public interests; 
 better, indeed, than in those States which conferred rate-making 
 powers upon their railroad commissioners. This is illustrated by the 
 following article from the Railroad Gazette of December 30: 
 
 AEE KATE MAKING COMMISSIOXS SUCCESSFUL? 
 
 It is an interesting jshenomenon, in connection with the agitation for the enlarge- 
 ment of the powers of the Interstate Commerce Commission, that so much effort is 
 expended in the exploitation of the evils alleged to exist, that none is available to 
 show the applicability of the proposed remedies. Without for a moment admitting 
 that the frictional evils incident to the mutual adjustments necessary between a 
 rapidly developing transportation system and an industrial organization, of which 
 the former is a part, which is moving forward with equal speed, are as great as the 
 proponents of the Quarles-Cooper bill contend, it is worth while to ask whether, if 
 they were, the remedy proposed would correct them. Thirty States of the American 
 Union now have railroad commissions, and in 22 instances these commissions have 
 rate making powers. 
 
 Would it not be reasonable to investigate the results in these States before adopt- 
 ing similar legislation concerning Interstate Commerce? Such data as are now avail- 
 able indicate that official rate making has not been very satisfactory to those states 
 which have tried it. Georgia, for example, was one of the earliest States to adopt a 
 drastic railroad commission law, and has consistently followed the plan of interposing 
 its authority between the buyers and sellers of railroad transportation. Yet the 
 newspapers of Georgia to-day declare that the shippers of their State pay more than 
 their neighbors in adjoining States, and that interstate traffic, which the Interstate 
 Commerce Commission so loudly complains is not subject to effective regulation, is 
 carried similar distances at much lower rates. A recent editorial in the Atlanta 
 Journal contains the following: 
 
 " A merchant in Marietta can ship certain goods to Chattanooga for 15 cents per 
 hundred; to Knoxville for 19 cents per hundred. To ship the same goods to Atlanta 
 he must pay 30 cents per hundred; to Macon 70 cents per hundred. Atlanta is 20 
 miles from Marietta; Chattanooga is 128 miles, and yet the Chattanooga merchant 
 pays just one-half of the freight the Atlanta merchant does." 
 
 Mr. Adamson. That argument relates to interstate commerce and 
 not to the Georgia railroad situation. 
 
 _Mr. Thurber. Well, sir; it speaks of the Georgia railroad situ- 
 ation, and it has a bearing on the interstate rates. 
 
 Mr. Adamson. There is no trouble about the Georgia railroad com- 
 mission, you can rest easy on that; the only question is, Has the 
 Federal Government the same right to make such a law as the State 
 has, the State chartering those corporations and the Federal Govern- 
 ment not chartering them? The Federal Government derives its 
 power solely from the interstate commerce •clause of the Constitution. 
 
 Mr. Thurbek. Yes, sir. 
 
 Mr. Adamson. And not from the fact that it is the father of these 
 corporations. 
 
 Mr. Thurber. Yes, sir; that is true. I think this article is perti- 
 nent to the situation and tends to touch the various sides of this 
 question. 
 
 Mr. Adamson. Y^ou can find newspaper articles pertinent to the 
 general subject that you could read until doomsday. 
 
PKOPUSED AMENDMENT OF INTERSTATE-COMMERCE LAW. Si 
 
 Mr. Thurber (continuing to read): 
 
 "Why? Because Chattanooga is out of the State, and Atlanta is in it. This is 
 merely one of a hundred instances where Georgia points are placed at a positive 
 disadvantage in freight rates because they are located in the State." 
 
 The editorial from which the foregoing is an extract shows traces of feeling which 
 suggest the attitude of an advocate rather than one of judicial impartiality 
 
 And then it goes on to discuss it. and it shows that the reason for it 
 is that it is the arm's length situation ; that the railroad agent simply 
 refers a shipper to the State commission, and says: "Those are the 
 rates fixed by the State commission, and we have nothing to do with 
 it." It removes the incentive he has to endeavor to meet situations 
 that arise in business. 
 
 Mr. Adamson. It is plain to any man, and I thinli to the Atlanta 
 Journal, that rates between Atlanta and Knoxville are not Georgia 
 railroad commission matters at all; they are interstate commerce 
 matters. 
 
 Mr. Thurber. The Railroad Gazette goes on to say : 
 
 The shipper is told, in effect, that the State will look out for the needs of business 
 in the way of reduced rates of transportation, and he knows that, until driven to 
 plead confiscatory taking of property without due process of law at the baK of justice, 
 the revenues of his corporation will have no defender but himself and his fellow 
 officers. He knows tliat a justifiable reduction will be made in argument for others 
 that are wholly devoid of justification, and he naturally assumes an attitude of hos- 
 tility to all reductions. Again, capital is reluctant to engage in railroad enterprises 
 where the rate-making power has been taken from its employees and lodged in polit- 
 ical officers, and the States which have the most drastic regulative laws have usually 
 seen the slowest development of railroad facilities, with the natural accompaniment 
 of slow development, the retardation of the natural decline in rates. 
 
 From my own knowledge, I can testify that it was not intended to 
 confer rate-malking powers upon the Interstate Commerce Commission. 
 This is proven by the following extracts from the debates in Congress 
 when the bill was pending — and I have a quotation here from what 
 Mr. Findlay said on December 8, 1884, and also what Mr. Reagan said, 
 in answer to Mr. Findlay. 
 
 Later, on January 7, 1905, Mr. Reagan said: 
 
 One of the greatest troubles I have had, even with the friends of legislation in this 
 direction, has been to get them to understand that this is not a bill to regulate freight 
 rates; that it does' not undertake to prescribe rates for the transportation of freight. 
 I know the difficulties which would attend any measure attempting to prescribe rates 
 of freight. I am persuaded that no law fixing rates of freight could be made to work 
 with justice either to the railroads or to the public; and I have intended from the 
 beginning to avoid that difficulty. 
 
 And in the Senate, May 6, 1886, Mr. Kenna said: 
 
 What constitutes a reasonable rate is precisely the thing which the people of this 
 country are unwilling to leave to the arbitrary discretion of the railroad commission 
 
 Judge Cooley, its first chairman, recognized this; but after his retire- 
 ment the Commission assumed that it had this power, and exercised it 
 until the Supreme- Court of the United States decided it had not, since 
 which time the radical element in the Commission has been seeking to 
 get this power, and has invoked the influence of the radical element 
 among shippers to induce Congress to confer it. The state of 
 mind of this element is illustrated by the fact that at the interstate- 
 commerce law meeting held at St. Louis, October 27, 1904, it was 
 stated that the railroads owned the Congress of the United States 
 and no longer ago than December 30, 1904, Mr. Prouty of the Inter 
 
 I c L — 05 6 
 
82 PROPOSED AMENDMENT OF INTEESTATE-GOMMEECE LAW, 
 
 state Commerce Commission, in an interview published in Chicago, is 
 reported to have said that ''If the Commission was worth buying, the 
 raih'oads would own it. '" 
 
 Mr. Bacon. May I ask to whom that is atti'ibuted — Congress being 
 owned by the railroads of the United States ''. 
 
 Mr. Thurber. Well, Mr. Bacon made a statement there which I 
 had not intended to say he was entirely responsible for, because it was 
 made by others. The attorney for the Texas cattle shippers — what 
 was his name? 
 
 Mr. Bacon. Mr. Cowan. 
 
 Mr. Thurber. Mr. Cowan also made that same statement. I was 
 present and heard it, and the whole trend of the jjapers and speeches 
 which were made there was so radical that it did not commend itself 
 to my judgment, although 1 am in favor of the regulation of the 
 railroads. 
 
 Mr. Bacon. I asked who made the statement that Congress was 
 owned by the railroads. 
 
 Mr, Thurber. 1 think j^ou did, Mr. Bacon, and I think that Mr. 
 Cowan did. 
 
 Mr. Bacon. I never made such a statement and never had such a 
 thought in my life. 
 
 Mr. Thurber. That was the impression I got. 
 
 Mr. Bacon. And I wish to say the trend of thought in that conven- 
 tion was decidedly conservative and reasonable. The statements that 
 were made were reasonable, and a resolution was adopted that the 
 statements of one man were not indorsed and would not be allowed to 
 go out as the expression of the convention. 
 
 Mr. Mann. When 1 asked you yesterdaj', quoting from "Freight," 
 whether you made such a statement, j^ou said that you did not remem- 
 ber, as I recall it. 
 
 Mr. Bacon. 1 said that on two or three occasions. 
 
 Mr. Mann. And now you say you did not make such a statement? 
 
 Mr. Bacon. I say 1 have no recollection of such a statement as the 
 one attributed to me. I will say now that if j^ou can prove I made 
 such a statement I will stand by it. 
 
 Mr. Mann. I never wanted to prove it; I wanted j^ou to deny it, for 
 your own good name and the good name of the members of Congress, 
 and you refused to denj^ it when I gave you the opportunity'. 
 
 Mr. Bacon. I stated that I had no recollection of making such a 
 statement. 
 
 Mr. Mann. 1 think you will find the record says that you say you 
 do not remember whether j^ou made the statement or not. You did 
 say afterwards that you never had such a thought. 
 
 Mr. Bacon. I think there has been enough said about that. 
 
 Mr. Adamson. You were given the opportunity to deny it for the 
 good sense of yourself and the integrity of yourself and your asso- 
 ciates. 
 
 Mr. Thurber. I can only say that I went into that convention with 
 a paper which advocated reasonable control of railroads, and after 
 three papers had preceded me which, in my judgment, advocated 
 unreasonable control of railroads, 1 was cut off by the passage of a 
 resolution limiting debate to two minutes. 
 
 Mr. Bacon. Let me say, Mr. Chairman, that Mr. Thurber offered 
 his resolution after the committee on resolutions had made its report 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 83 
 
 and there was no time to consider it. When the meeting of the com- 
 mittee pn resolutions was held a motion was passed that no further 
 resolutions would be entertained other than those that had been pre 
 sented to the committee. 
 
 Mr. Thurbee. I endeavored to speak to the report of the commit- 
 tee on resolutions but was cut off by the two-minute rule. 
 
 Mr. Mann. That is, there were only two, minutes allowed to discuss 
 the report of the committee on resolutions? 
 
 Mr. Thurber. No person was allowed more than two minutes. 
 
 _Mr. Mann. I think that 1 read some report of a speech that cer- 
 tainly took more than two minutes to deliver, discussing the report of 
 the committee on resolutions. 
 
 Mr. Thurbee. That was before the passage of the rule. 
 
 Mr. Adamson. Perhaps they were allowed leave to print. 
 
 Mr. Bacon. I will say that nearly an hour was devoted to the dis- 
 cussion of the report of the committee on resolutions. This was on 
 the second day, past noon on the second day, when there were onh' 
 two or three hours remaining for action and a large number of dele- 
 gates were desirous to return home by afternoon or evening trains, 
 and consequently a limit was set to debate; after there had been some 
 considerable debate a limit was set to further discussion on the ques- 
 tion, and finally the report was adopted, on the previous question 
 being adopted. 
 
 Mr. Thurber. Mr. Proutj-, of the Interstate Commerce Commission, 
 in an interview published in Chicago, is reported to have said that '"If 
 the Commission was worth buying, the railroads would own it." The 
 reasonable element among shippers does not believe this, but they are 
 less demonstrative than the radical element and do not make themselves 
 heard. Their view is well expressed by resolutions adopted by the 
 New York Board of Trade and Transportation. 
 
 Mr. Adamson. Are you still reading from a newspaper or is that 
 your own production? 
 
 Mr. Thurber. No, sir; I am not reading fi'om the newspaper now. 
 The resolutions referred to are as follows: 
 
 Resolved, That to invest the Interstate Commerce Commission with power to declare 
 ' ' what rate or rates ' ' are ' ' unjustly discriminative or unreasonable, ' ' and ' ' what rates^ 
 would be just and reasonable," and to further provide that the rates which the Com- 
 mission deem just and reasonable shall be substituted, is, in our judgment, a long 
 step toward conferring the general rate-making power upon the Commission, if, 
 indeed, the provisions of the Quarles-Cooper bill would not confer precisely that 
 power. The advocates of that bill disavow any intent to confer such power and do 
 not defend the conferring of such power. The Commission has heretofore claimed the 
 rate-making power, and has endeavored to exercise it in various decisions, which has 
 been overruled by the courts. It seems to have been made clear that neither the 
 framers of the act nor Congress intended to confer that power on the Interstate Com- 
 merce Commission. The Quarles-Cooper bill confers that power to the extent of 
 pronouncing rates and classifications to be unreasonable and how far they are unjust, 
 or the naming of a rate or practice in substitution. This confers a judicial power 
 upon a constantly changing body, appointed without special reference to that phase 
 of their duties; and while the country has been fortunate thus far in the character of 
 their men placed on the Commission, political and other considerations may have 
 undue weight in the selection of CommisBioners, and the Commission would be more 
 likely to be influenced by such considerations than the judiciary. The Commission 
 has full power of investigation and can appeal to the court to enforce its conclusions, 
 and the courts have supported the findings of the Commission by injunction when 
 the prohibition of unjust discriminations was concerned. This is the effective rem- 
 edy that has been found to exist under the present law. 
 
.S4 PROPOSEJ) AMEKDMENT OK INTER8TATE-COMMEKCE LAW. 
 
 Mr. Adamson. Will you let me ask you a question right there? 
 
 Mr. Thueber. Certainly. 
 
 Mr. Adamsox. Do you believe that it is more dangerous to invest 
 the Commission with the rate-making power, so far as the question of 
 possible partisanship is concerned, than to invest that power in rail- 
 road men ? 
 
 Mr. Thurber. I do not, know that, sir; but I do think they would 
 be more likely to err than the courts. Our Atlantic-port people are 
 afraid that the Gulf -port people will get the advantage of them, and 
 the Gulf-port people are afraid that the Pacific-coast people will get 
 the advantage. So this question of rates is a very intricate question 
 for the Interstate Commerce Commission to consider. 
 
 Mr. Adamson. Would not partisanship be the most dangerous fac- 
 tor to be reckoned with in investing the Commission with that power? 
 
 Mr. Thurber. I think sectionalism or partisanship would be most 
 dangerous. This country is a country where the great object is to get 
 the products of the country to a market abroad, and 1 don't think that 
 the power in any narrow way should be lodged anywhere where it 
 might interfere with the Constitution of the United States, which is a 
 safeguard in these great matters. 
 
 Mr. TowNSEND. Would not the Supreme Court look after that, if it 
 interfered with the Constitution ? 
 
 Mr. Thurber. Yes. That is where our safety lies — in our courts. 
 And if we have not enough courts now to give speedy decisions, then 
 we should have more courts established for that purpose. 
 
 I am now reading from the resolutions of the New York Board of 
 Trade and Transportation, adopted by them, and which have been 
 placed on the programme for consideration at the meeting of the 
 National Board of Trade in Washington the coming week [reading]: 
 
 We believe, therefore, that the decisions of the Interstate Commerce Commission 
 should be, and can be, enforced when made upon complaint of unjust discrimina- 
 tion; but we are not prepared to commend a measure which gives the Interstate 
 Commerce Commission a power so general. It seenas to us wiser, for the present at 
 least, to rely upon the recently applied method of enforcing the decisions of the Com- 
 mission by injunction than to enact the Quarles-Cooper bill, the provisions of which 
 may be construed to be much more far-reaching than even its a,dvoca,tes are willing 
 to defend or consent to. 
 
 Resolved, That this Board earnestly advocates legislation by Congress to stn^end 
 the interstate-commerce law so as to permit pooling by railroads, under the super- 
 vision and control of the Interstate Commerce Commission, to the end that unjust 
 discrimination may be prevented and reasonable, uniform, and stable rates be 
 established. 
 
 This view is further eniphasized by the following resolutions, adopted 
 by the directors of the United States Export Association January 3, 
 1905: 
 
 Resolved, That in the opinion of this association the bill now pending in Congress 
 known as the Cooper-Quarles bill, conferring in some degree rate-making powers 
 upon the Interstate Commerce Commission and making its findings operative until 
 reversed by the courts, is a step in the wrong, direction; that while the Interstate 
 Commerce Commission performs a useful function in investigating and making rec- 
 ommendations, it should not have powers equivalent to prosecutor, judge, and jury 
 combined; that to make its findings operative until reversed by the courts is like 
 hanging a man and trying him afterwards, for rates are so related that one affects a 
 thousand or a million, and a damage thus done can not be estimated or repaired. 
 
 Resolved, That this association is opposed to unjust discrimination in any form in 
 the operation of our public highways, but a reasonable elasticity in their operation 
 is necessary in order to market our surplus products abroad, and that to deny this 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 85 
 
 would operate to the detriment of our producers, manufacturers, laborers, and the ■ 
 general public. 
 
 Resolved, That the courts are the best judges of what constitutes a "square deal," 
 and if there are not now enough to give prompt decisions, more should be established 
 to that end. 
 
 Mr. Chairman and gentlemen of your committee, there are a few 
 great facts that are not generally recognized. Among them are, first, 
 that all combinations and consolidations of transportation lines in this 
 country have resulted in better service and lower rates. This is illus- 
 trated by the following figures. from the United States Bureau of Sta- 
 tistics. 1 have the figures here giving the average receipts per ton- 
 milie of leading railroads in 187D, 1880, 1890, and 1902, inclusive. 
 This shows a progressive decline, which it is not necessary for me to 
 give in detail, but the decline in avei'age receipts on these leading rail- 
 roads in the time given is from 1.99 in 1870 to 0.75 in 1902; that 
 is, per ton-mile. 
 
 This result has been attained largely through combinations and con- 
 solidations, which, contrary to the impression generally entertained, 
 have not resulted in abolishing competition, but rather in economies 
 of Operation and improvement in service, accompanied by a steady 
 reduction of rates, with but few exceptions, which prove the rule. 
 During the past three j^ears rates have slightly advanced. Owing to a 
 much greater advance in labor and materials. Railway freight rates 
 in the United States are, howiever, less than one-half those of other 
 principal countries. Our railroads carry our chief products 1,000 
 miles to our seaboard for less than the railroads of other countries 
 charge for carrying these products 200 miles inland from the seacoast 
 after they have crossed the ocean. And the railroad rates abroad and 
 in the United States have been graphically illustrated by the Philadel- 
 phia museums in a diagram which I have had reproduced, which is 
 attached to this paper. 
 
 Mr. EiCHAKDSON. What is the difference between local rates in this 
 country and in England ? 
 
 Mr. Thxjrber. They are about double in England what they are 
 here, sir — our local ratbs. 
 
 Mr. Bacon. Do you ilot know that the rates in England include 
 delivery at both ends — teaiiiing? 
 
 Mr. Thurber. They do in some instances. 
 
 Mr. Richardson. What is the difference between the profits of the 
 local rates in this country and the through rates — the long haul and 
 the short haul ? 
 
 Mr. Thurber. As to the profits ? ' . 
 
 Mr. Richardson. Yes; what is the proportion; what is the difference? 
 
 Mr. Thurber. That I don't know; but my impression is 
 
 Mr. Richardson. Is it not five times as great in local rates as in the 
 through rates? 
 
 Mr. Thurber. 1 do not think it is five times as great, but I think it 
 is greater. 
 
 Mr. Richardson. Do yOu not know that it is five times greater? 
 
 Mr. Thurber. No; that does not come under my observation. 
 
 Mr. Lamar. Do you know whether the capitalization of railroads is 
 under Government supervision and control in England? 
 
 Mr. Thurber. No, sir; I do not know; but they are capitalized 
 much higher in England: the cost of construction in England is much 
 
86 PEOPOSEp AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 greater than in the United States, and the land costs them more than 
 here; the damages are much greater in England. The capitalization 
 in England, I think, is more than double what it is in the United States. 
 
 ^Ir. Lamae. What is the relation of capitalization to cost in Eng- 
 land, if you know? I ask for information; 1 do not know myself. 
 
 Mr. Thurbek. I think the board of trade, a department of the Gov- 
 ernment there, has a very general supervision over capitalization, as 
 well as everything else. No railroad can be constructed in England 
 unless it has the approval of the board of trade, and second, get the 
 authority of Parliament. 
 
 Mr. Richardson. What is the difference between the classification 
 of this country and England? 
 
 Mr. Thitrber. The classification of freights I don't know. 
 
 Mr. Richardson. You don't know that? 
 
 Mr. Thurber. No, sir. 
 
 Mr. Richardson. You do not know how it comes in as to classifi- 
 cation in this country and in England ? 
 
 Mr. Thurber. No, sir; I do not. 
 
 Mr. Shackleford. In England they have a statutory maximum 
 rate, do they not? 
 
 Mr. Thurber. No, sir; 1 think not, unless it is in the charters of 
 the various railroads. I think that that was in the earlier charters, 
 from what I have read and studied, that the earlier charters of the 
 railroads all imposed maximum rates. 
 
 Mr. Shackleford. 1 think I noticed in Mr. Prouty's testimony 
 before this or some other committee that he stated that Parliament 
 had established maximum rates. 
 
 Mr. Thurber. So far as my knowledge extends, the maximum rates 
 were, in the beginning, in the charters of the roads, and they have 
 always been so much higher than those rates obtaining in actual busi- 
 ness that had no bearing 
 
 To continue along the line I was on 
 
 That this great result has been attained by free and unhampered 
 Amei'ican railroad men, who have induced investors to put ten thou- 
 sand million dollars into making this possible. It has merged the fer- 
 tile furrow of the prairie farm in the closing furrow of the sea, and 
 made myriad acres valuable which otherwise would be valueless. It 
 has made us the leading nation of the world. Are the men who have 
 done this less entitled to reward than those who invested in the land 
 and waited for the unearned increment? It isn't what j'ou have got, 
 but where j^ou have got it, that constitutes value, and this applies alike 
 to fields, forests, mines, and factories. 
 
 Every private car line which gives its owners an advantage over 
 the average shipper should be absorbed by the railroads, just as the 
 privately owned fast freight lines were absorbed. 
 
 Every terminal railroad which gives its owners a like advantage 
 should be thus absorbed. 
 
 If all the railroads in the United States were consolidated into one 
 great system under corporate management, it would be to the public 
 advantage, just as previous consolidations have been. It would not 
 abrogate competition, for the great competition is that of sections. 
 States, and nations. If a manufacturer in one State wants to bid on a 
 contract in another State, where a low commodity rate would get the 
 business and keep his works running, and a railroad has empty cars 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 87 
 
 going that way, it should be allowed to make a special rate, provided 
 that rate is open to all manufacturers on equal terms. If an exporter 
 can sell ii cargo of wheat in Europe in competition with Argentina, 
 if he can get a special rate at a minute's notice, and the railroad can 
 make the deal possible, it should be allowed to do sa. 
 
 The rate there is a very important consideration. In the great 
 movements in trade to-day the bargains are made largely bj^ telegraph. 
 It requires instant decision. An importer abroad will cable to his 
 correspondent here an offer. Whether that offer can be accepted 
 depends upon the rate of freight. The correspondent in this country 
 will go to the proper railroad man and if that can be decided right off, 
 without any regulations and laws to interfere, it is greath' to the inter- 
 est of this country. For the last five jears my study of this question 
 has been very largely in creating foreign markets abroad, widening 
 the markets for American products. 1 have seen the absolute neces- 
 sity for an absolute reciprocity in that business, and I believe that 
 there should be, in whatever legislation may be enacted in regard to 
 the control of rates, some provision which would, so far as our export 
 trade is concerned, give a greater reciprocity so far as our domestic 
 trade is concerned. It is an absolute requisite. All questions of ship- 
 ping, and the ocean rates, come in. But it is all summed up in the 
 total which enables the trade to be made, and it all has to be made, by 
 telegraph. 
 
 Mr. Adamson. Do you recommend any legislation at all, or do you 
 hold that it is unnecessary to have any ? 
 
 Mr. Thukber. I think, so far as the present situation is con- 
 cerned, that if 3-ou will create another court which will enable speedy 
 decisions to be made in all controversies that arise between shippers 
 and carriers, and you will give the railroads the right to make reason- 
 able agreements between themselves, subject to the approval of the 
 Interstate Commerce Commission 
 
 Mr. Adamson. You want a pooling clause '': 
 
 Mr. Thurbee. Yes, sir; because that is absolutely necessarj- to pre- 
 vent these unjust discriminations. 1 formerly was in favor of the 
 prohibition of pooling. I did all I could with "the commerce of this 
 country to prohibit pooling, because we felt that it was likely to 
 result, if the railroads had that power, in exorbitant rates for trans- 
 portation; but the experience of twelve years has shown me that there 
 was no danger of unjust rates, and thefe was great danger of unjust 
 discriminations; and the prevention of pooling, the making of agree- 
 ments between railroads allowed the unscrupulous element in railroad 
 management to sand bag the honest element in railroad management 
 into making these unjust discriminations, and Mr. Reagan wrote a letter, 
 which was submitted here to Congress, in which he stated that subject 
 to reasonable control by the Interstate Commerce Commission he 
 thought such agreements should be allowed, and he wrote to me to the 
 effect that he agreed with me in my conclusions that the law had 
 operated differently from what he thought it would when it was 
 enacted. 
 
 Mr. Bacon. I would like to ask one question, whether Mr. Thurber 
 is not aware that when pooling was in operation very extensively in 
 this country it failed to prevent discrimination, from the fact that 
 pooling arrangements were temporary and limited to a certain time, 
 and evei-y railroad was stri\ing to secure the advantage, so that upon 
 
88 PROPOSED AMENDMENT OF INTERSTATE -COMMERCE LAW. 
 
 the renewal of pooling arrangements it could acquire a larger per- 
 centage of the rate, and therefore the efforts of each railroad were 
 bent to the end of increasing their percentage, so as to make a better 
 arrangement upon the renewal of the pooling contract. 
 
 Mr. Thurbee. I will say in answer to Mr. Bacon's question that 
 Mr. Albei't Fink, one of the ablest railroad men in this country, con- 
 sidered that it was impossible to stop unjust discriminations, or to 
 minimize them,^ unless the railroads had the right to enforce their 
 agreements upon each other — in other words, the same right that all 
 other corporations or other individuals have. 
 
 Mr. Bacon. That does not answer my question. What 1 want you 
 to state is if you do not know that discriminations were actually made 
 under pooling contracts, dui'ing their continuance ? 
 
 Mr. Thdebek. I think that it was greatly minimized. 1 do not 
 think that it was stopped entirety. 
 
 The Chairman. There never has been a time when a pooling con- 
 tract could be enforced in the courts. They were always contraiy to 
 the common law, and never have been enforced by the courts. 
 
 Mr. Thurber. I do not know as to being contrary to the common 
 law, but I do know that when the 'trunk lines were upheld, and Mr. 
 Fink was commissioner, it resulted in fair rates and greater stability 
 than after that commission was pronounced illegal. 
 
 The Chairman. But the enforcement of those contracts was depend- 
 ent entirely upon the integrity of the parties and not at all upon fear 
 of the operation of the courts. 
 
 Mr. Thurber. That is my impression. 
 
 Mr. Bacon. May I say a word ^ 
 
 The Chairman. After Mr. Thurber has answered. 
 
 Mr. Thurber. Certainly. 
 _ Mr. Bacon. I want to say that while they were subject to the integ- 
 rity of the parties they were very largely observed by them, but that 
 whether or not, even though they were legally binding, the same 
 inducement would remain for a poor road getting a larger part of the 
 traffic than its percentage in order to get a higher percentage in the 
 next contract, and I will say that I have had repeated offers of rebates 
 from different roads on traffic that was comprised in the pools years ago. 
 
 Mr. Thurber. I see that your time is very short now, Mr. Chair- 
 man, and I will abbreviate my remarks. It is this freedom which has 
 reduced our rates in this couritry to one-half those of other countries, 
 and we should not put our railroads in official clamps which would 
 prevent this. 
 
 There is a broad distinction, however, between rate-making and 
 preventing unjust discriminations. We need the Interstate Commerce 
 Commission to police the latter, but it should not be the judge of the 
 former. I think that the rest of what I had to sav has been practicallv 
 covered here. 
 
 Mr. Adamson. Do you not think that the prevention of discrimi- 
 nation should be the limit of Federal interference? 
 
 Mr. Thurber. Yes, sir; 1 do. 
 
 Mr. Richardson. How would you enforce the power to prevent 
 the discrimination ? 
 
 Mr. Thurber. I would have the Interstate Commerce Commission 
 as a prosecuting body, and I would have the courts as judges of what 
 was ]ust and wliat was unjust, and what in accordance with the law. 
 
PROPOSED AMENDMENT OF INTERSTATE- COMMERCE LAW. 89 
 
 JNlr. Lamar. Are you acquainted with the President's views on this 
 matter ; 
 
 Mr. Thurber. I can not say tliat I am. 
 
 Mr. Lamar. You read his message to Congress t 
 
 Mr. Thurber. Yes, sir. 
 
 Mr. Lamar. You understand from that that he recommends that 
 the commission shall have the power, not exactly for original rate- 
 making — rate-making in general — but that they may have the power 
 to correct an unjust rate and put the corrected rate in effect at once, 
 subject to the action of the courts? 
 
 Mr. Thurber. Yes, sir; I think he has imbibed Mr. Bacon's views. 
 
 Mr. Lamar. Yes. You do not think, then, that he is safe and sound 
 on that'^ 
 
 Mr. Thurbek. I think that he is one of the most honest and well- 
 meaning men in the world,' but he is just as liable to be mistaken as 
 anybody else, and just as liable to error, because of not knowing about 
 the subject under consideration. 
 
 Mr. Stevens. I think the committee would like to have you and 
 your association identified, and I would like to know if you are -the 
 same person and if the United States Export Association is the same 
 body, which received funds from Gen. Leonard Wood when he was 
 governor-general of Cuba, and from Mr. Havemeyer, of the sugar 
 trust, on this so-called reciprocity treaty? 
 
 ]\Ir. Thurber. The bureau did receive money for the purpose of 
 endeavoring to get a reciprocity treaty between Cuba and the United 
 States. 
 
 Mr. Stevens. What I wanted to know is' whether you are the same 
 person as the Mr. Thurber who was then connected with that? 
 
 Mr. Thurber. I am. 
 
 Mr. Stevens. And whether this association is the same association 
 as endeavored to get funds from Genei-al Wood and Mr. Havemeyer? 
 
 Mr. Thurber. It is; yes, sir. 
 
 Mr. Bacon. I would like to ask one question, and that is, in view of 
 the fact that you have appeared at several of the commercial conven- 
 tions in opposition to this legislation — I wish to make this inquiry for 
 the information of the committee— whether you have received, are 
 receiving, or expect to receive compensation from any of the corpora- 
 tions for tha,t service? 
 
 Mr. Thurber. No, sir; 1 do not. 
 
 Mr. Bacon. That is all. 
 
 Mr. TowNSEND. Is this gentleman going to be here after to-day \ 
 
 The Chairman. Do you desire to ask him any questions >. 
 
 Mr. TowNSEND. Yes, I want to, very much. 
 
 The Chairman. Mr. Thurber, can you appear before the committee 
 on Fridaj'? 
 
 Mr. Thurber. I can if it is desired. 
 
 The Chairman. I wish you would. 
 
 Thereupon the committee adjourned until to-morro\\-. Thursday, at 
 10.30 o'clock a. m. 
 
 Mr. Chairman. I wish to correct my statement of Wednesday, to 
 which you called my attention, in regard to the matter of stating that 
 the Hon. John H. Reagan was "the father" of the present interstate- 
 commerce bill. Mr. Reagan was perhaps the most prominent advocate 
 of legislation for the regulation of railways at that time, in which I 
 
90 PROl^OSEI) AMENDMENT OF INTEBSTATE-COMMERCE LAW. 
 
 supported hini; but you are correct in stating that he was not the 
 author of the present interstate-commerce law, and I think that both 
 Mr. Reagan and myself at that time were very much in the position 
 of Mr. Bacon at the present time, namely, that we felt something 
 ought to be done, but we were not exactly sui'e as to how it should be 
 done and to what extent it should be done. 
 
 I would ask that the words "its father" be omitted from^ the first 
 page of my statement submitted to your committee on Wednesday 
 (see copy herewith). I also wish to answer more fully one of the 
 questions which was asked me on Wednesday. 
 
 Mr. Stevens, of your committee, just at the close of the hearing 
 asked me whether I was the Thurber who Was connected with the 
 agitation for the Cuban reciprocity treaty, and as this may have a 
 bearing on Mr. Stevens's (and possibly others) opinion of my view of 
 the bill now under consideration, I wish to answer his question more 
 fully than is possible by yes or no, viz: The Cuban chambers of com- 
 merce sent a committee here to try and get a reciprocity treaty which 
 would admit their products into the United States and our products 
 into Cuba. 
 
 They came to me as president of the United States Export Associa- 
 tion for advice and help. I told them to put the facts before the 
 American people and I thought they could get it. They didn't know 
 how to do it and hadn't means to do it, j'et they were paying to the 
 United States insular government a million and a quarter dollars a 
 month in duties on imports into Cuba, which was being expended for 
 police, sanitation, education, etc. I told them that if they could get 
 an infinitesimal part of this appropriated for publicity, it would help 
 Cuba and help American producers. Through General Wood they 
 got about one-tenth of 1 per cent of a single j^ear's duties, or $12,500, 
 appropriated for that purpose. - Then they couldn't get any more and 
 were short, and I got Mr. Havemeyer to contribute $2,. 500 more for 
 this purpose. This money was expended in printing, postage, and 
 clerk hire. 
 
 I told the whole story to the Senate Committee on Cuban AtJairs, 
 and the beet-sugar interests, which were opposing the treaty, sought 
 to make it appear that something improper had been done. 
 
 If it is wrong to try and widen our markets for all American prod- 
 ucts, I was wrong in doing so. If it was commendable, I am entitled 
 to credit. At any rate, I did what I thought was right for the greatest 
 good of the greatest number, and those who know me will testify that 
 I always do this; and that is my position on the bill under considera- 
 tion, which I believe in its present form would be against theinterest 
 of the producers and shippers of the United States. 
 
 Thursday, January 12, 1905. 
 
 The committee met at 10.30 o'clock a. m., Hon. W. P. Hepburn m 
 the chair. 
 
 Mr. Davey. I desire to move that the hearings in regard to all the 
 bills relating to the increase of the power of the Interstate Commerce ; 
 Commission be considered as closed Januai-y 23, and that the committee 
 pi'oceed to consider on January 24 the different bills before them. 
 
PROPOSED AMENDMENT OF INTEK8TATE-00MMERCE LAW. 91 
 
 The Chaihmax. That is inopportune now. It would be j^roper to 
 consider a matter of that kind in executive session. Later on we will 
 take that up. 
 
 Mr. Spencer, will you proceed, if you please. 
 
 STATEMENT OF MR. SAMUEL SPENCER, PRESIDENT OF THE 
 SOUTHERN RAILWAY COMPANY. 
 
 Mr. Chairman and gentlemen, before going into the matter before 
 us, 1 may say that it is not my purpose to discuss the subject in its 
 entirety because it would be impossible within the limit of time that is 
 now before us. 
 
 I am here representing, of course, among others, the Southern Rail- 
 way Company, of which I am the executive; but not that company 
 alone. As may not be known to the members of the committee, dur- 
 ing the winter I am resident in Washington, where our chief operating 
 offices are, and, growing out of that fact, several of the other railroads 
 of the United States, with some of which I am connected, have asked 
 me, after consultation, to do what I riow propose. Therefore it is not 
 one railroad's representation that I propose to make, nor is it the par- 
 ticular claim of any railroad or group of railroads. I have preferred, 
 so far as I have anything to say to the committee, to put it upon the 
 ground of a broad, open, and, I hope, a fair discussion of the princi- 
 ples involved in the question which the committee is considering. 
 
 To the present status we need devote very little attention. The 
 Commission has had eighteen years of service and experience. It is a 
 well-known fact that important results have been accomplished within 
 that time through the law and b3' the Commission, and I want to 
 emphasize the fact that that condition is recognized by the railway 
 companies. The great, the very great, abuses and irregularities at 
 which the act was originally aimed have largely been eliminated. The 
 rebate, the secret contract, the discriminatory devices of vai'ious kinds 
 were the rule instead of the exception in those da3's. Now the reverse 
 is the case. 
 
 The Commission itself bears testimony that rates are substantially 
 maintained. The law has been strengthened from time to time in order 
 to enable the Commission and the courts to proceed more promptlj', 
 more efficiently, by more direct methods, to deal with these questions, 
 and there is a large power now lodged in the hands of the Commission 
 for the remedy of those offenses which are regarded as the worst, and 
 which were so prevalent, and which led logically to the numerous com- 
 plaints which were then made before the Congress or before the public 
 or before the Commission. 
 
 I want to say emphatically, for a very large proportion of the rail- 
 roads of this country — a very much larger proportion than I have any 
 direct right to speak for, but I say it unhesitatingly — that there is no 
 difference of opinion between the railroads, the country, the Congress, 
 and the President on the subject that rebates are wrong; that they must 
 be stopped; that secret and discriminator}' devices of all kinds must 
 meet with the same fate, and, to use the President's own expression : 
 "The highways of transportation must be kept open to all upon equal 
 terms." On that basis the railway jcompanies are ready and anxious 
 to aid and cooperate. 
 
 I might add, while I would not suggest, and do not think that any 
 
92 PEOPOSED AMENDMENT OF INTEKSTATE-COMMEROE LAW. 
 
 additional legislation is required to strengthen the hands of the Com- 
 mission in order to proceed against that particular class of abuses, 
 that if such legislation does appear to the country, to your committee, 
 and to Congress to be necessary the railways will" certainly stand — and 
 I have no hesitation in saying so — in a position of cooperation and aid 
 toward that end. That particular phase of regulation of railways has 
 already been pronounced by the Commission as fully covered by 
 existing statutes. It becomes a question of the enforcement of the 
 law. 
 
 The question before you, however, as I understand it, is not of that 
 character, and 1 have alluded to it merely to emphasize the views which 
 I have expressed on behalf of the railways, and for a reason which will 
 come later in what I may have to say in connection with the proposi- 
 tion which is before you to give the Commission power to name a rate, 
 after hearing and complaint, which it has been claimed will be a means 
 of stopping rebates and irregularities. That I have no hesitation in 
 denying, and I will treat it further 9,s we go into that branch of the 
 subject. 
 
 Now, in a general way, first, is' there a necessity for such legislation? 
 Let us review the situation as it has developed for the last eighteen 
 years. Without burdening you with figures or occupying your time 
 with elaborate statements, summed up, that situation is this: About 
 90 per cent of all the claims or questions of various kinds which have 
 been presented to the Commission during that period have been 
 adjusted without even formal hearings and decisions upon the part of 
 the Commission. That certainly does not indicate either a defiant or 
 a nonoooperative position upon the part of the carriers of this country. 
 Of the remaining 10 per cent, scarcely 2 per cent have been the sub- 
 ject of litigation. That is to say, 90 per cent have been disposed ol 
 without formal hearings or decisions upon the part of the Commission; 
 10 per cent have been the subject of formal hearings and decisions 
 upon the part of the Commission, and less than one-fifth out of that 
 10 per cent — namely, 2 per cent of the total — have been the subject o! 
 litigation under the decisions of the Commission growing out of mat- 
 ters covered by the interstate commerce act. That is for the period 
 of eighteen years. 
 
 Reducing the suits to figures, there have been within that period but 
 43 suits out of 194 cases which were decided against the railroads. 
 The railroads acquiesced in four-fifths of those formal decisions, cover- 
 ing only 10 per cent of the total which were made by the Commissions, 
 
 The litigation was upon 43 cases. Those cases grew out of various 
 questions, but, as we are discussing the question of rates, I may say 
 that out of the 43 which went to litigation 26 related to rates. In 
 22 out of the 25 the decision of the Commission was reversed by the 
 courts. One case out of the 25 was affirmed absolutely by the courts, 
 and two were partially confirmed and partially reversed. 
 
 Now, looking at general results, I ask what condition of affairs does 
 this indicate in respect to the multitudinous rates over this country for 
 eighteen years, with now 210,000 miles of railroad, and at the Ibegin- 
 ning of that period 135,000 miles of railroad, covering a country from 
 the Atlantic to the Pacific and from the Lakes to the Gulf. Does the 
 fact that a total of 43 cases of litigation have arisen, and that 25 cases 
 have arisen with respect to rates,' indicate that there is a necessity for 
 legislation in respect to the regulation of those rates, when 90 per 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 93 
 
 cent, if yovi will allow me to repeat, of all the questions that have 
 arisen have been disposed of without even a hearing by the Commis- 
 sion, and four-fifths of those on which they have rendered a decision 
 have not required litigation in the judgment of either the railroads or 
 the Commission, and the remaining one-fifth of 10 per cent, namely y 
 per cent of the total complaints, have gone to litigation ? 
 
 I shall not comment further upon the fact of how successful that 
 litigation was, because it might nave various causes. Certainly I do 
 not mean to suggest to this committee any cause which is disrespect- 
 ful or derogatory to that Commission. The Commission in its per- 
 sonality is certainly entitled to the respect of this country and 
 ourselves. In its legal position as a tribunal of this country it has, 
 and is entitled to the respect, cooperation, and aid of the railway 
 interests in the carrying out of those purposes for which it was ap- 
 pointed, and those purposes were very important and the results have 
 been very large. 
 
 I will come , now specifically to the bills which are now before you, 
 or, rather, to the bill, because I shall address myself only to one, namely, 
 the Cooper bill, which is before you; and I shall not undertake in this 
 limited time to discuss more than one phase of that, namely, the 
 power which it proposes to confer upon the Commission, after hearing 
 and complaint, and the decision upon its part that an existing rate is 
 unreasonable, to substitute a rate therefor, to put it into effect at a 
 fixed time, and the provision that it shall remain in effect thereafter, 
 subject only, on the one hand, to change by the Commission in future, 
 in the exercise of similar power, or, upon the other hand, of appeal to 
 the United States courts upon the part of the railways, to set that rate 
 aside; the rate, however, remaining in effect pending such appeal to 
 the courts. 
 
 Various advantages and reasons have been assigned for the passage 
 of such an act conferring such powers. They are, first, that it would 
 be merely restoring a power which the Commission substantially for 
 ben years has exercised. That has been repeatedly stated, officially 
 md unofficially, directly and indirectly, and probably as often contra- 
 dicted. Exactly what is meant by the denial I hope to make clearer to 
 ^ou. What is meant, exactly, by the assertion that they did exercise 
 such power, 1 must confess that I am at a loss tO understand. Cer- 
 a,inly in the very first report to the Interstate Commerce Commission 
 :he chairman of the Commission distinctly stated in words that the 
 Jommission had no such power. It was reiterated by Commissioner 
 5choonmaker, and the citations which have been made as to the specific 
 !ases in which they exercised that power, I must be pardoned for say- 
 ng, do not cover the case. There is abundant proof of record, to 
 vhich I can refer you (but for the time I shall not do it, simply leaving 
 twith you, if you desire), that it was claimed and asserted, not only by 
 nembers of the Commission itself, but by lawyers, counsel for the 
 ailways, counsel for others, that the law did not give any such power 
 o the Commission. When the question came to be reviewed by the 
 ourts, the courts were emphatic in statitjg that the power was never 
 here. It is possibly uselgss for me to elaborate that any further. 
 !'he authorities are there, and they can be given at any moment that 
 01J want them. 
 
 I come now to what I consider the only possible basis which could 
 le made for the claim that the Commission once, and for ten years, 
 
94 PE0P08ED AMENDMENT OF INTEBSTATE-COMMEBCE LAW. 
 
 substantial! J' exercised that power, namely, the cases which it decided 
 during that period which did affect rates and did result in several 
 cases in their being changed as directed by the Commission. I can 
 cite you a case, or numerous cases, since 1897, where precisely the 
 same*^ thing has happened. The exercise of it at that time, or what is 
 called the exercise of it at that time, was simply this: That the Com- 
 mission took up those cases, investigated them, rendered a decision, 
 and that decision in many cases was. acquiesced in. The railroads did 
 not contest the case. There is authority in the utterances of Judge 
 (afterwards Justice) Jackson to the effect that in that respect the Com- 
 mission occupied the position of a general referee for all the circuit 
 courts of the United States in respect to such cases. N.ow, we all 
 know, whether lawyers or not, that the decision of a referee fre- 
 quently decides the case; that is, it is acquiesced in without further 
 litigation. That is the history of those cases in which it has been 
 claimed the Commission exercised the power of making rates. 
 
 The record of the last five years will show that there are numerous 
 similar cases. In 1897 the decision was finally reached by the courts 
 which it was claimed cut off a power of the Commission which it pre- 
 viously had. The reason that it arose was that the Commission under- 
 took to name and to put into effect what it regarded as reasonable 
 rates in contradistinction to what it claimed were unreasonable rates 
 as fixed by the carriers, and it reached that famous case, the Maximum 
 rate case, one of such magnitude and sucb importance that in mere 
 self-preservation the numerous railroads against which it was aimed— 
 for it was not one — had no alternative but to test that question. What 
 the result of that test was we all know. It was not a cutting off from 
 the Commission of any power which it had previously possessed. It 
 was simply invoking the powers of the courts to prevent the exercise 
 of what would have been a very disastrous action upon the part of the 
 Commission under a power which it never possessed. 
 
 It has also been claimed — it is difficult to conceive that it is serious— 
 that this power would be a weapon in the hands of the Commission to 
 prevent rebates. This is what I alluded to at the beginning. A very 
 few words should dispose of it. A rate fixed by the Commission can 
 be rebated and evaded as easily as any other. Therefore it would not 
 put a stop to that. ■ 
 
 The claim has been made, I believe not officially, that with that 
 power in the hands of the Commission it would act as a deterrent in 
 the matter of secret rebating or other devices for evading the tariff 
 rates. That could scarcely be considered a serious claim. If it should 
 answer as such a weapon, the effect of the use of that weapon would 
 simply be to punish not the guilty party who evaded the rate, because 
 he was already accepting less, but to punish every innocent party that 
 had obeyed the law and not evaded the rate; that is to say, if because 
 there was to be a rebate the Commission might put all rates down to 
 certain figures those who had not put the rates down would be the suf- 
 ferers, because the party that had put the rate down, as I say, had 
 already been accepting the lower rate, and therefore would suffer; no 
 punishment under the use of this particular weapon. Therefore- it 
 would be a weapon to punish the innocent and not to punish the guilty. 
 If it is not to be used, it ought not to exist at all for that purpose. 
 
 Probably the most important claim in the whole situation is that 
 such a power would enable the Commission to prevent discriminations 
 
PROPOSED AMENDMENT OF INTEESTATE-OOMMEBCE LAW. 95 
 
 between localities. It is needless for me to say to this committee that 
 the matter of adjusting rates between different localities — commercial, 
 rnanufacturing, mining, and agricultural— is an extremely intricate and 
 difficult question in any section of the country. It has been found 
 exceedingly difficult within the State borders' where such questions 
 have arisen. To apply it to the whole United States of course broad- 
 ens it out enormously. It is a question of deciding between ports, 
 deciding between distributing centers and jobbing centers, between 
 mamifacturing centers, between mining centers, between agricultural 
 and forest regions: 
 
 It is impossible to say, it is impossible even to estimate the enormous 
 variet}^ of questions that must arise in that connection, and therefore 
 the question presents itself as to what is the best way to deal with it. 
 The rates of this country — the relative rates, I mean, and. I am speak- 
 ing of relative rates alone — have already been adjusted in a certain 
 sense. That adjustment is the result of long experience, long and 
 sometimes bitter competition, not only between the carriers themselves, 
 but between communities, because the carrier is invariably appealed to 
 if one community feels that it can not put its product, whatever it may 
 be, into sonie distant market which it thinks it ought to reach. It is 
 not alone a question of carriers' rates. It is a question of prices. It 
 is a question of quality of goods. It is a question of every item that 
 enters into the problem as to whether a given article can be marketed 
 at a given place or not. To argue that would be endless. But the 
 result is that it has settled down to a measurable, fixed condition of 
 affairs. It can never be absolutely fixed, because the affairs of com- 
 merce fluctuate always to an extent that prevents absolute stability. 
 If absolute stability should exist there would be absolute stagnation in 
 commerce. 
 
 Let us see what the result of this question of discriminations 
 between localities has been for eighteen years since the passage of the 
 interstate-commerce act. The facts, as recorded in the Interstate 
 Commerce Commission's reports and the experience of the Commis- 
 sion, are these, and this comes from the Commission. I have stated 
 what all of the litigation was, namely, that there were 43 cases of all 
 kinds of litigation in eighteen years; there were 25 cases of litigation 
 on rates. For the ten years prior to 1901 the Commission sustained 
 31 cases of discriminations between localities. (See Senate Doc. 319.) 
 I use the ten years prior to 1900 because they happen to have been 
 grouped by the Commission itself. This shows only an average of 3 
 cases per annum, and of these 31 cases only 1 case of discrimination 
 between localities was sustained by the courts. 
 
 Now, admitting — and that is all I propose to argue before you gen- 
 tlemen—admitting that the adjustment of rates between localities 
 involving over 300,000 miles of railroad and 45 States is intricate, 
 enormous — so enormous as to be scarcely within the range of contem- 
 plation of any statement that could be made about it — if that is the 
 case, does the result of 31 cases going into court in ten years indicate 
 that there is a necessity for giving to another authority than that 
 which now has it the power to name the rates between those localities ? 
 
 There is a feature of that which is the Commission's affair, of 
 30urse, and not ours, but the Commission would be overwhelmed 
 with applications for relief from discrimination. I think the town 
 jr the district or the section in this country of any importance which 
 
i^6 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 does not feel in some form or other that it is discriminated against i>; 
 
 very rare. n i . ■ ■ 
 
 The adjustment between those localities is made by competition 
 between railroads, some of which reach one locality andsome another, 
 and a decision is obliged to be reached from a commercial standpoint. 
 It might be entirely different if all of these communities, or all these 
 centers of industry of whatever character, were reached by all the 
 railroads. It would then "be entirely a different question. But the 
 adjustment, such as it is, that now exists grows out of the fact of the 
 earnest purpose of a railroad which reaches a given point to see that 
 that point is protected and its products distributed against another 
 point which it does not reach and into the markets of which it wants 
 to put its products. That is the adjustment of competition, and it is 
 not competition alone of the carriers, as I have already stated. It is 
 the competition of commercial communities as well, and to undertake 
 to adjust that solely with reference to the carriers will be to cover only 
 one portion of that very complex and important subject. 
 
 The next point that has been made is that this legislation is neces- 
 sary to prevent the making and the continuance of unreasonable rates, 
 or rates unreasonable and unjust within themselves. Going back for 
 a moment to the result of the experience of the Interstate Commerce 
 Commission in its own decisions, and what has transpired where its 
 decisions have been appealed to the courts for eighteen j'ears, there 
 has not been one single case of unjust and unreasonable rates — unjust 
 and unreasonable per se — sustained by the courts of this country; not 
 a single one. The chairman of the Interstate Commerce Commission 
 himself has borne testimony to the fact that unjust and unreasonable 
 rates per se have become obsolete; that they do not exist. Of course, 
 I mean do not exist substantiallj^; I am not denying that they are pos- 
 sible. But if they are possible, they are condemned by the existing 
 law. They were condemned by the common law before the existing 
 law was passe^d. Since the passage of the law in 1887 the power of 
 the Commission has been materially increased by amendments to it. 
 Finally, by the Elkins Act of 1903, they have been'given what might 
 be called almost summary powers, as complete and prompt and drastic 
 as it is possible to give in respect to any offense against the law in any 
 country where trial must precede conviction. 
 
 If there are unjust and unreasonable rates in existence, the remedy 
 is at hand. We have seen that of the cases which have gone to the 
 courts not one single charge of unjust and unreasonable rates per se 
 has been sustained. Now I ask, gentlemen, if it is fair to the railroad 
 interests, under thqse conditions, that the irreparable injury shall be 
 inflicted upon the railroads of having that rate take effect on the find- 
 ings of the Commission? If there had been numei'ous cases where 
 rates had been adjudged unjust and unreasonable, and they had been 
 found to be so, and the penalty of reducing them had been inflicted 
 after long delays, and therefore an injustice had been done to others, 
 the case might wear a ver}'^ different aspect. But precisely the oppo- 
 site is true. On trial they have not been sustained; and from that I 
 think it is perfectly fair to argue and to answer that the necessity does 
 not exist for taking out of the hands (even after hearing a complaint) 
 of the railroad companies the making of those i-ates which, to a very 
 large extent — not entirely, of course — are the subject of competition 
 between carriers and competition between communities. 
 
PROPOSED AMENDMENT OP INTERSTATE-COMMERCE LAW. 97 
 
 In this connection in your committee room several weeks ago I 
 heard in person the statement made that this reason for the passage 
 of this act was a potent one, namely, because rates were unreasonable, 
 they were being raised extortionately ; and as alleged proof of that 
 the figures given in Senate Document No. 257 were placed before you, 
 the figures being these, that the average rates per ton per mile on all 
 the railrokds in the United States for the year ending June 30, 1903, 
 were thirty-nine thousandths of 1 cent per ton per mile higher than 
 they were in 1899, four years previous. There is no denying that 
 fact as stated in the Interstate Commerce (Commission's report. It is 
 probably proper to state, though, in passing, that the resolution which 
 called for that information from the Interstate Commerce Commission 
 requested a statement of the rates and of the effect on gross receipts 
 and net of the railroads. The answer 
 
 Mr. Mann. I think you said thirty-nine thousandths ^ 
 
 Mr. Spencer. Thirty-nine thousandths. 
 
 Mr. Mann. It should be thirtv^-three thousandths, if j^ou will par- 
 don me. 
 
 Mr. Spencer. I beg pardon, then; I am mistaken. I had that 
 impression. 1 am speaking from memory, and my notes had it thirty- 
 nine thousandths. 
 
 Mr. Mann. Well, I have a memorandum taken from the report of 
 the Commission itself. 
 
 Mr. Spencer. I beg pardon. I am very much obliged. That even 
 makes it less. But at all events it does figure out $155,000,000 
 
 Mr. Mann. That is right, on my basis. 
 
 Mr. Spencer. Yes, sir; I accept the correction with pleasure. 
 
 The fact is that the net results for that year were relatively smaller. 
 It is well known that during that period there was almost a constant 
 rise in the cost of material and labor in this country, so that the net 
 results to the railroad companies were less in 1903 than in 1899; and it 
 is an easy calculation to make that the railway companies paid out 
 more to haul a ton of freight 1 mite-the last-mentioned year than they 
 did in the first-named year, and that the money that they got would 
 not go as far in purchasing power as the dollar of 1899. But apart 
 from that, we all know that the fluctuation of rates per ton per mile 
 has, taking the average, gone steadily down. It happens in this pai'- 
 ticular resolution, whether by chance or otherwise I shall not under- 
 take to say, that the lowest average rate for any year in the history of 
 this country was taken, namely, 1899. From the formation of the 
 Interstate Commerce Commission, or going back of that, if you please, 
 until 1899, that rate went down steadily, and in the annual report of 
 that very year — 1903 — the Interstate Commerce Commission took 
 occasion itself to say that if, in meeting commercial depression, the 
 railway rates were put down during such a period, it was nothing but 
 fair that on a return of prosperity they should go up. 
 
 The Chairman. Mr. Spencer, the hour has arrived when, under the 
 rules of the House, this committee must adjourn. Will you continue 
 your remarks in the morning? I think we have another order for 
 to-morrow, but we have time enough to let you conclude. 
 
 Mr. Spencer. At your pleasure, sir. 
 
 Mr. Davet. May I ask for an executive session to-a:6rrow for the 
 purpose of considering the motion which I offered? 
 
 I c L— 05 7 
 
98 PROPOSED AMENDMENT OF INTEESTATE-OOMMEROE LAW. 
 
 The Chairman. Very well. The committee will be in recess until 
 to-morrow morning at 10.30 o'clock. 
 
 (Thereupon, at 11.56 o'clock a. m., the committee adjourned until 
 to-morrow, January 13, 1905, at 10.30 o'clock a. m.) 
 
 Thursday, January 13, 1905. 
 The committee met at 10.30 o'clock a. m., Hon. W. P. Hepburn in 
 the chair. 
 
 STATEMENT OF SAMUEL SPENCER, ESQ., PRESIDENT OF THE 
 SOUTHERN RAILWAY COMPANY— Continued. 
 
 The Chairman. Proceed, Mr. Spencer. 
 
 Mr. Spencer. Mr. Chairman and gentlemen: At the point of inter- 
 ruption yesterday I was in tTie midst of the discussion of that state- 
 ment or argument which had been presented to the committee in respect 
 to the increase of approximately $155,000,000 in 1908 as compared with 
 what the revenue would have been on the same tonnage at the aver- 
 age rates which applied in 1899, the statement that that increase had 
 taken place having been used as an argument that rates were rising 
 in this country and were becoming unjust, unreasonable, and extor- 
 tionate. Mr. Mann will pardon my repetition, because this has a par- 
 ticular bearing upon the difference of rates between 1899 and 1903, 
 upon which difference the computations were made in respect to the 
 tonnage of 1903 in order to produce the $155,000,000. 
 
 I think Mr. Mann, on examining the question, will find that the 
 average rate between those two years was thirty-nine thousandths of 
 1 per cent instead of thirty-three thousandths of 1 per cent. I should 
 be delighted to accept the difference, or the correction made by Mr. 
 Mann, because it would add force to what I have to say. 
 
 Mr. Mann. I understand 
 
 Mr. Spencer. But I think Mr. Mann was using the figures of 1899 
 and 1902, and I was using the figures of 1899 and 1903. Am I right? 
 
 Mr. Mann. Well, Mr. Spencer, it is very easy to get at what the 
 exact figures were. The figures as I got them from the Interstate 
 Commerce Eeport for 1899 were .724 of 1 per cent. 
 
 Mr. Spencer. Yes, sir. 
 
 Mr. Mann. And the figures for 1903 were .757 of 1 per cent. 
 
 Mr. Spencer. Well, I made those of 1902 as 0.757, and it is 0.763 for 
 1903, according to the reports themselves. 1 went back to the reports 
 and not to Document 257. 1 went back to the Annual Report of the 
 Commission. 
 
 Mr. Mann. I took the statement of the Interstate Commerce Com- 
 mission, and unless I am mistaken — which might easily be 
 
 Mr. Spencer. It really is not material, except that if I should 
 accept the figures as now suggested by Mr. Mann the increase would 
 be less than the 1155,000,000, and I think we must stand on the point 
 that the 
 
 Mr. Mann. It does not affect the principle, of course. 
 
 Mr. Spencer. It will not affect the principle in the slightest. 
 
 Now, as I said at closing, the year of the lowest average rate in the 
 history of the countrv was in 1899 and that year was selected as the 
 
PROPOSED AMENDMENT OP INTERSTATE-OOMMEBCE LAW. 99 
 
 basis of comparison. In the annual report of 1903 of the Commission 
 this language was used, not having reference to the point that is before 
 us, but to an entirely different question: That if rates are reduced 
 during periods of commercial depression, it would be reasonable that 
 they should be increased on the return of industrial activity. That 
 may not be an exact quotation, but it is substantially so. I find I have 
 it here. " When reductions have been made on account of commercial 
 depression, it is difficult to see why corresponding advances may not 
 be properly made witli the return of business prosperity," is the 
 wording. 
 
 Now, if that be true, and there can be no doubt about it, to reach 
 fair conclusions in respect to that small increase of thirty -nine thou- 
 sandths of 1 cent for the carrying of 1 ton of freight 1 mile it 
 would certainly be fair to go back and look at what the average was. 
 When the interstate- commerce law took effect the rate was over 1 
 cent. In 1903, the year on which this argument was made, it was 
 0.T63. There is a reduction of over 26 per cent within the period 
 since the interstate-commerce law was passed. If the railroads are to 
 be judged — and they ought not to be; I am not saying that at all — 
 adversely because during one particular period, from 1899 to 1903, 
 the rate rose gradually; if that is to be argued as representing an 
 extortionate raising of, rates, the reduction from 1887 down to 1899, 
 twelve years, from over 1 cent to 7.24 mills, ought to be put as a 
 balance upon the other side of the account. 
 
 The fact is, however, that the increase which took place from 1899 
 to 1903 did not, as it would appear from the surface of the report and 
 upon the statement and arguments which have been based upon it, indi- 
 cate a raising of rates in this country at all. The average rate per ton 
 per mile is always fluctuating. It is true that the average of all the 
 fluctuations has been down continually except for short periods, but it 
 is fluctuating more or less all the time. It would show a fluctuation 
 from now until next July, and from next July until next December. 
 If the rates were absolutely rigid and fixed and unalterable by any con- 
 ditions whatever, there are other large and important elements enter- 
 ing into the question of how an average rate results than the mere 
 point of what each individual tarifl' upon each individual article may be. 
 
 I have pointed out yesterday that even if there had been a raise of 
 rates, that the dollar which the railroad company got for that business, 
 for that particular j'ear, 1903, would have purchased less in the way 
 of its necessities in labor and material than it would have purchased 
 in 1899, upon the same tonnage; and all this increase of that 
 $155,000,000 is based upon the theoretical view of the same tonnage. 
 JThe $155,000,000 is made up assuming that the tonnage of the two 
 years was the same, and applying the average rate. 
 
 Mr. TowNSEND. Which year do you assume the tonnage to be in? 
 
 Mr. Spencek. Nineteen hundred and three was the year for which 
 the tonnage was taken, the larger tonnage of the two. If there is an 
 argument made upon the two, of course they took the larger tonnage. 
 On the same basis the operating expenses increased per ton, or per 
 unit of traffic, whichever you may call it, in a very much larger pro- 
 portion than the rate per ton per mile increased. 
 
 Now, what were the causes which were operative? Various explana^ 
 tions have been made. The manifest one to look at first is the difference 
 in the classes of tonnage. The statement has been erroneously made, 
 
100 PROPOSED AMENDMENT OF INTEKSTATE-COMMEECE LAW. 
 
 from what source 1 do not know at the moment, but I have seen it in 
 print, and lam not sure that it has not been presented to this com- 
 mittee, that the amount of low-class tonnage, which takes low rates, 
 increases more rapidly than the amount of high-class tonnage. Now, 
 sometimes that happens and sometimes it does not. Of course if rates 
 remain fixed and you get a larger proportion of low-class tonnage and 
 a smaller proportion of high-class tonnage the average rate per ton 
 of the total result will go down. Conversely, if a larger proportion of 
 high-class tonnage is shipped and a smaller proportion of low-class 
 tonnage the rate goes up. 
 
 There were two things that happened in 1899 and immediately there- 
 after which bore in a very important way upon that question. One 
 Tvas the movement of Government stores to the Spanish war. A great 
 many of them moved at low rates. Under the land grants thej^ 
 all moved at reduced rates. They all moved, practical!}', at special 
 rates made for the occasion. The j^ear 1899 happened to be marked 
 as the period of the lowest rates in the history of this country; by 
 far the lowest, in the movement of what is probabh- the very largest 
 single tonnage, and that is bituminous coal. After that the rates on 
 bituminous coal became more normal. They were certainly abnor- 
 mally low in 1899. That would have affected it. 
 
 Apart from that — 1 have not seen anyone state this fact, and the 
 statistics bear it out — j-ou will recall the period of depression which 
 preceded by a couple of years 1899. That depression was very great, 
 as you all remember, in 1896. The recovery in 1897, after the inau- 
 guration of Mi". McKinley, was slower than had been anticipated. It 
 came in 1898, and the fiscal year 1899 reflected some of the results of 
 that depression, although the revival of trade had been begun at that 
 time. 
 
 It is a well-known fact, and it is easily susceptible of proof, if you 
 want to burden yourselves with statistics, that when a period of 
 activity begins in this countrj^ it begins in one of two ways, or both; 
 and in that particular case it began in both. It begins with the move- 
 ment of large crops of agricultural products, the great bulk of which 
 move at low rates — extremely low rates — per ton per mile. Our export 
 grain business is done at an exceedingly low rate, far below the aver- 
 age — scarcely more than half of the average for the total tonnage of 
 the United States. It begins with the acti^-ity of the iron mills and the 
 furnaces. Of course, therefore, the coal mine and the iron-ore mine 
 and the coke oven all provide low-class freights. Thei-efore, the 
 movement at the beginning of a period of prosperity is at a less aver- 
 age rate per ton per mile than if everything were in normal condition. 
 
 Now, tnen, you follow that along for three or four years, as th^ 
 prosperity of this country developed from 1899 to 1903, "marking the 
 very highest period of activity and wealth and wealth production in 
 the history of the country, and what is the result* The result of the 
 movement of the large crops and their sale, the result of the operation 
 of the blast furnace, and the rolling mill, and the coal mine, and the 
 coke oven, is that money is diffused from one end of this country to 
 the other. That is the time when people have money — the people at 
 large— and during that period they had more of it than at any time in 
 our history. That is when the h'igh-class freights, the merchandise, 
 the dry goods, the luxuries of all kinds begin to move, and move in 
 larger numbers. Taking the total tonnage of the countrv— the agri- 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 101 
 
 cultural products in 1899 were 11 per cent of the total; in 1903 they 
 were 9.56 of the total. The products of animals were 3.12 of the total 
 of 1899, and thej' were down to 2.63 in 1903. The products of mines 
 were 51.47 in the one case, in 1899, and 51.56 in the other, in 1903. 
 The manufactures were up 
 
 Mr. Adamson. Are you speaking of tonnage or rates? 
 
 Mr. Spencer. Tonnage — tons of movement — combating the state- 
 ment that although the average rate per ton per mile went up it was 
 in the face of the alleged fact that low classes grow more rapidly in 
 inovement than the high classes. 
 
 Now, we have seen how those low classes dropped, the product of 
 the mines standing practically still. The products of the forest went 
 up slightly, and the product of the forest is at a high rate — from 10. 89 
 to 11.67. We now come to manufactures, of which I spoke. It was 
 13.45 per cent in 1899 and it was 14.39 in 1903. The merchandise 
 went from 4.49 up to 4.69. Miscellaneous commodities, which include 
 the articles unclassified, the kinds not shown in the other classes, 
 advanced from 5.25 in 1899 to 5.50 in 1903. 
 
 The'fact is therefore true that the high-class freights increased more 
 rapidlj' in amount than the low-class freights, and therefore there 
 would have been an increase in the average rate per ton per mile if 
 tariffs had stayed exactly where they were. 
 
 I have gone very much more into that than I intended, and I will 
 just call attention to one more thing, as to whether that was a large 
 increase, under the circumstances. The difference, as I have stated, 
 was thirty-nine thousandths of 1 per cent per ton per mile. And it is 
 spoken of as representing an enormous increase in rates and charges 
 by the carriers in this country. In the year 1902 the Interstate Com- 
 merce Commission in its report, commenting upon the difference in 
 rate per ton per mile — exactly the same subject — between the years 
 1897 and 1902, referred to the fact that that difference was forty-oue 
 thousandths of 1 per cent (you will observe that it was thirty-nine 
 thousandths in the other case), and that was coupled with the state 
 ment that, in their words, "broadly speaking, the rates were about 
 the same."' Now, if a difference of forty-one thousandth? of 1 pei 
 cent is "about the same" in commenting upon this subject in 1902, it' 
 seems scarcely reasonable to characterize a difference of thirty-nine 
 thousandths in 1903 as "enormously" increasing the rates in this 
 country. It illustrates merely the point of view. 
 
 Mr. Manx. What was the first year you named there ? 
 
 Mr. Spencer. 1897 as compared with 1902. 
 
 Mr. Mann. Have you made any calculation as to how much more 
 the total freight bill would have been in 1903 if the freight rate per 
 ton per mile in 1897 had been in force in 1903 'i 
 
 Mr. Spencer. The freight rate? That difference is $165,000,000. 
 That is precisely the calculation which has been made, if I understand 
 Mr. Mann's question. 
 
 Mr. Mann. No; the position that has been taken is that if the 
 freight rate of 1899 per ton per mile had been in force in 1903, freight 
 collected would have been $155,000,000 less than actually was the case. 
 Now, have you made any calculation as to how much more would have 
 been collected if the freight rate per ton per mile of 1897 had been in 
 force in 1903? 
 
 Mr. Spencer. 1 have not made it, but you can make it approxi , 
 
102 PROPOSED AMENDMENT OF INTEESTATE-OOMMEECE LAW. 
 
 mately in a moment. The rate in 1897 was 0.798 and in 1903 it was 
 0.763. There are thirty-five thousandths upon the same tonnage as 
 thirty-nine thousandths. It would have been about 11 per cent off of 
 
 fl55;000,000. .•,■;, 
 
 Mr. Richardson. Was there not a gradual decrease o± railroad 
 freights from the close of the civil war down to 1900? 
 
 Mr. Spencer. At the close of the civil war I have not the figures. 
 1 have the figures back as far as 1870. 
 
 Mr. Richardson. What was the cause of the sudden increase or 
 raise of the charges from 1900? 
 
 Mr. Spencer. It has not been sudden. 
 
 Mr. Richardson. That is what I asked. Has it been sudden ? 
 
 Mr. Spencer. No. 
 
 The Chairman. He has been discussing that prior to your coming 
 in at length. 
 
 Mr. Richardson. 1 did not know it. 
 
 Mr. Adamson. I understand your 'idea to be that if in 1897 as high 
 a character of goods had been shipped, they would have been charged 
 in a higher classification, and the difference would not have been as 
 much as $155,0.00,000? 
 
 Mr. Spencer. No; it would not. If the character of the tonnage 
 had been precisely the same in the two vears there would have been no 
 such difference as $156,000,000. 
 
 Mr. Adamson. The difference in charges would have been greater, 
 because the goods would have been in a higher classification, and there 
 would have been no change in the classification ? 
 
 Mr. Spencer. Well, that is true; and, if you will pardon me, the 
 fact is in this case that there was more of the higher class. 
 
 Mr. Adamson. Of course 
 
 Mr. Spencer. And if you are going to make the comparison not 
 ouly of the same rate per ton per mile, but of the same character of 
 tonnage for the two years, the $155,000,000 would not have worked 
 out. 
 
 Mr. Adamson. Then if you apply the rates in 1897 to the character 
 of tonnage in 1902, the difference would not be so great? 
 
 Mr. Spencer. No. 1 say it would not, although I have not looked 
 at it, because the relative amount of high-class tonnage was rising dur- 
 ing the whole of that time after 1896. 
 
 Mr. TowNSEND. Have not the railroads changed their classification, 
 changing from. the lower to the higher, during that time ? 
 
 Mr. Spencer." Sometimes, yfes. On any wholesale basis, no. But 
 there are fluctuations going on in classifications as there are in rates, 
 all the time. 
 
 Mr. TowNSEND. Can you state how much that change has been ? 
 
 Mr. Spencer. I could not. It would require a very intricate analy- 
 sis for the whole country. No one railroad would have it, you know. 
 We would have to go to the Interstate Commerce Commission to get it. 
 
 Mr. Townsend. To make j'our argument complete, we ought to 
 know that, ought we not? 
 
 _Mr. Spencer. Well, I think not; because we are necessarilj^ dealing 
 with it upon general principles. You could analyze it down to any 
 point that you please, but I think the point is clear, irrespective of 
 that, that the gradual rise in the average rate per ton per mile on all 
 the tonnage of the whole country to the extent of thirty-nine thou- 
 
PE0P08EB AMENDMENT OF INTEB8TATE-C0MMBRCE LAW, 103 
 
 sandths of one cent per ton per mile is not significant of any elevation 
 of rates in this country, and that is the only point to which I am 
 addressing myself— as to whether there is any indication that rates 
 are being raised or becoming extortionate in this country. 
 
 Mr. Adamson. In changing classifications, do you ever lower the 
 classification of any article in common use? 
 
 Mr. Spencer. Frequently; in fact, the great majority of changes 
 are in that direction. 
 
 Mr. Richardson. What principle governs you in making your classi- 
 fication? Is it the articles or goods that are related to each other? 
 
 Mr. Spencer. They are related to each other. 
 
 Mr. Richardson. And when you establish a classification and put a 
 rate upon it that embraces all of the articles or goods of that nature 
 and kind? 
 
 Mr. Spencer. Of that nature and kind. 
 
 Mr. Richardson. And that are dependent upon each other ? 
 
 Mr. Spencer. Well, dependent upon each other or for any reason 
 for convenience classed together. I do not know that I could give a 
 better illustration of this very complicated subject than this, it has 
 grown up so gradually. Originally it was simply a means of obviat- 
 ing the necessity of naming rates upon every commodity by getting 
 together a class and saying that that particular class shall take a cer- 
 tain rate. 
 
 I do not know that I can give any better illustration of it than to 
 say that when goods come through the custom-house they are classed. 
 That is for convenience, because commodity rates upon all the com- 
 modities, everything that appears in the United States, would be end- 
 less, and it is a mere matter of convenience. Now, experience has 
 demonstrated that a classification did not wholly answer the purpose; 
 and therefore articles have been taken out of what are known as classes 
 A, B, C, D, or 1, 2, 3, 4, and 5, and put in with commodities. Coal, 
 for instance, got to moving in such large quantities that it was a class 
 of itself. Pig iron moves in a class of its own. Cotton moves in a 
 class of its own. Wheat and corn all move irrespective of the num- 
 bered classes. 
 
 Mr. Adamson. Just for information, if you will excuse me. When 
 you make a classification that way, say in the third class or the fourth 
 class, that is not the same classification throughout .the whole country; 
 it only applies to the particular railroads in a certain province or ter- 
 ritory ? 
 
 Mr. Spencer. It is limited to certain railroads that have agreed to 
 adopt that classification. That is all. It may be one or it may be a 
 dozen. 
 
 Mr. Adamson. And the same articles or the same goods in any other 
 section of the country may be classed entirely diflferentl}' ? 
 
 Mr. Spencer. Yes, sir. 
 
 Mr. Adamson. And then, when you fix the class, for instance, in 
 the territory in which your railroad or the others have agreed to a 
 certain tariff, it only applies to that territory and none other? 
 
 Mr. Spencer. Yes, sir; that is, the bill of lading is issued undei 
 that particular classification. 
 
 Mr. Shackleford. In that connection, would there be any objec- 
 tion, by either the shipper or the carrier, if there should be a tight and 
 fast uniform classification for the country? 
 
104 PKOPOSED AMENDMENT OF INTEBSTATE-COMMEECE LAW. 
 
 Mr. Spencer. Theoretically 1 should say not, if it could be done 
 but what would happen would be this— and that has been the gvei 
 obstacle in the way of doing it so far— that the classification, of course 
 fixes the rate unless you alter the tarifi' at the same time. 
 
 Mr. LovEEiNG. May I ask vou 
 
 The ('hairman. I would like to have Mr. Spencer complete hi 
 answer first. 
 
 Mr. Spencer. Yes, sir, The difiiculties which have arisen are tha 
 the A road classifies a certain article in a certain class, say in Califoi 
 nia, and B road in New England classifies it in a difterent way, bot 
 of those classifications having grown up as a matter of practice in the 
 particular region, and the i-ates having become settled upon thai 
 Now, the rates on those two classifications may be entirely difierent o 
 they may be the same. Such a coincidence might occur. But if yo 
 undertake to make it uniform, each road is going to say and eac 
 region is going to say: " Well, if I am to adopt that it thi-ows my rate 
 out of line. I have either got to lower certain rates to do it or 1 hav 
 got to raise certain rates to do it, and that will work harm or injustice. 
 
 Mr. Shackleford. It would not be any inconvenience to adjust th 
 rates to a general and uniform classification ? 
 
 Mr. Spencer. It would be a great convenience, if it could be done 
 
 Mr. Shackleford. Well, would it be an impossible task to adjus 
 the rates to a uniform classification ? 
 
 Mr. Spencer. I could not answer that question as to whether i 
 would be impossible or not. In the end, 1 do not suppose, in thes 
 matters, that anything is impossible; but to do it violently and sue 
 denly would be impossible without a commercial upheaval of som 
 kind. You wovild have a distorted condition of affairs. 
 
 Mr. Adamson. Do not different commodities predominate in diff'ei 
 ent sections of the country? 
 
 Mr. Spencer. Yes, sir. 
 
 Mr. Adamson. For instance, in California and Massachuseti 
 oranges would be more important at one end and codfish at the othef 
 (Laughter.) 
 
 Mr. Spencer. Precisely. 
 
 Mr. Adamson. That is an exaggerated statement, of course, but : 
 expresses my idea. 
 
 Mr. Spencer, 'l^he classifications originally upon each road wei 
 made up with reference to that road. There was a time in this countr 
 when each railroad was a little territory within itself. It did nc 
 exchange business all over the United States as is done to-day. The; 
 classifications gi-ew up from that primitive condition. They were n( 
 made primarily or originally to fit the present conditions. What hf 
 been done by a gradual process of evolution is that, as circumstance 
 arose, certain commodities would become important in certain commi 
 nities, and classifications would be made covering large territories ar 
 areas which would be adopted by roads similarly situated carryir 
 similar products. That process of evolution is still going on, but 
 has b}^ no means covered the entire United States, and except at tl 
 expense of commercial disturbance must be a gradual process. It 
 growing every day. 
 
 Mr. Adamson. 1 was only going to say that 1 think I can show yc 
 language of the Supreme Court in which they say that uniformity 
 absolutely impossible in the United States in commerce. 
 
PROPOSED AMENDMENT OF INTEKSTATE-COMMERCE LAW. 105 
 
 Mr. Spencer. It is. And when all the business of this country 
 moves at uniform fixed rates this countr}' is through growing. 
 
 Mr. LovBRiNG. I would like to ask: Take, for instance, dry goods; 
 manufactures are in one class, and the rate is made, say, from Boston 
 to Atlanta at one rate for that class. Is it the same on the return from 
 Atlanta to Boston as it is from Boston to Atlanta? 
 
 Mr. Spencer. I can not answer that specifically with reference to 
 those two points. 
 
 Mr. LovERiNG. Is it not very much larger? 
 
 Mr. Spencer. 1 can not answer it specifically. 
 
 Mr. LovERiNG. Is it not very much larger? 
 
 Mr. Spencer. The classification is very frequently diflerent in the 
 two directions, and I think as a rule it is difierent. In the trunk-line 
 territory it certainly is the case. 
 
 Mr. LovERiNG. Take it in the matter of drj' goods; does it not cost 
 a great deal more to ship dry goods from Boston to Atlanta than from 
 Atlanta to Massachusetts? 
 
 Mr. Mann. It can not be possible that they ship anj' dr3' goods from 
 Atlanta to Boston ? 
 
 Mr. LovERiNG. They do, sir; a great deal. 
 
 Mr. Spencer. You will probably recall the fact, Mr. Lovering, that 
 in the annual report of the Interstate Commerce Commission for last 
 year it was stated that there were 165,000 tarifis filed in that one year 
 with them by the railroads. You will therefore pardon my not know- 
 ing about the particular rates embraced in your inquiry. 
 
 Mr. Sherman. Mr. Spencer has stated the general principle, that 
 the freight rate is frequently much larger in one direction than it is 
 in the other. 
 
 Mr. Spencer. Yes, sir; and that may be the rate itself, or by difi'er- 
 ence of classification. 
 
 Mr. Shackleford. Is that due to the fact that railroads are liable 
 to have more demand for cars in one direction than in the opposite 
 direction ? 
 
 Mr. Spencer. That is always the case. There is always an excess 
 in one direction. Moreover, this is true, and you must not lose sight 
 of that, because it is a prime factor in this situation, that out of Mew 
 England and the Eastern States, from the importing ports, the move- 
 ment of merchandise is very much larger inward than the movement 
 of merchandise is from the interior to the coast, because our merchan- 
 dise and manufactures are as yet in the eastern portion of this country, 
 and the eastern portion of the country also does the importing. The 
 interior of the countrj' is a manufacturing territory of lower class goods 
 than dry goods and things of that kind; that is, the highly finished 
 products, and it is still predominantly an agricultui'al region. Now, 
 the tariffs and the classifications are made east bound with reference 
 to the convenient grouping of the particular products which prevail in 
 that direction, going back to the point that the classification is a mere 
 convenient grouping of the stufl[' that does move. If one class of stuff 
 moves west, a classification is made with reference to that particular 
 kind of movement. 
 Mr. Lovering. Does that depend on the volume of it? 
 Mr. Spencer. No; it depends upon the character and volume both. 
 As 1 say, a classification started as a mere matter of convenience to 
 obviate having a thousand and one commodities to deal with, the idea 
 
106 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW 
 
 being to classify them as you classify imports at the custom-house 
 am consuming a great deal of your time. 
 
 Mr. Richardson. 1 understood you to say at the beginning of j 
 statement that you were entirely in favor of a law prohibiting reba 
 
 Mr. Spencer. Yes, sir; absolutely. You can not make it any 
 tight for me. 
 
 Mr. Richardson. It can not be made too drastic to suit you, so 
 as you speak for your own company? 
 
 Mr. Spencer. Yes; and I think I can unauthoritatively speak 
 more than 75 per cent of the railroads of this country. 
 
 Mr. Richardson. Is the practice of rebates going on among ] 
 roads now? 
 
 Mr. Spencer. No; not to any appreciable extent. It is practic 
 a criminal act to-day. For me to say "no" absolutely would be 
 my saying, probably, that robbery is not going on in the United St 
 to-daJ^ I suppose it is, but I do not know it. 
 
 Mr. Richardson. You do not know it? 
 
 Mr. Spencer. I only mean to say this, that it is decidedly the exi 
 tion. It is not countenanced by any honest, well-managed railroa 
 this country, and 96 per cent of all the railroads in this country w( 
 put their face against it just as emphatically as you would. 
 
 Mr. Richardson. And the law to-day prohibits it? 
 
 Mr. Spencer. Absolutely prohibits it, and it provides sumn 
 methods for the punishment of it. 
 
 Mr. Richardson. Then no additional law that we might ,ir 
 here 
 
 Mr. Spencer. I expressed the opinion yesterday that I do not tl 
 any additional legislation is necessary for that purpose. 
 
 Mr. Mann. Before you go further, may I ask you a question al 
 this $155,000,000? 
 
 Mr. Spencer. Certainly. 
 
 Mr. Mann. As I understand, the claim that $155,000,000 more 
 collected for freight in 1903 than would have been collected at the r 
 in 1899 is arrived at by multiplying the total mile tonnage by the 
 per mile tonnage, 0.724, of 1899? 
 
 Mr. Spencer. Yes, sir; and 0.763 of 1903. 
 
 Mr. Mann. And that gives an increase of $155,000,000 in frei 
 Now, then, would the converse also be true if that is the cor 
 method of arriving at it? In 1896 it is claimed that the Inters 
 Commerce Commission had the power to say what was a reason 
 rate, and it must be assumed that if the}' exercised that power the i 
 then in existence were reasonable; and in 1896 the rate 
 
 Mr. Spencer. It did not make a single one of them. 
 
 Mr. Mann (continuing). In 1896 the rate per ton per mile was 
 of a cent, or forty -three thousandths higher than it was in 1903? 
 
 Mr. Spencer. Yes, sir. 
 
 Mr. Mann. Now, if the proposition is true that $155,000,000 r 
 was collected in 1903 than should have been collected on the rai 
 1899, is it not true converselj' that if the rate of 1896 had been in e 
 in 1903 there would have been nearly $200,000,000 more collected 
 were in fact collected ? 
 
 Mr. Spencer. Yes. sir— well, I should not make it $200,000,00 
 
 Mr. Mann. Well, it is not quite $200,000,000. 
 
 Mr. Spencer. But it would have been considerably larger. 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 107 
 
 Mr. Mann. It would have been over 1160,000,000? 
 
 Mr. Spencer. Yes; considerably over. 
 
 Mr. Mann. Now, is there such a difference in fact in the freight 
 rates ? 
 
 Mr. Spencer. No, sir; 1 do not believe there was. It would involve 
 an examination of every waybill that was made during that 3'ear to 
 finally answer that question; but you can group the information and 
 arrive at it very closelj' and approximately. 
 
 Mr. Mann. Was there such a reduction in the general average of 
 freight rates between 1896, when the Interstate Commerce Commis- 
 sion claimed it had authority to fix rates, and 1903, when it admitted, 
 by the Supreme Court decision, that it did not have authority? Was 
 there such a reduction during that period of time as would make a dif- 
 ference of more than 1160,000,000 in freight? 
 
 Mr. Spencer. No, sir; I do not think there was that difference in 
 the tariffs. ' I think the difference was partially made up, just as I have 
 stated about the $155,000,000. I must saj', in all fairness, that it was 
 partially made up in the difference in the character of the movements, 
 and not entirely in the rates. These rates which had been in effect 
 were not changed to that extent. I have no hesitation in asserting 
 that the average changes of rates wherever changes took place were 
 reductions instead of increases. There may have been a few increases, 
 but the great majority were decreases and always are. 
 
 The Chairman. Proceed, Mr. Spencer. 
 
 Mr. TowNSEND. Did you assent to the proposition or statement of 
 Mr. Mann that the Interstate Commerce Commission had the power, 
 really, under the act, to declare what was a reasonable rate ? 
 
 Mr. Mann. I said " claimed to have " the power. 
 
 Mr. Spencer. No, sir; he said "claimed to have it." No, sir; I 
 must distinctly disclaim that. I do not think that that power ever 
 existed. 
 
 Mr. TowNSEND. That they can not ever declare what is an unreason- 
 able rate ? 
 
 Mr. Spencer. Yes; undoubtedly the law gives them that power. 
 
 Mr. TowNSEND. That is the question I asked you. 
 
 Mr. Richardson. Do you recall any instance for ten years after the 
 existence of the act where they did exercise the authority of fixing a 
 rate after they had declared a rate to be unreasonable? 
 
 Mr. Spencer. They did not do that any more than they are doing 
 it now. 
 
 Mr. ,TowNSEND. That is not my question. I did not ask if you 
 thought they had the power to fix rates, but if you now believe that 
 the Interstate Commerce Commission has the right to declare what is 
 an unreasonable rate? 
 
 Mr. Spencer. Yes, sir; they have the right to make the declaration. 
 We have also the right to dispute it in the courts. 1 am coming to 
 that in a few minutes, if I am not consuming too much of the time of 
 the committee. The question of the determination of what is a rea- 
 sonable or an unreasonble rate is purely a judicial function under 
 our law. 
 
 Mr. TowNSEND. Has that question ever been passed upon directly 
 by the the Supreme Court, saying that this Interstate Commerce Com- 
 mission has the right to declare what is an unreasonable rate? 
 
 Mr. Spencer. T do not recall the language of the court on that sub 
 
108 PROPOSED AMENDMENT OF INTEKSTATE-COMMEBCE LAI 
 
 ject. They have done that in many cases, and in two cases, as I n 
 yesterday, where there were questions of discriminations bet 
 localities they were sustained by the courts in it. They can decl 
 rate unlawful, and the law is that their declaration on that sul 
 with the evidence before them, is prima facie evidence when the 
 tion goes to the court. I would rather you would ask that questi 
 a lawyer. I am not a lawyer. 
 
 Mr. CusHMAN. As I understand your position, Mr. Spencer, 
 that the Interstate Commerce Commission have the power to d( 
 any given rate unreasonable, but they have not the additional p 
 to declare and enforce what is a reasonable rate ? 
 
 Mr. Spencer. What they regard as a reasonable rate. 
 
 Mr. CusHMAN. What they regard as a reasonable rate? 
 
 Mr. Spencer. That is it, sir. 
 
 Mr. Lamar. Do you think that power attempted to be conf 
 by Congress would l)e a constitutional power '^ Did yo'u say 
 a while ago? 
 
 Mr. Spencer. I am not a constitutional lawyer. 
 
 Mr. Lamar. I understood you to say that. 1 was not quite su 
 
 Mr. Spencer. No. 
 
 Mr. Shacki^eford. He said he was not a lawyer. 
 
 Mr. Spencer. I did 'not state as to whether the law would be 
 stitutional or not. I would not undertake to do that. 
 
 Mr. Lamar. I thought you did say a few moments ago. 
 
 Mr. Spencer. I might have a layman's view of it; but I couL 
 sj)eak as a lawyer. 
 
 Mr. Lamar. I misapprehended a remark of yours; that is all. 
 
 Mr. Spencer. Now, I shall have to run hurriedly over a few j 
 and endeavor to show you that that particular power of substit 
 what they regard as a reasonable rate in the place of one which 
 regarded as unreasonable and to be condemned was not necessary ( 
 to protect the reasonableness of rates of this country or the re 
 rates between localities; was not necessary to give them pow 
 enforce tariffs or to prevent rebates. Against the granting of s 
 power to that particular body I want to give some reason, and i 
 will pardon my saying it again it is that particular power" that I 
 to, not legislation on railroad questions. That I am not discussing 
 moment, but only that particular power which would be prejudic 
 many respects. In the tirst place, it would necessarily diminis 
 activity of competition between localities. 
 
 In another connection, which I touched upon yesterday, and 
 which I shall say very little now, that activity of competition is h 
 made up, as I stated, of the desire of a railroad which does not 
 a certain territory to put the products which are manufactured 
 territory into the market against those which are manufactured 
 territory which it does not reach. That produces a constant ci 
 tition all the time, and not only that, but they have the active su 
 of the merchants and manufacturers along the line of their n 
 ^ut their products in the market. Now, if that power is to be 
 from the railroads who are engaged in that contest with the sh' 
 and the manufacturers and the merchants and the jobbers along 
 lines, necessarily their efforts will be to a greater or less exten 
 tralized. They would necessarily wait, if they were applied to 
 down a rate as a means of developing additional business; they 
 
PE0P08ED AMENDMENT OP INTEESTATE-OOMMEKCE LAW. 109 
 
 necessarily say: "Well, if I put that in, that is regarded as a reasona- 
 ble rate. The very fact that I put it in is almost a conclusive -argu- 
 ment — it is conclusive against me — that it is a reasonable rate that 1 
 am willing to submit to if the business pays me." 
 
 The moment the right to make rates is given to a governmental body 
 there is a power other than the other railroad, and the power of a 
 mind from a certain distance to put the corresponding rate right in 
 against it. Therefore they will wait. And that is what happens 
 to-day in the States where they have commissions exercising any 
 power to make rates. The initiation of rates upon the part of the rail- 
 roads is — I will .not say entirely, because that would not be wholly 
 true — but it is partially true that the railroads stop initiating new 
 rates in those territories. 
 
 Mr. Shaoklefoed. Right at that point, which it seems to me is a 
 crucial point in this whole controversy: As between those two com- 
 munities, would the Commission have the power to raise a rate from 
 one point rather than lower the rate from the other in order to pre- 
 serve the equilibrium which the}'^ would .seek to preserve by the regu- 
 lation of rates ? Take a case which I submitted to a witness the other 
 day: Supposing that Ea,u Claire and La Crqsse, Wis., are competing 
 points for a general central market; that the j-ate from Eau Claire is 
 supposed by the Commission to be reasonable and still Eau Claire can 
 not successfully compete with La Crosse, would the Commission in 
 such a case as that be authorized under this law to raise the rate from 
 La Crosse to Chicago rather than to lower the rate from Eau Claire to 
 Chicago ? 
 
 Mr. Spencek. Is that the question ? 
 
 Mr. Shackleford. Yes, sir; that is the question, whether that 
 would be a power granted by this bill, and whether it would be a wise 
 one to exercise. 
 
 Mr. Spencer. I must say, in the first place, that I have not read the 
 bill with reference to that particular question, as to any power that 
 might be conferred to. raise a rate. I confess, in all frankness, that 
 that aspect of it had not occurred to me as a pi-actical question. If 
 they have the right under the act, and I am answering without accu- 
 rate knowlege of the wording at the moment, to name a reasonable 
 rate in the place of one that they adjudged to be unreasonable, I should 
 say that legally and technically it would carry with it the power to set 
 the low rate up instead of putting the high i"ate down. 
 
 Mr. TowNSEND. But the Interstate Commerce Commission has 
 always ruled that that was a bill solely in the interests of the people, 
 have they not? 
 
 Mr. Spencer. I have so understood it; and I have not thought that 
 purpose was as suggested by Mr. Shackleford, for the reason, I sup- 
 pose, that I never read it with that view. 
 
 Mr. TowNSEND. 1 agree with you on that. ' 
 
 Mr. Shackleford. Have not the Commissioners themselves said 
 that they wanted the power to do that very thing that I have sug- 
 gested, ds between the two very towns that I have cited ? 
 
 Mr. TowNSEND. I do not know that. I only knew that the rulings 
 
 of the Commission have been, as I understand it, heretofore, along 
 
 the line that they are exclusively for the people, and that is why I do 
 
 not like it. 
 
 Mr. Shackleford. But there will be other commissioners that will 
 
110 PROPOSED AMENDMENT OF INTEESTATE-COMMERCE L. 
 
 follow them. It is not a question as to what has been the p 
 -but what will the law authorize. 
 
 Mr. Spencer. If I may interject there, I may say that I thi 
 power given to any tribunal to name the maximum rate for tl 
 ways, the carriers of the United States, or to carry with it th 
 to name a maximum, would have no equity in it. 
 
 Mr. Mann. I call your attention to the specific proposition 
 in the Cooper- Quarles Act. It is not the power to fix a ma 
 rate at all. 
 
 Mr. Spbncek, No; it is not. 
 
 Mr. Mann. It is the power to fix a particular rate, 
 
 Mr. Spencek. That was my recollection, as I stated it from m 
 I thought it would convey it. 
 
 Mr. EsoH. Would not'that carry with it the power to raise 
 as to lower? 
 
 Mr. Spencer. I should think so. But I repeat I did not 
 with "that view, because in all frankness 1 must say 1 do not thi 
 would arise as a practical question under it. 
 
 Mr. Shacklefoed. And in giving this power to fix rates 
 gives the power to raise rates as well as to lower rates. Wo- 
 the ultimate tendency of it be to raise the rates on water tran 
 tion where they make it impossible for railroads to live in com] 
 with water transportation ? 
 
 Mr. Spencer. At present the law does not apply to water 
 portation. 
 
 Mr. Shackleford. The Commission is seeking to have it dc 
 
 Mr. Spencer. I should say interstate commerce transporta 
 water ought to be covered, but you will find some of it that co 
 be covered. 
 
 Again, while undertaking to protect the shipper, under t 
 there is no provision for the protection of the carrier at all. Th 
 state Commerce Commission has stated in one of its reports t 
 rates in this country were in many cases too low. Now, if that 
 ought not a bill which undertakes to regulate against rates that 
 high make some practical provision for regulating against ra 
 are unreasonably and improperly low? It may be said, doubt) 
 be — that has been the practice, at all events — that that is a sul 
 which the carriers would be expected to take care of themselvf 
 of course, the burden of it must fall upon them. They can no 
 their aid with any justice or fairness the arm of the Go verm 
 support their tariffs and their management. In the first pla 
 would not receive it, and in the next place it would be impract 
 do not think that protection in the way of their raising a rate i 
 to equalize and regulate would be feasible. I do not think it\\ 
 successful in practic/C, and the only form that it can be given 
 could suggest would be that the carriers should be relieved of 
 ability which they are now under of not being able to make rea 
 agreements among themselves. The fact is that in order to main 
 rates as provided for in the interstate commerce law such agr( 
 must be made. It can not be otherwise. Rates to be unifc 
 stable, as is intended by the law, to be public under all the 
 stances, must be made with one carrier knowing what the ( 
 doing with precisely the same traffic at the same time. 
 
 The interpretation which has been placed upon the antitrus 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. Ill 
 
 that they can not make an agreement among themselves in respect to 
 traffic of any kind, whether reasonable or unreasonable. And I merely 
 submit for your consideration in that connection that if any legislation 
 is to take place in any form — I hope it will not be in this particular 
 form, if it does— that it should include something that will insure that 
 sort of stabilit}^ of rates upon the one hand which is required by the 
 law and upon the other that reasonable protection of the carriers in 
 making charges that are at least reasonably high, in order to remu- 
 nerate them for the service which they perform. 
 
 If you will look through th^ Interstate Commerce Commission's- 
 report, you will see three or four or five utterances to the effect that 
 the rates are in many cases in this country entirely too low. , Surprise 
 is expressed in one case that the service can be performed at some of 
 the rates that pertain upon the railroads. 
 
 If there is to be legislation, I merely throw out that suggestion that, 
 the cai'riers be relieved of that entirely anomalous prohibition which 
 is put upon them of making reasonable agreement among themselves. 
 They ought not to be entitled to make unreasonable ones. They ought 
 not to be entitled to make any, possibly, that are not subject to pub- 
 lic scrutiny. 
 
 Mr. Richardson. Is not that "pooling," what you mean? 
 
 Mr. Spencer. Oh, no. You can extend it until it is pooling, but 
 it is not necessarily pooling. 
 
 Mr. Shackleford. It is a joint contract for through rates ? 
 
 Mr. Spencer. A joint contract for through rates. They are in 
 existence all around. You put out a rate from Atlanta or from New 
 York to-day for the several carriers, and despite the law that I have 
 referred to, it is necessarily the case that these carriers have got to 
 exchange their views. You can say they make no agreement, but 
 they do exchange views, and issue the same rate on the same day. 
 Nothing can stop it, you know. 
 
 Mr. Adamson. Would the advantage to the carriers from this oppor- 
 tunity to make an agreement be that they could recoup in other places- 
 for their losses where they are compelled to maintain these low rates, 
 abnormally low, as you say ? . 
 
 Mr. Spencer. Well, I do not think so, to any extent. I think it 
 would have to be reasonable in itself. That is, if I understand your 
 question, if they were taking a very unreasonable rate here, which 
 they could not get out of in any way 
 
 Mr. Adamson. I take it for granted that wherever these rates are- 
 abnormally low, as you said, it is for some reason of necessity, where 
 you find that you have it to do? 
 
 Mr. Spencer. Yes, sir. 
 
 Mr. Adamson. And therefore you think that if you had authority 
 to make these agreements you could, in the general adjustment of the 
 agreement, recoup those losses elsewhere? 
 
 Mr. Spencer. No, sir. My idea was that the causes which lead to- 
 that unreasonable rate there might be removed with reference to that 
 rate if a reasonable agreement could be made. I would propose for 
 that authority — and I think I stated it accurately 
 
 Mr. Adamson. Then you could raise those rates? 
 
 Mr. Spencer. We could then raise that rate. The remedy is tO' 
 allow the railroads to make a reasonable agreement for the mainte- 
 nance of reasonable rates. If we found that we could not touch the- 
 
112 PEOPOSED AMENDMENT OF INTERSTATE-COMMERCE LA^^ 
 
 particular rate at all, and we wanted to recoup, as you sugges 
 making it up somewhere else, with the law in the form I sugge 
 we would have to submit to some public authority that agreei 
 which we proposed as a reasonable one. So that we could not e 
 lish an unreasonably high rate here in order to recoup for an ui 
 sonably low one elsewhere. 
 
 Mr. Richardson. To whom would you submit that agreemen 
 supervision ? 
 
 Mr. Spencee. To the Interstate Commerce Commission. 
 
 Mr. RiCHAEDSON. Would you give them authority to say that 
 unjust or unfair? 
 
 Mr. Spencer. If it was not just we could not do it. 
 
 Mr. Richardson. And if it is unjuit, they would have the pow 
 designate what the contract should be? 
 
 Mr. Spencer. No. I would not suggest that they make the 
 tracts between us. 
 
 Mr. Richardson. But simply to pass on your contracts? 
 
 Mr. Spencer. To have the power to annul it, or that it can nc 
 into effect without their consent. That is better still. 
 
 Mr. Richardson. I just wanted to understand that. 
 
 Mr. Spencer. Again, the granting of that authority to name a 
 under the circumstances described in this bill, would inflict an 
 parable injury upon the carrier in a case where the matter was app( 
 to the courts. The rate having already taken effect, if the c( 
 should' decide that the original rate of the railway company was 
 sonable and just, there would be no possible means for the rai 
 company to recoup that loss. Now, the process is that the Inter 
 Commerce Commission has the power, and it is one of its duties, 
 having found what it regards to be an unreasonable rate, either t 
 own motion or after hearing, it shall condemn that rate. We 
 seen that in the great majority of cases, something over 90 per i 
 where they have done that thing, the railway companies have ai 
 €sced, and stated: "All right; We accept your judgment." 
 where it has gone into court, the Commission has not establishec 
 single case of an unreasonable rate per se, and they have only e 
 lished two cases of discriminatory rates as between localities, itha 
 ing less than 10 per cent of the total of the cases which have goi 
 the courts. If that is the case, is it not fair to the railroad compi 
 that before a rate, on a record like that, is put into effect, the c( 
 should pass upon it, if the railroad company is going to suffer irj 
 rable loss if they finally gain the case? 
 
 Mr. Adamson. Right there, take the converse of that conting( 
 Say that they declare a rate to be reasonable and just, and you ( 
 it up, and after years of litigation the courts hold that the adjudici 
 of the Interstate Commerce Commission was correct, and that the 
 they declared was the proper one, and allowed it to stand; is no 
 loss of the shipper irreparable? 
 
 Mr. Spencer. Yes, sir; and that point harks right back to th( 
 question: If I have been guilty of a crime, at what date after ] 
 meht should my punishment begin ? 
 
 Now, you can cover that, if there is any doubt about it, anc 
 court feels that it is a very doubtful case on presentation by le 
 the court require bond. 
 
 Mr. TowNSEND. That could all be obviated by injunction, any 
 could it not? 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 113 
 
 Sir. Spkncer. No; the only thing subject to injunction under the 
 Elkins Act, as I understand it, is a departure from established tariff 
 rates, which are a violation of law. It is not a question of enjoining 
 a rate which has not been adjudged unreasonable. 
 
 Mr. TowNSEND. 1 mean during the time. If the railroad took an 
 appeal in the case, they can enjoin during that proceeding? 
 
 Mr. Spencer. Oh, yes. Now you have a case in point at once. 
 The Interstate Commerce Commission has under consideration the 
 lumber rates from the Southern States, Georgia, Alabama, and Mis- 
 sissippi particularly, to points north of the Ohio Eiver, attacked as 
 unreasonable. That case is now pending in court. 
 
 Mr. LovERiNG. How long has it been pending? 
 
 Mr. Spencer. It is in the form of a bill for an injunction now. The 
 bond — that is what I was coming to^-the bond has been given by the 
 railroad companies to refund to shippers if the case goes against them. 
 
 Mr. LovERiNG. How long is it likely to continue, if the case is not 
 pressed? 
 
 Mr. Spencer. Well, the Commission is holding the case, so our 
 counsel tells me. The details I have not in mind. 
 
 Mr. Richardson. I understood you to say that in the event of the 
 pawer being given the Cominission to fix a rate, after the rate had been 
 investigated and found to be unreasonable and unjust, if the law should 
 give the Commission authority to fix the rate, and if the question should 
 
 to up to the Supreme Court, the railroad would sustain irreparable 
 amage if the Commission had made a mistake. Now, do you not 
 think that there would be a very strong likelihood of decreasing the 
 probability of those damages if, after the Commission had authority to 
 fix the rate, and the appeal was taken by the railway company to the 
 Federal circuit court, where the appeal had been taken, either party, 
 the railroad or the complainant, should be given the right to summon 
 witnesses and bring them up there and test the question as to whether 
 the Interstate Commerce Commission had fixed a fair and just rate? 
 Would it not lessen the probability of your damages and throw a strong 
 safeguard around the interests of the railroad and the public ? 
 Mr. Spencer. I do not see how. 
 Mr. Richardson. You do not see how it would ? 
 Mr. Spencer. I do not think it would. 
 
 Mr. Richardson, Would you not have a second trial on it? Would' 
 you not have a second opportunity in the presence of a Federal 
 
 judge 
 
 Mr. Spencer. Yes; but if the rate is running all the time, the loss 
 is going' on, and there is no way we can get it back. 
 
 Ml'. Richardson. Suppose authority was given to the court to 
 suspend the rate until that investigation took place ? 
 Mr. Spencer. That is all I am asking. 
 
 Mr. Richardson. And then, after the investigation took place, and 
 the circuit judge, under the evidence that was given, after this Com- 
 mission had fixed the rate, concluded that it was a reasonable rate, 
 and then the rate went into effect, and you took an appeal to the 
 Supreme Court on the same question, would not that lessen the prob- 
 ability of your damage, because it would not run so long — or the 
 shippers' damage, either? 
 
 Mr. Spencer. If I understand you, Judge, your suggestion is 
 simply to expedite the litigation, whatever it may be ? 
 I c 1^05 8 
 
114 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 Mr. EiCHAEDSON. That is right. 
 
 Mr. Spknoer. We are willing to have it expedited. If, under ( 
 process of law, the thing can be decided in twenty-four hours, 
 would rather have it decided in twent3'-four hours than to hav( 
 decided in forty-eight hours. But, in the meantime, we do not w 
 that rate, which we have regarded as just and reasonable and which 
 put in for what we regarded as good business reasons, set asi 
 because that involves the punishment for a wrong thing before ] 
 have been adjudged by a competent tribunal to have done a wrc 
 thing. 
 
 Mr. Richardson. I was glad to hear you say that if there was tc 
 any legislation upon that subject you would like to give your views- 
 Mr. Spencer. That is all I am here presenting. Do not understa 
 gentlemen, that I am opposing all. legislation with respect to the re 
 lation of commerce. I am here arguing to the best of my abilitj; ¥ 
 this particular legislation would not be effective on the one hand, ; 
 would be prejudicial against the interests of one important industry 
 this country, the carriers, on the other. 
 
 If, in the wisdom of Congress and of this country, legislatioE 
 necessary, all that the railway companies, so far as I have anything 
 say for them, ask is that this legislation shall be mature, careft 
 thought out, and shall protect both interests as well as one. I have 
 right to ask beyond that, and I do not intend to do so. I am mer 
 trying to point out wherein this particular legislation would be hai 
 ful to us and not be effective in the direction in which it is aimed. 
 
 Mr. Adamson. You have no objection, if the law does not aires 
 provide for it, to an arrangement to prevent discrimination and sec 
 the speedy termination of litigation? 
 
 Mr. Spencer. Not the slightest. Not the slightest. 
 
 Mr. Mann. When you speak of discrimination, what do you m< 
 by that, in answer to Mr. Adamson's question? 
 
 Mr. Spencer. Well, I mean discrimination that really discri 
 nates. I mean unjust and unreasonable and "undue" — I believe 
 letter of the statute is " undue" — discrimination. 
 
 Mr. Adamson. " Giving an undue advantage to one person or lo( 
 ity over another" is part of it. 
 
 Mr. Spencer. The man does not live, and the body of men does 
 live, that can frame any law, or adopt any policy in the managem 
 of the carriers of this country, whether owned as they are now. 
 owned by the Government, or owned by any power — nothing ex 
 that will do away with the alleged discriminations between localit 
 You can get rid of the discriminations between individuals. I 
 almost done away with. If it exists it is a crime and can 
 reached by law. I do not want for a moment, however, to be unc 
 stood as indicating that we will agree to the adoption of something 
 a means, or cooperate in putting something into effect as a means, f 
 is going to quiet the question of whether one community is discri 
 nated against in comparison with another. I do not know, as I sai 
 you yesterday, any community of any size that does not feel in s( 
 way that it is discriminated against in favor of some other commui 
 engaged in similar enterprises or business. That is going to contir 
 and if a law like this passes, it will grow a thousandfold. 
 
 Mr. Adamson. If some railroad touches two towns of equal size 
 importance, equally distant from a distributing center, and in on 
 
PROPOSED AMEISTDMENT OF INTEESTATE-COMMEECE LAW. 115 
 
 those towns that railroad meets competition and gives a low rate to 
 people who already have a railroad and do not need it, and at the othei 
 town it is two or three times as much, is not that discrimination? 
 
 Mr. Spencer. I am not sure of it. I do not think I understand '- 
 
 Mr. Adamson. The towns being of the same size and the distance 
 from the distributing center being the same, one of the towns needing 
 help and the other not needing help? 
 
 Mr. Spencer. I do not know what you mean by one of the towns 
 needing help and the other not. I never saw one that did not need 
 help, or did not think it needed it. All you can ever do from the car- 
 rier's standpoint is to adopt something that is commercially reasonable. 
 It may not be equal. You can not measure it as to distance or locality. 
 You can not measure it bj'' reason of a particular position, because no 
 two positions are alike. You r.iubt settle 
 
 Mr. Adamson. But I made two alike. 
 
 The Chairivian. I wish that the interruptions would not occur so 
 frequently when the witness is in the midst of an interesting statement. 
 
 Mi-. Adamsox. Well, I understood that Mr. Spencer wr.s v.illinrj to 
 answv3r questions. 
 
 Mr. Spencer. Gentlemen, I am perfectly willing to answer any 
 questions. The one point with me is that I do not want to consume 
 too much time of the committee. I am at your disposal. 
 
 Mr. Adamson. I am perfectly willing to wait until you are through 
 and then ask my question. 
 
 Mr. Spencer. If it takes a week I am perfectly willing to stay here 
 and answer all questions. I simply wish to avoid occupying too much 
 time of the committee. 
 
 Mr. Adamson. When you are through with your statement I will 
 ask j'ou what I wish to know. 
 
 Mr. Spencer. I will hurry through with it. There is not very 
 much more of it. 
 
 Mr. Adamson. I think that is better myself. 
 
 Mr. Spencer. As I have said, the bill inflicts the irreparable injury 
 in the loss of revenue which is going on while the case is pending. 
 That is not the only part of that irreparable injury. You may run 
 into this difficulty: , We will assume that the Commission has put a rate 
 into effect and a railroad company has appealed it to the courts. Now, 
 that very fact that the rate goes into effect is a material deterrent, irre- 
 spective of the reasonableness or unreasonableness of the rate itself. 
 One of the greatest difficulties we have to deal with — and that is the 
 reason that our unreasonably low rates exist, to a very large extent, 
 because something has occurred — it may be one thing or it may be 
 another; it may be fierce competition; it may be an abortive effort to 
 create new business that did not woi'k out — for various reasons these 
 low rates have gone into effect; and one of the most serious difficulties 
 we have to deal with in practice is to ever get them back. It is not 
 only that people are loath to pay an increased rate above what they 
 have paid. That is natural. None of us like to pay more for a thing 
 than we paid yesterday or the day before yesterday or last year, if we 
 can help it. Beyond that, however, and apart from any individual or 
 personal reluctance in paying more, the rate having gone into effect, 
 the commerce of that particular article, its distribution, the commerce 
 of that particular community, becomes settled around that rate. 
 
 Not only have you got the question, then, by the time it goes out of 
 
116 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 the courts, to deal with as to whether that rate was a reasonable or 
 unreasonable one, but you have got the additional question then 
 expediency to deal with, in view of the altered situation. It may ha 
 been perfectlv agreeable to everybody almost, except, probably, o 
 complainant, to pay that. They have been convinced by that tii 
 that the experiment, if you may so call it, of putting in that rate d 
 not bring in expected results; that it is a disappointment, and j 
 the very fact that it is there, that the commerce of that section of t 
 country is being carried on in respect to that condition of affairs 
 thus changed, will be a material reason why that rate could not be p 
 up again; and there is an irreparable loss on a rate which the coun 
 1 am assuming, would finally adjudge (as it has in most of the cas 
 that have come up) was not an unreasonable rate. And yet son: 
 body whose judgment was brought to bear upon it, other than t 
 carrier that controlled that rate, has put it down, and the sum total 
 the result is that the carrier permanently loses that much revenu 
 when the commerce of the country would have gone on just 
 smoothly, just as successfully, to the same volume that it did befoi 
 
 Lastly, with respect to the objection that it would be conferrii 
 anomalous powers upon one body. 1 might elaborate that at lengt 
 but in view of the limited time I shall say very liltle about it, leavii 
 it, probably for able counsel to follow me hereafter. 
 
 The Interstate Commerce Commission, under the present law, is i 
 investigating and a prosecuting body, with administrative powers 
 well. They entertain claims that are presented to them. They ha 
 the power, and it is their duty, in certain cases, to institute proceedin 
 against the cariiers with reference to their rates or their practices, 
 their management in general. 
 
 Now, it is proposed to confer bj'^ this bill the right for the Comm: 
 sion, upon hearing and complaint — and not upon their own initiativ 
 I quite recognize that — to hear and determine whether a rate is re 
 sonable or unreasonable. That step taken alone is in the nature of 
 court. That is a judicial function beyond a doubt. It has be( 
 decided so by the Supreme Court. There is no question about it, th 
 a determination primarily of what is a reasonable or an unreasonab 
 rate is a judicial function. Now, the Interstate Commerce Commi 
 sion in that sense is not a court. It has never been so constitute 
 Its trials are not conducted in accordance with the established rules 
 evidence of the United States courts, and yet it is suggested in th 
 bill that it shall have the specific right to do what only a court ci 
 do— declare a rate unreasonable per se. 
 
 Now, if that is the case, they are exercising there a judicial functio 
 
 Let us take the next step in what would be their procedure in that cas 
 Having taken that judicial action and condemned a rate as unreaso 
 able and unjust, as if they were a court, their next step is, under su 
 authority as is now proposed, to place in existence under its order 
 new rate — a rate which shall govern for the future. They were dei 
 ing up to that point with a rate which related to the past or t 
 present. Now it is proposed that they substitute for that rate, whi 
 they have condemned as unreasonable, a rate for the future. To wh 
 department of the Government does that belong? That is distinctl 
 under the law, under the decisions of the courts, a legislative functio 
 The power to name a future rate, so far as it is invested in govei 
 ment, is purely a legislative function. 
 
PROPOSED AMENDMENT OF USTTERSTATE-OOMMEBCE LAW. 117 
 
 Now, j'ou are going- to have this position. You have got, under 
 the existing law, and it is proposed in this bill to change it, a body 
 which is a prosecuting body. It has been described by Justice Jack- 
 son, as 1 said to you a day or two ago, as follows: 
 
 The functions of the Commission are those of referees, or special commissioners, 
 appointed to make preliminary investigation and report upon matters for subsequent 
 judicial examination and determination. In respect to interstate-commerce mat- 
 ters covered by the law, the Commission may be regarded as the general referee of 
 each and every circuit court of the United States upon which the jurisdiction is 
 conferred of enforcing the rights, duties, and obligations recognized and imposed by 
 the act. 
 
 You have, therefore, got a prosecuting body exercising adminis- 
 trative functions, as they do to-day, whose findings are prima facie 
 evidence when the cases go to court. It is proposed to invest them, 
 in the next step, with a purely judicial function of condemning and 
 setting aside a rate because in their judgment it is unreasonable; and 
 when that judgment is pronounced the}"^ can not possibly, have sat 
 with all the powers and functions of a court, and under all the prac- 
 tices of a court, and a rate ought not to be condemned until that has 
 been done. Yet it is proposed that this Commission condemn it and 
 set it aside. Then it is proposed that, having set it aside as a judge, 
 they shall immediately assume the functions of a legislature and say 
 w^hat shall take place for the future. 
 
 I submit to the committee whether, if there is to be legislation upon 
 this question — and 1 am not saying that there is not to be and ought 
 not to be; I am passing the question for a moment and will come back 
 to it — if that is the case, is it not worth while to stop now and consider 
 whether the particular legislation which is now proposed is- safe, is 
 proper, is such that will stand and be effective, and so far as the car- 
 riers' interest is concerned. What is possibly equally as important, is 
 it fair to the carriers' interest? 
 
 I am sure that Congress will not enact, I am sure that this commit- 
 tee will not recommend, a thing which, after mature reflection, is 
 regarded as unfair to one of the ^ery great, if not the very greatest, 
 industrial interest in this country. All we have the right to ask, and 
 all I ask in behalf of those that t represent, is that the subject shall be 
 given a veiy thorough and careful considei-ation before action is taken. 
 
 Let us see exactly what the bearings of all this are going to be. 
 Pause to consider its alleged necessity upon the one part, and upon the 
 other if it is not necessary; its expediency upon the third, and then 
 the promise of success whenever it is enacted. 
 
 I have occupied a great deal of your time and I must still apologize. 
 There is only one point more, and 1 will pass it before I make you a 
 suggestion. 
 
 It has been claimed— and I am sori-y I have not time to elaborate 
 that— that the granting of this power is not the granting of the total 
 rate-nlaking power. It is a big subject, and I will call your attention 
 to only one case, the maximum-rate case, in which it was decided against 
 the Commission that they did not have the power to make rates. That 
 case involved 3,000 rates in one decision. It means not only that 
 upon complaint they have the right to take up any one rate or set 
 of rates. It means, sooner or later, that not only will they have the 
 power to do it, but the greatest misfortune of all would be that the 
 making of them all would be practically forced upon them. They could 
 not escape it. 
 
118 PROPOSED AMENDMENT OF INTEKSTATE-COMMEECE LAW. 
 
 Now, I am going to very briefly mal?:e a few suggestions. 
 
 (1) Form an interstate-commerce court, or so increase the number c 
 judges of the existing court that a special interstate-commerce court ca 
 be formed from their number, which shall have special jurisdiction ove 
 all oases arising under the interstate-commerce act and its amendments 
 this court to pass upon all rates adjudged by the Commission on con 
 plaint and hearing to be unreasonable before the rate shall take effecl 
 there being no appeal from the decision of this court to the Suprem 
 Court, except upon questions of law, and no stay during such appea! 
 
 (2) Bring the private-car lines, fast-freight lines, and the wate 
 lines doing a through interstate traflic within the jurisdiction of th 
 interstate-commerce act. 
 
 (3) Relieve the carriers of the existing prohibitions against mat 
 ing reasonable agreements among themselves for the purpose of mair 
 taining lawful rates, the agreements and the rates to be subject to th 
 previous approval of the Interstate Commerce Commission. 
 
 (4) Enforce the existing laws, not only as a matter of administratio 
 of law and justice, but as the most eflective means of eliminating th 
 number of complaints. 
 
 I want to reiterate that we are not here asking that there shall be n 
 legislation. If in the wisdom of Congress it is thought proper, 
 suggest that it should take this line: Form an interstate commerc 
 court, or probably better still, give special functions to special sitting 
 of the circuit courts of the United States. Give to the Commissio 
 the right to name the rate or suggest the rate, subject to appeal t 
 the courts. That will leave the question where it is if the railroad 
 acquiesqe, and they have acquiesced in nearly 90 per cent of all th 
 cases. Now, if thej^ do ,not acquiesce and take it to the courts, let th 
 rate remain in eflect, and the railroad company give bond until th 
 court — I mean the circuit court alone, this interstate commerce couri 
 either a special court or made up from judges of the other circuit court 
 sitting here or anywhere else — decides that the rates shall go into effeci 
 Then it goes into effect, and there is no suspension after that in appea 
 ing to the Supreme Court on questions of law. Begin at the circu: 
 court, stop the appeal at the circuit court, except in cases of law goin 
 to the Supreme Court, and that appeal on a law point to the Suprem 
 Court not to stay the proceedings. 
 
 Mr. EscH. Suppose you have a separate coiirt? 
 
 Mr. Spencer. Give it exactly the same power with the right of a 
 appeal on questions of law to the Supreme Court without stay of pn 
 ceedings. 
 
 Bring the necessary water lines engaged in interstate commerc 
 which are competitive with rail carriers — the fast-freight lines, tt 
 private-car lines — all of them within the purview of the interstati 
 commerce law. All of those three which I now mention are exemp 
 
 Relieve the carriers, as I have already suggested, of the anomaloi 
 prohibition now against them that they must maintain uniform rate; 
 and at the same time be prohibited from forming any agreement as 1 
 what those rates shall be; and give them the authority, under the supe: 
 vision of the Interstate Commerce Commission, to make reasonab 
 trafii(j arrangements among themselves, those traiBc arrangements 1 
 be in writing, to be submitted to the Interstate Commerce Commissic 
 before they take effect, and if approved by the Interstate Commerc 
 
PEOPOSED AMENDMENT OF INTEESTATE-COMMEKCE LAW. 119 
 
 Commission to go into effect, and unless they are found to be reason- 
 able and proper, to give the power to the Interstate Commerce 
 Commission to annul them at any time. 
 
 Lastly, which is nine-tenths of the whole subject, do anything that 
 will strengthen the hands of the Commission at any time to do away 
 with abuses and rebates. 
 
 Mr. TowNSEND. Without appeal? 
 
 Mr. Spencek. In a word, enforce the present law, and do anything 
 that may be necessary to promote that enforcement. 
 
 Gentlemen, I am very much obliged to you for your courteous 
 attention. 
 
 Thereupon, at 12 .o'clock m., the committee adjourned until Mon- 
 daj, January 16 1905, at 10.30 o'clock a. m. 
 
 . Monday, January 16, 1905. 
 The committee met at 10.30 o'clock a. m., Hon William P. Hepburn 
 in the chair. 
 
 STATEMENT OF HON. W. R. HEARST, MEMBER OF CONGRESS 
 
 FROM NEW YORK. 
 
 The Chairmax. The committee will be in order. This hour was 
 set for hearing Mr. Hearst. Under this order, Mr. Hearst, the com- 
 mittee is considering all of the bills amendatory of the interstate- 
 commerce law, and is hearing upon all of them together, and so there 
 will be no impropriety in your discussing any of these bills pending 
 before the committee if you so choose. 
 
 Mr. Hearst. Yes, sir. I think that I will confine myself, Mr. 
 Chairman, to my own bill, except where the committee desires my 
 views on another. 
 
 The Chairman. Very well. 
 
 Mr. Hearst. I wish to say that I do not appear before this com- 
 mittee at all as a lawyer or as an expert railroad man, but merely as a 
 business man who has had some experience before the Interstate Com- 
 merce Commission, and of course as a legislator with a bill to correct 
 some of the difficulties and delays and the lack of effectiveness that I 
 encountered while I was before the Commission. I had the coal trust 
 cases before the Commission. They were instituted in the fall of 1902, 
 and it has been something over two years since then, and we have not 
 finished our procedure before the Commission yet. Thein we encoun- 
 tered other delays. 
 
 The Chairman. Will it interrupt you if you are interrogated as you 
 pass along, or would you prefer to conclude your remarks first? 
 
 Mr. Hearst. Not at all. . Anything that suits the committee is 
 agreeable to me. 
 
 The Chairman. You speak of this long delay before the Commis- 
 sion. What is the cause of that delay ? 
 
 Mr. Hearst. The cause of the delay was the number of points that 
 can be appealed, and the delay in the appeals, and the number of 
 
120 PROPOSED AMENDMENT OF INTEE8TATE-0OMMERCE LAW. 
 
 courts to which the appeals have to go. For instance, the defendant 
 questioned my right to bring the complaint. The}' said that I ws 
 not a shipper. I was, in fact, merely bringing the complaint as a cit 
 zen of New York who was subjected to very high coal tariff, to ver 
 high prices for coal. That point was appealed. Then the defendant 
 declined to produce certain books and papers — contracts — which wei 
 essential and important in the case, and they refused to answer que; 
 tions, and those points were appealed. 
 
 The Chairman. Were these appeals taken separately or in on 
 appeal? 
 
 Mr. Hearst. I think they were taken in one appeal. 
 
 The Chairman. Yes. 
 
 Mr. Hearst. First before the circuit court. Judge Lacombe, of th 
 southern circuit of New York, and he decided in favor of the defenc 
 ant and against the Commission, and then it was appealed to th 
 Supreme Court, and the Supreme Court upheld the Commission i 
 every point, but, nevertheless, those appeals took altogether about 
 year's time. 
 
 The Chairman. How much time was consumed in the hearing 
 before the Commission? 
 
 Mr. Hearst. I suppose the rest of the time was consumed in th 
 hearings. 
 
 The Chairman. How long was it? 
 
 Mr. Hearst. About another year. ' 
 
 The Chairman. How long was it after the institution of your pre 
 ceeding before the Commission put the thing in such shape that i 
 might be appealed? 
 
 Mr. Hearst. The appeals were taken, I think, after hearings ha 
 been going on for several months. I would not say how long, exactlj 
 The total time has been from November, 1902, down to this date, an 
 the final arguments, I believe, are to be made before the Commissio 
 on February 7; that is, next month. 
 
 Mr. Richardson. There was as much time consumed in the dela; 
 before the Interstate Commission as there was in the appeals befor 
 the higher courts? 
 
 Mr. Hearst. Just about, I should say; yes, sir. They were abou 
 equal, I think. 
 
 Mr. Kyle. Both of you appealing; both parties appealing the case 
 
 Mr. Hearst. In the first case the defendant appealed and in th 
 second case the Interstate Commerce Commission appealed to th 
 Supreme Court. 
 
 Mr. Kyle. Then there were two separate appeals, each of you hav 
 ing appealed from some decision? 
 
 Mr. Hearst. Yes, sir. The Interstate Commerce Commissio 
 ruled and then appealed from the decision of the circuit court whic 
 was wrong. They appealed to the Supreme Court, and the books an 
 papers were produced. 
 
 Mr. Richardson. Did 1 understand you as having made any specis 
 complaint about the matter of delay, either before the Interstate Con 
 merce Commission or before the appellate court ? 
 
 Mr. Hearst. No, I have not made any complaint about that. I 
 my bill I have tried to provide clauses that would remedy that. 
 
 Mr. Richardson. By establishing precedents? 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 121 
 
 Mr. Heaest. No, sir; by establishing this Interstate Commerce 
 Court; by establishing a court that will have a power of review. 
 
 Mr. Richardson. 1 see. 
 
 Mr. Hearst. The coal cases were instituted originally to show that 
 the high price of coal was due originally to the pooling of the rail- 
 roads, the establishment of a monopoly, and a combination in restraint 
 of ti'ade, and we succeeded in bringing out before the Interstate Com- 
 merce Commission those facts, that the railroads interested, the New 
 Jersej^ Central and the Reading — the Reading owns the New Jersey 
 Central — those two roads own about 60 per cent of the unmined anthra- 
 cite coal, and with the other coal roads owned altogether something 
 over 90 per cent, and that they had adopted various measures to crush 
 out competition. For instance, the Temple Iron Company contracts 
 were one of the things that were refused to be produced, and when 
 they were produced they showed that the independent operators, after 
 the establishment of these high rates, had finally gotten together and 
 decided to build a competing line, and that they got rights of way, and 
 bought the steel rails, and at that time, when they began to be threat- 
 ening, the coal roads stepped in and bought this Temple Iron Com- 
 pany, which had a liberal Pennsylvania charter entitling them to do 
 almost everything, paying for it about $240,000. 
 
 Then they have issued stock and bonds amountingtoabout|15,000,000, 
 and guaranteed interest on the stock, and the payment of interest and 
 principal on the bonds, and with this stock and these bonds they bought 
 up eleven of the collieries which were in this combination, in this plan 
 to build a competing road. These collieries belonged to Simpson and 
 Watkins, and that broke the back of this competition. The railroads 
 did not do it by lowering the rates, but they did it in the way 1 have 
 described. Now, the point is that the stock and bonds of this Temple 
 Iron Company were guaranteed b3' the six coal roads, and the presi- 
 dents of the six coal roads are the directors of the Temple Iron Com- 
 pany, and that they operate the collieries which the Temple Iron 
 Company has bought, jointly. This showed the combination in 
 restraint of trade. 
 
 Then there were the other contracts — the coal purchase contracts — 
 which showed the discrimination. The independent operators through 
 these contracts were allowed 66 per cent of the price of the coal at tide 
 water, and when these-con tracts were made coal was selling at $4 — that 
 is, the domestic sizes of coal — and this made the rate of transportation 
 about f 1.40. It also relieved the operators who went into this contract 
 of the cost of handling the coal, the cost of selling their coal, which I 
 understand is about 16 cents, and it relieved them of the waste, which 
 I understand is about 5 cents on a ton, therefore giving them an 
 advantage over the men who did not make these contracts of about 
 36 cents a ton. This we considered discrimination, and the result of 
 it of course was to force almost all the independent operators into 
 these coal-purchase contracts. Then, when that was done, and there 
 was practically no competition, the price of coal was put up to $5, 
 where it now is — between |5 and $5.60. 
 
 The Chairman. In your investigation there did you become familiar 
 with the value of coal in the bank, the cost of mining, the cost of 
 transporting to the centers, say Philadelphia and New York? In your 
 investigations did you study those subjects? 
 
122 PEOPOSED AMENDMENT OF INTEE8TATE-C0MMEECE LAW. 
 
 Mr. Hearst. Yes, sir; more or less. 1 do not remember all t) 
 details of this case, especially the figures, prices, cost, and so fort 
 I would have to refer to memoranda for that. 
 
 The Chairman. You could not give us those figures as to the vali 
 of the coal in the mines, the cost of mining, the cost of transportii 
 from the mines, and so forth ? 
 
 Mr. Hearst. I do remember the cost of transportation from tl 
 fields to New York, which was developed to be not greater than i 
 cents; and I remember that the rate is $1.55. So that the profit 
 about 100 per cent, and the Interstate Commerce Commission had raa( 
 a futile attempt to lower that rate. 
 
 The Chairman. Could you give the committee some idea of the vah 
 of the coal in the bank and of the cost of mining it? 
 
 Mr. Hearst. I can only do it 
 
 The Chairman. Just approximately, if you can? 
 
 Mr. Hearst. I can do it only in this way, that I believe the defeni 
 entered a claim which they thought was to their advantage, that afti 
 the freight had been estimated at the rates that are published — that i 
 11.55 — it only left a profit of about 7 cents a ton. 
 
 Mr. TowNSEND. How much? 
 
 Mr. Hearst. Seven cents. 
 
 Mr. TowNSEND. Seven cents? 
 
 Mr. Hearst. Yes, sir. Now, 1 think that is correct, but I can ik 
 recall all these figures without referring to documents. 
 
 The Chairman. That was their claim ? 
 
 Mr. Hearst. Yes, sir. 
 
 The Chairman. You did not concede that to be true ? 
 
 Mr. Hearst. "We are disposed to accept it in a way, because 
 shows the outrageous character of the rate. They undoubtedly raal 
 a great deal of money, and it makes no difference to them, becau! 
 they own the railroads and the coal mines, and if the}' fix the rate i 
 such a point that it brings them a proQt of only 7 cents a ton the ind 
 pendent operator, who does not own the railroads, but only a mine, 
 at a very distinct disadvantage, while the railroad operator, who owi 
 both the mines and the railroad, can make his profit out of the railroai 
 That was their claim, as you say, Mr. Chairman, but I suppose v 
 might be disposed to accept it on account of the deduction to be dra^ 
 from it. 
 
 The Chairman. According to that estimate, if the selling price ( 
 the coal was $5 a ton in the market, the cost of transportation $1.5 
 and there was only 7 cents of profit to them, then the value of the co 
 and the charges for mining must be something over $3, according 
 that claim of theirs. 
 
 Mr. TowNSEND. That includes the profit of the dealer ? 
 
 The Chairman. No; 1 have included' that in the profit of 7 cents. 
 
 Mr. Ryan. Was that profit of 7 cents independent of the $5 sellir 
 price ? 
 
 Mr. Hearst. I presume so. 
 
 The Chairman. That was substantially their claim ? 
 
 Mr. Hearst. Yes, sir. 
 
 The Chairman. Was that true? 
 
 Mr. Hearst. 1 think not. But I would hesitate to go into the fi 
 ures of this case very definitely without something to refer to, becau 
 figures are elusive things. 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 123 
 
 The Chairman. 1 would like to have a little approximate idea of 
 how much the public are being robbed. 
 
 Mr. Hearst. 1 did not know that this case was to be investigated 
 except as it related to the Interstate Commerce Commission, so that I 
 did not fortify myself with these figures; but I will be glad to do it, 
 if it is required. 
 
 The Chairman. If you will furnish us with a statement on these 
 points we would be glad of ^t. 
 
 Mr. Hearst. I shall be delighted to do it. But what I wanted to 
 bring out here were the facts as to the contracts that were called for, 
 and their relevancy, and the difficulty that we had in securing them ; 
 and I wanted to say, further, that after all this delay the finding of the 
 Interstate Commerce Commission will not be final, will not really be 
 effective; it will only be a sort of recommendation, and in order to 
 sustain it they will have to go into court and try the matter all over 
 again, first before a circuit court, and if it is appealed, before the 
 United States court. And after all those proceedings have been gone 
 through, all they will have succeeded in establishing is that the pres- 
 ent rate is unreasonable, and the road may go to work and put into 
 effect another rate which is somewhat less, but almost equally unreason- 
 able, and the whole thing will have to be taken up from the beginning 
 again. That is, at least 
 
 Mr. TowNSEND. What is the number of your bill? 
 
 Mr. Hearst. No. ISTYS. 
 
 Mr. Adamson. I do not know whether you brought it out, or have 
 stated it, but 1 would like to know whether you employed counsel in 
 your case, or whether you relied upon the Government's counsel 
 entirely ? 
 
 Mr. Hearst. T employed counsel in my case. Now, the object of 
 my bill is to obtain expedition and effectiveness in actiocr. Its object 
 is to give the Interstate Commerce Commission the power to fix a 
 reasonable rate, and not merely to say, not merely to determine or 
 succeed in bringing out that a certain rate is unreasonable; and the 
 establishment of a court is in the interest of promptness, and other 
 interests, too, to secure a more consecutive line of opinion, for instance, 
 but chiefly to secure a prompt enforcement, by writ, of the orders of 
 the Commission, and to enable the Commission to speedily get at the 
 facts, and to effectively provide a remedy. 
 
 The first section deals with that: 
 
 Be it enacted by the Senate and House of Representatives of the United States of America 
 in Congress assembled, That hereafter when the Interstate Commerce Commission 
 shall, in any case pending before it under the act to regulate commerce, approved 
 February fourth, eighteen hundred and eighty-seven, as amended or supplemented 
 by other act^s of Congress, decide that a rate for the transportation of freight or pas- 
 sengers is unreasonable or unjust it shall be the duty of the Commission, and it is 
 hereby authorized and empowered, to fix a rate in lieu of the rate it has found unrea- 
 sonable and unjust. 
 
 Now, I understand that the constitutionality of that, or of a similar 
 section in another bill, has been questioned before the committee, and 
 while I do not pretend to be a lawyer at all, I have endeavored to deal 
 as a layman with that point. 
 
 Mr. Mann. Does that provision relate to the Interstate Commerce 
 Commission or to the court? 
 
 Mr. Hearst. It is to the Commission. 
 
124 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 Mr. Richardson. What is your authority that you propose for th 
 Interstate Commerce court; it is final, is it noi^-you can not go beyoi 
 that except by certiorari to the Supreme Court? 
 
 Mr. Heabst. Yes. There is no appeal from it except where gra' 
 constitutional questions are involved. The Interstate Commerce Cor 
 mission, probably under section 1, has an opportunity to move of i 
 own motion, and that has seemed to be in accordance with the expre 
 sion of the Supreme Court, in my case, that the shipper's complain 
 or even the citizen's complaint, was not necessary; but it was in tl 
 power of the Commission, and it was the duty of the Commission, 
 investigate unjust and unreasonable conditions generally. I give the 
 simply the power, then, in this: When they have found the rate unre 
 sonabie, to fix a reasonable rate; and I can refer the committee here i 
 var,ious decisions of the Supreme Court in which these points have bee 
 decided — the maximum-rate case and the Reagan case, for instance. 
 
 The Chairman. I do not think, Mr. Hearst, that that propositic 
 troubles any member of the committee; at least I have not heard sue 
 expressions. The trouble, whatever there is of that character, is wil 
 reference to giving the court the power — a judicial body the power- 
 to fix the rates. 
 
 Mr. Hearst. Yes. 
 
 Mr. Mann. For the future. 
 
 The Chairman. For the future. 
 
 Mr. Richardson. Conferring any legislative power upon the Inte 
 state Commerce Commission. 
 
 Mr. Hearst. Legislative power? 
 
 Mr. Richardson. Yes, sir; delegating it, a power of Congress. 
 
 The Chairman. I would be glad to have that brief upon the recoi 
 upon that other point. 
 
 Mr. Hearst. It is not really a brief. What I have here is just wil 
 regard to the right of Congress to delegate its legislative powers, ar 
 the references are made to the maximum-rate case, to the effect thi 
 Congress itself might prescribe rates, and to the Reagan case, to tl 
 effect that the power to fix rates is not within the absolute discretic 
 of the carriers, but is subject to legislative control. The iegislatiii 
 has the power to fix rates, and this power can be delegated. Accon 
 ing to the maximum-rate case Congress might itself prescribe the rate 
 or it might commit to some subordinate tribunal this duty. 
 
 Mr. Shackleford. Could it confer the power upon the judiciarj 
 
 Mr. Hearst. It is conferring it upon the 
 
 Mr. Lamar. Is it seriously contended before this committee thi 
 Congress can not delegate its power to fix rates to a quasi legislati^ 
 body or a legislative body like the board of commissioners? 
 
 Mr. Richardson. I do not know if I understand this correctly, bi 
 the question is, as I understand, Can Congress delegate its legislatii 
 power to a commission that is judicial? 
 
 Mr. Lamar. Is that a general question is dispute among lawyers? 
 
 The Chairman. No; the question, as I understand it, that involv( 
 difficulty is. Can Congress impose upon a judicial body the duty ( 
 fixing a future rate? 
 
 Mr. Richardson. Then the further question is, if that is done, th( 
 a higher court could not revise that legislative authority. Fi 
 instance, suppose that the right is given to this Interstate court, or 
 Mr. Hearst calls it — how do you name it? 
 
PTJ0P08ED AMENDMENT OF INTER8TATE-0OMMEKCE LAW. 125 
 
 The Chairman. Interstate commerce court. 
 
 Mr. Richardson. Yes; the Interstate Commerce court. Suppose 
 the right is given, as this bill gives it, to fix a rate; that is, conferring 
 upon that court by Congress, legislative authority. 
 
 Mr. Hearst. This bill confers legislative authority on the Com- 
 mission. 
 
 Mr. Richardson. If that is a fact, could the Supreme Court of the 
 United States revise that legislative authority we have delegated to 
 the court that this bill creates? 
 
 Mr. Lamar. That is not the intent of the bill, is it? 
 Mr. Hearst. No, sir. 
 
 Mr. Richardson. That is the way that it strikes me. 
 Mr. Hearst. The bill delegates to the Interstate Commerce Com- 
 mission the legislative power of Congress, and gives to the Commission 
 the power to tix the rate. 
 
 Mr. Richardson. I understand that, and then to this court 
 
 Mr. Hearst. Is given the power to review the rate fixed by the 
 Commission. 
 
 Mr. Richardson. And confirm it. 
 
 Mr. Hearst. As the circuit court now has the authority, this court 
 is simply constituted to take the place of the circuit court. It is not 
 empowered to fix rates at all. I was proceeding to show that the 
 
 Commission 
 
 Mr. Richardson. That very question rises right there, it seems to 
 me, if I can understand you or make myself understood by you, that 
 there would be conferred by this bill on the Interstate Commerce 
 Commission, legislative authority. 
 Mr. Hearst. Yes, sir. 
 Mr. Richardson. The authority to fix rates ? 
 Mr. Hearst. Yes, sir. 
 
 Mr. Richardson. Now, if they have got the legislative authority to 
 fix rates, do you think the court that you make there as an appellate 
 court would have a right, a judicial right, to pass upon a legislative act? 
 Mr. Shackleford. Might they not pass in that case upon whether 
 the Commission had exceeded the legislative authority that is conferred 
 upon it, and is not that the only question that does come into the 
 court? 
 
 Mr. Burke. As I understand it, the court might find that the rate 
 fixed by the Commission was unreasonable, and this intends to give 
 the court the power to fix a rate. Is not that the proposition? 
 Mr. Hearst. That is not the proposition of this bill. 
 Mr. Shackleford. I imagine that Mr. Hearst's bill intends to 
 give the court the power to review the finding of the Commission and 
 to say whether the Commission has exceeded its authority by passing 
 a confiscatory or otherwise unjust rate? 
 Mr. Hearst. Yes, sir; that is it. 
 
 Mr. Richardson. As I understand it, Mr. Burke, there is not a 
 single bill, so far as I have read — I do not know that I have examined 
 all of them carefully — that does not place somewhere the right to fix 
 a rate. 
 
 Mr. Hearst. My bill does, but places that right with the Commis- 
 sion, where I think it belongs. 
 
 Mr. Mann. Let us take a specific case and see what your idea is as 
 to the authority that is in your bill. Suppose the railroad rate from 
 
126 PEOPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 r 
 
 Chicago to New York — the first-clasa rate^— is 75 cents a hundred, and 
 that complaint is made before the Commission, and the Commission 
 decides that 50 cents a hundred is a reasonable rate. Suppose that that 
 decision is appealed to the court which you propose to create and the 
 court finds that that rate is unreasonably low. Now, under your bill, 
 would the court, finding that 50 cents a hundred was unreasonably 
 low, have the power at the same time to say what is a reasonable rate 
 for the future? 
 
 Mr. Hearst. No, sir, not at all. The court will simply find that 
 the finding of the (Commission was unjust or confiscatory, and it would 
 remand the case. 
 
 Mr. Mann. And have the Commission act again ? 
 
 Mr. Heaest. Yes, sir. I suppose in the court's decision the Com- 
 mission would find some light for its guidance in its further action. 
 
 Mr. Adamson. What reason can you assign that we should not 
 empower a court to fix that rate right there ? 
 
 Mr. Mann. You do not run against the question of the (/onstitu- 
 tion in your bill which has been bothering us, then ? 
 
 Mr. Hearst. No. I simply wanted, in citing these cases, to show 
 that Congress has a right to delegate its legislative powers to this 
 Commission, and that it has a right to institute a court to review the 
 action of the Commission, and to enforce by writ the orders of the 
 Commission when they are approved. 
 
 Mr. Adamson. What reason do you assign, if a court may review 
 the finding of a commission and determine it to be wrong, that we 
 can not empower that court at the same time to render a final judgment 
 in the matter? 
 
 Mr. Hearst. It seems to me to be outside of the functions of the 
 court to fix a rate. 
 
 Mr. Adamson. If the court can review and undo a part of the action 
 of the Commission, why can not they finish the job, if we authorize 
 them to do so? 
 
 Mr. Hearst. It might be decided that you could not authorize them 
 to do so. 
 
 Mr. Adamson. That is not the question that has concerned me. 
 The idea that comes to my mind is, why should we take charge of 
 other people's property and run their business without their consent? 
 
 Mr. Hearst. We aje here to represent the people and to act for 
 them, and if the majority of the people of this country are being 
 oppressed in any way and unjustly treated, or unreasonably treated, 
 we ought to seek some means of preventing it, even if we should to 
 some extent regulate the business of the railroads without their consent. 
 
 Mr. Adamson. We have passed that proposition, and everybody has 
 agreed that it is right to take charge and establish a tribunal to fix 
 rates for the railroads. Now, you propose to constitute a separate 
 body to review the findings of this Commission, to which we have dele 
 gated the power to fix rates, and that body may hear the case and 
 decide that everything that has been done is wrong; and yet you say 
 that you can not empower that court to finish the job and declare "a 
 final rate that shall prevail ? 
 
 Ml-. Hearst. It might be done, but I do not think that you can 
 constitutionally do it. It may be so, but I do not think so; and con- 
 sequently I did not put in my bill that clause. 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 127 
 
 Mr. Adamson. You have had in mind the decisions in thp Supreme 
 Court in which they have said they can not confer that authority upoti 
 the courts. 
 
 Mr. RiCHAKDSON. If 1 understood the question a few minutes since, 
 you said in your answer that your bill did not come into conflict with 
 the idea that there had been an expression on the power of Congress 
 to_ delegate its legislative authority to the Interstate Commerce Com- 
 mission; that is what I understood you to say, that this bill avoided 
 that. ^ If I understand your bill, from the reading that I have given it, 
 it is, first, to give the Interstate Cormnerce Commission, where a rate 
 has been challenged and investigated and found to be unreasonable, 
 the power and authority then to substitute what is considered a reason- 
 able and just and fair rate, right then and there? 
 
 Mr. Hearst. Yes, sir; ,to fix a rate. 
 
 Mr. Richardson. And that, possibly, under certain conditions, and 
 under limitations of time, it should go into efiect. You have then 
 constituted the interstate commerce court, to which an appeal can be 
 taken. Now, when you get to that court, the court has only the 
 authority to confirm or remand? 
 
 Mr. Hearst. Yes, sir. 
 
 Mr. Richardson. That is all the authority that it has^ 
 
 Mr. Hearst. Yes, sir. 
 
 Mr. Richardson. Now, do you not think when you clothe the Inter- 
 state Commerce Commission with the authorit3'' to substitute a reason- 
 able rate for a rate which is thought unreasonable, that that is Vesting 
 the Interstate Commerce Commis.=iion with the legislative authority? 
 
 Mr. Hearst. Yes, sir. 
 
 Mr. Shaokleford. That has never been questioned by anybody. 
 
 The Chairman. I call your attention to this provision in the bill on 
 page 9: 
 
 Said court shall thereupon, as speedily as may be, proceed to review the order 
 appealed from, as to its justness, reasonableness, and lawfulness upon the said record 
 returned by the Commission, and thereupon if, after hearing the parties, said court 
 shall be of the opinion that such order is unjust, unreasonable, or unlawful, it shall 
 modify, set aside, or anul the same by appropriate decree, or remand the cause to the 
 Interstate Commerce Commission for a new or further hearing; otherwise the order 
 of said Commission shall be affirmed. 
 
 Mr. Hearst. Yes, sir. 
 
 The Chairman. Now, there is the authority conferred to modify 
 a rate. 
 
 Mr. Hearst. No, sir; I beg j'our pardon. At least, it is not neces- 
 sarily meant to confer authority to modify a rate. It is meant to con- 
 fer authority to modify orders of the Commission. Those orders do 
 not all relate to rates. In ray opinion it could not constitutionally 
 modify a rate, but it could constitutionally modify other orders of the 
 Commission, and it is onl}^ authorized to do what it can do constitu- 
 tionally — at least, what we think it can constitutionally do. 
 
 The Chairman. Yes. Then if it can or could have the power under 
 a law to perform this act — this legislative act, so called — then it could 
 modify the order that would say a rate of 26 cents, for instance, is a 
 just rate, and it could make it 22 cents, or it could make it 27 cents? 
 
 Mr. Hearst. Yes, if it has the constitutional right to do it, it could 
 do it. 
 
128 PROPOSED AMENDMENT OF INTER8TATE-COMMEE0E LAW. 
 
 The Chairman. But you think that it has not the constitutional 
 right? 
 
 Mr. Hearst. I think that it has not the constitutional right, but I 
 think that it has the constitutional right to modify other orders of the 
 Comnaission, which do not relate to rates, which might relate to classi- 
 fications or schedules, or any of a number of other things. 
 
 The Chairman. Then we might not give to the Commission the 
 power to fix a rate, or the court. Could not Congress require the 
 court to review the action of the Commission fixing a rate, to say 
 whether that rate is just and reasonable, and, if not, what rate would 
 be just and reasonable, and then say that that rate, so found by them 
 to be just and reasonable, should be the rate hereafter to be charged? 
 
 Mr. Hearst. Of course the court does that as far as it is constitu- 
 tional for it to do it. It does it to this extent, that in rendering an 
 opinion and in remanding the case to the Commission it gives its rea- 
 sons for its opinion — its reasons why the rate is considered unreason- 
 able — and the Commission, guided by that opinion, goes ahead and 
 fixes the rate, with its legislative powers, as I do not think the court 
 can fix is as a judicial tribunal. 
 
 The Chairman. In that instance the court would not be fixing the 
 rates in contemplation of law; but the legislative act comes in there 
 then, after it has completed its duty, and says- that that rate that they 
 have named shall be the lawful rate that shall be charged. 
 
 Mr. Shackleford. Now, in that connection, I want to ask a question. 
 
 The Chairman. I would like to have Mr. Hearst answer that — that 
 is, if he has studied that branch of it. 
 
 Mr. Hearst. Of course I am a layman and I can not put my opinion 
 up against that of distinguished lawyers, but I do not think that the 
 court has the right to do that. I think that it has simply the right 
 to pass on the findings of the Commission, and if it disapproves of the 
 findings of the Commission it remands the cause to the Commission 
 and the Commission goes ahead and fixes another rate in accordance 
 with the decision of the court; but the decision of this legislative body 
 to fix a rate does fix the rate, and the court, with its judicial power, 
 reviews the action of the Commission. 
 
 The Chairman. After that, they having this power of reviewing, 
 acting in this manner you have just spoken of, they remand the matter 
 to the Commission, and the Commission, under the law, would then 
 be required to fix the rate as suggested by the court. Now, the ques- 
 tion I have suggested is, whether the legislature could do that without 
 the necessity of remanding the case and the consumption of that time. 
 
 Mr. Hearst. I understand you, sir. 
 
 The Chairman. Because if the Commission carries out the sugges- 
 tion of the court and fixes that particular rate, it will simply be exer- 
 cising a legislative function that Congress has conferred upon it. 
 
 Mr. Hearst. Yes, sir. 
 
 The Chairman. Now, why, by this broad declaration that the rate 
 that tl^ey have determined shall" be the future rate to be charged, can 
 not they avoid all that difficulty at the time, and fix future rates?' 
 
 Mr. Hearst. I think it is simply a question of the constitutionality 
 of that method. 
 
 Mr. Shackleford. I would like to make a suggestion right there. 
 
 Mr. Wanger. It would be desirable, if the court has the power, 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 129 
 
 that it should determine the matter without any further proceeding-. 
 Do you not think so 'i 
 
 Mr. Hearst. I do not know whether that would be rnoi-e desirable 
 than the procedure proposed in this bill. 
 
 Mr. Shackleford. In that connection, uhder the provision that this 
 bill now contains authorizing the court to review and modify or 
 remand, if the court should find it is clothed with constitutional power 
 to fix a rate instead of a rate that had been fixed by the Commission, 
 would it not have authority to do that under the provision of your 
 bill which says that it might modify an order? 
 
 Mr. Hearst. Most certainly it would have power to do it. 
 
 Mr. Shackleford. Would not the matter that the chairman speaks 
 of be embraced in your bill under that clause, giving it the power to 
 modify a finding of the Commission ? 
 
 Mr. Hearst. I think so. 
 
 The Chairman. I was under the impression that the power of the 
 Commission to act after the remanding of the case in conjunction and 
 in harmony with the suggestion of the court would depend upon the 
 act of Congress that gave them this legislative power to fix the rates. 
 In other words, the Commission borrow their power from the courts. 
 Now, it occurs to me that if we could do that, about which I have no 
 doubt, we could also, without any question, by enactment say that the 
 rate which was modified by the Commission — that they had determined 
 would be a just rate — might be legislated into virility and force by such 
 language as I have used: "And this rate, so determined, shall, after 
 notice, be the lawful rate to be charged for this service." 
 
 Mr. Hearst. The point is that the bill provides that, if it is consti- 
 tutional. 
 
 The Chairman. No; I think not. Oh, it provides 
 
 Mr. Hearst. It provides it in the word "modify." 
 
 The Chairman. Yes; but it does not contain this other, to my mind 
 essential, provision, that the rate, as it is modified, shall be thereafter 
 the lawful rate. Then, the rate gets its sanction and its power from 
 this sentence of the law, this declaration. 
 
 Mr. Hearst. It seems to me that the bill does give the court that 
 power, provided that power can be constitutionally given to the court, 
 by the use of the word "modify." But I say it is only a matter of my 
 opinion. I do not presume to put my- opinion up against yours; but 
 my opinion is that Congress can not give the court that power; but 
 if it can, the court has it under the phraseology of my bill, and if it 
 can not, then that phraseology applies merely to other orders where 
 the court obviously has the power. 
 
 The Chairman. I am afraid that you do not get my idea with regard 
 to this matter. I am trying to avoid the difficulty of conferring this 
 legislative power upon a judicial body. 
 
 Mr. Hearst. Yes, sir. 
 
 The Chaib^ian. I say, I think there may be very great diflSculty in 
 doing it; and we may not have the power to do it. I am trying to 
 avoid it by requiring there what may be perhaps considered a minis- 
 terial act, namely, after they have investigated one of these cases, and 
 found that the rate is unreasonable, which we undoubtedly may do, 
 then requiring them to go one step further and say what would be a 
 reasonable rate, not for the purpose of their putting that rate into 
 
 I c L— 05 9 
 
130 PEOPOSED AMENDMENT OP .INTEKSTATE-COMMEKCE LAW. 
 
 effect, not for the purpose of making that action a part of a decree 
 that would be carried out as a decree, but simply for the purpose of 
 stating a fact; and then the law comes in and says that that rate which 
 they have thus named shall be the future rate to be charged.^ I am 
 afraid that you did not^et the idea that I had in this suggestion. I 
 have not any doubt myself about our power to do that, and I think 
 that is the solution of this constitutional difficulty. 
 
 Mr. Kyle. Would not that be in effect the same as if the Commis- 
 sion then established that rate? 
 
 The Chairman. No; it would not be the same, because it then 
 becomes the direct act of the Congress. 
 
 Mr. Adamson. The witness is nov/ right at the point where I had 
 him when I asked him my last question, and 1 would like to go on from 
 there if you have finished. 
 
 The Chairman. I am through with this, if Mr. Hearst gets ray idea. 
 
 Mr. Hearst. I think I do; but I do not see the advantage of a doubt- 
 ful method of fixing a rate by a court when the clearly constitutional 
 method of fixing the rate by a commission is available. 
 
 The Chairman. Have you thought of this matter, and have you an 
 opinion as to whether this method would be operative and would over- 
 come that constitutional difficulty? 
 
 Mr. Hearst. Of course I did think of the various difficulties, and , 
 doubtless that, or something like that, occurred to me; and in framing 
 the bill in this way it seemed to me the possible difficulties — all possible 
 difficulties — that might arise would be avoided, because there is no 
 question of the powers as given to the Commission and as given to the 
 court, as herein set forth. And the delay is inconsiderable compared 
 with the delays that occur now. The greatest saving of time and 
 machinery and expense is provided for in this bill. And it insures, I 
 think, beyond question the procedure of the Commission and the court 
 being constitutional and being supported by the Supreme Court. 
 
 Mr. Adamson. Now, Mr. Chairman, this matter that I want to pur- 
 sue will not disturb your line of questions. It is entirely in line with 
 yours. 
 
 I was asking you, Mr. Hearst, a few minutes ago, what reason you 
 could give why, in constituting a court for review of the finding of 
 the Conamission with authority to judge the rates fixed by that Com- 
 mission, and to adjudge what its rates should be, it could not be 
 empowered by us, endowed with the authority, to declare what would 
 be a just and proper rate, and why we should not then, in the same 
 act, legislate that that should be the future rate. 
 
 Mr. Hearst. Yes, sir. 
 
 Mr. Adamson. And you said in answer to Mr. Mann that perhaps 
 you could not do that. You did not fully answer that. Now, 1 want 
 to_ know, when this court is constituted by us with power to say what 
 a just and proper rate would be, if we could not by enactment, the 
 same act, provide that that rate so found by them should be the future 
 rate ? There has never been any decision to the effect that that could 
 not be done, has there ? 
 
 Mr. Hearst. There has never been any decision of the Supreme 
 Court as to this court, because this court has not yet been established; 
 but it has been decided to be unconstitutional to give that authority to 
 a court. 
 
 Mr. Adamson. What provision of the Constitution says that? 
 
PROPOSED AMENDMENT OF USTTERSTATE-COMMEBCE LAW. 131 
 
 Mr. Hearst. The clause of the Constitution separating the execu- 
 tive, legislative, and judiciary. 
 
 Mr. Adamson. 1 am trying to get your views, now. 1 notice that 
 Judge Lamar made a suggestion to you which I did not hear. He is 
 a good lawyer, of course 
 
 Mr. Hearst. You may be equally confident that 1 am not, and I am 
 very willing to hear a suggestion, because I suppose you are more 
 anxious to get the real facts of the case than you are to get my views. 
 
 Mr. Lamar. I suggested the fact of the' broad distinction between 
 the legislative and judicial functions. 
 
 Mr. Adamson. I asked him if he knew of any other reason except 
 that distinction. 
 
 Mr. Lamar. That is broad enough. 
 
 Mr. Hearst. I can only repeat what I have said, that under this 
 phraseology 
 
 Mr. Adamson. I am not asking you with reference to any bill. 1 
 have no idea that any bill now before Congress will become a law. 
 We are trying to find out what is right, and to make and report a bill, 
 which I believe will be done. I am asking you the abstract question 
 as to doing or not doing the particular thing. Now, you do not think 
 that the provision as to the integrity and keeping separate of the three 
 departments of the Government would prohibit the legislation Sug- 
 gested to you by the chairman? 
 
 Mr. Hearst. 1 think that it might, and I think that if it did pre- 
 vent it, my bill would stand, and if it did not prevent it, they would 
 be able to proceed under the word "modifj%" as you wish them to 
 proceed, and it does not seem to me advantageous to go the length of 
 putting in a clause which might be considered unconstitutional, when 
 they have the privilege, under the phraseolog)'^ that exists in this bill, 
 of doing the very thing that you desire them to do. 
 
 Mr. Adamson. Can you tell me how it would be mixing the two 
 departments under the Constitution, under the law we- are going to 
 pass, to declare that whatever rate the court shall declare would be or 
 would have been a just and reasonable rate, shall become the law? 
 The court has not a thing to do with making the law. This Congress 
 makes the law, and it seems to me that it provides for the judicial 
 interpretation. 
 
 Mr. Hearst. All right if it can do that; it can do it under this bill. 
 
 The Chairman. Taking this act of yours, and leaving the word 
 "modify" just as it is, and all of that sentence just as it is, would it 
 strengthen it to add, in the appropriate place — I do not know just 
 where it would come— a provision that the rate so approved or so 
 modified by the court should be the lawful rate thereafter to be 
 charged by the carriers? Would that strengthen it? 
 
 Mr. Hearst. That assumes that the court may modify a rate ? 
 
 The Chairman. Yes. 
 
 Mr. Hearst. I have not assumed that. 
 
 The Chairman. What is the office, then, of the word "modify?" 
 That relates to some other proceeding in your mind other than the 
 
 Mr. Hearst. Any orders of the Commission that the court can 
 modify. Now, it obviously can modify certain orders of the Commis- 
 sion, and it can possibly modify all orders of the Commission, and if 
 it can not it will be confined to those which it can constitutionally 
 modify. If it can modify the rate it will go ahead and modify, and 
 
132 PROPOSED AMENDMENT OP INTEBSTATE-COMMEECE LAW. 
 
 state a definite rate and fix a rate; but I repeat I do not think the court 
 fix a rate. 
 
 Mr. TowNSEND. As I understand it, your bill makes provision for 
 the Interstate Commerce Commission to take testimony necessary, and 
 if a rate shall be found unreasonable should determine what is a rea- 
 sonable rate. Now, if that is not satisfactory to the defendent, he 
 takes an appeal to this interstate court that you have provided 'i 
 " Mr. Hearst. Yes, sir. 
 
 Mr. TowNSEND. And that interstate court passes upon the lawful- 
 ness, if I may use that word, to cover all cases in which an appeal may 
 be taken — the lawfulness of the order of the Commission. And if that 
 court finds that the Commission has made a lawful rate, then that rate 
 immediately stands, does it not? 
 
 Mr. Hearst. Yes, sir. 
 
 Mr. TowNSEND. If it finds it has not made a lawful rate, then it is 
 remanded for further hearing? 
 
 Mr. Hearst. Yes, sir. 
 
 Mr. Shackleford. Unless modified ? 
 
 Mr. TowNSEND. Mo; I do not want to say "modified." Now, I am 
 talking on the supposition, as I agree with Mr. Mann on that, that it 
 seems to me that the Supreme Court would hold that the court could 
 not make that rate. As I understand from your bill here, a rate does 
 stand, if it is decided by the Supreme Court that the Commission made 
 a lawful rate ? 
 
 Mr. Hearst. Yes, sir. 
 
 Mr. Stevens. Let me ask one concrete question, to get it in such 
 shape that we can find the distinction. Suppose that the railroad was 
 charging 12 cents a hundred, and that rate was challenged on the 
 
 f round that it was unreasonable, and the Commission made an order 
 xing it at 8 cents a hundred; then suppose that an appeal for review 
 was taken, and the case went to this court on that. The person who 
 challenged that rate demanded reparation for the injustice done in the 
 difference between 8 cents and 12 cents a hundred, and demanded that 
 no greater rate in the future should be charged than the just and rea- 
 sonable rate. Now, the rate fixed by the Commission was 8 cents a 
 hundred, and it was brought to this court, and the court said that 8 
 cents a hundred was too low, and that 10 cents a hundred was a just 
 and reasonable rate, and ordered reparation for the past aCnd enjoined 
 them from charging more than 10 cents in the future. That is con- 
 stitutional. That is a perfect exercise of judicial authority up to that 
 point, is it not? Your bill would give the court authority to do that 
 in that kind of a case? 
 Mr. Hearst. May I have that question read to me? 
 Mr. Stevens. I think 1 can probably restate it more plainlj'. Sup- 
 pose that a rate of 12 cents a hundred is charged by a railroad com- 
 pany, and that rate is challenged by the Commission on the ground 
 that it is unfair and unjust and unreasonable, and the man who brings 
 the complaint demands reparation due to him on account of that unjust 
 charge. The Interstate Commerce Commission hears the case, as pro- 
 vided by your bill, and fixes the rate at 8 cents a hundred as a just, 
 fair, and reasonable rate, and grants him reparation. A review is 
 then taken to the court provided for in your bill. On that review the 
 court makes this decree, that the rate of 8 cents is confiscatory — too 
 low — and that a rate of 10 cents is just, fair, and reasonable, and grants 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 133 
 
 him reparation for the past, and enjoins the railroad against charging 
 more than 10 cents for the future. Is not that a perfect exercise of 
 judicial authority authorized by the Constitution in such cases ? 
 
 Mr. Hearst. It seems to me that that is merely a more complicated 
 way of stating the previous proposition — that the court has a right to 
 fix the rate? 
 
 Mr. Stevens. I am just asking your opinion on that subject. Does 
 that confer upon the court that equitable authority to enjoin for the 
 future the exercise of an illegal rate, up to a certain point? 
 
 Mr. Hearst. I have endeavored to frame this bill so that the court 
 would have authority to act up to its constitutional right. 
 
 Mr. Stevens. If it should be held that that was an exercise of judi- 
 cial authority, that the court would be obliged to declare, in view of 
 that provision, what was a reasonable rate for the past years, and to 
 compel reparation, it would exercise its equitable functions and forbid 
 charging any more than an equitable rate for the future, which it 
 seems to me it has a right to do now, has not Congress a right, then, 
 to declare that a rate for that class of business, under those circum- 
 stances, is a fair, just, and reasonable rate, and should be the rate for 
 the future for everybody? Has not Congress a right to do that? 
 
 Mr. Hearst. Yes, sir. 
 
 Mr. Shackleford. If Congress has the right to do that, is not that 
 right given in the words authorizing the court to modify the orders of 
 the Commission? 
 
 The Chairman. No, sir. 
 
 Mr. Mann. I think you will agree the Supreme Court has decided 
 that the judicial authority has not the power of determining what is a 
 reasonable rate for the future. We understand the decisions to be 
 that way; that it has always declared that the judicial authority has 
 the power to declare what is a reasonable rate for to-day, or what was 
 a reasonable rate when their service was rendered in the past. 
 
 Mr. Hearst. Yes, sir. 
 
 Mr. Mann. Now, would it not be entirely competent, in accordance 
 with the suggestion made by the chairman, for us to require the court 
 to decide in a certain case what is the reasonable rate at the time of 
 the hearing: that the rate in existence, not a future rate, is reasonable, 
 and then to legislatively say, when that has been adjudicated, when the 
 court has decided what is a reasonable rate at the time of the hearing, 
 that that rate shall be the reasonable rate and enforced by the courts 
 for the future, that being a legislative act ? 
 
 Mr. Hearst. I doubt it, but possibly it can do that. 
 
 Mr. Mann. Can there be any question about it? It is not the court 
 declaring what is a reasonable rate for the future. It is the court 
 exercising its common-law jurisdiction. 
 
 Mr. Lamar. The rate that you speak of is the rate already in litiga- 
 tion and pending before the court to be passed upon, or is it a sup 
 posititious rate? 
 
 Mr. Mann. Suppose that we provide that a complaint shall be made 
 as to an existing rate, any shipper would have the authority to bring 
 a common-law suit. We may provide a different form of action, 
 requiring the court or Commission to determine what is the reasonable 
 rate at the time. That is the common-law duty of the court. And 
 when that is adjudicated, why can not we legislatively say that that 
 shall be considered and be the reasonable rate for the future? 
 
134 PEOPOSED AMENDMENT OF INTBESTATE-OOMMEECE LAW. 
 
 Mr. TowNSEND. Does any other bill have any other object in view 
 than that? 
 
 Mr. Mann. Every other bill, and ever^^thing else, except what 1 
 have just heard here in the way of suggestion by the chairman, is to 
 the effect that the court shall determine what is a reasonable rate for 
 the future. 
 
 Mr. Shacklefokd. Let me ask you a question. If the. court should 
 do what you say, would it not take the form of a judgment, and being 
 in the form of a judgment, would the Commission have any right 
 thereafter, under changed conditions, to regulate that rate again until 
 it had proceeded to have that judgment vacated and set aside? 
 
 Mr. Mann. Any bill covering that question will of course provide 
 a method for reviewing the rates fixed in that manner, just as any other 
 rate may be reviewed. 
 
 Mr. Richardson. May I ask a question? 
 
 Mr. Shacklefokd. Mr. Hearst has not yet answered Mr. Mann's 
 question. 
 
 Mr. Richardson. Excuse me; I did not know he had not answered 
 Mr. Mann's question. 
 
 Mr. Hearst. I simply wanted to repeat what I have said, that 'there 
 is no doubt of the right of Congress to delegate its legislative func- 
 tion to the Commission, and there is no doubt of its right to consti- 
 tute a court to review the decisions of the Commission, and there is 
 no doubt, first, that it is an entirely legal system of procedure, and 
 that it is also an extremely prompt system of procedure. 
 
 Mr. Richardson. Under your bill the Commission have power to 
 raise rates when they find them discriminative? 
 
 Mr. Hearst. Yes, sir; they have. 
 
 Mr. Richardson. To raise a rate when it is too low ? 
 
 Mr. Hearst. Yes, sir; the Commission has that power here, if it 
 has fixed a rate that becomes too low. 
 
 Mr. Richardson. Suppose that the rate is fixed originally for the 
 purpose of discrimination, does your bill give the Commission the 
 power to raise it if it is too low ? 
 
 Mr. Hearst. Yes, sir; it gives it the right to fix a rate, and if it has 
 the power to fix a rate, I suppose it would unquestionably have the 
 right to raise a rate. 
 
 Mr. Richardson. You know that often occurs in the matter of 
 discrimination; that is what makes discrimination, often, locally. 
 
 Mr. Hearst. Yes, sir. 
 
 Mr. Shackleford. It has that right already? under the power to 
 regulate. 
 
 Mr. Hearst. Yes, sir. . 
 
 The Chairman. 1 would like to pursue this matter further. In 
 calling your attention to the authority given on page 10, line 2, "it 
 shall modify, set aside, or annul the same by appropriate decree or 
 remand the cause to the Interstate Commerce Commission for a new 
 or further hearing," in your judgment, would that authority to remand 
 for further hearing permit the court to determine the lines on which 
 that rehearing would be had ? aSj for instance, they might say that the 
 rate fixed by the Commission as just and reasonable was, in their judg- 
 ment, either too high or too low, and they not having the power to fix 
 the rate themselves, they chose to remand it to the Commission with 
 
PROPOSED AMENDMENT OF INTEKSTATE-COMMERCE LAW. 135 
 
 the instruction to fix a rate lower or higher. Do you think they should 
 have that power? 
 
 Mr. Hearst. You mean to positively direct the Commission what 
 rate to fix? 
 
 The Chairman. Well, in their judgment. 
 
 Mr. Hearst. Of course their opinion would naturally be that. In 
 giving their opinion they would give their reasons for it, and that 
 opinion would guide the Commission in fixing the subsequent rate. 
 In other words, it would endeavor to fix the rate in accordance with 
 the decision of the court. 
 
 The Chairman. Then that power to remand would substantially 
 give to them the power of determining what the action of the Com- 
 mission should be — as is usually the case in the case of a court of 
 equity in remanding a case, or in remanding an equity case for further 
 proceeding — of indicating what should be the line of conduct. 
 
 Mr. Hearst. Yes, sir; it would certainly tell them what they could 
 not do, and that would enlighten them as to what they could do, and 
 the opinion of the court in details would enlighten them, to a consid- 
 erable extent, and perhaps altogether as to what they could do; as to 
 what rates would pass the censorship of the court. 
 
 The Chairman. The thing that I want particularly to get your 
 opinion about is as to whether this Congress can require a judicial 
 body to say to the Commission what line of conduct they are to pur- 
 sue in case the cause is remanded to them. 
 
 Mr. Hearst. That is the whole point at issue, the whole point upon 
 which I have expressed the opinion that 1 do not think they can go to 
 the extent of fixing the rate definitely themselves. 
 
 Mr. Adamson. If they can not do it, can they help do it? 
 
 Mr. Hearst. Yes, sir; because their opinion materially assists the 
 Commission in fixing it. 
 
 Mr. Adamson. If they can not do it, what right have they to tell 
 another body to do it? 
 
 Mr. Hearst. They are not telling another body to do it; they are 
 telling another body what can not get through that court. 
 
 Mr. Adamson. In other words, to pass on their future action in 
 advance. 
 
 Mr. Hearst. That is what every court has the right to do; they 
 have the right to reverse 
 
 Mr. Adamson. A lower court 'I 
 
 Mr. Hearst. Yes, sir. 
 
 Mr. Richardson. Mr. Adamson, your question goes to the point of 
 whether the Supreme Court of the United States, the court of last 
 resort 
 
 Mr. Adamson. I have never heard anybody deny that the upper 
 court could give instructions to the lower court whose judgments are 
 sent to it. 
 
 Mr. Lamar. The cotfrts can challenge the reasonable rate, and 
 declare that the legislative power can not confiscate a railroad's 
 property. 
 
 Mr. Adamson. This is a distinct court, and it is a court that you 
 say can not fix a rate, and yet you say, though it can not do it, it can 
 tell another body how to do it. 
 
 Mr. LiAMAR. It can not legislate, but it can declare under its 
 powers^ 
 
136 PROPOSED AMENDMENT OF INTEK8TATE-C0MMEKCE LAW. 
 
 The Chairman. That is what I want to know, can we require them 
 to declare? 
 
 Mr. Lamar. I should say not. The Congress of the United States, 
 the legislative bodj-, can not indirectly make the Constitution of the 
 United States different from what it has been fixed. Within their 
 constitutional functions they can adjudicate questions of property or 
 judicial rights. They can find questions of fact within their functions. 
 
 Mr. Stevens. Then it will be necessary for them to adjudicate what 
 is the fact in a particular case. 
 
 Mr. Lamar. The^^ can adjudicate what is a reasonable rate and 
 declare whether it should exist. 
 
 Mr. Hearst. I was reading from the first paragraph of my bill. 
 Section 6 enumerates orders that may be issued by the Commission. 
 
 Section 6 is as follows: 
 
 That when in any investigation made by the Interstate Commerce Commission 
 it shall be made to appear to the satisfaction of the Commission that' anything has 
 been done or omitted to be done by any common carrier^ respondent or defendant, 
 in such proceeding in violation of the provisions of the abt to regulate commerce, 
 approved February fourth, eighteen hundred and eighty-seven, or any act amenda- 
 tory thereof or supplemental thereto, or of the provisions of this act, it shall be the 
 duty of the said Commission forthwith to cause a copy of its report in respect 
 thereto to be delivered to such common carrier, together with an order or orders 
 directing such common carrier, its officers and agents, and any receiver or trustee of 
 its property, to wholly cease and desist from such violation, and to establish, put 
 into effect, and maintain such individual rate, fare, charge, relation of rates, fares, 
 or charges, joint rate, fare or charge, and division thereof, classification of freight 
 articles involved in the proceeding through and continuous carriage over connecting 
 lines or roads, including intersecting switches or connections, and regulations con- 
 cerning transportation, including the furnishing and apportionment of cars, the pro- 
 vision of other facilities connected with or incidental to transportation, and the 
 receiving, forwarding, and delivery of traffic, as in the judgment of said Commission 
 may be necessary to prevent the continuance in any degree of such violation. That 
 whenever any common carrier, subject to the provisions of this act, shall fail or 
 refuse after reasonable notice to furnish cars to shippers for the transportation of 
 freight as interstate commerce, or to forward and deliver such freight at desti- 
 nation within a reasonable time, such failure or refusal shall be deemed to con- 
 stitute unjust discrimination and undue and unreasonable prejudice and disadvan- 
 tage, and in any case or proceeding pending before the Commission or any circuit 
 or district court of the United States based upon such failure or refusal oh the part 
 of any such common carrier, proof that, in the furnishing of cars or forwarding or 
 delivery of its traffic, other shippers have been preferred shall not be required. 
 
 The Chairman. You have passed over section 2'i 
 
 Mr. Hearst. Yes, sir; because I was proceeding primarily with the 
 powers given to the Interstate Commerce Commission, then passing 
 to the character of the orders that they may issue, and then coming to 
 .section 7, which tells how the above-described orders shall become 
 effective. Section 8 deals with " The Court of Interstate Commerce." 
 
 The Chairman. I would like to ask you if it was intended by the 
 language of section 2 to bring ocean carrying within the purview of 
 the interstate commerce act ? 
 
 Mr. Hearst. The language there is, " and also to such transporta- 
 tion over any part water and part rail route used for through ship- 
 ment or through carriage." Yes, sir; I should think that covers coast 
 transportation 
 
 The Chairman. By water. 
 
 Mr. Hearst. This is designed to bring under the action of the Com- 
 mission the independent water lines that are engaged in forwarding 
 interstate commerce, and which are not under the provisions of the 
 
PROPOSED AMENDMENT OF Iiq^TERSTATE-COMMEECE LAW. 137 
 
 present act, I believe, unless they are owned by one of the railroads 
 which is engaged in interstate commerce. It is practically what Mr. 
 Spencer, I think, said was desirable, a day or two ago. 
 
 The Chairman. Do not the provisions of that section require the 
 foreign vessel engaged in interstate commerce to file a schedule of 
 tariffs, and would the joint tariffs between a railway and such a vessel 
 have to be filed? 
 
 Mr. Hearst. I had not considered that particular relation of it. I 
 had considered it particularly in regard to lesser water lines. 
 
 The Chairman. Yes; the lakes and rivers? 
 
 Mr. Hearst. Yes, sir. Section 3 reads: 
 
 Sec. 3. That when the rate fixed by the Commission is a joint rate and the car- 
 riers parties thereto fail to agree upon the apportionment thereof among themselves 
 within twenty days after notice of such order, the Commission may issue a supple- 
 mental order fixing the portion of such joint rate to be received by each carrier party 
 thereto. 
 
 That seems to be necessary in order to carry out the first order of 
 the Commission. 
 
 Mr. Shackleford. Does that not apply simply where the rate is 
 part rail and part water; is not that the limit to which that is intended 
 to go? 
 
 Mr. Hearst. That is the limit that 1 considered. 
 
 Mr. Richardson. Does not your language there, "through ship- 
 ment," indicate that very thing — that it does apply to this country? 
 
 Mr. Hearst. This country, necessaril}'. 
 
 Mr. Richardson. You do not intend it to apply to any water route 
 except to a route that is a continuous one — part water and part rail ? 
 
 Mr. Hearst. That is my view. 
 
 Mr. Mann. Would that applj- to the shipment of wheat or corn 
 from New York to Liverpool '. 
 
 Mr. Shackleford. That is foreign commerce and not interstate 
 commerce. Would that not be foreign commerce? 
 
 Mr. Hearst. If the Interstate Cominerce Commission were given 
 power to regulate that, it might, but it has not the power. 
 
 Mr. Mann. The Supreme Court has decided that the present law 
 does not cover such a case as that. 
 
 Mr. Hearst. I should think 
 
 Mr. Maxn. It has always seemed to me that it might properly 
 cover a case of that kind, and I have wondered whether your bill pro- 
 vided that it should or not. 
 
 Mr. Hearst. Section 4 reads: 
 
 Sec. 4. That it shall not be lawful for any common carrier subject to any of said 
 acts, or any company or person acting for or in the stead of such common carrier, to 
 advance, reduce, or cancel any individual or joint rate, fare, or charge now or here- 
 after in force over the route or line of such common carrier unless or until notice 
 thereof, plainly showing the change intended to be made in such rate, fare, or 
 charge, and the date when the same shall take effect, shall have been filed with the 
 Interstate Commerce Commission and posted in all depots or stations where pas- 
 sengers or freight are received for transportation under such rate, fare, or charge, for 
 at least thirty days prior to the date when such change is to become effective. 
 
 That is simply a modification of existing laws which require that 
 if a rate is to be raised ten days' notice shall be given and filed, and if 
 a rate is to be lowered three days' notice shall be given. That increases 
 the time to 30 days in the interest of the shipper, believing that the 
 
138 PEOPOSED AMENDMENT OF INTEE8TATE-00MMEECE LAW. 
 
 third provision gives opportunity for discriminating rates. Section 4 
 
 continues: 
 
 Provided, however, That said Commission may, for good cause shown, upon special 
 application, allow a particular rate, fare, or charge to be changed upon shorter 
 notice published and filed as aforesaid. No joint rate, fare, or charge shall become 
 effective until all carriers named as parties thereto shall have concurred therein by 
 signing the rate schedule or filing general authorization or specific notice of concur- 
 rence with the Commission. 
 
 I think that this is generally in effect now, at least by agreement; 
 but I have made it a part of this bill in order that no railroad shall 
 post a rate and lead a shipper to ship his goods over connecting roads, 
 only to find out that the rate is not concurred in by the other roads. 
 
 Mr. Mann. Is there anything in your bill, in that connection, that 
 will prevent putting into operation what they call "midnight rates?" 
 
 Mr. Hearst. What is a midnight rate ? I am not familiar with that. 
 
 Mr. Mann. Then 1 will not go any further on that. That is one 
 method of evading rates. 
 
 Mr. Richardson. Known to Chicago? [Laughter.] 
 
 Mr. Shackleford. Is that practiced to any extent in the West? 
 
 Mr. Mann. It is practiced wherever they have a cutthroat road, 
 and it is practiced very extensively in various parts of the country, I 
 believe, so they say. 
 
 Mr. Hearst (continuing reading): 
 
 and any common carrier enforcing any schedule or joint rates, fares, or charges 
 which shall not have been concurred in by all carriers parties thereto, or any sched- 
 ule of rates, fares, or charges which shall not have been published and filed as 
 required by this section, shall be subject to a forfeiture of one hundred dollars for 
 each day such unlawful tariff shall be published or enforced. The said Commission 
 may prescribe the form, contents, and arrangement of all schedules of rates, fares, 
 and charges, and it shall be the duty of said Commission to make orders from time 
 to time, as may be practicable, with a view of securing uniformity in freight classifi- 
 cation and the use of rate schedules containing concise and easily understood provi- 
 sions and regulations. 
 
 These provisions are all merely designed to simplify and make the 
 schedules intelligible, because I understand they are now only to be 
 interpreted by an expert, and to secure business simplicity and system 
 as far as may be for the convenience of shippers, and in the classifica- 
 tion of rates. Shall I call attention to some of these other points? 
 
 The Chairman. Certainly. That is what we desire you to do. 
 
 Mr. Hearst. I see that it is getting pretty late, Mr. Chairman. 
 
 The Chairman. You will not be able to get through to-day ? 
 
 Mr. Hearst. I am afraid not. 
 
 The Chairman. We will have to adjourn at 12 o'clock, and if you 
 will suspend now and resume to-morrow morning at half-past 10, we 
 will be glad. 
 
 Mr. Hearst. Very well. 
 
 (Thereupon, atl2 o'clockm. ,the committee adjourned until to-morrow, 
 Tuesday, January 17, 1905, at 10.30 o'clock a. m.) 
 
PROPOSED AMENDMENT OP INTERSTATE-COMMERCE LAW. 139 
 
 Tuesday January 17, 1905. 
 
 The committee met at 10.30 o'clock a. m., Hon. William P. Hepburn 
 in the chair. 
 
 STATEMENT OF MR. G. WALDO SMITH. 
 
 Mr. Smith. I would like to present the views expressed in a report 
 to the New York Board of Trade and Transportation. 
 The Chaikman. How long would this take you ? 
 Mr. Smith. 1 think it will take only about five or eight minutes. 
 The Chaikman. Proceed. 
 Mr. Smith read the report referred to, as follows: 
 
 evils of interstate commerce — auarles-cooper bill defective — a joint congres- 
 sional commission on interstate commerce favored. 
 
 Rooms op the New York Board op Trade and Transportation, 
 
 New York, December S8, 1904. 
 To the New York Board of Trade and Transportation. 
 
 Gentlemen: Your committee on railway transportation on the 27th of January 
 last submitted to you a report giving reasons why you should oppose the Quarles- 
 Cooper bill amending the interstate-commerce law. That report you adopted unani- 
 mously. We now have the honor to submit a further report in support of your action. 
 
 The more we have studied the evils and abuses of interstate commerce, the firmer 
 are we of the opinion that the Quarles-Cooper bill will not in any desirable way add 
 to the effectiveness of the existing lawful remedy. 
 
 The delay, incident to the enforcement of existing law, was one of its chief weak- 
 nesses, but that condition has been in a large degree remedied since the passage of 
 the Elkins law February 19, 1903. 
 
 That the Quarles-Cooper bill would make no improvement in expediting the trial 
 of complaints is evidenced' by the criticism of its provisions made by Hon. .John D. 
 Kernan in his address before the interstate-commerce law convention held in St. 
 Louis last October. Mr. Kernan was urging the importance of an amendment to the 
 bill which was designed to hasten the taking of additional testimony if required by 
 the courts, and his conception of what the experience would be under the Quarles- 
 Cooper bill without his amendment is indicated by his remark, as follows: Mr. Ker- 
 nan said: 
 
 "After a shipper, whose complaint is filed in his youth, dies of old age the dis- 
 position of his case is of no use to his business." 
 
 The amendment proposed by Mr. Kernan was suggested to Mr. E. P. Bacon in 
 these rooms last year and he, after consultation with his counsel, rejected it as being 
 unconstitutional, and the bill in this respect remains hopelessly defective. 
 
 The greatest evils now complained of are those growing out of the private car 
 line, pri\ate terminal-track and side-track systems. It is not claimed by its sup- 
 porters, and can not be demonstrated, that the Quarles-Cooper bill will in the 
 slightest degree affect these abuses. 
 
 The private car companies deny that they are under the provisions of the interstate- 
 commerce law, and the Interstate Comitierce Commission has not determined their 
 status, neither have the courts adjudged them to be subject to such law. 
 
 The language of the Elkins law is as follows: 
 
 "And it shall be unlawful for any person, persons, or corporation to offer, grantj 
 or give or to solicit, accept, or receive any rebate, concession, or discrimination in 
 respect to the transportation of any property in interstate or foreign commerce by 
 any common carrier subject to said act to regulate commerce and the acts amenda- 
 tory thereto whereby any such property shall by any device whatever be trans- 
 ported at a less rate than that named in the tariffs published and filed by such carrier, 
 as is required by said act to regulate commerce and the acts amendatory thereto, or 
 whereby any other advantage is given or discrimination is practiced." 
 
 This would seem to warrant a belief that it is sufficient to reach such devices. If 
 it is not so, it should be made so. These private car-line, private terminal-track and 
 side-track systems are devices by which, among other things accomplished, the 
 grossest discriminations are made and rebates given. The method of evading the law, 
 if effective to that end, is very simple. The shipper pays his freight to the railroad 
 company. The charge so paid is the lawful tariff rate plus the regular charge for the 
 
140 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 use of the private car. The railroad company in turn settles with the private car 
 company. Finallv, the private car company pays to the shipper the rebate previously 
 guaranteed to him". The shipper, having been assured of his rebate in advance of 
 the transportation, has been able to calculate in his own transactions the ultimate 
 return to himself of the amount agreed upon. By this device his goods have been 
 transported at a less rate than those of his competitor, and he has enjoyed an advan- 
 tage over him to that extent. 
 
 But these are evils which, if not reached by the broad, comprehensive, far-reaching 
 provisions of the Elkins law, as supplementary to the interstate-commerce act, could 
 not be reached by the Quarles-Cooper bill. All other known forms of discrimination 
 ^nd preference between shippers are now forbidden by the Elkins law, and sum- 
 mary methods of proceeding by the courts are provided with penalties seemingly 
 adequate, if enforced, to deter such practices. 
 
 Mr. E. P. Bacon, of Milwaukee, the distinguished and able leader of the advocates 
 of the Quarles-Cooper bill, wrote this board October 5, 1903, as follows: 
 
 "The Elkins bill, which was enacted at the last session, seems to provide the most 
 effectual means possible of preventing such discrimination (between shippers), either 
 in the granting of preferential rates or the paying of rebates or by any other device. 
 The legislation on this point seems to be as complete as it is possible to make it." 
 
 The consideration of the Quarles-Cooper bill has thus far been mainly confined to 
 a discussion of the rate-making powers provided. This is a very important feature 
 of the measure. Intelligent men honestly differ as to the propriety^ of giving such 
 power to the Commission. The advocates of the bill deny that it gives that power 
 except in cases determined by the Commission upon complaint, but that it empowers 
 the Cominission to require the substitution in future shipments of a rate declared to 
 be reasonable for one declared to be unreasonable. 
 
 This provision, it is declared, would require the substitution "for the future" of the 
 rate named by the Commission, but it must be observed that this interpretation of 
 its meaning is the purest assumption, as the words "for the future" do not appear in 
 the bill, these words, "for the future," were in all the original bills and in the 
 draft of the Quarles-Cooper bill, but before its introduction in the present Congress 
 they were stricken out by Mr. Bacon and his counsel, lest their presence would cause 
 the courts to adjudge the bill unconstitutional. Thus the bill is intended bjj its advo- 
 cates to accomplish by obscure language the doing of something which, if plainly 
 declared, they themselves believed unconstitutional. It is not probable that the eye 
 of the Supreme Court of the United States would fail to penetrate this disguise. 
 
 But this provision is open to a radically different construction, which, if held, 
 will utterly confound those who, trusting to their leaders, look tor relief from its 
 passage. 
 
 As stated above, it is intended that the rate substituted by the Commission for the 
 rate complained against shall apply to future shipments. Serious doubt can well be 
 raised that this construction would be sustained. A complaint is made against the 
 validity of a specific charge or rate made upon a specific shipment'. The case ia 
 tried and determined, as Mr. Kernan said, after the complainant "has died o^ old 
 age." The difference between the shipper and railroad on that shipment is adjusted, 
 but there is nothing in the bill which provides that the railroad shall not charge the 
 9'a,me rate upon the next shipment, and the framers of this bill dare not make the 
 language so as to explicitly provide that the corrected rate shall apply "for the 
 future." 
 
 The existing Elkins law, on the other hand, does not run amuck with any such 
 •doubtful construction of its terms. 
 
 But it is said it gives the Commission no power to correct the rates or to declare a 
 lawful rate. The Elkins Act is specific in forbidding any unlawful rate and clearly 
 •elucidates what rates are unlawful. It with equal directness declares the ' ' tariffs pub- 
 lished and filed by such carrier" to be lawful. The Commission after investigation 
 could do no more. If the carriers are held rigidly to their tariff rates it matters not 
 much what those tariffs are if all shippers are charged and required to pay alike, and 
 excessive tariff rates are no longer to be accounted with to the same extent as form- 
 erly. Hon, Martin A . Knapp, chairman of the Commission, at a public hearing before 
 the Senate Committee on Interstate Commerce, March 18, 1898, made the following 
 declaration: 
 
 , "The question of excessive rates, that is to say, railroad charges, which in and of 
 t hemselves are extortionate, is pretty nearly an obsolete question." 
 
 Furthermore, the penalties under the Elkins law are heavier. In this respect it 
 provides that — 
 
 "Every person or corporation who shall offer, grant, or give or solicit, accept or 
 eceive any such rebates, concession, or discrimination shall be guilty of a misde- 
 
PEOPOSED AMENDMENT OF INTEBSTATE-COMMEECB LAW. 141 
 
 meanor, and on conviction thereof shall be punished by a fine of not less than one- 
 thousand dollars nor more than twenty thousand dollars." 
 
 The corresponding provisions of the Quarles-Cooper bill are as follows: 
 
 ' ' The offending party shall be subject to a penalty of five thousand dollars for each 
 day of the continuance of such violation which, together with costs of suit, shall be- 
 recoverable by said Commission by action of debt in any circuit court of the United 
 States, and when so recovered shall be for the use of the United States." 
 
 This provision of a per diem penalty was manifestly written to fit the bill when it 
 contained the words "for the future," and is doubtless retained in the belief that the 
 bill would apply to future shipments. The maximum penalty therefore is ?5,000 per 
 day under the Quarles-Cooper bill, whereas under the Elkins law each and every 
 specific violation of the act is an offense punishable by a fine of |20,000, whether there 
 is one offense per day or one hundred offenses per day, each paying a penalty. 
 
 And again, the Quarles-Cooper bill provides that the penalty "shall be recoverable 
 by said Commission by action of debt," requiring such special litigation subject to- 
 delays and doubts of ever reaching a conclusion or that the penalty would ever be 
 actually imposed. 
 
 On the other hand the Elkins law provides that offending persons upon conviction 
 of the offense "shall be deemed guilty of a misdemeanor 'and' shall be punished 
 by a fine," etc. 
 
 It seems to us that the advocates of the measure made a fatal confession-of the 
 serious doubt they entertained of its constitutionality when they struck from it the 
 words ' ' for the future. ' ' 
 
 This raises the question as to whether the Federal judiciary would in any event 
 pass upon a rate for the future prescribed by an administrative board, and this does- 
 not appear to be involved in any doubt. This is indicated as follows: 
 
 1. In deciding the ^laximum Rate Case ( 167 U. S. , 479) , the Supreme Court of the 
 United States said: 
 
 " It is one thing to inquire whether the rates which have been charged and col- 
 lected are reasonable — that is a judicial act; but an entirely different thing to pre- 
 scribe rates which shall be charged in the future — that is a legislative act." 
 
 2. At a hearing before the Senate Committee on Interstate Commerce on March 
 10, 1898 (p. 9 of the hearings), Hon. Martin A. Knapp, chairman of the Interstate 
 Commerce Commission, said: 
 
 "One doctrine is now settled — that whereas the investigation of the question 
 whether an existing rate is a reasonable and lawful one or not is a judicial question, 
 the determination of what that rate shall be in the future is a legislative or adminis- 
 trative question with which the courts can have nothing to do." 
 
 3. At a hearing before the Senate Committee on Interstate Commerce on February 
 21, 1900, at page 118 of the hearings, Hon. Charles A. Prouty, Interstate Commerce 
 Commissioner, said: 
 
 "The prescribing of a rate is, under the decisions of the Supreme Court, a legis- 
 lative, not a judicial function, and for that reason the courts could not, even if Con- 
 gress so elected, be invested with that authority." 
 
 And yet the advocates of the Quarles-Cooper bill propose that Congress shall elect 
 to require the Federal judiciary to pass upon a rate for the future prescribed by the 
 Commission. 
 
 Thus far we have omitted to refer to the provisions of the second section of the 
 Quarles-Cooper bill which invests the Commission with the power "to prescribe the 
 just relation of rates to or from common points." This feature, we think, requires 
 some attention, as it is perhaps the most important provision in the bill as relating 
 to the interests of the city of New York. 
 
 To illustrate what the effect of this provision would be, we state that, if this second 
 section is enacted, it will give the Interstate Commerce Commission the power to fix 
 rates and to determine absolutely what differentials shall exist as between New York, 
 Philadelphia, Baltimore, and Boston from Chicago or any other common point; also, 
 what just relation of rates shall be enforced as between Chicago and New York to 
 common points in the South. 
 
 This means that an autocratic administrative board would be endowed with the 
 arbitrary power of artificially apportioning the trade of the country between such 
 places as it should determine. We do not think that such a body as the Interstate 
 Commerce Commission should be permitted to assume the power arbitrarily to so 
 apportion the trade of the country to nullify natural and acquired advantages in one 
 locality and confer the favors of trade and commerce upon other localities by their 
 dictum. This is precisely what they have done in at least one case and what they 
 attempted to do in another against New York. In the decision of the Interstate 
 Commerce Commission, filed April 30, 1898, in the case of the New York Produce 
 
142 PKOPOSED AMENDMENT OF INTERSTATB-COMMEECE LAW. 
 
 Exchange v. The Baltimore and Ohio Railroad and other lines, being a determination 
 in the question of differentials existing against New York (Interstate Commerce 
 Eeports, Vol. VII, pp. 669 and 670), the Commission among other things said: 
 
 "In 1882 about 65 per cent of all the exports from the United States exported 
 through the Atlantic and Gulf ports passed through the port of New York. The 
 same year 80 per cent of all the imports into the United States by way of these same 
 ports came in at the port of New York. It will be seen, therefore, that during that 
 year, being the year when the advisory commission pronounced upon the reason- 
 ableness of these differentials. New York practically engrossed the foreign trade of 
 this country. A preliminary question is. How far is the port of New York entitled, 
 or how far can that port expect to continue, to enjoy that commercial supremacy? 
 
 "Plainly not to the same extent. It would be in accordance neither with the 
 theory of our institutions nor with the history of the development of our nation to 
 permit any one port upon our vast extent of seacoast to monopolize the trade with 
 foreign nations." 
 
 Then the Commission stated the various sums of money Congress had appropri- 
 ated for the improvement of the several Atlantic and Gulf ports, and they concluded 
 the paragraph with the following declaration: 
 
 "Kather does this recognize it as the policy of our Government that its foreign 
 commerce should be distributed between various ports." 
 
 Actuated by this revolutionary sentiment, the Commission dismissed the complaint 
 of New York and sustained the differentials. It is not necessary here to enlarge 
 upon the injury that by these differentials has been done to our city. They have 
 been the subject of repeated investigation and report by this and other organizations 
 in this city and by official commissions. 
 
 In like manner the Commission in the Maximum Rate case assumed to adjust 
 "the relation of rates" then existing between Chicago and the South and New York 
 and the South. The complaint in this latter case was made by the Chicago and Cin- 
 cinnati freight bureaus that rates to the South from those points were not "in just 
 relation" to rates from New York to the same southern points. The Commission 
 in this case, acting upon the principle enunciated by them and quoted above, ruled 
 against New York and ordered an adjustment of rates which would give Chicago 
 jobbers a better chance to take from New York her southern trade. This being the 
 most important case in which the Commission attempted to exercise this power, it 
 was appealed to the United States Supreme Court, and the action of the Commission 
 was made void and the power of the Commission denied. Thereupon, the Quarles- . 
 Cooper bill was drafted. The geographical area from whence this bill gets its chief 
 support is clearly defined. 
 
 But here again comes in the United States Constitution, exhibiting the wisdom of 
 the fathers and rescuing us, as it assuredly will, from this great wrong. Section 9 of 
 Article I provides: 
 
 "No preference shall be given by any regulation of commerce or revenue to the 
 ports of one State over those of another." 
 
 There are still other features of the interstate commerce question, a consideration 
 of which would further reveal the inadequacy of the Quarles-Cooper bill. Among 
 these the question of making and changing the classification has the highest rank in^ 
 mportance. It is of but little practical consequence to the railroads who fixes the 
 tariff rate if they retain the power to change the classification at pleasure. It matters 
 little if prohibition of discriminating rates be enforced as between localities if classi- 
 fications in those localities be not uniform. If the classification upon a manufactured 
 product from western points to New York be sixth class and the eastern classification 
 makes the same article third class going from New York, we are hopelesslv discrimi- 
 nated against, and the Quarles-Cooper bill would give no relief. 
 ^ It is needless to enlarge upon this feature. Almost every branch of business in 
 New York has suffered grievous injury from this form of discrimination through the 
 making of the classification. The Quarles-Cooper bill affords no relief for this evil. 
 
 It was the consideration of these and other important shortcomings and manifest 
 weaknesses of the Quarles-Cooper bill that determined your committee to oppose its 
 
 Not only does it fail to do many things that should be done, and does nothing in 
 our judgment desirable that is not already provided for by the existing law, but it in 
 so many ways seems to run counter to constitutional provisions that it would almost 
 certainly become void after the first litigation under it had reached the Supreme 
 Court of the United States. Therefore we have preferred to wait for a better bill, 
 and the policy of this committee and of this board has been to oppose this measure 
 as not only a useless, but, in some respects, a pernicious one, hoping that the grow- 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 143 
 
 ing sentiment throughout the country and, in Congreas, and a more perfect and thor- 
 ough study of all the questions involved shall develop a measure whose provisions 
 and scope will be just, ample, and broad enough to meet the needs of the whole 
 country and repair in every respect, as far as practicable, the faults and weaknesses 
 found to exist in the present laws. 
 
 Holding these views, we welcome most cordially the recent courageous and patri- 
 otic utterances of President Roosevelt and the renewed and intelligent discussion of 
 the question he has thus precipitated. We are confident that this country is now 
 upon the right track, and that the near future will bring about the enactment of wise 
 and sound laws. To this end we observe that the President, after mature delibera- 
 tion, has invoked the aid of the distinguished Judge Grosscup, of Illinois, and enlisted 
 his services to draft a new bill to meet the demands of the situation. 
 
 We further note that the Hon. Paul Morton, Secretary of the Navy, a man of broad 
 views and possessing a personal and expert knowledge of railroad problems, gained 
 by a lifetime's association with and practical knowledge of the transportation depart- 
 ment of railroad management, has, at the President's request, undertaken to assist 
 in bringing about proper legislation. 
 
 Attorney-General Moody and former Attorney-General Knox, now a United States 
 Senator, are also in the counsels of the President with special reference to this matter. 
 The appropriate committees of the United States Senate and of the House of Rep- 
 resentatives have also taken up the subject with renewed activity. 
 
 In addition to this a proposition has been made, and meets with much favor, to 
 appoint a joint special commission on interstate commerce to thoroughly investigate 
 all problems involved, to take testimony during the long recess after the adjournment 
 of the present Congress, and to report their conclusions and recommendations by bill 
 at the opening of the next Congress, as was done in the last session of Congress with 
 the merchant marme question. 
 
 With all these elaborate plans in preparation under the guidance of President Roose- 
 velt, we believe that it would be very unwise and a serious error to take action at 
 this time in behalf of the Quarles-Cooper bill, the enactment of which by this Con- 
 gress would, beyond doubt, be used as an excuse for indefinite delay of the more 
 comprehensive legislation which we may believe will come out of the pending dis- 
 cussion. Never in the history of this country has this cause had, to the same extent, 
 the advantage it now derives from the attention and study of the President and the 
 ■wise men associated with him. If, therefore, the Quarles-Cooper bill should be 
 enacted with all its faults and weaknesses, and clothed in doubt, as it is, of the con- 
 stitutionality of some of its provisions, and by its enactment the present aroused 
 sentiment of the country should be so quieted that these efforts should cease, we 
 believe it would be most unfortunate and delay the final solution of the problem for 
 many years. 
 
 We also point to these conferences and preparations as suggesting a broader inter- 
 pretation of the President's utterances than has been given to them by the friends of 
 the Quarles-Cooper bill. We have interpreted the President's language to mean sub- 
 stantially that the existing laws must be enforced with reference to discriminations 
 and rebates and other forms of preference in interstate commerce, and that if exist- 
 ing law is found inadequate to remedy these evils, additional legislation must be 
 enacted. We indorse most heartily this sentiment. 
 
 In conclusion, we recommend that no action be taken at this time except that 
 your committee be directed to promote as far as it can the necessary action by Con- 
 gress to secure the appointment of a special commission on interstate commerce or 
 such other plan as will bring about action in substantial harmony with the views 
 expressed in this report. 
 Respectfully submitted. 
 
 W. H. Pabsons, Chairman. 
 Irving R. Fishek, 
 J. Fredk. Ackbkman, 
 Charles A. Moore, 
 Dick S. Ramsay, 
 W. S. Armstrong, 
 Thomas P. Cook, 
 Committee on Railway Transportation. 
 
 A true copy. 
 
 Oscar S. Straus, Presudent. 
 
 Attest: 
 
 [seal.] Frank S. Gardner, Secretary. 
 
144 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW; 
 
 Mr. Smith. Now, will the committee permit me to say just a few 
 words of my own in this matter, if they have time? 
 
 The Chairman. We have not the time. 
 
 Mr. Smith. Then I will merely submit a paper handed me this 
 morning by Mr. Thurber, who received it from the Museum of Phila- 
 delphia, prepared by them, which gives the rates of freight of the 
 principal countries of the world that have railroad transportation, and 
 I would like to submit that with this. 
 
 The Chairman. Very well. 
 
 Mr. Davey. May I iile a resolution of the board of directors of the 
 Receivers and Shippers' Association of Cincinnati? 
 
 The Chairman. Yes, sir. 
 
 The paper referred to is as follows: 
 
 Resolution unanimously adopted by the board of directors of the Receivers and Sliippers' 
 Association of Cincinnati oii December 22, 1904- 
 
 Whereas the item of transportation vitally affects everj^ line of business; and 
 
 Whereas the factor of competition among the carriers is now in process of elim- 
 ination under the community-of-interests idea; and 
 
 Whereas reasonable, equitable, and stable freight rates are absolutely essential 
 for the fullest development of legitimate business enterprises- of the country; and 
 
 Whereas the common carriers and the people are so interdependent upon each 
 other as to make their interests in the transportation problem mutual; and 
 
 Whereas by virtue of this mutuality of interests, it is essential that the question 
 of regulation of common carriers by the National Government should be dealt with 
 in a broad and intelligent manner and in a spirit of absolute justness and fairnesa to 
 all interests: Therefore be it 
 
 Resolved by this association, That in view of the public character of the business of 
 common carriers, it is but fair to the people and also to the carriers themselves that 
 the national Government should reasonably and conservatively regulate the trans- 
 portation charges of common carriers so as to avoid discrimination between individ- 
 uals, localities, and communities. And that this association favors a minimum 
 amount of national legislation, which will not unfairly prevent the legitimate devel- 
 opment of railroads as servants of the people, yet of sufficient potency to amply pro- 
 tect tbe shipping public from unjust and unreasonable rates, rules, and regulations, 
 and to secure absolute justness and fairness as between the shipping public and the 
 carriers; and be it further 
 
 Resolved, That this association strongly commends the recommendations made by 
 President Roosevelt in his message in dealing with the great transportation prob- 
 lem ; and be it further 
 
 Resolved, That this association favors the passage of the Quarles-Cooper bill, now 
 pending in Congress, with an amendment to section 8 of the act to regulate com- 
 merce, as amended, that shall provide that in the event of rebates or discriminations 
 of any kind whatever by the transportation companies the minimum measure of 
 damages shall be the difference between the special rates and the tariff rates charged 
 the shippers seeking redress; and be it further 
 
 Resolved, That a copy of these resolutions be sent to the President and to members 
 of Congress. 
 
 Mr. TowNSEND. Is this organization, represented by Mr. Smith, the 
 same one that Mr. Thurber represented when he appeared before us? 
 
 Mr. Mann. Not at all. 
 
 Mr. TowNSEND. Is this organization represented by Mr. Thurber? 
 
 Mr. Smith. Not at all. His organization is the export organization; 
 ours is the New York Board of Trade and Transportation, which has 
 existed for a great many years, and, we believe, has done a great deal 
 of good. 
 
 Mr. Lamar. Mr. Chairman, I would like to present Mr. Burr, of 
 Florida, a member of the railroad commission of that State, who will 
 define his position before the committee. 
 
 The Chairman. You are recognized for ten minutes, Mr. Burr. 
 
PROPOSED AMENDMENT OP INTERSTATE-COMMERCE LAW. 145 
 
 STATEMENT OF MR. R. HUDSON BURR. 
 
 Mr. Chairman, the committee that comes here to-daj^ was appointed 
 by the president of the National Association of Railway Commission- 
 ers, comprising 30 States that have commissions in this country, 
 pursuant to the following resolution passed at their last annual con- 
 vention: 
 
 Whereas provisions of existing laws do not adequately authorize and empower 
 the Interstate Commerce Commissipn to properly correct .and prevent unjust dis- 
 criminations against persons and places, and enforce fair and reasonable interstate 
 railway rates and charges: Therefore be it 
 
 Resolved by the National Association of Railimy Commissioners in convention assem- 
 bled at Birminghom, Ala, this 16th day of Norember, 7904, That in accordance with 
 previous recommendations the Congress of the United States be, and is hereby, 
 requested to so amend the existing law as to authorize the Interstate Commerce 
 Commission, on complaint that any interstate rate is unreasonable or unjust, and 
 after full hearing, to ascertain what rate is reasonable and just in the particular case 
 and order the carrier to observe that rate for the future, subject to rehearing upon 
 application of the carrier when the conditions may have changed, the rate so pre- 
 scribed to be effective unless enjoined by the court; and be it further 
 
 Resolved, That the president of this convention appoint a committee of nine to go 
 before the proper committees of Congress and urge the passage of this needed legis- 
 lation, and that each Senator and Representative in Congress be furnished by the 
 secretary with a copy of these resolutions. 
 
 We do not propose to burden this committee to-day with statistics, 
 because we believe that you have already been furnished with sufficient 
 in that direction. But I feel safe in saying that there is no set of men 
 dealing with this question in the United States who are more familiar 
 with the demands for such legislation, that come in contact with it 
 daily in the several States, and that realize more fully the public neces- 
 sity and public demand for legislation on this question. Full}^ 75 per 
 cent of the commerce of the United States is interested, and while it 
 runs in some States to 90 and 95 per cent, we believe, after investi- 
 gating this question, that it will average 75 per cent in the United States. 
 This amount of our commerce, as you know, goes entirelj' without 
 regulation, and the rates are made by the railroads themselves. ]Many 
 of these rates are fair; a great many of them are unreasonable. There 
 is one particular measure that I want to call ^-our attention to, that in 
 whatever measure is settled upon we would like to have secured, and 
 that is a provision that will correct the abuses of the long and short 
 haul. Unless we get that, much may be left undone. 
 
 Mr. TowNSEND. Would not the power to fix rates regulate that? 
 
 Mr. Burr. I am not certain that it would. Some commissions to-day 
 have the power to make rates, and yet they can not always correct the 
 abuses of the long and short haul. For instance, in my State, on trains 
 moving from the West — from western points without the State; take, 
 for instance, the through rate from points in Oregon to the base point 
 in Florida — I will say Jacksonville, as that is our principal base point — 
 and to intermediate points the rate is the through rate to Jacksonville 
 plus the local rate from Jacksonville back to that point, although.they 
 do not perform the service. As an illustration, on a'certain class of 
 freight moving from a western point to Tallahassee, which is 165 miles 
 farther west, or nearer the point of origin, the rate to Jacksonville is 
 $1. The local rate is 75 cents, and that 75 cents is added to the through 
 rate to determine the rate to Tallahassee, although Tallahassee is 165 
 
 I c L— 05 10 
 
146 PROPOSED AMENDMENT OF INTEESTATE-OOMMEECB LAW. 
 
 miles near the market. Now, we claim that that is a discrimination 
 against all the stations between Tallahassee and the base point. 
 
 For instance, a station 25 miles west of Jacksonville, the same prin- 
 ciple would apply there; the through rate, plus the local rate, would 
 be the rate there. But the local rate would be a much less local 
 than the one Tallahassee would pay. 
 
 Mr.LovERiNG. That is on the same line of road? 
 
 Mr. Burr. Yes. That applies in several directions in the rate, but 
 I used that as illustrating the whole, so that the freights to all these 
 intermediate points are not on the same footing. A point nearer the 
 base point, where the railroad actually hauls the freight farther, gets 
 a less rate than Tallahassee. 
 
 The Chairman. Is there a statute now existing that would remedy 
 that? 
 
 Mr. Burr. It was supposed to be remedied in the act to regulate 
 commerce, but it has been held that it will not hold. 
 
 The Chairman. Why will it not hold ? 
 
 Mr Burr. I can not explain that particular feature of it, and will 
 leave that to another member who will address you. 
 
 The Chairman. It is because that provision of the statute has been 
 suspended in its operation by the Interstate Commerce Commission, 
 has it not, in the particular case j'ou speak of? 
 
 Mr. BuRK. The Interstate Commerce Commission has decided, I 
 believe, that they can not regulate that matter. 
 
 Mr. Mann. Did they not regulate it in the Social Circle case, and 
 was not that case sustained by the Supreme Court of the United States? 
 
 Mr. Burr. I am not prepared to say, sir. But this condition that 
 I speak of they have assured me that tlie3^ can not correct. 
 
 The Chairman. What is the reason that they can not correct it? Is 
 it because of the inadequacy of the law, or some other reason ? 
 
 Mr. Burr. That is my understanding, sir; that is my understanding, 
 and we feel that whatever legislation Congress passes, that particular 
 feature of it ought to be remedied. 
 
 The Chairman. What suggestion have you to make as to change of 
 the phraseology of the present law ? 
 
 Mr. Burr. We have not undertaken to say to you, gentlemen, what 
 particular law you shall pass, nor do we advocate the passage of any 
 particular pending bill. We simply take the broad position that we 
 ne^d legislation on this question. 
 
 Mr. Mann. Might 1 ask you whether you believe that the law ought 
 absolutely to forbid in all cases a greater charge for the shorter dis- 
 tance than for a longer distance ? 
 
 Mr. Burr. No, sir. There are conditions where water competition 
 at the base points would necessarily make the long haul a very much 
 lower rate, and we do not pretend to say that in all cases the rate should 
 be made strictly on mileage basis in that particular; but we do believe 
 that the through rate, or very little addition to the through rate, 
 would, be the fair rate to intermediate points. 
 
 The Chairman. Let me call your attention to this section 4 of the 
 interstate-commerce act: 
 
 That it shall be unlawful for any common carrier subject to the provisions of this 
 act to charge or receive any greater compensation in the aggregate for the trans- 
 portation of passengers, or of like kind of property, under substantially similar 
 circumstances and conditions, for a shorter than for a longer distance over the same 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMEECE LAW. 147 
 
 line in tlie same direction, the shorter being included within the longer distance; 
 but this shall not be construed as authorizing any common carrier within the terms 
 of this act to charge and receive as great compensation for a shorter as for a longer 
 distance: Provided, however, That upon application to the Commission appointed 
 under the provisions of this act, such common carrier may, in special cases, after 
 investigation by the Commission be authorized to charge less for longer than for 
 shorter distances for the transportation of passengers or property; and the Commis- 
 sion may from time to time prescribe the extent to which such designated common 
 carrier may be relieved from the operation of this section of this act. 
 
 The difficultj' that you complain of i.s because the road in that par- 
 ticular case has been exempted from the operation of that act. Is not 
 that the fact? 
 
 Mr. BuER. I do not think it is. I do not think they have ever 
 attempted to regulate it at all. 
 
 The Chairman. You do not think they have? 
 
 Mr. Burr. Now, Mr. Chairman, one of my colleagues has just men- 
 tioned to me that the Supreme Court has not upheld the action of the 
 Interstate Commerce Commission in the Social Circle case. 
 
 Mr. Mann. The Supreme Court did uphold the Interstate Commerce 
 Commission in the Social Circle case in that particular. 
 
 Mr. Burr. I will leave that point to Mr. McChord, who will follow 
 me. 
 
 The Chairman. All right, sir. 
 
 Mr. Burr. I simply want to reiterate that we get complaints in the 
 various States from shippers and receivers of freight calling attention 
 to the freight charges, the abuses that they suffer, and in nine- tenths 
 of these cases we have to try to explain to these people that this is a 
 condition that we can not meet, because it is interstate commerce. 
 Then, when that explanation is made to them, we invariably hear 
 from them again making demand that we do all we can to get Congress 
 to empower the Interstate Commerce Commission sufficiently to regu- 
 late these matters. And, while you do not have a unanimous demand 
 upon you for this legislation to-day, I believe .that fully nine-tenths of 
 the people in the country want it and are in a position now to go to 
 demanding it. 
 
 I will leave the further discussion to the other members who will 
 follow me. 
 
 STATEMENT OF CHARLES F. STAPLES. 
 
 Mr. Chairman and gentlemen of the committee, appreciating the 
 importance of time, and realizing that you desire all preliminaries 
 waived, I last night endeavored to ]ot down memoranda of my thoughts 
 upon this question, which will be a guide to me and will be the foun- 
 dation for my remarks. I have not them in full, but with your per- 
 mission I wish to read the matter. 
 
 Mr. Burke. Please state who you are and where you are from. 
 
 Mr. Staples. I am a member of what we term the railroad and 
 warehouse commission of the State of Minnesota, and have been for 
 years; and in order to protect and shield myself I want to say to you 
 gentlemen of the committee that I am not an attorney, and therefore 
 can not be expected to answer all the legal and technical questions 
 which you might proj)ound. 
 
 Mr. Mann. That will be some relief. 
 
 Mr. Staples. Yes. I will try, however, to treat the question from 
 
148 PKOPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 a practioal standpoint, and wish to say that while these views may be 
 personal, to an extent, they are representative of the consensus of 
 opinion of the commissioners of the several States of the Union which 
 meet every year to consider this, with other kindred questions. 
 
 We find to-day that the unification of railway interests has progressed 
 to such an extent, through actual consolidation, control of stock in 
 previously competing lines, the evolution of stockholding interests, 
 more often called unity of interest, that the open competition between 
 carriers which has previously operated to keep down rates, and cer- 
 tainly prevented wholesale increases in rates, has been very largely 
 suppressed. These conditions being no longer factors, we can not rely 
 on them for the control of the rate question. It is impossible to com- 
 pel competition by legislation. Very naturally, competition springs 
 from self-interest, and results only from the independent activities of 
 those engaged in trade and commerce. It follows, therefore, that 
 without effective competition in railway rates, and with no effective 
 law for public control, the public is reall}' defenseless, and must sub- 
 mit to conditions often manifestly unfair. We believe most conserva- 
 ti\'e and thoughtful men will agree that the railway companies could 
 not live and prosper under the old method of open, active competition, 
 which on]}' results in a demoralized condition of the rate question. 
 
 I want to say here that I am one of those who believe firmly — and 
 the public generally do not coincide with that A'iew — that actual, open 
 competition in the way of making rates among railroad companies is an 
 absolute impossibility'. We could not live under that sj^stem to-day, 
 in my judgment. 
 
 Mr. Mann. Because it would reduce rates too low ? 
 
 Mr. Staples. It would result in what 1 term a demoralized condi- 
 tion. The companies, we will all agree, are entitled to a fair earning 
 upon their legitimate investments, and we all want them to have it. 
 
 Mr. Mann. Active competition, in your judgment, would reduce 
 railroad rates so low that the railroads could not afford it ? 
 
 Mr. Staples. It would have that tendencj'^ at times, and in certain 
 localities; there is no doubt of it. If that was the real motive, that of 
 securing their share of the traffic, the_y would have to resort to that 
 which I have desciabed. As I say, I appreciate that the public gener- 
 ally clamor for open competition among railroad companies, with the 
 object in view of reducing rates. What we want is such legislation 
 as will authorize some public body to act as arbitrators between trans- 
 portation companies and their patrons^ thereby securing them against 
 excessive or unfair charges or discriminating practices in the movement 
 of commerce between States and the giving of shippers and localities 
 an equal S3rstem of rates, which shall be fair to the shippers and remu- 
 nerative to the railroad companies. 
 
 The chief complaint now is that the transportation companies are 
 the sole arbiters as to what is reasonable treatment. The inadequacy 
 of making rate regulations dependent upon rates as applied in the 
 past, without reference to rates to prevail in the future, is surely 
 apparent to all. The real parties to suffer are left without remedy. 
 
 And here I want to say, Mr. Chairman and gentlemen, that in my 
 opinion it is just as necessary in the matter of public control that 
 there should be some tribunal who may act as intermediaries between 
 the patrons and the roads, and shall have just the same power, and 
 
PEOPOSED AMENDMENT OP INTEB8TATE-C0MMERCE LAW. 149 
 
 there is just the same necessity for raising a rate as there is for lower- 
 ing rates, or prescribing what is a fair and reasonable rate. There 
 are many times, in my judgment, when rates should be raised; and I 
 have, as commissioner of our State, participated with our board in 
 directing certain railroads to raise certain rates when rates should be 
 raised. There were times when it seemed to be the only means of 
 affording fair relationship between different localities. 
 
 Mr. BuEKE. Has the authority of your commission to raise a rate 
 ever been determined in your State?" Has that question ever been 
 determined as to whether you had that power? 
 
 Mr. Staples. No, sir; t do not wish to say that it has. 
 
 Mr. Wangeh. Has the action been acquiesced in by the railroad 
 companies and patrons? 
 
 Mr. Staples. Yes, sir. And I want to say at this juncture that in 
 the State of Minnesota the powers of the commission are very broad, 
 perhaps as broad as the powers of the commission in any State in the 
 Union, and I think it is fair to say that the relation between the rail- 
 ways and the commission has been rather harmonious on the whole. 
 
 Under the ruling of the court the Government is gradually losing 
 control, and the tendency has been for the management of the com- 
 panies to centralize. Weak companies have been obliged to go out of 
 business, or have been absorbed by the larger ones or the stronger 
 ones. So that at the present time no one disputes that the great share 
 of the mileage is controlled by very few men. These men naturally 
 represent the interests of the stockholders. Can we look for them at 
 the same time to be philanthropists? If rates and conditions in differ- 
 ent localities are reasonable, surely the railroad man should not fear 
 investigation by any impartial tribunal. I do not believe that any tribu- 
 nal vested with the power to arbitrate between the carrier and the 
 shipper, and appreciating all the responsibility placed upon them, after 
 hearing all the testimony on both sides, would do otherwise than render 
 a fair decision. Surely such a body, composed of intelligent men, is 
 as competent to pass upon a question as are railway officials. That 
 position may of course be disputed, but it is based upon my contact 
 with railway officials. 
 
 Rate making at best is an arbitrary matter. I never yet heard any 
 traffic man say anything else. The chief effort is all the time to approxi- 
 mate what share of the whole burden of transportation shall a particu- 
 lar traffic stand, one of the most difficult problems possible, and, as I 
 say, finally the decision is an arbitrary one, and necessarily so, for there 
 is no scientific method of determining what share it should stand nor 
 the actual cost of transportation of any particular commodity. I thinly 
 the record will show that in most cases the complaints are of discrimi- 
 nation or unfair relation of rates rather than of rates being too high. 
 And surely it will be conceded that such questions should be submitted 
 to some intermediate body to pass upon, and not leave the shippers or 
 locality solely to the mercy of interested parties. 
 
 Take, for instance, Chicago and St. Paul, or as was stated here this 
 morning. New York and Philadelphia, competing for common markets 
 in the West; one of those places has the rate prescribed at one point 
 which gives it a slight advantage over the other. Should that ques- 
 tion be left solely to the railway companies, or should there be some 
 intermediate body to step in and say that that is an unfair relation? 
 
150 PROPOSE]? AMENDMENT OF INTERSTATE-OOMMEEOB LAW. 
 
 I do not claim there that the question is involved as to whether a 
 rate is too high or not. It is the relationship that 1 am speaking of; 
 the foundation for the complaint. It being so manifest to all that 
 public sentiment is so strongly crystalized in favor of such legislation 
 as would restore to the Interstate Commerce Commission the powers 
 supposed to have been conferred by the law of 1887, it seems only fair 
 to ask you, gentlemen of the committee, to recommend such a law, 
 and have it enacted, and let time tell whether this will solve this great 
 question. 
 
 The Chairman. Would it interupt you if I were to ask you a 
 question ? 
 
 Mr. Staples. I would be pleased to answer, if I can, Mr. Chairman. 
 
 The Chairman. Speaking on that subject of differentials between 
 localities, imagine the condition that existed a few years ago, when 
 the Pennsylvania road had its line to the west from Philadelphia, and 
 the Baltimore and Ohio had its line to the west from Baltimore, and 
 neither had a line between Baltimore and Philadelphia. Suppose that 
 the Baltimore and Ohio Railroad gives to its terminal, Baltimore, an 
 advantage of 2 or 3 or 4 cents; do you think that that would be a 
 proper subject for governmental interference, or for the Commission 
 to act upon? Would not the people of Baltimore have the right to 
 whatever benefit a road coming to their place, and not going to its 
 rival, would give them? 
 
 Mr. Staples. I will give you my honest opinion about it. 
 
 The Chairman. I want to get your idea about it. 
 
 Mr. Staples. Yes, sir. I do think, without going into details, that 
 there should be an intermediary tribunal for the purpose of passing 
 upon that question; a tribunal which is disinterested and has the inter- 
 ests of the whole public at heart. 
 
 The Chairman. You think those two rates should be the same? 
 
 Mr. Staples. Do not understand me to saj'^ that. There may be 
 reasons whj'^ there should be a difference. But I do not believe that 
 the question should be solely settled by those different companies. 
 
 The Chairman. Then, you think that it would be proper for the 
 Government to provide means by which the rate to Baltimore should 
 be raised, and they lose the ad^•antage that comes to them from this 
 situation that I have described ? 
 
 Mr. Staples. I do. However, upon that question I wish to say that 
 while there might be a case parallel to the one you cite, under the 
 conditions to-day, such cases are rare. 
 
 The Chairman. 1 was speaking of the conditions that existed. 
 
 Mr. Staples. 1 understand that. 
 
 _Mr. Mann. The condition does exist to-day, in Iowa points, in ship 
 ping grain that goes to Liverpool as to whether it shall go to Galves 
 ton or to the South, or whether it shall go to New York coming east 
 That is a practical condition'to-day, is it not? 
 
 Mr. Staples. Yes, sir; that is true. I agree with you there. 
 
 Mr. Mann. Do you think that it is wise to confer upon a commis- 
 sion the jDower to set aside all rivalry in trade and by an arbitrary 
 order determine that the grain shipments to Galveston shall cease, on 
 the one hand, possibly, or that the grain shipments to New York shall 
 cease, on the other hand, possibly? 
 
 Mr. Staples. Yes, sir. And as a qualification I wish to say that I 
 
PROPOSED AMENDMENT OF INTER8TATE-C0MMEECE LAW. 151 
 
 do not believe that a commission would so find under any circum- 
 stances. They might, however, find that there should be a certain 
 change in the conditions. 
 
 Mr. Mann. Do you believe that it is within the power of finite 
 wisdom, in an order, in a specific case, and upon a hearing, to abso- 
 lutely determine between these two points, Galveston and New York, 
 say, so as to reach absolute equality that must remain, instead of leav- 
 ing it to a question of rivalry ? 
 
 Mr. Staples. There can be no such conclusion on the question; 
 under our constitution — getting a little way into law, as I understand 
 it now — that is absolutely precluded, as I understand. There can be 
 no decision by any commission which is final or which is not subject 
 to review by a court. ' 
 
 Mr. Mann. I mean assuming that the courts would review it and 
 «ome to the same opinion. Assuming all that. 
 
 Mr. Staples. I reiterate my opinion; restate it — that these different 
 common carriers being public servants you can not present to me a 
 feature or a question which would change my opinion that there 
 should be some supervisory power. 
 
 Mr. Adamson. Do you not think that a better plan would be that 
 where the railroads are willing to compete they should be allowed 
 liberty to do so, and where they desire to throttle competition and 
 combine on rates that then the intermediate power should take a hand 
 and set that right? 
 
 Mr. Staples. The railroad companies in certain conditions desire to 
 compete, as you put it, but the cases are rare where, for any length of 
 time, they dare do it. They can not do it and live. If they do it, 
 they will kill each other off. 
 
 Mr. Adamson. That would be because they cut one another's 
 throats ? 
 
 Mr. Staples. Yes, sir. Now, speaking of the Elkins law which 
 has been enacted, I think it was wise legislation. I have not any doubt 
 in my mind that it was enacted as much, and perhaps more, to benefit 
 the railway companies of the country than the people of the country. 
 Yet I think there is a common benefit, and I think that was very 
 desirable and necessarj^ legislation. I am not able to prove anything, 
 and am making no charges, but it is claimed that that law is evaded 
 to-day in certain localities and by certain railroad companies. I do 
 not make any charges, but it is so stated by persons who claim that 
 they can prove it. 
 
 But it is a benefit to the country by preventing this demoralization 
 of the railway situation, and certainly must have added very greatly 
 to the revenues of the railroads of the country, as it has obviated the 
 necessity of refunding to certain favored shippers those charges which 
 properly belong to ftie carrier, which demoralization would simply 
 result in discriminations between certain individuals or favored locali- 
 ties on the lines. I think this law has in a great measure done away 
 with that, and has been a good thing. 
 
 Mr. Mann. You are a practical man, and your views are of great 
 value to us, and you will pardon me if I ask you another question. 
 
 Mr. Staples. You appreciate that I wish to take up as little time 
 as you wish me to take up. 
 
 Mr. Mann. I understand. It is claimed, now, by both Chicago and 
 
152 PROPOSED AMENDMENT OF INTEE8TATE-C0MMERCE LAW. 
 
 New York, that the grain rates from Iowa points through Chicago 
 and New York to Liverpool are too high as compared with the rates 
 from Iowa points to New Orleans or Galveston on the way to Liver- 
 pool. Do you think it is wise to permit the Interstate Commerce 
 Commission, after hearing, to raise the grain rates from Iowa points 
 to Galveston and New Orleans, and prevent the railroads now leadings 
 south from getting what they consider is their share of that grain 
 trade, and helping those southern ports at the same time? 
 
 Mr. Staples. I think this, that there is more than the question of 
 grain rates involved in that question. Those roads running south are 
 operated to serve the public. It may, work no injustice to the pro- 
 ducer of grain in our Western and Northwestern States if that rate 
 shall be raised, thereby enabling them to get ^ share of that trathc and 
 to have that to help support them in rendering the other necessary 
 service to the communities served by them. As I say, I. can only reit- 
 erate mj' opinion. I do not wish to stand here as an advocate of the 
 principle, generally speaking, of the raising of railroad rates. 
 
 Mr. Mann. We understand that. 
 
 Mr. Staples. Not at all; and I believe that power should be con- 
 ferred upon the Commission. 1 say "the Commission." I mean any 
 tribunal. 
 
 Mr. Mann. I understand. You base your answer upon the propo- 
 sition that the raising of the grain rates to the South might possibly 
 reduce rates on something else, because it would add to the income? 
 
 Mr. Staples. No, sir; not at all. That answer was based on the 
 principle that they ought to have a share of that traffic if they are in 
 a position to carry it. 
 
 Mr. Mann. I base my question upon the proposition that the Inter- 
 state Commerce Commission might, within its power, raise the grain, 
 rates South so that the roads South would lose that business. I do 
 .not think any of the grain ought to go South. It is a longer way 
 round; and the Interstate Commerce Commission might entertain that 
 same view. But the question is whether they oiight to have the 
 power to put it into effect. 
 
 Mr. Staples. We have in our State to-day a law the wording of 
 which is slightly different from the wording of section 4 of the inter- 
 state-commerce act. Our law is effective on the question of the long 
 and short haul. Under that law it is left arbitrarily subject to the 
 review of the courts, with our permission, to detennine when that 
 clause may be abrogated b}^ the company. Thej' universally^ apply to 
 the commission for permission to waive that at certain common points. 
 Now, it rests with us to say whether the question of competition 
 which enters and whether the volume of business they would get at 
 that point are such that in our opinion they should be permitted to 
 lower the rates at that common point on their line because of the 
 fact that their line may be one-third longer than the other line. That 
 answers that question. 
 
 Mr. Adamson. Do you think it would be right, without the consent 
 and contrary to the judgment of a carrier, to raise a rate that carrier 
 thought was fair and profitable and which it was willing to operate? 
 
 Mr. Staples. I do not think it is fair to take it from that standpoint. 
 You can not determine whether the carrier thinks it is fair and profita- 
 ble or not. They may have another motive. 
 
PROPOSED AMENDMENT OP INTEESTATE-COMMEECE LAW. 153 
 
 Mr. Adamson. That is not the case I state. 
 
 Mr. Staples. Yes; they may have another motive. 
 
 Mr. Adamson. That is not the case that I state. The case I state is 
 that of a rate which a carrier thinks is fair and finds profitable and 
 which it is willing to operate under. Is it right to raise that rate 
 against the judgment and consent of that carrier? 
 
 Mr. Staples. There may be conditions existing why, in my opinion, 
 it would be fair. 
 
 Mr. Adamson. You think that if a carrier finds that it is downhill 
 to New Orleans, and that it can haul twice as much, and can get better 
 loading back, and that other conditions combined will enable it to haul 
 cheaper to New Orleans from the grain fields of the West than from 
 those grain fields to New York, it would be right for the Commission 
 to annul natural conditions and rob that carrier of its market, rob that 
 road and that city of its business, to give it to somebody else, do you? 
 
 Mr. Staples. I think there might be conditions where that would 
 be a wise policy. I do not think it often occurs. 
 
 Mr. Adamson. It would be entirely for the benefit of another fel- 
 low that it would be wise, though, would it not? 
 
 Mr. Staples. No, sir; not in my judgment, not at all. 
 
 The Chairman. A little while ago, in answer to Mr. Mann, when 
 you were discussing the contention between Chicago and Gulf ports, 
 you said, as I understood you, that those people, the Chicago people, 
 would have a right to some patt of that traffic? 
 
 JVIr. Staples. I spoke of common western points, between Chicago 
 and St. Louis. 
 
 The Chairman. I thought the contention came from Chicago. 
 
 Mr. Staples. No, sir. 
 
 The Chairman. As a matter of fact, it does. 
 
 Mr. Staples. It was a misunderstanding. 
 
 The Chairman. It was a controversy between Chicago and those 
 Gulf ports? 
 
 Mr. Staples. I had no reference to that in the connection you speak 
 of now. 
 
 The Chairman. I did not understand you, then. 
 
 Mr. Staples. Proceeding, Mr. Chairman, we are not here to advo- 
 cate any particular measure; but I wish to call attention to the 
 so-called Quarles-Cooper bill, as it is generally claimed that this meas- 
 ure simply restores the same powers to the Interstate Commerce Com- 
 mission which it was supposed to have under the former law. This, 1 
 think, is an erroneous idea. . There seems to be but one question promi- 
 nent in this discussion , and that is the question of granting power to make 
 rates to an intermediate body. From my view, and so far as I have 
 been able to read from the public press, that seems to be the prime 
 contention here, and I wish to emphasize that, in my opinion, while 
 that is a very necessary power to confer, I do not believe that it is 
 the crying evil to-day; that is, that the chief complaint comes from 
 the source of the rate, particularly. 
 
 It comes more from the inequalities of unfair conditions existing 
 between difl'erent localities. And in that connection I wish to say 
 that I. have in mind somewhat the question of common markets, and 
 also the question of the long and short haul clause or feature of it, as 
 to which our courts have held, as I understand, as in one of the meas- 
 
154 PEOPOSBD AMENDMEiSTT OF INTEBSTATE-COMMEKCE LAW. 
 
 ures referred to here this morning, that that question of determining 
 when competitive conditions are such that the long and short haw 
 clause should be abrogated rests with the judgment of the carrier and 
 not with the judgment of the Interstate Commerce Commission. 
 The law is worded just slightl}"- different from the law of my State, 
 which has been tested and found to be good. 
 
 In that connection I want,, at this juncture, to give an instance, and I 
 want you gentlemen to consider — not to give your opinion to me but 
 to consider — this instance. Taking the different stations — which I can 
 name here — I have on my desk now, which of course we can not treat 
 because it is interstate commerce, an instance where the railway com- 
 pany takes grain from intermediate points between the Twin Cities and 
 Chicago for the shipper who offers it. The shipper pays the local 
 freight into the Twin Cities; he pays the other freight back to Chicago 
 and makes a half cent a bushel on the transaction. In other words, he 
 saves a half a cent over what he would have to pay if they picked up a 
 car on the road to Chicago. It seems to me that 1 can not find a clearer 
 case of what to my mind is an unjust relation of rates. I simply ask 
 the question, and ask you gentlemen to consider, whether such a situ- 
 ation as that should not be treated by some intermediary body. I do 
 not say that they should have final authority, but the opinion should 
 come in there as to whether those rates are fair. 
 
 Mr. Mann. That rate you named is made in the interests of Minne- 
 apolis flour, I suppose? 
 
 Mr. Staples. I am not here to make any but general statements. 
 I simply cite that as an incident. : 
 
 Mr. Mann. I understand. 
 
 Mr. Staples. And I could cite many of them, but I do not think it 
 would be right to take up the time of this committee. I could cite 
 other instances; for instance, where companies bringing cement and 
 lime and other necessarj^ commodities in — for instance, for the build- 
 ing of sidewalks — charge the through rate to St. Paul and the local 
 rate back. Now, there may be reasons why that could be justified. 
 There no doubt are, to my mind. But ordinarily I think that is exact- 
 ing an unfair rate from the intermediate points. 
 
 The Chairman. Will you state, Mr. Staples, why that would not be 
 a case that could be corrected under the long and short haul clause of 
 the interstate commerce act? 
 
 Mr. Staples. For the very reasons that I have stated to you, Mr. 
 Chairman. Understand, I make no pretenses to being a lawyer, but 
 I have read those decisions, and it is made clear to my mind that the 
 courts have held that the competitive conditions between the distrib- 
 uting and terminal points may be such that that is necessary. 
 
 "But the point that I criticise or complain of is that the courts only 
 hold that that is left to the opinion of the carriers. They are to be the 
 judges. If you will read the decisions I am confident you will find 
 that that is the finding of that court. 
 
 The Chairman. Then the remedy would be to strike out from section 
 4 this line: " Under substantially similar circumstances and conditons." 
 Would you strike that out? 
 
 _ Mr. Staples. Mr. Chairman, I beg to be relieved from giving spe- 
 cific answers as to the wording or the substitution of words which 
 would cover what I call the defect. 
 
PROPOSED AMENDMENT OF INTEKSTATE-COMMEBOE LAW. 155 
 
 The Chairman. But, Mr. Staples, you are a man of large experience 
 in this matter, and you are a public officer who has to deal with ques- 
 tions very similar to this, the only difference, perhaps, being that your 
 subjects are State commerce and this question that I speak of applies 
 to interstate commerce. The principle ought to be the same in each, 
 and you must be familiar with that principle. Now, can you not aid 
 us with your experience upon a question of this kind, as to whether 
 that is the language that destroys the benefit of section 4? 
 
 Mr. Staples. Mr. Chairman, I can do this. I do not wish to pre- 
 sume, but I will say that I could and would cheerfully transmit to you 
 a copy of our law, the wording of which has been upheld by the 
 courts. I could not quote it to-day exactly, and 1 would not care to 
 place niyself in that position. 1 realize that a most grave question is at 
 issue, and I would not attempt it. A man sometimes gets a word 
 wrong, even in a prayer that he says every day. With all due respect, 
 Mr. Chairman, 1 ■ could not attempt to give you specific language. 
 But certainly the point at issue I make clear, and I am certain if the 
 committee will review the findings of the court they will agree with 
 me. And to emphasize that, 1 want to say this: That the very cases, 
 some of which 1 have spoken of here to-day, I have taken up with the 
 Interstate Commerce Commission, and they have convinced me that 
 they are absolutely powerless, excepting to make a recommendation, 
 which the railway companies may observe and may not, just as they 
 see fit. They are without the power to enforce their recommendations. 
 
 Mr. Mann. Perhaps 1 can aid you, and I am sure you can aid us, by 
 two or three questions in sequence. 
 
 First, do you think that in no case should the railroad company be 
 permitted to charge more for a shorter haul than for a longer haul? 
 
 Mr. Staples. 1 do not hold that at all. 
 
 Mr. Mann. Do you believe, then, that they ought not to be permitted 
 in any case to do that unless they have consent, after apijlication to 
 some board or commission like the Interstate Commerce Commission ? 
 
 Mr. Staples. Yes, sir; which of couj'se carries with it what goes 
 without saying, that it may be reviewed by the courts. 
 
 Mr. Mann. I assume that. 
 
 Mr. Staples. Yes, sir. 
 
 Mr. Mann. Now, do you think from your experience that there 
 would be physical and mental capacity on the part of any one commis- 
 sion to settle all of those questions that would arise, together with the 
 rate questions and other questions involved, under the present act to 
 regulate commerce? Would there be time enough, I mean? 
 
 Mr. Staples. Well, that is a most difficult question to answer, and 
 in answering it 1 want to say this, that as soon as the decisions of the 
 Commission have been found to be reasonable they are obeyed. 
 
 1 speak from experience in my own State. In 90 to 95 per cent of 
 the cases where they take it up intelligently and hear the evidence on 
 both sides their findings are brief^ they are to the point, and they are 
 observed by the carriers. I think I can say in more than 96 per cent 
 of the cases. In a large share of the cases in our commission the 
 experience has been that they do not even have to go through the for- 
 mality of a hearing. If in conference with a representative of the com- 
 pany who is in touch with the commission they show a disposition to 
 be fair, the point is often conceded without a hearing at all. It is 
 
156 PROPOSED AMENDMENT OF INTERSTATE-COMMEKCE LAW. 
 
 utterly impossible to say, for that reason, how much time might 1 
 consumed in these hearings. I can appreciate that the draft on tl 
 time of the commission in the first four or five years would be eno 
 mous, because the complaints might overwhelm the commission. Bi 
 that would not alarm me; 1 do not think it is an alarming feature. 
 
 It may be necessary. I am not indorsing it, but I am in a positic 
 to say that our legislature is considering a measure this winter havir 
 for its object the authorizing of our commission to take up with tl 
 Interstate Commerce Commission these very questions, where con 
 plaints of the nature of the different ones which have been spoken ( 
 this morning might have to be treated, giving the commission autho 
 ity to take up such cases with the Interstate Commerce Commissio; 
 with the idea that they are in a position to take them up intelligent!; 
 and providing that the State should bear the expense, and with ti 
 idea that less time would be consumed, of course, to the end that th 
 commission would be largely relieved by being somewhat advised ( 
 the facts, and it would necessaril}'^ take much less of their time. 
 
 I simply speak of that to bring out the fact that in my opinion tl 
 time is coming when the Interstate Commerce Comnaission, throu^ 
 its agents or through some system of reorganization, will act in son 
 such way as that, assuming that this power of public control will t 
 conferred in the end — that there will be a relation between State cod 
 missions, or that there may be district commissioners, or some oth( 
 system may be established whereby the central power would be reliev( 
 of a share of the detail work. That is a general idea on which I hai 
 thought more or less; but I can not answer your question specificall; 
 I have expended a good many words in endeavoring to answer it, i 
 you see. 
 
 Mr. Mann. You have said a great deal that is of value to us. Not 
 another question. 
 
 You have spoken of deciding these questions without a hearing. E 
 you think that the Interstate Commerce Commission ought to hai 
 authority to relieve the carrier from the long and short haul claui 
 without a hearing? 
 
 Mr. Staples. I think j^ou must have misunderstood those wor( 
 before, used in connection with the statement that it was by confe 
 ence with the railway companies, and a harmonious agreement. 
 
 Mr. Mann. I mean without a hearing of the parties? 
 
 Mr. Staples. No, sir; I do not entertain that idea for one moment- 
 that the railway companies, particularly, should be denied evei 
 opportunity to present every phase of the case from their standpoin 
 
 1 want to saj' in that connection that I emphasize this statement 
 that there can be no question that the Interstate Commerce Commi 
 sion, if that is to be the tribunal, after having experience and beii 
 composed of the men that it should be composed of, is far better ab 
 to pa^s upon these questions than any court in the land. 
 
 Some one has asked. Why not let the court make these rates? Tl 
 court is a very intelligent body, but it has to deal with thousands 
 questions and issues, and has no particular training along this lin 
 and with all due respect to the court, they are not competent, in n 
 opinion, excepting to review the question and determine wheth 
 some illegal act has been performed by the Commission, or some a 
 which in itself is unreasonable or which would result in an unreaso 
 able finding. 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMEKCE LAW. 157 
 
 Mr. Mann. Could you give us any idea of the number of findings 
 of the Commission in your State relieving the railroads from the long 
 and short haul clause? 
 
 Mr. Staples. Yes; very quickly. There has never been one? 
 
 Mr. Mann. There is no place in your State where a carrier is per- 
 mitted in local traific within the State to charge more for a short haul 
 than a long haul? 
 
 Mr. Staples. Not one. And I want to say in that connection that 
 there have been many applications. 
 
 Mr. Lamar. I would like to ask the witness a question. 
 
 The Chairman. Certainl3^ 
 
 Mr. Lamar. The proposition to invest some administrative or min- 
 isterial body, or whatever it might be termed, with the legislative 
 power to review rates and fix a rate, upon hearing, to be reasonable, 
 which up to that time had been challenged, is looked upon, of course — 
 and it is not disguised by those who have railway interests — with great 
 alarm, and, I think, from their standpoint with very sincere alarm. 
 They look upon the further proposition of the original rate-making 
 power as being something almost satanic. 
 
 -Now, the question 1 would like to ask you is this: If this adminis- 
 trative or ministerial body is given the right to review a particular 
 rate and fix upon a rate to be reasonable, which up to that time had 
 operated unjustlj^ and unreasonably, in their opinion, can not every 
 rate in the United States be challenged? I mean now logically, with- 
 out reference to whether they do it or not? 
 
 Mr. Staples. I understand. 
 
 Mr. Lamar. Can not everj' rate in operation be challenged by com- 
 plaint, either by filing a complaint against 'that particular rate or 
 
 Mr. Staples. I would have to answer that question in the aflirmative. 
 
 Mr. Lamar. That is what I have alwaj^s thought. I have thought 
 that it was a distinction without a diflference. 
 
 Mr. Staples. I am only giving you mj' opinion. My judgment is, 
 3'es, to that. 
 
 Mr. Lamar. I never have seen any use in arguing the proposition. 
 It is either somebody humbugging himself or, more unfortunately, 
 humbugging somebody else when a distinction is attempted to be drawn 
 between the giving of a power to challenge the rate and fix it in a par- 
 • ticular case and challenging every rate in the United States. Continu- 
 ing it logically, they would have the same power in the one case as in 
 the other. Now, whether they would do it or not is another question. 
 I have no idea that they would. I tell you frankly that if I were to 
 vote for a bill that gave this administrative body a right to challenge 
 a particular rate and fix it upon hearing, I would just as lief go the 
 length and give it the entire power, because logically 1 think it is the 
 same. Now, whether or not the Commission vested with power to 
 fix rates would any more think of disturbing the business of the coun- 
 try and go to the extent of interfering with existing i-ailroad rates in anj- 
 such manner as that is another question. I do not think they really 
 would. 
 
 Mr. Staples. Nor do I. 
 
 Mr. Lamar. And I think there will be enough to convince the public 
 in the challenging of rates, so that whether they have the original 
 rate-making power or not, the result will be about the same. 
 Mr. Staples. No; I could not agree with you on that. 
 
158 PROPOSED AMENDMENT OF INTEBSTATE-OOMMEECE LAW. 
 
 Mr. Lamar. No? Still, logically- 
 
 Mr. Staples. The probabilities and the possibilities are two ver 
 different things. Now, I am answering that from my knowledge o 
 the question in issue. 
 
 I want to add that in the State of Minnesota, under the powers o 
 the Commission, on their initiative they are authorized to challenge 
 rate— any rate or all rates — without petition. Of course there is n 
 such purpose, or at least it has not been advocated here, except o: 
 petition; and it is not the Commission in this instance who challeng 
 the rates; it is the petitioners. And judging from the result in m; 
 State, where the petitioners may challenge a rate, experience has showi 
 me — and I have learned that the same idea prevails in most of th 
 States — the shippers are very slow to make their grievances public 
 They hesitate a long time to do it. I am not here to set out the reason 
 why; but these reasons are what has prompted the legislature of th 
 State of Minnesota to confer upon the Commission the power to initi 
 ate, by resolution, the question of the reasonableness of any rate 
 That is what prompted our legislature in our State to do that. Now 
 the Commission in our State, in exercising that power, are very dis 
 creet, if I may say so, and very careful and conservative, and th 
 complaints by shippers or localities challenging rates are relatively few 
 
 Mr. Richardson. I understood you to say a few minutes ago tha 
 it would be safer and better to leave the Interstate Commerce Com 
 mission, with their experience, with power to regulate and fix a rat 
 than it would be to confer that power upon a court composed of judges 
 
 Mr. Staples. I answered that emphatically, and I said that wa 
 with all due respect to the court. 
 
 Mr. Richardson. I understand that. Your opinion, then, is on thi 
 line, that while a man may be very able in law he may not be ver 
 practical in regulating railroad lines? 
 
 Mr. Staples. Exactly so. 
 
 Mr. Richardson. And you would rather take the Interstate Com 
 merce Commission, with the experience that they have now, and thei 
 qualifications, than to trust to a court of three or nine men, of lawyers 
 judges, men qualified in the law ? 
 
 Mr. Staples. Yes, assuming, of course, that they are not especial! 
 appointed to do this work. 
 
 Mr. Richardson. You assume that they know their business, an 
 have studied and they may be learned in the law, but they are not a 
 competent in these practical lines and in the matter of fixing rates a 
 the Interstate Commerce Commission, who have had a great deal c 
 experience in that way? 
 
 Mr. Staples. Yes, sir; and my experience has been, where we hav 
 had cases in the courts in our State, that the courts steer clear of a 
 the questions except the legal ones. 
 
 Mr. Richardson. We have had much talk about experts. Is it nc 
 the fact that generally there is no testimony more uncertain and i 
 which there is more difference of opinion among the witnesses tha 
 expert testimony ? 
 
 Mr. Staples. I will answer that question, and then I want to add 
 statement. 
 
 Mr. Richardson. All right. 
 
 Mr. Staples. In any case where there was an issue which had to I 
 tried by the court 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 159 
 
 Mr. Richardson. Yes. 
 
 Mr. Staples (continuing). I would rather rely on common sense 
 md honest people than on experts. 
 
 Mr. Richardson. You would rather rely on good men, pi'actical 
 men, in the practical affairs of life, to arrive at what is a practical con- 
 slusion in the practical affairs of life, than on a court? You would 
 rather take an honest jury of nien than five judges learned in the law? 
 
 Mr._ Staples, Yes, sir; that is where the jury system excels. 
 
 1 fail to find where power is conferred to require two or more com- 
 panies to make and maintain joint rates, which is very necessary if full 
 relief is to be granted. 
 
 Some claim the remedy for a party claiming a rate is unreasonably 
 bigh lies in a suit for recovery of damages. This may be good theory, 
 but mighty poor pra,ctice. In the event he can afford the cost of litiga- 
 tion he is liable to die before the courts have finally passed upon the 
 question; but more likely if the rate complained of is an unreasonable 
 Dne as compared with the rate given some competitor at another point, 
 be is sure to be driven out of business before the case is determined. 
 If the rate is an unreasonably high one and he continues to do business 
 ander it, he is not the real sufferer and should not recover. The real 
 loss falls upon the producer who has been required to sell his product 
 based on the high rate. 
 
 The shipper, usually the middleman, is not so much interested in 
 the rate itself as he is in a fair rate from a competitive standpoint. 
 
 The cases are comparatively few where more than one rate is 
 involved, or at most the rates on one commodity. In the event this 
 rate is reduced by an order of the Commission and the order put in 
 affect during a review by the courts,, if the order is not sustained it 
 ^eems reasonable the railway company can better stand the temporary 
 loss in its revenue on this one product than the shipper can in case the 
 jrder is sustained, pending which time he had been paying the higher 
 •ate. 
 
 We can not treat the transportation companies as private enterprises. 
 rhey exercise the rights of eminent domain, and are organized under 
 public franchises for the sole and only purpose of performing a pub- 
 ic service for hire. Our courts have repeatedly held them to be sub- 
 ect to public control. 
 
 Can any one imaginethe railway companies consentingto a law pro- 
 dding that the farmer shall have the final say as to what price is to 
 )e paid for his land needed for the right of way ? This is simply 
 ihanging the shoe over to the other foot. 
 
 No one to-day questions the necessity and wisdom of public control 
 )f public turnpikes, ferries, telephone, telegraph, and express com- 
 janies, street-car companies, and even grain elevators, stock-yard 
 jompanies, public carriages, etc. We do not stop at how they shall 
 :onduct their business, but arbitrarily prescribe their rates and charges. 
 is it not as much necessary to regulate and control under reasonable 
 afeguards the business of these powerful but very necessary public 
 ervants as are railway companies? 
 
 In closing, gentlemen, permit me to say there is no feeling antago- 
 listic to railways in the Northwest, and certainly no sentiment favor- 
 ng national legislation which will in any degree act to cripple the 
 Bgitimate growth and development of their properties; but there is a 
 
160 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 well-grounded and strong demand for immediate legislation which shall 
 grant reasonable Government control over interstate commerce. 
 
 The Chairman. We will give you an opportunity to continue your 
 statement to-morrow morning, Mr. Staples. 
 
 Mr. Staples. I thank you very much. 
 
 Thereupon, at 12 o'clock m., the committee adjourned until to-mor: 
 row, Wednesday, January 18, 1905, at 10 o'clock a. m. 
 
 Wednesday, January 18, 1905. 
 The committee met at 10.30 o'clock a. m., Hon. William P. Hep- 
 burn in the chair. 
 The Chairman. Mr. Staples, we are ready to hea-r you further. 
 
 STATEMENT OF MR. CHARLES F. STAPLES— Continued. 
 
 Mr. Staples. Mr. Chairman and gentlemen, I will ask for just' one 
 minute, and not more. I regret very much that I could not finish my 
 remarks j^esterda}'. I have taken occasion to file an addition to them 
 with your reporter. 
 
 I wish now just to emphasize three points which have been brought 
 out in these remarks. In the Quarles-Cooper bill are the words "when 
 a case has been referred to the courts and an appeal taken, a court may 
 den}!- or modify the order." This is the point that I wish to make, Mr. 
 Chairman. Under the decisions of our Supreme Court, when treating 
 the question of rates, the courts can not modify the order of the Com- 
 mission. They must affirm or deny, and that upon the ground whether 
 the rate authorized by the Commission is a confiscatory rate or not. 
 1 am not here to cite those decisions of the court, which this committee 
 can look up and consult. 
 
 I notice that a great deal of time has been spent upon that in the 
 different bills that have been presented. 
 
 Another thing is, that 1 think any bill which is enacted should con 
 tain the provision that the findings of the Interstate Commerce Com- 
 mission should be made prima facie, thereby making the railway 
 company the defendant, rather than the Commission. That is a pro- 
 vision contained in the statute of Minnesota, ai)d has been upheld by 
 the courts and has been found to be very effective. 
 
 Another provision, Mr. Chairman, which seems to me to have been 
 omitted or not taken cai'e of in the so-called Quarles-Cooper bill, is one 
 authorizing the Commission to insist upon the companies providing a 
 through joint rate and maintaining the same. Without that author- 
 ity they are not powerless, but a large share of the good which is 
 hoped for from some legislation of this character will be denied. 
 
 Now, Mr. Chairman, I do not wish to elaborate upon those points, 
 and will give the balance of the time to my associates. 
 
 Mr. Burke. 1 would like to ask Mr. Staples one question, if I may 
 be. permitted. 
 
 The Chairman. Certainly; proceed. 
 
 Mr. Burke. The newspapers report this morning that a member oi 
 the Minnesota legislature declined to vote for the reelection of Senatoi 
 Clapp to the Senate because he had not declared himself in favor of the 
 Quarles-Cooper bill, or that he had not declared himself soon enough. 
 I would like to ask you if you are in favor of the Quarles-Cooper bill. 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 161 
 
 Mr. Staples. I am very sorry to be put in that attitude. However, 
 my situation upon this necessary legislation must have been made 
 clear to this committee. The Quarles-Cooper bill, in my opinion, will 
 accomplish very- little of what the public are clamoring for to-da}^; 
 that is, in the way of strengthening the hands and powers of the Inter- 
 state Commerce Commission. 
 
 Mr. Richardson. Mr. Chairman, one word. From indications, it 
 seems to me that the hearings are going to close pretty soon, and I 
 think there ought to be a fair division of time made. Now, we had 
 one side pretty thoroughly represented here, and I do not think that 
 the large number of railroad gentlemen who are interested in this 
 matter have hM an equally fair chance here. We are going to close 
 pretty soon, and should we not have a fair understanding? 
 
 The Chairman. The situation is somewhat peculiar, because Mr. 
 Bacon announced early that the proponents of the Cooper bill did not 
 want any time. 
 
 Mr. Richardson. 1 do not mean to reflect on the other side at all. 
 1 simply made the suggestion that we could reach some fair division of 
 the time. I believe these hearings are going to close pretty soon. 
 
 The Chairman. We will have to limit you gentlemen this morning 
 strictly to the time you said you wanted. 
 
 Mr. Burr. I believe I understood yesterday that the other members 
 of our committee would consume twenty minutes. 
 
 The Chairman. Twenty minutes between them I 
 
 Mr. Burr. Yes, sir. 
 
 STATEMENT OF MR. C. C. M'CHORD. 
 
 Mr. McChord. Mr. Chairman and gentlemen: 1, of course, do not 
 know how wide a range this testimony has taken, but I apprehend that 
 in the discussion of such a proposition as this there are three questions 
 that should be determined. The first is the power of Congress to 
 delegate the authority that it proposes to give the Interstate Commerce 
 Commission. 
 
 The Chairman. I do not think there is any question about that. 
 There is no member who is disturbed about that. 
 
 Mr. McChord. Yes, sir; I thought not. The next question is as to 
 the necessity for such an amendment. The third question is as to the 
 possibility of it. I mention the first proposition because in Kentucky 
 we have in the last few years had a full discussion of the proposition, 
 and an effort has been made there to pass a law giving the State rail- 
 road commission of that State the power to pass rates. That question 
 was raised with a great deal of emphasis and seriousness, and it has 
 gone to the extreme there that it is almost contended that the Consti- 
 tution itself was unconstitutional. So far as I am concerned, I believe, 
 and I believe that the people of this country — the masses and the 
 shippers— believe in this legislation; that they are in favor of giving 
 the Interstate Commerce Commission additional powers which it does 
 not now possess. And in making that claim we do not desire to be 
 understood as taking the position that all railroad rates and all tariffs 
 made by the railroad corporations of this country are unjust or unrea- 
 sonable. I believe, as a rule, in the main they are adjusted upon a 
 fair and equitable basis. But it is the exception to the rule that we 
 
 I c L— 05 11 
 
162 PROPOSED AMENDMENT OF INTEKSTATE-COMMEKCE LAW. 
 
 want this Congress to cure by the amendment to the interstate com- 
 merce law. 
 
 Now, the question was propounded yesterday regarding the long 
 and short haul section of the act. It is well known that in the Social 
 Circle case there were two propositions, one as to whether the rate 
 to Social Circle from Cincinnati — the differential on shipments froiii 
 Cincinnati to Social Circle — of 50 cents was just and right; whether 
 the circumstances and conditions that there prevailed justified thai 
 particular rate to Social Circle as against the rate of $1.07 to Atlanta 
 and Augusta. It is a question of fact that the Commission heard and 
 determined, and it was not justified under the act. ^That questior 
 went to the Supreme Court of the United States, and that court held 
 that the finding of the Commission was proper. The Commission in 
 the same proceeding undertook to fix the maximum rate to Atlanta, 
 The Supreme Court held in the same case that it was not within the 
 power of the Commission to fix a maximum rate. 
 
 The Interstate Commerce Commission under that decision assumed 
 that it had power to decide whether the circumstances and conditions 
 surrounding the transportation of commodities to and from the varioug 
 territories in the country were soleh' for their consideration, and in the 
 case which followed, the Belma case, I believe, and then afterwards in 
 the case of the Tennessee, Virginia and Georgia Railroad Company 
 against the Commission, it was held that the law, the act itself, fixed 
 the proposition that if there were dissimilar circumstances and condi- 
 tions even as to competition between rail and rail, that that was a ques- 
 tion which the carrier itself should consider, and which the law con- 
 sidered, and it was said that it was such a dissimilarity of circumstances 
 and conditions as would justify the higher rate. Therefore, that being 
 the state of the law, we do not think that any such discretion should 
 be given to the carrier, nor do we think that that should be the law. 
 
 In Kentucky we had the same provision engrafted into our consti- 
 tution as to the long and short haul. The railroad commission oi 
 Kentucky there refused to exonerate the railroad company from the 
 provisions of that section on the shipment of coal from eastern Ken- 
 tucky to the city of Louisville. We did that, not because we did not 
 believe that there should be a less rate to Louisville where that coal 
 came in competition with coal that was floated down the river or 
 barges for something like 25 or 30 cents a ton, but we contended thai 
 the rate to the intermediate points was too high and should be reduced, 
 The Kentucky court of appeals held that that was a matter purely ir 
 the discretion of the railroad commission and that the court could no( 
 interfere with that determination on the part of the railroad commis- 
 sion. That case came to the Supreme Court of the United States anc 
 was upheld, and it will be found in United States Statutes, volumt 
 33, pa^e 503, I believe. 
 
 The impression seems to prevail that tariffs and rates, so far as inter 
 state commerce is concerned, are in a chaotic condition ; that it is i 
 mere jumble of rates and a jumble of tariffs. Why, it is well knowi 
 that there are certain bases or schemes adopted by the railroad corpo 
 rations of the country for making rates. As an illustration, you tak( 
 the rates from the eastern seaboard cities. It is based upon a rat( 
 primarily from New York to Chicago. And a differential is allowec 
 to Philadelphia, Baltimore, and Boston, I believe. In arriving at s 
 rate north, east, or west of Chicago it is made plus the New York 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 163 
 
 Chicago rate. I have a few illustrations of that; and, by the way, I 
 have a map here that shows the entire adjustment of rates so far as 
 that section of the country is concerned. 
 
 Take, for instance, the section in which the official classification ap- 
 plies, roughly described as lying east of the Mississippi River and north 
 of the Ohio and the Potomac rivers. The whole territory is divided 
 into territories each of which takes a portion of the Chicago rate. 
 East St. Louis takes 116 per cent of the Chicago rate, the Chicago 
 rate being regarded as 100 per cent. Indianapolis takes 107 per cent 
 of the Chicago rate, Cincinnati 87 per cent, a,nd Louisville takes the 
 same rate as Chicago. That is, territory penetrated takes less per- 
 centages of the Chicago rate than those territories which are off from 
 the Cnicago line. I could enumerate others. Mow, I do not believe 
 that the question is as great a problem as many think. 
 
 The Chairman. May I interrupt you there ? 
 
 Mr. McChokd. Certainly. 
 
 The Chairman. What has produced the establishment of this Chi- 
 cago rate and the resultant rates? 
 
 Mr. McChord. Investigation and the judgment of traffic men. 
 
 The Chairman. Has it been long continued? 
 
 Mr. McChord. Vei-y long. 
 
 The Chairman. Ought it to be disturbed ? 
 
 Mr. McChord. I do not know. I would not say, because I would 
 be unworthy of the confidence of this committee, and unworthy to pass 
 upon any interstate rates, if I should pass upon a question of that sort 
 without the most thorough and searching investigation; and that is 
 what 1 apprehend the Interstate Commerce Commission would give it 
 if the question came before them. 
 
 As I said in the outset; this is not a proposition to upset the traffic 
 and freight rates of this country, because as a rule, I believe, the basis 
 for making rates is right and proper. It is the exception to the rule 
 that wants to be cured here, and it can only be cured in one way, and 
 that is by giving the power to the Interstate Commerce Commission. 
 after complaint has been made, to hear and determine and fix a rate 
 
 Now, so far as I am concerned, I have not had the time to examine 
 the various bills that have been proposed here. I am frank to say that 
 1 am wedded to this proposition, because it was my own measure, a 
 measure that I introduced in Kentucky, that has been upheld by the 
 Supreme Court of the United States. There the power is given to 
 the railroad commission, upon complaint, or upon its own motion, 
 when it is charged or believed by the commission that a rate is or rates 
 are extortionate, to give notice to the carrier, to hear all the evidence 
 and arguments that may be produced, and from that and from its own 
 investigation to deterinine whether that rate is just and reasonable; 
 and if they find that the rate is not just and reasonable, then it fixes a 
 rate that must be just and reasonable, by which the carrier is bound. 
 There we stopped, knowing as we did that from the creation of high- 
 ways, from the first building of railroads, every court in the land has 
 been open and is open to-day to the shipper and the railroad in a prop- 
 erly instituted action to try the question as to whether the rate fixed 
 is just and reasonable. 
 
 Mr. Richardson. Does your rate go into effect at once ? 
 
 Mr. McChord. After ten days' notice. 
 
 Mr. Richardson. Ten days' notice ? 
 
164 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 Mr. McChord. To the carrier. 
 
 Mr. RiCHAEDSON. Then there is the right of appeal? 
 
 Mr. McChord. There is no appeal at all. 1 can not conceive how 
 there can be an appeal from the legislative act to the court. There is, 
 of course, the rignt of review everywhere in a properly instituted 
 action, but the idea of appeal has been confused here with the idea of 
 review. The courts have the right to review, but you can not appeal 
 from the legislature or from the act of a legislative tribunal to the 
 court. This is not against the railroads. It is in the interest of the 
 railroads, and to protect them from a greater evil. I believe that 
 these questions should be discussed and considered fairly. 
 
 I regret to see that some traffic men, some railroad men, and some 
 shippers have so far forgotten the great question that is pending here as 
 to inject personalities into it. I have seen it even charged in the press, 
 or have seen the question asked, whether or not the power was sought 
 by certain people for the purpose of selling out. I do not believe that 
 it is fair, gentlemen, to deal with a great qiiestion in that way. If 
 that question can be properly asked of the Interstate Commerce Com- 
 mission, it can be asked of that great man who sits in the White House 
 to-daj^, and, while I differ with him politically, I believe that the meas- 
 ures that he has proposed will immortalize him. 1 believe that when 
 he carries them through he will have made the greatest President that 
 this country has ever had. 
 
 My time is limited, gentlemen, and I j'ield to Judge Crump, of 
 Virginia. 
 
 STATEMENT OF HON. BEVERLY T. CRUMP. 
 
 Mr. Chairman, I shall detain this committee but for a moment, as 
 I appreciate the fact that the time is limited, and other gentlemen 
 desire to be heard. There are, as I understand, various bills now 
 pending before this committee, and 1 notice that two additional bills 
 were introduced in the House on the day before yesterday, which I 
 presume were likewise referred to this committee. It would seem 
 vain on the part of anyone to attempt to discuss this general position, 
 considering the great public importance of the proposed measures 
 before this committee, with any degree of intelligence or efficiency, 
 with merely a few moments in which to do it. Several hours would 
 scarceh' suffice for that. I onlv desire to emphasize this one point, 
 that there seems to be a great desire and wish, not to say demand, on 
 the part of those interested in rates in this country, that there should 
 be action. We have in the fii'st place the recommendation in the mes- 
 sage of the President. We have resolutions of commercial bodies all 
 over the country. 
 
 The committee of which I am a member appears before this com- 
 mittee of Congress for the purpose of representing an additional 
 interest, and I desire to restate that fact, which has been stated by our 
 chairman, that this National Association of Railway Commissioners 
 represents the commissions of 30 States. At their last annual conven- 
 tion they adopted unanimously a resolution .to the effect that the Inter- 
 state Commerce Commission should be given additional power — that is, 
 •the power to substitute one rate for a rate that they condemn. The 
 general question is whether or not Congress should enact such legis- 
 lation. Why should it not? I can not undertake to discuss that ques- 
 tion at all from a general legal aspect. But permit me to call your 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 165 
 
 attention to one phase of it. If 1 understand aright the principles 
 upon which this Government was founded, the Congress is not under- 
 taking to manage private propertj^, but in all this character of legis- 
 lation it is resuming governmental functions which have been by its 
 consent for some years intrusted to private parties. That unquestion- 
 ably follows from the decisions of the Supreme Court of the United 
 States from Chief Justice Marshall down. 
 
 As a general matter we find these railroad gentlemen, and among 
 them in my section of the country are some close friends of mine, who 
 are splendid men, patriotic men, men earnest in their endeavors to db 
 the best they can for the commercial interests of the country, too, but 
 in the end I say that those gentlemen, as a general proposition, in 
 making rates are exercising a governmental function. The properties 
 they hold are held in a public trust, under a public use. This may be 
 a theorj', but is a practice, nevertheless, that is recognized in our Gov- 
 ernment. And why should not the Government, through its own tri- 
 bunals, exercise this governmental function? If a meeting of traffic 
 men fixes a rate, they are doing what Congress has a right to do, and 
 has, on occasions, the duty to do. 
 
 The question before this committee to decide is, without going into 
 the merits of this proposition, whether under the present circumstances 
 it is its duty to resume the exercise of this governmental function and 
 to create a tribunal by extending the powers of the Interstate Com- 
 merce Commission, which shall stand between the railroad rates and 
 the shippers. I do not think that we ought to confess in this country 
 that a set of gentlemen acting in their private interests, however high 
 minded thej^ may be, however recognized they ma}' be as men actu- 
 ated by the highest motives, are such a set of men that we are unable 
 to create a governmental tribunal to take their place which can be 
 intrusted with the discharge of governmental functions, and for that 
 reason we prefer to leave that to those who, as private persons, exer- 
 cise those governmental functions. And on behalf of this association 
 we ask that this legislation be enacted. 
 
 In regard to my own State, the State of Virginia, I would like to 
 state one fact. The Old Dominion has come into line a little late. 
 Our commission >is of a recent origin, and quite unique. I doubt 
 whether there is such a body as that body is almost in the world. It 
 was created by the Virginia constitutional convention which promul- 
 gated a new constitution about two years ago. That convention was 
 composed of the best men in Virginia. It was unquestionably the best 
 body of men that have collected together in the State of Virginia, cer- 
 tainly since the war. There was scarcely a man in it who had been to 
 the legislature; there was scarcely a man in it who had held or would 
 accept a public office of any kind. [Laughter.] I was not a member 
 of it, 1 would say. 
 
 Mr. Mann. You had been a member of the legislature? 
 
 Ml . Crump. I had been a member of the legislature for one session 
 a number of years ago, and that cured my taste for public office, and 
 I felt that I would never be willing to hold a public office- again. I 
 only want a professional office. I have been a lawyer all my life. 
 
 Such a body as that constitutional convention certainly expressed 
 the desire of Virginia as to the regulation of railroad rates— of course 
 in that case only intrastate rates— and they created a commission to 
 prescribe rates, originally, and with the power to correct rates on com- 
 
166 PROPOSED AMENDMENT OF INTEBSTATE-COMMERCE LAW. 
 
 plaint, and with the power to put rates into effect and then to sit ai 
 court, and if the rates were not observed or any regulation promi 
 gated by them as a commission was not obeyed, they have the rig 
 as a court to act. We have all the paraphernalia of a court. ^ 
 have the marshal, called a bailiff, who serves our processes; we ha 
 the right to summon the railroad if it violates any of our enactmen 
 we have the power and the right to make enactments, and when ^ 
 summon the parties we have the right to try them and impose a fi 
 on them and to issue a process from our clerk's office, and to enfoi 
 that fine. I doubt whether there has ever been a body created that 
 distinctly c'ombined legislative, judicial, and administrative f unctio 
 of that kind. 
 
 The Chaikman. And inquisitorial? 
 
 Mr. Crump. Yes, sir; and inquisitorial. But, mark me — no, M 
 Chairman, I do not say inquisitorial, because I do not think it is propt 
 Either the Supreme Court of the United States is wrong or it is n 
 inquisitorial to do what the Government has the right to do, and 
 do what it is its duty to do. I come back to this original propositio 
 that the making of rates and the regulation of railroads is an exerci 
 of governmental power. And when we create a tribunal we are n 
 creating a tribunal to pry into private secrets or to exercise dominii 
 over private property, but we are taking away from private perso 
 
 Governmental functions which they have been allowed to discharg 
 o that I say it is not exactly inquisitorial, in my. mind. 
 The Chairman. When I asked you the question I was under tl 
 impression that the word '"inquisitorial" might cover duties and pu 
 poses that were not offensive. 
 
 Mr. Crump. I understood, of course, the meaning of the term, si 
 But I was only coming back to this original principle, which I had 
 mind. I will not detain the committee any longer. I think that the 
 are tribunals in the countrj^ that can be entrusted with the making 
 laws and the executing of them at the same time. 
 
 STATEMENT OF HON. WILLIAM R. HEARST, A REPRESENTATI\ 
 IN CONGRESS FROM THE STATE OF NEW YORK. 
 
 Mr. Hearst. I have practically finished with my bill, but I noti 
 that two bills have been introduced since I addressed the committ 
 the other day and that those bills contain some provisions that are n 
 in my bill, and they do not contain other provisions that are in my bi 
 
 The Chairman. Will twenty minutes be enough time for j'^ou? 
 
 Mr. Hearst. That will be ample.- 
 
 Mr. Richardson. What bills are these that you speak of? 
 
 Mr. Hearst. Bills introduced by Mr. Esch and Mr. Townsend. 
 
 Mr. Adamson. Have you not seen the bill introduced by Mr. Dave 
 also? 
 
 Mr. Hearst. Yes, sir; I saw something introduced by Mr. Dave 
 
 Mr. Mann. And by Mr. Shackleford and others? 
 
 Mr. Hearst. I made particular reference to the bills of Mr. Tow 
 send and Mr. Esch because they contain manj"- provisions similar 
 those in mj'^ bill, and, as I saj', they contain some provisions that a 
 not in my bill, and my bill contains some provisions that are not 
 theirs, and I do not propose to criticise, but simply to say why I d 
 not include certain provisions and why I did include others which a 
 not in the bills which Mr. Townsend and Mr. Esch have just introduce 
 
PROPOSED AMENDMENT OF INTBESTATB-COMMEECE LAW. 167 
 
 As the time is very limited, I suggest that I take merely the most 
 important provisions. 
 
 Section 1 of Mr. Townsend's bill establishes a court of transporta- 
 tion. I think perhaps the name " court of transportation " is fully as 
 good as the name " court of interstate commerce," which is in my bill. 
 
 My bill provides for three judges at salaries of 110,000 a year' each. 
 Presumably, better judges can be obtained for |10,000 each than can 
 be obtained for $8,000. Anyhow, if they are to be the best grade of 
 judges, they should receive compensation in proportion to their excel- 
 lence. I maintain that it is better to have three first-class judges with 
 first-class salaries than to have five slightly inferior judges at $8,000 
 a year, or seven still slightly inferior judges at 16,000, or nine at 
 $4,000, or a dozen at $1,000 a year. 1 believe in good salaries for 
 good judges. 
 
 Section 2 does not call for special comment. It provides, like my 
 bill, for sessions of court in any part of the coiintry. 
 
 Section 3 confers upon the court jurisdiction over all suits brought 
 to enforce the act, and requires no special comment, embodying as it 
 does the principles of my bill. 
 
 Section 4 merely amplifies section 3 by providing generally that the 
 court shall possess all the powers of a circuit court of the United States. 
 
 Section 5 of Mr. Townsend's bill provides, as does my bill, that the 
 hearing in the transportation court shall be upon the record made 
 below, but it contains a clause permitting evidence which the railroad 
 claims could not have been with due diligence discovered before the 
 trial by the Commission to be offered there. I did not include that in 
 my bill, because it seemed to me that anything of that kind simply 
 left a large loophole, and would result inevitably in the double trials 
 which we are so anxious to avoid and which are such an abuse under 
 the existing system. 
 
 Mr. Adamson. While that may be right, .ought not the new hearing 
 to be had before the Commission and not before the court? Ou^t 
 not the additional testimony to be heard before the Commission? Do 
 you think it is right for the Commission to be reversed on testimony 
 that it never heard and passed upon at all? If there is going to be 
 a rehearing as provided on the showing of due diligence on the part 
 of the railroad, ought not that rehearing to be had before the Com- 
 mission and not before the court that is reviewing the proceedings of 
 the Commission? 
 
 Mr. Hearst. That is, in a way, the point that I was trying to make. 
 But I do not think the case should be remanded to the Commission on 
 that point. The case might properly be remanded if the Commission 
 had refused to accept evidence which the defendant had offered and 
 which ought properly to have been accepted. 
 
 Mr. TowNSEND. Does the bill that you are discussing make pro- 
 vision for that? , , ,x m J J! 
 
 Mr. Hearst. The bill which you introduced, Mr. lownsend, so tar 
 as I am able to understand by a" hasty reading of it, in section 6 pro- 
 vides that the court may examine witnesses and bring before it par- 
 ties from all over the country . This is, of course, only necessary when 
 there is going to be a double trial, and it seems to me that your bill 
 contemplates to that extent the continuation of the double-trial evil. 
 It leaves a loophole for the double trial and for possible delays and the 
 
168 PROPOSED AMENDMENT OF INTEESTATE-COMMBEOE LAW. 
 
 other evils of double trials. 1 do not presume to dictate what y 
 should put in your bill, but I say that I did not introduce it in my 1 
 for the reasons given. 
 
 Furthermore, it should be observed that my bill provides for a 
 contemplates such expeditious action after the decision of the Cooiir 
 sion that there will be practically no opportunity to discover additioi 
 evidence, since a very brief interval will elapse between the trial bef( 
 the Commission and the hearing under appeal. 
 
 Mr. Adamson. You do not hope for the millennial condition of 1 
 law that will cut off all possibilities of litigation ? 
 
 Mr. Hearst. Not unless you pass my bill, and I doubt very mi 
 if you will do that. [Laughter.] 
 
 Section 7 of the Townsend bill contains no noteworthy provisic 
 except that authorizing the transportation court to grant tempore 
 restraining orders at any time previous to the hearing of the appe 
 The opportunities for appeal are more limited under the language 
 my bill, which says the court "can only grant stays in case of obvic 
 and manifest error." The whole object of my bill, as lexplainec 
 yesterday, is to prevent delay and secure effective action in the bri 
 est possible time. 
 
 Section 8 of the Townsend bill provides for the summoning of tal 
 men to act as jurors in the District of Columbia in eases involvi 
 right of trial by ]avj. The cases contemplated are damage suits 1 
 reparation which must be brought before a jury. The present pro 
 dure is that when the Commission awards or recommends reparatic 
 the shipper proceeds before a jury in any circuit or district coi 
 where he resides to sue for damages, and on presenting the order 
 the Commission rests his case, whereupon the burden is thrown uf 
 the railroad of showing that the order of the Commission is unju 
 Under these circumstances it seems to me that the shipper is ve 
 likely to get fair consideration and full justice in each case, and th( 
 is not any complaint about the effectiveness of this procedure, once 1 
 order of reparation has been made. . To transfer all of these jury ca; 
 to the transportation court would greatly burden the court and int 
 fere with its effectiveness in other cases. 
 
 Moreover, if I understand the provision of the bill rightly, this s 
 tion provides for the summoning of talesmen to act as jurors in 1 
 District of Columbia by the marshal here, and consequently all cai 
 of that kind would have to be heard here. And it would be a gn 
 hardship to compel complainants in all these cases to come to the E 
 trict of Columbia for trial instead of being able to go before a jury 
 their own neighborhood. 
 
 Mr. Townsend. I will state to you that, in my opinion, there shoi 
 be an addition there, the same as there is in the last provision of 1 
 bill, that the court may order the marshal of the United States for 1 
 District of Columbia, or for any district where the court is held, 
 summon talesmen, if it makes provision that the chief justice may se 
 two of the justices anywhere in the United States to try a case. 
 
 Mr. Hearst. Yes; with that correction, then, we will pass fr 
 that. 
 
 It still seems to me that this court is likely to have a greatly increai 
 amount of business before it on account of the increased powers gii 
 to the Commission — the increased effectiveness given to the Comn 
 sion — and that a great many cases, probably four or five times as m£ 
 
PROPOSED AMENDMENT OF INTEE8TATE-0OMMEECE LAW. 169 
 
 cases as now come before the Commission will come before the Com- 
 mission when it is believed that some effective aid may be obtained. 
 The proposed court would then be unnecessarily burdened by these 
 reparation cases, which are effectively and adequately dealt with under 
 the present system. 
 
 Mr. TowNSEND. "Was that the experience during the first ten years 
 when this power was exercised by the Commission ? 
 
 Mr. Heaest. The first ten years were very largely employed in 
 deciding what powers the Commission had through cases before the 
 courts. It seems to me that in nearly all those cases which Mr. Spen- 
 cer referred to the other day, cases in which the Commission was 
 reversed in technicalities, that it was not very distinctly known 
 what the powers of the Commission were, and as the cases before the 
 court largely resulted in reversals, shippers must have been doubtful 
 and discouraged and unwilling to bring cases before the Commission. 
 I should think that it would hardly be fair to make a comparison with 
 that period. 
 
 Mr. Adamson. I was going to ask this; if, instead of largely increas- 
 ing the litigation, it is not true that the chief advantage to be hoped 
 from securing a more perfect system is not this, that the carriers, 
 knowing that correction and regulation would certainly follow in case 
 it was necessary, would either adjust their rates more carefully them- 
 selves or satisfy complainants and compromise the matter before going 
 into litigation? 
 
 Mr. Heakst. I think that is certainly to be hoped for. I do not say 
 that it would increase the present amount of litigation, because I doubt 
 if anything could increase the present litigation. Each particular 
 case, like my coal case, which has taken over two years, is involved 
 in an immense amount of litigation, and it is only a typical case. 
 
 Mr. Adamson. That was because of the system applying at that 
 time to that case. If you had had a system from which it would have 
 been possible to prejudge what the result would have been, would not 
 they have compromised that case ? 
 
 Mr. Heaest. I think they might, but if they have extended to them 
 the opportunity to raise disputes on innumerable particulars they will 
 certainly take advantage of it. If you give them opportunities for 
 appeal after appeal they probably will continue to appeal and appeal. 
 I am coming to the question of the granting of appeals and the grant- 
 ing of stays. 
 
 Mr. Adamson-. The law already vests the common-law courts with 
 power to grant an appeal, and it is immaterial whether you fix an 
 appeal, is it not? 
 
 Mr. Heaest. Hardly; because you can fix the appeal, as 1 did, on 
 review to the interstate-commerce court, and not carry it up to the 
 Supreme Court of the United States except in cases where a grave 
 constitutional question is involved. That is one of the chief features 
 
 of my bill. , ^.^ , . , 
 
 Mr. Townsend. Who is to decide what a grave constitutional ques- 
 tion is? „ , 1 • 1 .1 . .• 
 
 Mr. Heaest. The Supreme Court frequently decides that question 
 by a writ of certiorari. I am not a technical lawyer, but I believe 
 
 that is the method. j-j.u4.u- • *.i, 4- 
 
 Mr. Adamson. Does not a court often decide the thing in the out- 
 set, before it goes to the court? 
 
170 PEOPOSED AMENDMENT OK INTEESTATE-COMMEECE LAW. 
 
 Mr. Hearst. Yes, sir; and I provided in my bill that either the int( 
 state-commerce court or the Supreme Court may decide that a ce 
 involves questions that should be reviewed by the Supreme Cou 
 But the very distinct and notable difference is that practically the sai 
 amount of appeals are allowed in Mr. Townsend's bill as are allow 
 now, as you said just a moment ago, if I understood you, while in r 
 bill that is not the case. The object is to secure expedition and eff( 
 tiveness, and the appeal is limited to the one court. 
 
 Mr. Adamson. And the more of that you get the less litigation y 
 have, because the railroads will find it out and fix their own rates. 
 
 Mr. Hearst. That is theory, and it may be correct, Mr. Adamsc 
 but on the other hand, it seems to me, as 1 said, that the railroads a 
 likely to take advantage of every opportunity for delay, and there 
 no reason for providing them with very many opportunities. That 
 my opinion. I am simply explaining why 1 did not put that in my bi 
 
 In my coal case, which I cited the other day, we found that t 
 appeals took a year's time, and then the case was finally decided by t 
 Supreme Court upholding the Commission in every point. One of t 
 objects of my bill was to prevent that long delay and those numero 
 appeals. Naturally, I think my bill is preferable on that point. 
 
 Another thing is, despite the giving of the bond in the appeal to t 
 Supreme Court, a situation must necessarily continue to exist whi 
 will work harm to the consumer — to the common people — say, f 
 instance, as in the coal case. I speak of that, as I am familiar with 
 The rate is $1.65. Suppose the Commission should decide that a ji 
 rate was $1, and suppose that the appeals permissible under this t 
 consume, as they actually did in my coal case, a year, the rate di 
 ing that period would remain at $1.55 and the coal sold in New Yo 
 would be based on the high rate, and the price would necessarily be 
 proportion to the high rate, and during that period, therefore, t 
 consumer would be paying 55 cents more for his coal than he would 
 those appeals were not involved. And you can not recompense t 
 consumer by any bond. You can only make that bond apply to t 
 shipper. 
 
 Mr. Adamson. How could you fix a condition in a bond where a m 
 was a business man whose business was being discriminated again 
 how could you fix a provision in a bond vmich would protect h 
 against the future consequences of that unjust rate? During the pe 
 dency of the litigation his business might be wiped out of exister 
 entirely. 
 
 Mr. Hearst. I did not understand that. 
 
 Mr. Adamson. You say that you can not provide for the consum( 
 but you can for the shipper. Now, the railroad makes a bond, su 
 pose, for some excessive rate that the shipper pays, and that is 
 that you can get them to do ? 
 
 Mr. Hearst. Yes, sir. 
 
 Mr. Adamson. If they were to give a bond covering all his busine 
 the court would say that you can not testify about speculative damag 
 and that would shut him out, and by the time the litigation is ena 
 and the railroad is compelled to pay back the excessive freight, t 
 man's business is wiped out by the discrimination. How would y 
 provide for that? 
 
 Mr. Hearst. I do not provide for any bond at all. 
 
 Mr. Adamson. How can it be done at all ? 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. l7l 
 
 Mr. Heaest. I provide that this interstate commerce court, as I call 
 it-^trans^ortation court, as Mr. Townsend calls it — shall review the 
 finding ot the Commission, and that there shall not be any appeal from 
 it except in case of grave constitutional questions. 
 
 Mr. LovEBiNG. So far as the mere shipper is concerned, the object 
 could be accomplished by impounding the difference, could it not? 
 
 Mr. Hearst. Possibly. But it seems" to me there is no way in which 
 you can recompense the consumer. 
 
 Mr. LovERiNG. No. 1 agree with you there. 
 
 Mr. Adamson. It would protect the carrier to impound the excess, 
 but it would not protect the shipper to impound, because it would ruin 
 his business in the njeanwhile before a decision would be arrived at. 
 
 Mr. Townsend. Now, to get my notion a little clearer before you, 
 as you have been discussing my bill: You say in cases where grave 
 constitutional questions are involved there shall be an appeal, and 
 that, you say, is a matter to be decided by the Supreme Court as to 
 whether an appeal shall lie or not. You do not deny, of course, 
 that that question will be raised by every aggrieved party, or by the 
 railroads, especially if they are aggrieved, and that they will claim 
 that there is a grave constitutional question involved? The bill here 
 provides that the court may decide when an appeal shall be taken. 
 It also provides for this bond, for the reason that I know of no law 
 that could be passed that would prevent the suing out of a writ to 
 stay proceedings of any kind until a review is had if it should appear 
 that there was a serious defect in the law. Would you not want a 
 bond under those circumstances? 
 
 Mr. Hearst. 1 do not see any particular objection to a bond. Your 
 bill seems to me to allow greater latitude for appeal than my own does. 
 If it is the same on that point as my bill I have not any criticism to 
 make, but I believe that if the cases before the Commission under an 
 effective law increase, as I' think they will, and all cases are allowed to 
 be taken up to the Supreme Court, as they will be under your bill, 
 there will not only be great delaj", but the Supreme Court will have to 
 abdicate all of its other functions and become merely a supreme inter- 
 state commerce court. 
 
 The Chairman. The other day certain questions were propounded 
 to you that at the time you were not able to answer in connection with 
 this coal case that you have prosecuted. I would like to ask you now 
 if you could tell the committee the value of the royalty of a ton. of 
 coal, the cost of mining it. You have given us the just rate for trans- 
 porting it. I want to get that information if you have it now. 
 
 Mr. Hearst. I did not look it up, I am sorry to say. I could give 
 the facts you require generally, but I would rather not; I would 
 rather give them definitely and specifically, if you will allow me to 
 do that. 
 
 The Chairman. If you will furnish that in a memorandum I wish 
 you would do so. 
 
 Mr. Hearst. Yes, sir; 1 will do so. There is another bill, which 
 has been introduced by Mr. Esch, and I would like to touch on that 
 in some degree where it differs from my bill, and explain my bill in 
 that connection. I think that it differs in the first para,graph. The 
 Commission has now, under the present act, power to institute pro- 
 ceedings on its own motion, and by the existing act it is given the power 
 to- institute inquiries into the business of common carriers, and the 
 
172 PROPOSED AMENDMENT OF INTERSTATE-COMMEBCE LAW. 
 
 Supreme Court has in several cases announced, as in the coal cas 
 that it was the duty of the Commission to carry on its investigatioi 
 of its own motion, and that it had such powers; and Mr. Esch's Ml 
 which says that the Commission may proceed on complaint, it seen 
 to me, may limit those powers rather than enlarge them; may lim 
 the present powers of the Commission, although undoubtedly M 
 Esch's bill in this paragraph confers other very largely increase 
 powers, namely, the power to fix rates. But 1 think my bill, whit 
 has also given the Commission the power to fix rates, but omits tl 
 words "on complaint," is better to that extent. Certainly' if the Cor 
 mission discovers unjust conditions it should have the power to remed 
 them with or without complaint, provided the facts have been pro] 
 erly developed aad tried out before the Commission. 
 
 Then the question of part water and part rail transportation 
 handled in my bill, as I do not understand it to be handled in M 
 Esch's bill. The existing act covers traffic part rail and part water fc 
 shipments when made over a rail and water route which is all und( 
 one management or under one control. My bill covers part rail ar 
 part water transportation, even when the water line is independent. 
 
 Mr. A DAMSON. What do you understand to be the desirable purpos 
 of seeking to put water transportation under the commerce law? 
 
 Mr. Hearst. To prevent a discrimination that may occur on watt 
 as well as on land. 
 
 Mr. Adamson. Is it for the purpose of forcing them to charg 
 higher rates in order that the railroads may compete with them ? 
 
 Mr. Hearst. I should not express it that way. 
 
 Mr. Adamson. How would you express it'^ Is it not because the 
 give lower rates than railroads can give that this is desired, becaus 
 it is thought desirable to raise them so that the railroad can compel 
 with the water rates ? 
 
 Mr. Hearst. It is because they discriminate. 
 
 Mr. Adamson. Charge lower rates than the railroads? 
 
 Mr. Hearst. May charge lower to one individual, and may m 
 charge lower to another individual. In other words the definition c 
 the word discrimination. 
 
 Mr. Adamson. Is that all the reason that you have heard of c 
 know of? 
 
 Mr. Hearst. That seems to be the chief reason. 
 
 Mr. Adamson. You never heard that it was desirable to prevei 
 them charging such low rates as were unfair to the railroads ? 
 
 Mr. Hearst. I never heard that. 
 
 The Chairman. Was it intended by your bill to include other shij 
 ments ? European shipments, for example ? 
 
 Mr. Hearst. No, sir; it was not. I replied to that question da 
 before yesterday, Mr. Chairman. 
 
 In my bill all the difl'erent kinds of water traffic — river traffic, lat 
 traffic, and coastwise traffic — were put under the provisions of the con 
 merce act if they were connecting lines, no matter whether the wate 
 roads were owned and controlled by the railroad lines or not. Ths 
 is, it applies where a shipment is made from Albany to Chicago, i 
 Omaha, to Ogden, and then to San Francisco, and it also applies if tl 
 shipment is made from Albany through New York to Panama an 
 thence to San Francisco,' and the rail and water lines do not have to 1: 
 under the same control. 
 
PROPOSED AMENDMENT OP INTERSTATE-COMMERCE LAW. 173 
 
 That is, the present interstate law does not include such a shipment 
 unless the lines were under one control, and my bill makes it apply 
 even though they are not under one control. 
 
 Mr. Mann. Would that eliminate the use of tramp steamers ? 
 
 Mr. Hearst. I do not see how it would. I do not see how it would 
 eliminate anything. 
 
 Mr. Mann. If all water transportation, say on the lakes, is put under 
 the intei'state-commerce act, the tramp steamer evidently could not 
 file a schedule of rates \ 
 
 Mr. Hearst. Why could it not? 
 
 Mr. Mann. It would not be a tramp steamer if it could file a schedule 
 of rates. 
 
 Mr. Hearst. Is there any particular advantage in having it known 
 as a tramp steamer \ It could file rates. It has rates unquestionably, 
 and if it has them, it might file them. 
 
 Mr. Adamson. If a line from New York via Colon, Panama, to San 
 Francisco, under the control of the interstate-commerce act, should 
 charge a rate lower than the transcontinental railroad charged, and if 
 the Interstate Commerce Commission had power to raise that rate 
 through Colon, Panama, so as to equalize it by raising it to the rail- 
 road rates, there would be no benefit derived by the construction of 
 the Panama Canal, would there ? 
 
 Mr. Hearst. My idea is not to have the Panama route raised to the 
 same amount as any other route. Obviously a water route could and 
 would charge less than a rail route, but it could not or would not be 
 allowed to discriminate between shippers and give rebates in ray bill. 
 
 Mr. Adamson. We are not confining our remarks to any one bill. 
 I am speaking of all these bills. 
 
 Mr. Hearst. Yes, sir. I would not think that it was necessary to 
 have any rate raised at all. There might be very good reasons why 
 it should be lowered. But my plan is to bring under the interstate-' 
 commerce act these part rail and part water classes in order to prevent 
 discriminations and rebates and other abuses that the present law does 
 not touch if the water lines are independent. 
 
 The Esch bill omits to make any provision to prevent a railroad from 
 posting joint rates that have not been concurred in by all connecting 
 
 carriers. , , . ■, ^ i 
 
 Mr. Adamson. That is, in the original act that this seeks to amend, 
 
 is it not? . . • xu- ^- t 
 
 Mr. Hearst. There are two other provisions in this section ot my 
 bill to which no attention is paid in the Esch bill, but which I deem 
 worthy of mention. One, the requirement that before any change in 
 rate shall be made thirty days' notice shall be given to shippers and 
 the Commission, for the reason that very short notice, such as per- 
 mitted at present, is an obviously easy method of granting favored 
 rates. 
 
 SECTION 6. — joint RATE. 
 
 For instance, the carriers can agree on a joint rate, but wrongfully 
 agree so as to bring about a preference or rebate, as is the favorite 
 method to-day, instanced bv the terminal railroad abuses. 
 
 Mv bill makes it clear that the jurisdiction of the Commission 
 extends to these abuses and authorizes the Commission to issue orders 
 in relation to joint rates and the division thereof. 
 
174 PBOPOSED AMENDMENT OF INTERSTATE-COMMEKCE LAW. 
 THE PSOVISION OF OTHER FACILITIES, PRIVATE CARS, ETC. 
 
 The Esch bill makes no provision that I can understand to apply 1 
 the private-car abuse, and that is one which in the testimony beJo: 
 this committee has been shown to be one of the greatest abuses. 
 
 My bill makes provision for that in two places in section 6, whei 
 the Commission is authorized to issue orders affecting the apportioi 
 ment of cars, the provision of other facilities connected with and inc 
 dental to transportation. Refrigerating obviously comes under tl 
 head of facilities connected with and incidental to transportation. 
 
 Again, in the last paragraph of section 7, my bill provides — 
 
 in case any person, company, or corporation other than a carrier, who may be inte 
 ested in the traffic or transportation involved, shall be included as a party defendai 
 or respondent in addition to the carrier in a proceeding before the Commission, orde 
 may issue against such additional party in the same manner, to the same extent, ar 
 subject to the same provisions as are authorized with respect to carriers. 
 
 In other words, if the abuse under considei'ation were a private-ca 
 abuse and it was proper and necessary to make Armour & Co., fc 
 instance, a party defendant as the owner of the private cars and s 
 one interested in traffic or transportation involved, the orders of th 
 Commission would be as effective against Armour & Co. as thoug 
 Armour & Co. were the railroad corporation. 
 
 CLASSIFICATION. 
 
 There are a number of other things with which I do not want t 
 take up the time of the committee, but which 1 have put in my hi 
 after full consideration, and which are certainly advantages if notabsc 
 lutely essential. 
 
 My bill provides that the Commission may issue orders regardin 
 the classification of freight articles involved in the proceeding, an 
 this is important, for obviously a rate can be raised as effectively b 
 transferring it from one classification to another as in any other mar 
 ner. In fact, in the hay case which has been under consideration fo 
 several years, hay was transferred by the railroads from one classifies 
 tipn to another, therebj^ raising the rate. The Commission endeavore 
 to prevent this. The railroads maintained that the Commission ha 
 no authority, and that case has been under advisement altogethe 
 about three years. 
 
 This clause proposes to give the Commission authority in such cases 
 And furthermore it proposes to give the Commission authority t 
 issue orders affecting through and continuous carriage over conned 
 ing lines of roads, including intersecting switches or connections. 
 
 And it furthermore gives them authority over abuses analagous t 
 the terminal railroad abuses. 
 
 Another important provision in my bill is the one that compels th 
 railroad to furnish cars to a shipper if by any means they can furnis 
 cars, and does not compel him to prove that he is being discriminate 
 against and to show that cars are being furnished to somebody else t 
 his disadvantage. For instance, in my coal case, it developed that th 
 Reading Railroad for certain purposes withdrew all tariffs on coal t 
 New York tide water, and that when these tariffs had been withdraw 
 no shipper was allowed to have cars to ship coal from the mines t 
 that tide-water point. 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMEKCE LAW. 175 
 
 The object of this was of course to keep the price of coal from break- 
 ing in New York. No matter what the hardship might be to the ship- 
 per by having his revenue cut off for weeks at a time, the railroad 
 persistently refused to handle any traffic to that point. In other words, 
 it abdicated its function of common carrier. My bill cures that evil, 
 enables the shipper to get an order for cars and have his product trans- 
 ported. And on the application the shipper is not required to show 
 that any other shipper is being unduly preferred. The mere failure 
 to forward his freight is enough. 
 
 Finally the Esch bill refers to a transportation court, although there 
 is now no transportation court created by law. And unless the Town- 
 send bill, which provides for a transportation court, should pass, the 
 Esch bill would have no meaning. 
 
 The Esch bill and the Townsend bill are largely my bill divided 
 between them, with a few things that I consider good omitted and a 
 few things that I consider bad added. 
 
 The Chairman. You have consumed twenty-five minutes, Mr. 
 Hearst. 
 
 Mr. Hearst. Very well, Mr. Chairman. I will file what notes I 
 have left with the committee instead of continuing the argument. 
 
 My notes relate to the Quarles-Cooper bill and to decisions by the 
 courts indicating that Congress has power to delegate the power to 
 fix rates to a commission, but may not impose the power of fixing 
 rates upon a court. 
 
 POINTS AGAINST QUARLES-COOPER BILL. 
 
 I. Permits taking additional testimony in Federal courts on review. 
 
 (1) This encourages railroads in practice of not disclosing their side 
 of case before the Commission, thus multiplying chances of erroneous 
 finding by Commission, with incidental and protracted delay. 
 
 (2) This means a double trial, one of the evils of the existing law, 
 thus imposing great expense on complainant and a useless burden upon 
 the courts, which are already far behind their calendars. 
 
 II. Permits railroads to select the judge to retry case from any cir- 
 cuit through which roads run. 
 
 (1) This renders it quite feasible for the railroad to insure trial of 
 every case before friendly judge, who, if not absolutely controlled, is 
 amenable to influence of political and local considerations. 
 
 (2) This leads to conflicting and erroneous decisions because of the 
 large number of judges from whom the selections can be made, most 
 of whom have had no training or experience in this special branch of 
 
 III. Makes it almost a matter of course that all orders would be 
 stayed for a year or more. , . -, , ,, ■. ^ u 
 
 (1) Because with the power of selectmg the ]udge and the wide held 
 to choose from, it would be obviously easy for a railroad to find a judge 
 who would grant a stay. Witness the practice in New York State of 
 procuring from up-State judges "certificates of reasonable doubt" in 
 criminal cases. ^ ^ ■ 
 
 IV. Permits an appeal to the Supreme Court in every case. 
 
 (1) The Supreme Court is already overburdened, and as these 
 appeals are made preferred cases, the progress of other cases, which 
 now require two years or more to be reached, would be greatly 
 impeded. 
 
176 PROPOSED AMENDMEKT OP INTERSTATE-COMMEBCE LAW. 
 
 (2) Adds enormously to the expense and difficulty of successful 
 prosecutiqn, and thus discourages resort to the law. 
 
 V. Fails to provide eflfective means of compelling before Commis- 
 sion production of papers and answering of questions. 
 
 (1) This is one oi^ the worst evils of the existing law, under which 
 a case can be halted for a year while the relevancy of a paper or of a 
 question is being litigated all the way up to the Supreme Court, as in 
 the coal trust case. 
 
 This bill does not touch qiatter of terminal railroads or private car 
 abuses at all, and these are among the greatest and most outrageous 
 abuses existing. 
 
 MERITS OF HEARST BILL. 
 
 I. Avoids all the enumerated objections to Quarles-Cooper bill. 
 
 II. Provides a trained and experienced court for this special branch 
 of law. 
 
 III. Judges less liable to be controlled by railroads, for, as every 
 case would come up before them and they would be conspicuously 
 before the public, a positive tendency to favor the railroads would be 
 patent and therefore unsafe and improbable. 
 
 CONSTITUTIONAL QUESTION. 
 COMMISSION CAN FIX BATE. 
 
 Section 1. Congress has power to regulate interstate commerce. 
 (Constitution, section 8.) 
 
 Power to regulate includes power to fix a rate. 
 
 Maximum rate case (vol. 167, U. S. — opinions of Supreme Court), 
 Judge Brewer: "Congress might itself prescribe rates." 
 
 Reagan case (154 U. S.): 
 
 The power of fixing rates is not a matter within the absolute discretion of the car- 
 riers, but is subject to legislative control. 
 
 "The legislature has power to fix rates." (143 U. S.) 
 
 THIS power can be DELEGATED. 
 
 Maximum rate case (167 U. S.): 
 
 Congress might itself prescribe the rates, or it might commit to some subordinate 
 tribunal this duty. 
 
 lieagan case (154 U. S.): 
 
 There can be no doubt of the general power of a State to regulate the fares and 
 freights which may be charged or received by railroads or other carriers, and that 
 this regulation can be carried on by means of a commission. 
 
 Similarly decided in State railroad commission cases. (116 U. S.) 
 In maximum rate case, where the court held that under the existing 
 law the Commission did not have power to fix a rate, its decision was 
 based solely on the fact that the express words giving power were not 
 contained in the act and that it would not imply sucn broad powers. 
 No suggestion was made that this power could not be delegated. On 
 the other hand, the court quoted the statutes from a dozen or more 
 States where the power to fix rates was given to commissions, such as 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 177 
 
 Alabama, California, Florida, Georgia, Illinois, Iowa, Minnesota, Mis- 
 sissippi, New Hampshire, South Carolina, Kansas, and New York. 
 
 [New York statute.] 
 
 If in the judgment of State railroad commissioners it appears necessary that addi- 
 tional terminal facilities shall be afforded, or that any change of rates of fare for 
 transporting freight or passengers or in the method of operating a road or conduct- 
 ing its business is reasonable or expedient in order to promote the security, conven- 
 ience, and accommodation of the public, the board shall give notice and informa- 
 tion in writing to the corporation of the improvements and changes which they 
 deem proper. The supreme court, at special term, shall have the power in its dis- 
 cretion in all cases of decision and recommendations by the board which are just 
 and reasonable to compel compliance therewith by mandamus. 
 
 NOT CONFINED TO COMPLAINT. 
 
 Reagan case (16i U. S.), Judge Brewer: 
 
 It is not to be supposed that a commission appointed under the authority of any 
 State will ever engage in a deliberate attempt to cripple or destroy institutions of 
 such great value to the community as the railroads, but will always act with the 
 sincere purpose of doing justice to the owners of railroad property as well as to other 
 individuals. 
 
 Coal trust case (194 U. S.): 
 
 Powers conferred upon the commission, under section 12 of the act, to inquire 
 into the management of the business of all common carriers, subject to the provisions 
 of the act, and keep itself informed as to the manner and method in which the same 
 as conducted. 
 
 Maximum rate case (167 U. S.): 
 
 The Commission is charged with the general duty of inquiring as to the manage- 
 ment of the business of railroad companies and to keep itself informed as to the man- 
 ner in which the same is conducted. 
 
 CONSTITUTIONAL QUESTION. 
 
 COURT CAN NOT FIX RATE. 
 
 Reagan i\ Farmers' Loan and Trust Company (1.51 U. S.): 
 
 The courts are not authorized to revise or change the body of rates imposed by a 
 legislature or a commission; they do not determine whether one rate is preferable to 
 another or what under all circumstances would be fair and reasonable as between 
 the carriers and the shippers; they do not engage in any mere administrative work. 
 
 This rule specifically restated in St. Louis and Santa Fe Railroad 
 Company ^. Gill (156 U. S., 662). \. ,,^, ,. a 
 
 San Diego Land and Town Company ,\ National City (174 L. &., 
 739): 
 
 But it should also be remembered that the judiciary ought not to interfere with 
 the collection of rates estabhshed under legislative sanction, unless they are so 
 plainly and palpably unreasonable as to make their enforcement equivalent to the 
 taking of property for public use without just compensation. 
 
 Trammel v. Dinsmore (102 Fed. Rep.), 800 circuit court of appeals): 
 
 The formation of a tariff of charges for the transportation by a common carrier of 
 Bersons or property is a legislative or administrative rather than a judicial function. 
 The courts are not authorized to revise or change the body of rates miposed by the 
 commission. 
 
 Western Union v. Myatt (98 Fed." Rep., 335): 
 
 Concisely stated, to prescribe a tariff of rates and charges is a legislative function; 
 to determine whether existing or prescribed rates are unreasonable is a judicial func- 
 
 T c I.— 05 12 
 
178 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 tion. That this is the settled doctrine of this country is no longer open to question. 
 It is firmly fixed in the body ot our jurisprudence. It follows, therefore, as a corol- 
 lary of this doctrine that courts have no power to prescribe a schedule or rates and 
 charges for persons engaged in a public or quasi public service, because that is a legis- 
 lative prerogative. The legislative prerogative is the power to make the law to pre- 
 scribe 'the regulation or rule of action; the jurisdiction of the courts is to construe and 
 apply the la\\' or regulation after it is made. The two functions are essentially and 
 vitally different. 
 
 The fundamental reason for these decisions is that all power to regu- 
 late commerce, from which flows the right to tix rates, is derived from 
 the Constitution. Where the Constitution confers no power, no power 
 lies. The Constitution has expressly given this power to Congress and 
 has refrained from gi\'ing-it to the judiciarj^ Fundamentally therefore 
 and wholly apart from the constitutional separation of the Executive, 
 the legislature, and the judiciary there is no possible basis for assert- 
 ing that the courts might fix a rate. 
 
 If anything more is needed, see Hayburn's case (2 Dallas, 409), 
 United States v. Ferreira (54 Q. S., 40), and Interstate Commerce 
 Commission v. Brimson (154 IT. S.). 
 
 All to the effect that it is not in the power of Congress to assign to 
 the courts of the United States any duties except sucla as are properly 
 judicial and to be performed in a judicial manner. 
 
 THE COST OF MINING COAL. 
 
 Replying to the questions of the chairman concerning the cost of 
 mining and preparing anthi-acite coal, 1 find on referring to the testi- 
 mony that the average cost per ton to the Philadelphia and Reading 
 Ooal and Iron Company . the largest company in the trust, for six months 
 ending April 30, 1904, was f2.31 a ton, and for the six months ending 
 April 30, 1900,. $1.79 a ton, showing an increase of 52 cents a ton 
 These figures cover all sizes. I might state parenthetically that the 
 average increase in the selling price of the domestic sizes during the 
 same period is $1.14 a ton. This period of increased cost includes, 
 both advances in wages after the two strikes. It is clear that the coal 
 companies ha\e not only made the public bear the entire burden of the 
 strike awards, but have actually turned the strikes into a source of 
 profit. 
 
 The following figures for the Reading Company, just mentioned, for 
 the month of April, 1904, during which month the cost of mining and 
 preparing coal was |2.06 a ton is fairly illustrative of the elements 
 that make up the cost. 
 
 Mining, $1.43; repairs, |0.07; deadwork, $0.23; colliery improve- 
 ments, $0.17; royalty, $0.06; department expenses, $0.07; proportion 
 of general expenses, $0.02. The cost to the Delaware and Hudson 
 Company for mining coal during the month of January, 1904, was 
 $2.14 a ton, including a sinking fund of 4 cents a ton and general 
 office expenses of 6 cents a ton, and the various other elements men- 
 tioned in the Reading statement. 
 
 These figures may be taken as fairly typical of the othei- companies, 
 including the Lehigh Valley Coal Company, where the cost was $2.25 
 a ton, and it was claimed by the company that the profit for the year 
 ending June 30, 1904, on a business of 6,000,000 tons was" but $0,079 
 a ton. They claimed to account for the discrepancy between the sell- 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMEKCE LAW. 179 
 
 ing price of $5 and the cost of |2.23^ plus the freight rate of 11.55, by 
 alleging that on the small sizes, such as pea coal and the like, which 
 constitute about 40 per cent of the total output, there is a loss after 
 paying the freight rates, because the selling price of the smaller sizes 
 averages under $3 a ton. 
 
 These figures sufficiently show the intimate relation between the 
 freight rate and the selling price of coal. They demonstrate with 
 equal force that coal freight rates are so exhorbitant that it is with the 
 greatest difficulty that the mining company is able to keep its head 
 above water, and its only chance of making a reasonable profit, after 
 paying excessive freight, is by increasing the selling price to the con- 
 sumer. This is exactly what has been done. The freight rates are the 
 key to the situation. It is at these unreasonable freight rates main- 
 tained by a_ combination of railroads in control of both the means of 
 transportation (and most of the production) that I am striking in my 
 pending suit before the Interstate Commerce Commission. 
 
 STATEMENT OF WALKER D. HIKES, ESQ. 
 
 Mr. HixES. Mr. Chairman and gentlemen of the committee, I 
 appear here in behalf of the Atlantic Coast Line and the Louisville 
 and Nashville Eailroad. Mr. Erwin, president of the Coast Line, was 
 here yesterday and expected to make a preliminary statement on 
 behalf of that company, but he was called to New York by important 
 engagements, and as we had discussed the matter, and our views coin- 
 cided, he left the matter to me entirely. 
 
 It would perhaps be well for me at the outset to state in a general 
 waj' what opportunity I have had to form conclusions on this subject. 
 As early as 1895, while I was in th« law department of the Louisville 
 and Nashville Railroad Company, I began a close studj' of the inter- 
 state-commerce act on account of traffic questions then arising in 
 Kentucky. In 1897 I enlarged that study on account of the efi'orts 
 which began then to secure the rate-making power for the Commis- 
 sion. Until 1901 I remained in the law department of the Louisville 
 and Nashville Railway Compan}^ and continued to make a special 
 study of these questions. I was then made first vice-president of the 
 company, in charge of traffic matters as well as law matte-rs, and 
 until last July, when I resigned from the company to enter the gen- 
 eral practice" of the law, I continued to give the question special 
 attention. 
 
 I may say on behalf of the two railroad companies for which I 
 appear, andl think on behalf of railroads generally, that there is no 
 effort to deny the propriety or necessitj' of effective regulation of the 
 railroads. 'l think if the day ever existed, and probably it did, when 
 railroad managers denied the right or propriety of it, that day has 
 passed. The public certainly expect effective regalation; and I 
 realize and I believe that the railroads generally realize, that effective 
 regulation must be had. The question is, What is the best effective 
 regulation? What are. the evils that call for regulation? What reg- 
 ulations will correct those evils? And what are the possible evils 
 that may flow from any character of regulation that may be adopted? 
 
 As this committee is considering various bills which nearly all 
 
180 PROPOSED AMENDMENT OF JNTEESTATE-COMMEEOE LAW. 
 
 involve in one way or another the rate-making power, and as that 
 seems to be the vital thing now under consideration, it seems proper at 
 the outset to consider briefly what is the necessary scope of the rate- 
 making power, if conferred upon any tribunal. I am glad to say that 
 the fallacy which has misled a great many people, that you can give a 
 rate-making power which is not a general rate-making power, seems 
 to have been pretty effectively exploded. 
 
 We still hear some talk about not making rates in the first instance, 
 not making original rates, making rates only on complaint and notice, 
 and after investigation, but I think it is generally recognized that if 
 you put all those incidents in it can not change the substantial and the 
 general character of the power. Suppose, to illustrate it briefly, that 
 Mr. Jones is appointed traffic manager of a railroad company. He 
 can not make rates in the first instance, because they are already made. 
 He does not undertake to make rates generally; he does not undertake 
 to make rates except when a case arises for considering the propriety 
 or the applicability of an existing rate to a new situation, or on account 
 of some trouble that has arisen as to an existing situation. Presuma- 
 bly he does not make a rate without finding out what he is doing. 
 
 You give the power to any tribunal to make a rate on notice and after 
 investigation, and you give that tribunal the power for all practical pur- 
 poses to do exactly what the traffic manager of that railroad company 
 would do. No matter how you restrict it, if you say that it shall make only 
 one rate in a proceeding, or that it shall make a rate only on complaint, 
 that is simply a dift'erence in incidents; it is not a difference in sub- 
 stance, and a tribunal vested with the power in the most restricted 
 language which could be devised would still have the power, one at a 
 time, it may be, but still the power, to change every i-ate it thought 
 ought to be changed. If it could not originate a complaint itself, you 
 can not find a rate anywhere that Somebody is not ready to complain 
 against, if he thinks that he is to be benefited by it, so that complaints 
 would come, and fullest opportunity would be given to change every 
 rate which that tribunal wanted to change. And, no matter now you 
 frame the language that confers the power, the fact still remains that 
 a tribunal with the rate-making power is the traffic manager of every 
 railroad company in the United States to whatever extent it chooses to 
 exercise that power. 
 
 Now,' I think the situation ought to be, and I think, now is being, 
 faced with a full appreciation that there is no sticking your head in 
 the sand on that proposition; that if you give the rate-making power, 
 you give the rate-making power, and that there is not a little rate- 
 making power and a big rate-making power, but there is sinjply one, 
 and you give it or withhold it. 
 
 Now, let us consider what is meant and what will be some of the 
 important effects of giving that power to any governmental tribunal. 
 In the first place — and this is the point that I think has not been gener- 
 ally touched upon or appreciated — whenever any tribunal undertakes 
 to make a railroad rate it necessarily becomes the perpetual adminis- 
 trator of that rate. It is not like a case in court. When a court 
 decides a case, that case is done. The court goes on and decides some 
 other case. But when a railroad commission or any tribunal makes a 
 rate, which is necessarily a rate for the future, its work is not done; 
 its work has just begun. 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 181 
 
 The rate-making business is never finished. You make a rate, but 
 that does not finish that rate. It is always a question with you as to 
 the application of that rate to new conditions or to old conditions which 
 have been overlooked, or the adjustment of it to existing rates, to which 
 it must bear a relation. There is scarcely an occasion when the trafiic 
 officers of railroads undertake to prescribe a new adjustment, or to 
 readjust an old adjustment of rates, but that almost as soon as it is 
 done something does not crop out that has not been thought of that 
 needs adjustment to additional conditions. The most experienced 
 traffic man, one who has confined his observations to traffic in a partic- 
 ular section and is as near a specialist on the traffic of that section as 
 anybody can be, can not possibly make a rate adjustment afi'ecting 
 several places but what he will find as soon as he does it that some- 
 thing else has to be done, and something may have to be done next 
 month and something else next year, in respect to that adjustment. 
 You take a tribunal that attempts to do that for the whole United 
 States, and which can not have as to any special section the special 
 knowledge that the traffic officers in that section have with respect to 
 it, and that necessity of changing what you have done to meet things 
 you have overlooked becomes more pi'essing and more general than it 
 can possibly be under present conditions. 
 
 Moreover, there is such an interdependence of rates that if one is 
 fixed something has to be done for another. For a rate that is fixed 
 for one point you will have perhaps twenty points that will straight- 
 waj' find they have been affected by that reduction. As I said to 
 begin with on this point, when the Commission fixes a rate it simply 
 begins its work as to that special rate. When it makes a rate it does 
 not get a rate off its hands, but it gets one on its hands. When it 
 makes a number of rates it does not get that much work behind it, but 
 that much more work ahead of it, because it is bound to administer 
 those rates and change them from time to time. This will be par- 
 ticularly true with respect to the adjustment of rates between localities, 
 which, as is apparent from the hearings here, is the principal sort of 
 work that a rate- making tribunal would undertake. You prescribe an 
 adjustment between localities, and, as I say, other localities straightway 
 crop up that had not been thought of before, and it has to be adjusted 
 to them. Perhaps next year some one commodity will be affected by 
 new conditions — a new place of production, or the discovery of a new 
 source of supply, or something of that sort — and that adjustment, while 
 proper generally, may have to be changed with respect to that one 
 commodity. 
 
 Mr. Mann. Perhaps you can give me a little light on one question. 
 Last year the Interstate Commerce Commission reported that over 
 160,000 tariff' rates or tariff schedules were filed with the Commission. 
 Do you know whether each one of those contained a change in some 
 rate 'i 
 
 Mr. HiNES. Not necessarily; but in all probability it involved some 
 change in some rate. 
 
 Mr. Mann. Is there any occasion for filing new tariff schedules 
 unless there are changes? 
 
 Mr. HiNES. Rarely, unless they want to put a tariff and all its sup- 
 plements together and reprint it. Generally it involves some change 
 in some rate; and I was just going on to say that all these traffic meet- 
 
182 PROPOSED AMENDMENT OF INTEESTATE-COMMEKCE LAW. 
 
 ings that are constantly being held, and these classification meetings 
 that are constantly being held all over the country, are for the purpose 
 of considering new conditions or conditions that had been overlooked 
 at the time the rate adjustment had been fixed. Just to the extent 
 that a rate-making tribunal acts on this matter, it draws to itself the 
 administration and the decision of all those questions. So that the 
 difiiculties of administering this matter would increase in a most 
 remarkable progression. Every time an adjustment is made, that 
 brings so much more work to the Commission. When two adjustments 
 are made it has got to manage both of them, in addition to considering 
 all new cases. 
 
 In view of the extent of this country, and the complication of com- 
 mercial conditions which affect railroad rates, I do not believe it is 
 possible to exaggerate the conditions that would exist after a few 
 years when the Commission had undertaken, as it undoubtedly would 
 undertake, to prescribe various important rate adjustments on differ- 
 ent commodities. There would be demands, ahnost day bj'^ day, for 
 some change or some modification of some adjustment. The Commis- 
 sion, with its various duties, now finds it diificult to handle these 
 matters with expedition. How much more difficult is it going to be 
 when it is the actual and perpetual administrator of every rate that is 
 made, and when the railroads can not meet new conditions as they arise, 
 but must ask the Commission to meet them for them? 
 
 One of the glories of the commerce of this countrj^, and one of the 
 o-reatest advantages, the secret of the great and almost universal 
 development of commercial and industrial enterprise, has been the 
 flexibility and facility with which railroad men have met new condi- 
 tions and have reached out after new markets, and have striven to help 
 the localities on their lines to extend their trade. Rapidity is the secret 
 of success in this direction, and you put a damper on all that when 
 you say, "You must get the Commission to fix these changes;" and 
 you will find that the new commerce will disappear and the people will 
 forget all about it before you get the new rate fixed. This is a situa- 
 tion that has not been sufficiently dwelt upon, and I think that phase 
 of the matter is one of such serious importance that it can not be dwelt 
 upon too much. Appreciating as I nave from my experience and 
 from my connection with the railroads how these things take the time, 
 of the officers of the railroads in a single section, I believe J am per^ 
 fectly correct in saying that one can not imagine the extent to which 
 this would in a few years affect the commerce of the whole country, 
 when these rates are made by this Commission. 1 do not mean that it 
 should make them all at once, but when one is made 
 
 Mr. Stevens. Do you think those difficulties would apply to 
 sparsely settled territory in new regions as well as to thickly settled 
 territory ? 
 
 Mr. HiNES. I think they would be especially applicable there, 
 because there is more new development there. Of course in old terri- 
 tory there are more different interests than in a new territory. These 
 conditions perhaps offset each other. In a new territory you are mak- 
 ing new adjustments to meet new conditions. In the old territory 
 you are making new adjustments to meet new conflicts that are aris- 
 ing under old conditions. But the work is a continuing work, and is 
 never finished. 
 
PROPOSEI) AMENDMENT OF INTERSTATE-COMMERCE LAW 183 
 
 The Chairman. The hour of our adjournment has arrived Will it 
 suit you to go on in the morning, Mr. Hines ? 
 Mr. Hines. Yes, sir. 
 
 Thereupon, at 12 o'clock, the committee adjourned until to morrow, 
 Thursday, January 19, 1905, at 10.30 o'clock a. m. 
 
 Thursday, Januanj 19^ 1905. 
 The committee met at 10.30 o'clock a. m., Hon. William P. Hepburn 
 in the chair. 
 
 The Chairman. Mr. Hines, you will proceed. 
 
 STATEMENT OF MR. WALKER B. HINES— Continued. 
 
 Mr. Hines. Yesterday 1 endeavored to point out to the committee a 
 practical difficulty in the way of administering the rate-making power 
 by any national tribunal, consisting in the fact that that tribunal would 
 have to administer perpetually every rate or rate adjustment which it 
 undertook to prescribe; that it was the experience of railroad people 
 that no rate adjustment could be devised which did not when put in 
 operation develop difficulties which had to be met, and that in the 
 nature of things a railroad rate is a varying proposition and must be 
 dealt with constantly in the light of existing conditions. 
 
 So that the more rates and rate adjustments the Commission under- 
 took to make the more work it would be piling up for itself, in addi- 
 tion to the new work that would be coming on, and that considering 
 the magnitude of the interstate commerce of this country and the 
 difficulties the railroads now find in dealing with these questions it 
 would in a short time be simply appalling — the amount of work with 
 which the Commission would be confronted in administering the rates 
 and rate adjustments already made. 
 
 Now, 1 wish to go on to one of the important economic aspects of the 
 question. It is admitted on all hands that one of the important pur- 
 poses of the proposed rate-making power is to give the Commission 
 the right to regulate the differentials between different localities that 
 compete and different communities that compete; that is, the prescrib- 
 ing of terms on which that competition shall be conducted. It has 
 been thoroughly impressed, 1 think, on the gentlemen of this commit- 
 tee, as well as all others who have carefully studied the subject, that that 
 competition between localities, between markets, between commodi- 
 ties, is the most vital and beneficial competition that can be found in 
 this country or any country, and if it continues unabated, there is a 
 tremendous motive on the part of every railroad of the country always 
 to increase the volume of its traffic, for that is the only way it can be 
 sure of increasing its return or even retaining the average returns it 
 has received in the past. So we find that railroads all along have 
 striven, and are now striving, constantly to find new markets for the 
 products on their lines; to find new markets for the trade centers on 
 their lines, and to prevent any other trade centers getting ahead of 
 those on their lines. This is the real competition that has caused the 
 
^84 PROPOSED AMENDMENT OP INTEBSTATE-OOMMEKOE LAW. 
 
 pi-ogressi\ e dct rease in rates in this country, and it is a competition 
 that keeps up e\-er3- da}' in the year. 
 
 Mr. Staples ^ery frankly said to the committee that his idea is that 
 it is necessary for some Federal tribunal to decide these questions, and 
 instead of allowing, for example, the railroads to the Gulf and to the 
 Atlantic seaboard, respectively, from the grain sections of the West to 
 strive for a di\"ision of the traffic and each one try to get as much grain 
 traffic as it can for export, that he believes the public interest would 
 be subserved by allowing some Federal tribunal >to consider that ques- 
 tion and to determine what the adjustments of rates should be, and 
 consequehth' what traffic should go by one route and what ti'affic should 
 go by another route. 
 
 It seems to me that there is a fundamental error in this proposition. 
 It seems out of the question in a country that has developed as ours 
 has developed, and is continuing to develop as ours is developing, to 
 attempt to give any tribunal established by the Government the power 
 to apportion the commerce of the country and say that this result of 
 long rivalry between competing localities and the railroads that serve 
 them is unwise, and that town A should have a little more favorable 
 adjustment so it can get more of the traffic. Of course every time the 
 tribunal decides a question of that kind, and decides in favor of the 
 commerce of one locality, it is deciding against the commerce of another 
 locality. It is not at all a question of deciding as against the railroads 
 on the one hand and the public on the other, but it is a question of 
 deciding between one portion of the public as against another portion 
 of the public. And it seems to me simplj^ pieposterous to imagine 
 that that would be advisable, or that there can be any necessity for such 
 a radical departui'e from everything that we have regarded as safe gov- 
 ernmental principles in this country. 
 
 Mr. TowNsENij. May I ask you a question ''. 
 
 Mr. HiNEs. Certainly. 
 
 Mr. TowNSEND. Is it not a fact that the question of the port difl'er- 
 ential, so called, relating to the ports of Baltimore, Philadelphia, New 
 York, and Boston, for instance, has been a source of serigus trouble 
 with the railroads for many years? 
 
 Mr. Hikes. Yes, sir. 
 
 Mr. TowNSEND. And is it not a fact that they finall}^ submitted vol- 
 untarilj' to the Interstate Commerce Commission the question to deter^ 
 mine for them what it should be and agreed to abide bj^ their decision? 
 
 Mr. HiNEs. My impression is that that is correct. 
 
 Mr. Bono. If you will pardon me — because that is in mj^ territory — 
 the cities themselves asked the Interstate Commerce Commission 
 
 Mr. TowN'sEND. Did not the railroads agree to it? 
 
 Mr. Bond. The railroads said they would be very glad to have the 
 Commission take it up. 
 
 Mr. TowNSEND. And is it not true also that the Cotton Belt Rail- 
 I'oad and the tity of Memphis had the same difficulty and that that 
 matter is now pending, by consent of the railroad and the other par- 
 ties interested, before the Interstate Commerce Commission to 
 determine. 
 
 Mr. HiNEs. I think that is correct also. But I would suggest to the 
 ommittee in that connection that there is a ^'ital distinction between 
 
 submission, by an agreement not merely of the railroads inter- 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 185 
 
 ested but of the communities interested, to a particular tribunal that 
 suits them and that they are willing to submit it to, and the Govern- 
 ment saying that every such question may be submitted to a tribu- 
 nal established by the Government against'the consent not only of the 
 railroads but of the interests involved. Arbitration is one thing and 
 compulsory arbitration is entirely another thing, and it does not follow 
 because some people submit some things to arbitration that all the com- 
 merce of the country shall be submitted to the compulsory arbitration 
 of any governmental tribunal. 
 
 The point was raised here — and I think it was made clear to the com- 
 mittee — that anj' plan of apportioning commerce through the action of 
 the Commission necessarily involves the plan of prescribing rates, and 
 any way you look at it, if the Commission determines this question it 
 will say, in effect, to some railroad or some community "You must 
 quit getting as much of this commerce as you are now getting because 
 somebody else ought to have it." That will be a decision in favor of 
 one part of the public against another part of the public, and unless 
 conditions grow very much worse even than they ever have been it 
 .seems that individual initiative should be left to work out its own 
 solution in commercial matters. 
 
 Of course when there is a controversy between a shipper on the one- 
 hand and the railroad on the other. I recognize that it is finally estab 
 lished in our theory of government that the parties are not on equal 
 terms and the I'ailroad must be regulated; but when it is a conflict 
 between two sections of the public it is equally a theoi-y of our Gov- 
 ernment that those two sections of the public shall fight it out and settle 
 it for themselves, that this is not a paternal government, that this is 
 not a government that dispenses prosperity to one or denies it to 
 another or' tells how prosperous one shall be or how much prosperity- 
 another shall give up; and as soon as you give the government the 
 power to prescribe the adjustment of rates between two commianities 
 you do create that dispensing power and depart fundamentally from 
 the theories of our Government. 
 
 As I said yesterday, one of the difSculties with the commerce of 
 this countrj^ has been that there has been more independence and 
 going ahead and developing every part of the country than could be 
 found anywhere else in the world. That initiative has been made pos- 
 sible by the fact that a railroad, when it has found that traffic could 
 be created or extended to other points, has gone ahead and made an 
 adjustment to help out the communities on its line. '"You can not 
 have your cake and eat it too," and if j'ou say the Interstate Commerce 
 Commission shall control this initiative you necessarily take it awaj- 
 from the railroads and you discourage the railroads from attempting 
 to reach out and get new traffic, because they will realize what they 
 do in that particular instance will be applied as a precedent in some 
 other case, and that instead of i^imply developing traffic in that par- 
 ticular case they will simph' be piling up precedents that will serve to 
 disturb some other relation and biing the matter before the Commis- 
 sion and have its dispensing power extended still further. 
 
 Considerable reference has been made in the last day or two to the 
 long and short haul clause. I may properly state briefly the exact 
 efl'ect of the present law. The courts have held that where the condi- 
 tions of competition are substantially dissimilar at the longer distance 
 
186 PROPOSED AMENDMENT OF INTEESTATE-COMMEECE LAW. 
 
 point and the shorter distance point it is no violation of the long and 
 short haul law for the railroad company to recognize those conditions; 
 but the rate to the longer distance point must be no lower than is 
 necessary to meet the competition, and the rate to the shorter distance 
 point must be reasonable. And the railroad company is not the final 
 arbiter of whether these conditions are similar or dissimilar. The 
 Commission can determine it in the first place. Its finding has prima 
 facie force, and then it may go to the courts to say whether the con- 
 ditions are similar or not. 
 
 Mr. Burr, of Florida, cited the case of less charges on freight to 
 Jacksonville, say from the Ohio River, than to Tallahassee. It is 
 obvious that the conditions of Tallahassee and Jacksonville are dissim- 
 ilar, Jacksonville is on the Atlantic Ocean and has water transporta- 
 tion, and Tallahassee has not. Therefore JacTisonville always has had 
 a substantial advantage, and always will have, in competitive condi- 
 tions over Tallahassee, which is an interior point. If the rate charged 
 to Tallahassee from the Ohio Kiver is unreasonably high, there is 
 ample provision for correcting that condition under the law to-day; 
 and if the railroads voluntarily give a lower rate to Jacksonville than 
 the conditions justify, that can be stopped under the law to-day. 
 
 Mr. TowNSEND. Who is going to determine under the law to-day 
 what the conditions justify? 
 
 • Mr. HiNES. The Commission can. They did it in the Social Circle 
 case, and the Supreme Court affirmed its findings. That is one of its 
 prime duties — to determine those things and enforce their findings. 
 
 Mr. Stevens. As the law stands to-day is it left to the railroads to 
 determine those conditions primarily ? 
 
 Mr. HiXES. They are bound to determine it primarily, and will con- 
 tinue to do so until the fixing of rates is left to some other tribunal. 
 
 The idea seems to be on the part of Mr. Staples and Mr. Burr that 
 there should be an ironclad long and short haul clause, with the idea 
 that the Commission could suspend it. That is what the Interstate 
 Commerce Commission considered at the outset of its career, and in an 
 elaborate opinion of Judge Cooler, in which I think the entire Com- 
 mission concurred, the Commission announced that the adjustment of 
 conditions between localities which would be thrown upon the Com- 
 mission by that effort to say when the long and short haul clause should 
 be suspended would be an enormous power in a single State and would 
 be absolutely superhuman in the United States as a whole. And it is 
 this power that the Commission condemned in that vigorous language 
 which these gentlemen now urge be conferred upon that Commission. 
 There has certainly been no change in conditions which would make 
 that wise now when it was so unwise seventeen or eighteen years ago. 
 
 On the contrary, everything has tended toward an equalization, an 
 improvement of these conditions. They have not been wiped out, 
 because you can not legislate commercial conditions out of existence, 
 but there has been a constant tendency to improve in that direction. 
 The Commission has passed on numerous cases, and has decided that 
 those conditions were not substantially dissimilar, and the railroads have 
 complied with the orders of the Commis.sion and put them into effect. 
 
 Mr. Stevens. Supposing that ruling were put into effect, what would 
 be the condition and result of such a law in moving corn, for example, 
 or grain from points like -western Iowa and Nebraska and South Dakota 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 187 
 
 Mr. HiNES. I would not undertake to make a positive statement 
 about that territorj;-, because I am not familiar with the conditions. 
 
 Mr. Stevens. I am speakingf of the general effect. 
 
 Mr. HiNES. But 1 will say that in the Southeast, where I am reason- 
 ablj' familiar with the conditions, one or two results would come about — 
 either that the long-haul business would have to be given up and the 
 markets reached by that traffic would be lost or very much restricted, 
 or the short-haul rates would have to be so reduced as to bankrupt 
 the railroads. The consequence would be that the Interstate Com- 
 merce Commission would be compelled to suspend that law. But the 
 Commission has power to remedy conditions under the present law, 
 and this power to suspend that is proposed is something that I can 
 find no foundation for in any part of the history of the traffic of this 
 country. 
 
 Mr. ADA31SOX. Referring to the case where the rate to Jacksonville 
 was cheaper than to Tallahassee, I presume the theory is that from 
 most of the markets of the country it is actually cheaper to go b^' Jack- 
 sonville than by Tallahassee? 
 
 Mr. HiNES. Yes. 
 
 Mr. AiJAMSON. Then would it not be practicable to arrange excep- 
 tions in a general freight bill as to those places and as to particular 
 commodities, when it is not cheaper to go by that route? 
 
 Mr. HiNES. That is what the statute does now. 
 
 Mr. Adamson. There may be interior places from which traffic is 
 moved where that theory would not apply at all? 
 
 Mr. HixES. Yes; it is possible, but not probable, because the com- 
 mercial status of those two places is fixed by the enormous advantage 
 which Jacksonville has; but if it did exist, as you suggest, the law 
 would apply to it. 
 
 Mr. Adamsox. If there was a carload of freight originating in the 
 interior onW a few hundred miles away, it would look like the railroad 
 was charging for service it did not perform to charge the rate to Jack- 
 sonville and back to Tallahassee. 
 
 Mr. HiNES. The question would be whether the rate to Tallahassee 
 is per se reasonable. If not, it ought to be brought to the attention 
 of the Commission. If the rate is reasonable (to the shorter point) 
 and the rate to the longer distance point is no lower than it should be 
 to meet the conditions, there is no violation of the present law, and it 
 is impossible to see how that condition can be injurious. 
 
 Mr. Adamsox. As a lawyer right there I would like j'^ou to go on 
 record, if you are willing, with an opinion. If the lines to Jackson- 
 ville, by water or otherwise, are carrying freight there at a rate that 
 is profitable to them, a rate they are willing to haul it for, do you 
 think any judgment or order would be valuable requiring them, against 
 their consent, over their objection, to raise that rate, because some 
 other port or some other line could not do as well? 
 . Mr. HiXES. That is an untried field in Federal constitutional law, 
 as to what could be done, under those circumstances. Of course the 
 theory- 
 
 Mr. Adamsox. It will never be decided until somebody offers an 
 opinion or tries it. 
 
 Mr. HiXES. Of course, the theory of all this regulation for the pur- 
 pose of- deciding the comparative commercial importance of localities 
 
188 PROVOSED AMENDMENT OF INTERSTATE- COMMEEOE LAW. 
 
 is on the idea that you could increase one rate and thereby diminish 
 the importance of that place if the rate to the other place is reasonable. 
 
 Mr. Adamson. These are not the same lines, you understand. 
 
 Mr. HiNES. I understand. 
 
 Mr. Adamson. But there is one line going to New Orleans and one 
 to New York. The line to New Orleans says it can make money and 
 do business at a certain rate that is fair and reasonable, and it objects 
 to changing it because the conditions are such that others can not make 
 profits on the same rates. That states it squarely- Now, is it right, 
 and would it be legal, constitutional, against the consent of that line to 
 order them to raise that for the benefit of some competitor? 
 
 Mr. HiNES. I can not get it into my head that Congress could pass 
 a law that would directly give New York an advantage o\'er Ne>\- 
 Orleans in that way, and I do not see how the same thing could be 
 accomplished bj' indirection by delegating the power to a commission. 
 
 Mr. Stevens. I would like to ask a question in that connection. 
 Judge Prouty states in one of his papers that the rate on oil from 
 Cleveland to New Orleans was 26 cents: the rate on oil from Chicago 
 to New Orleans was 24 cents. At Cleveland there were independent 
 refiners who sought the southwestern market. At Chicago was the 
 Standard Oil Company, which practically had a monopoly running 
 over that line. The Cleveland rate was fair and reasonable. The 
 rate from Chicago to New Orleans was unfairly low because other 
 commodities of the same character and class had the same rate between 
 Cleveland and New Orleans and Chicago and New Orleans. So that 
 the comparative rates on oil between Cleveland and New Orleans and 
 Chicago and New Orleans were unfaii'ly low as regards Chicago and 
 New Orleans. Now, what could be done under the pi'esent law, con- 
 ceding that condition exists? 
 
 Mr. HiNES. Under our present law the Commission could prevent 
 the chai-ging of more than a reasonable rate from Cleveland to New 
 Orleans. 
 
 Mr. Stevens. But it is conceded that that is a reasonable rate — that 
 26 cents is a reasonable rate — and the other is unreasonably low. How 
 would you remedy that discrimination ; 
 
 Mr. HiNES. If some railroad that runs from Chicago to New Orleans 
 establishes that condition, I do not see how it can be remedied, and I 
 do not see why anybody would want to remedy it. If some railroad 
 running from Chicago or New Orleans establishes that condition, and is 
 willing to carry the business for a lower rate, that certainly is an 
 advantage that Chicago ought to have, 
 
 Mr. Stevens. Now, conceding that the article is competitive with 
 oil — for example coal, or anything of that sort that would be competi- 
 tive with oil — and that that article has the same rate between Cleveland 
 and New Orleans and Chicago and New Orleans; the result would be 
 then that thei'e would be a monopoly of oil over every other competi- 
 tive article and a monopoly of the Chicago mai'ket over everj^ other 
 market owing to those conditions. Now is not that discrimina- 
 tion ? 
 
 Mr. HixES. If the traffic conditions are such that oil can be and is 
 carried from Chicago to New Orleans for less than other competitive 
 commodities are carried from Chicago to New Orleans it is entirely 
 probable that as a matter of fact the Commission could find, and could 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 189 
 
 sustain its findings, that it would be unjust discrimination on tlie part 
 of the railroad from Cleveland to charge more for oil than it does for 
 competitive commodities from Cleveland. 
 
 Mr. Stevens. But it is conceded that charge from Cleveland is a 
 fair, just, and reasonable charge, not only as to oil, but competitive 
 commodities; it is conceded that as to the other competitive commo- 
 dities the charge fromChicago to New Orleans would be the same as 
 from Cleveland. Oil is the one single exception. 
 
 Mr. HiNES. If from a traffic standpoint oil may be an exception at 
 Chicago the Commission might find that to be a basis for dealing with 
 the cai-rier from Chicago to Cleveland; but if there is a railroad from 
 Chicago to New Orleans that does not go to Cleveland and is not 
 responsible for conditions at Cleveland, and it is willing to carry oil 
 for less than a reasonable rate, whereas that is not true at Cleveland 
 as to the railroads there, that is simply the advantage Chicago has. 
 It may be that the refiners at Chicago are owned by tbe Standard Oil 
 Company; but if you enforce the law against rebates it gives everj'^ 
 body else the same opportunity to establish a refinery there. It gives 
 Chicago the benefit of its favoi-abl^ location. 
 
 Mr. Stevens. Right there, then, you concede that carrying oil 
 from Chicago to New Orleans at less than a reasonable rate would be 
 a discrimination against other competing commodities that ought to 
 be carried at a reasonable rate and are carried at a reasonable rate^ 
 
 Mr. HiNES. That is on the same railroad; ye^, sir. 
 
 Mr. Stevens. How are 3'ou going to remedy that discrimination, then ? 
 
 Mr. HiNES. If it is on the same railroad, declare that that is an 
 unreasonable discrimination. 
 
 Mr. Stevens. What would you provide to equalize conditions? 
 
 Mr. HixES. Do you mean as respects Cleveland '. 
 
 Mr. Stevens. No; as respects Chicago. Supposing that competi- 
 tive articles with oil were carried at a reasonable rate from Chicago 
 to New Orleans; that oil was carried at an unreasonably low rate; 
 how would you equalize? 
 
 Mr. HiNES. The Commission could declare that that was an undue 
 discrimination and order a discontinuance of that rate. 
 
 Mr. Stevens. In what way ? 
 
 Mr. HiNES. Just that the railroad is ordered to cease and desist 
 from charging a lower rate on oil than on other commodities. 
 
 Mr. Stevens. And that means they have to increase the rate ? 
 
 Mr. .HiNES. One or the other, either increase one rate or lower the 
 other rate. 
 
 Mr. Stevens. A condition might occur by which they would have 
 to increase their rate? 
 
 Mr. HiNES. Certainly. 
 
 Mr. Stevens. That is what I wanted to know. 
 
 Mr. Adamson. If conditions are such that without dishonesty or 
 improper purpose that rate is a profitable and desirable rate to the line 
 that makes it and acts on it, is it really a discrimination for it to estab- 
 lish that rate to which its energy or nature or the situation entitles it? 
 Woilld it not be just as much discrimination for a woman to be by 
 nature prettier than other women? 
 
 Mr. HiNES. I would like to make myself clear on that. What I 
 intended to say to Mr. Stevens was this: If the A. B. railroad from 
 
190 PROPOSED AMENDMENT OF INTEKSTATE-COMMEECE LAW. 
 
 Chicago to New Orleans charges a lower rate on oil than it charges 
 on other competitive commodities, whereas the conditions are such 
 that the rates ought to be the same, and there is no reason why oil 
 should be lower, that is a dircrimination on the part of that railroad 
 as between those commodities; but no matter how low a rate the A. 
 B. railroad charges from Chicago to New Orleans on oil that is not a 
 discrimination against Cleveland, where another rate is maintained on 
 oil by another railroad. That is a natural or acquired advantage 
 which Chicago has and is entitled to. 
 
 Mr. A DAMSON. Has not a man or a corporation a i-ight to the busi- 
 ness at any rate which it finds profitable, that it can get h\ certain 
 rates ? 
 
 Mr. HiNES. I think it has, with this qualification, of course, in the 
 case of a railroad, that it is a quasi public corporation, and the rail- 
 road has not quite the right to make discrimination between points on 
 its own line and give one point an advantage at the expense of another 
 point on its line. But if a railroad gives every point on its line an 
 advantage over every point on another line, that is simply the 
 natural advantage of the points on its line and is no discrimination 
 against any other railroad, and you might as well issue an injunction 
 against exceptional progressiveness and enterprise on the part of 
 the Board of Trade of Chicago, so as to equalize with Cleveland, as to 
 say that the railroad running from Chicago shall not give the ship- 
 pers from Chicago any advantage o\'er the shippers who use the rail- 
 road from Cleveland. 
 
 Mr. EiCHARDSON. I will call your attention to something outside the 
 through long haul. You are familiar with the rates of the Louisville 
 and Nashville Railroad, are you? 
 
 Mr. HiNES. Fairly so, yes; as far as I had occasion to investigate 
 them. 
 
 Mr. EiCHAEDSON. Well, can you give me any reason why there 
 should be a marked difference in the freight on a commodit}" from 
 Huntsville, Ala. , to New Orleans^ and the rate from New Orleans back 
 to Huntsville; is there any reason why there should be adifierence in 
 the freight charges? 
 
 Ml'. HiNES. Why, Judge Richardson, there are numei'ous reasons 
 that might call for that; I will mention an illustration that perhaps 
 will put it in congrete form from one standpoint. The Florida rail- 
 road commission, which has the power to make classifications, made 
 some changes in the Louisville and Nashville, classification, and it put 
 molasses in the commodity class. The reason for that was that the 
 stations along the Louisville and Nashville Railroad in Florida — that 
 is, the farmers along there — made molasses and wanted to get it to 
 market, and the commission's idea was that a low rate ought to be 
 given to encourage that. W^ell, we went to the commission and 
 explained the. situation to them. We said, "The only place these 
 people ship molasses to is Pensacola. That is their only market, and 
 we already have commiodity rates in thei'e lower than the new rate you 
 have prescribed, and the rates you have prescribed take molasses out 
 of the class it has been in, the fifth or sixth class, along with other 
 groceries. When a man ships a can of molasses from Pensacola there 
 is no reason why that should be carried at a lower rate than cofli'ee or 
 sugar or rice or other things of the same class with it, which are also 
 
PfiOPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 191 
 
 moved in small quantities. Now you let molasses stay where it is as a 
 grocery commodity and we will maintain a rate lower than you have 
 asked us to put on molasses to market." A railroad will make a low 
 rate on freight to allow it to tind a market with the hope that it will 
 inove in large quantities, when it may properly maintain a higher rate 
 in the opposite direction. Another "thing to take into consideration is 
 the necessity oftentimes of hauling back empty cars. In one direction 
 the cars may be moved full of freight and in' the other direction may 
 be empty. So a railroad can often give a rate to encourage the loading 
 of its empty cars when it could not afford to give the same I'ate in the 
 direction in which its cars are alreadj' moving filled. 
 
 Mr. Richardson. Do you think that difference, for the reasons you 
 have given, should be 100 per cent? 
 
 Mr. HixES. That would depend, Mr. Richardson, on the connuercial 
 conditions. Taking molasses, if the rate on sixth-class groceries was 
 a reasonable rate, there is no reason why molasses when cai'ried from 
 a wholesale house should be carried at anj' less rate. If a rate just 
 half that was necessary to develop the industry of . the production of 
 molasses on that road, and it was not so low as to inflict an actual loss 
 on the railroad company, it would be proper to make that low rate. 
 
 Mr. Richardson. What do you think of this proposition: The 
 freight charge on a horse from Huntsviile to New Orleans was 129.87. 
 To ship the same horse back the freight charge was less than $15. 
 How could 3'ou explain that^ 
 
 Mr. HiNES. 1 could not without the facts. 
 
 Mr. Richardson. I am giving you the facts. 
 
 Mr. HiNES. I mean the reasons for those rates. Every rate has a 
 reason, and there may have been a good reason for the difference 
 there. On the other hand, it looks as if there was too much difference. 
 
 Mr. Richardson. Don't you believe that that is too much difference? 
 
 Mr. HiNES. I was going to say that if that does exist — and I know it 
 does from your statement — and if there is no reason for it, the Inter- 
 state Commerce Commission ought to declare under the law that the 
 rate should be the same both ways. 
 
 Mr. Stevens. If it were called to your attention, as traffic manager 
 of a railroad, what would you do? 
 
 Mr. HiNES. Change the rate if there was no good reason for the 
 difference. Where there are no special conditions affecting the question 
 the rat^ should be equal each way. I have found from my experience 
 in the railroad business that there are a great man}' things necessarilj- 
 arbitrary. But generally speaking, there is nearh- always some color- 
 able reason, I believe, for all those things, and generally a good reason. 
 Sometimes the reason may be bad and the rates ought to be changed; 
 but they can be changed under the present law. 
 
 Mr. fiiOHARDSON. And you believe that when instances of that kind 
 are called to the attention of the railroad companies that they would 
 change them? 
 
 Mr. HiNES. I think so, and if* not the Commission can change them 
 under the present law. 
 
 Mr. Richardson. Where they ought to be changed. 
 
 Mr. HiNES. Yes, sir. I will hurry along. 
 
 Another branch in the matter is no doubt fully agreed to by you 
 gentlemen, which is this. That while the business of the railroad is a 
 
192 PROPOSED AMENDMENT OF INTEKSTATE-COMMERCE LAW. 
 
 quasi public function and is subject to whatever regulation is neces- 
 sary to protect the public, yet the public has elected to allow railroads 
 to be built by private capital, and has not undertaken to furnish the 
 capital oi' anj^ guaranty against the A-icissitudes of commerce, and 
 every I'ailroad must take the risk of bad times, which are bound to 
 come, and suffer all the losses that may occur from any cause, and 
 certainly it is a very delicate subject -when you come to reduce radi- 
 cally or make it possible to reduce radically the revenue that a rail- 
 road company receives. 
 
 Of course, if it receives too much it ought to be reduced, but a con- 
 servative rather than a radical method ought to be adopted. And it 
 should be borne in mind that while a railroad might make a favorable 
 showing in good years, that is no guaranty that it will make any 
 showing above operating expenses in bad years, and that it is entitled 
 to get a return in good years which will tide it over the bad years. 
 That while unreasonable and extortionate rates can be and ought to be 
 prevented, yet that there is no reason in the world why you should 
 attempt to hold a railroad company down to four or five or six percent 
 on its actual investment in good years, because in bad years they may 
 not get anything; and the real issue is. Is the rate extortionate and 
 oppressive? If so, reduce it. Is it unjustly discriminatory between 
 points on the same line i If so, stop it. But within those limits allow 
 the railroads to share in a reasonable degree of prosperity of the times 
 and to prepare for the times when they will have to go without any 
 returns whatever above their operating expenses. 
 
 It it apparent from what has been said to this committee that the 
 tendency always on the part of a rate making governmental tribunal 
 is to reduce rates. They may have to raise them at times to preserve 
 the adjustment between localities, but the general tendency will be to 
 pull rates down and leave only a small margin of profits. And that 
 will be the case in prosperous times; and when times get bad, when 
 business falls off, everybody? knows that a Government tribunal will 
 be extremely reluctant to raise those rates. It will resolve every doubt 
 against the railroad. The consequence is that there will be a constant 
 downward tendency, more than is necessary to protect the public, 
 that will in the end be a serious handicap upon the railroads in this 
 country. It will prevent them from paying the wages that they can 
 pay when times are good. When times are good the Commission will 
 be pulling rates down a little, making their margin of returns narrow. 
 Times will get bad, business will fall off, and the railroads themselves 
 will have to reduce the rates to get any business. And then when 
 times get good the men want more wages, materials will cost more 
 (nobody can prevent material costing more in good times), and then 
 there will be a situation that no Government commission can be 
 expected to deal with. 
 
 Now, if that was the only way in the world to prevent a great public 
 evil, of course the railroads ought to.suffer that disadvantage; but if 
 there is another way, if there is any conservative, safer ground where 
 you can protect the public, and at the same time not put upon the 
 railroads this constant incubus of pressing the rates down all the time 
 with almost no hope of getting them up in the event of there being 
 sufficient reason for their being raised, then a conservative rather 
 than a radical method ought to be adopted. 
 
PROPOSED AMENDMENT OK INTEBSTATE-COMMEECE LAW. 193 
 
 Mr. Adamson. Is it not fair to assume that railroads in most 
 instances, where they promulgate a rate, have made one satisfactoiy 
 to themselves? 
 
 Mr. HiNES. You must take into consideration all the conditions 
 under which they have promulgated a rate. 
 
 Mr. Adamson. When you- find one abnormally low it is the result of 
 a rate war, is it not? 
 
 Mr. HiNES. Generally; but a rate that is put in very low, provided 
 it is over the actual cost of moving the business over the line, is a good 
 thing for the public and a good thing for the railroads. It may be a 
 temporary condition that enables the railroad to do that, and when that 
 temporary condition is over it cuts out the rate. 
 
 Mr. Adamson. It is not intended for a permanent rate I 
 
 Mr. HiNES. No; it is simply to meet that temporarj^ condition. And 
 if the power is given to a commission to fix absolutely the rates that 
 shall be charged, there is something that the railroad always has before 
 it to discourage its meeting special needs at special times by making 
 reductions, because it will know that the Commission will seize hold 
 of that rate and say that that proves that is a I'easonable rate; and it 
 will be used elsewhere; it will be a handicap upon the facility and flex- 
 ibilitv of railroad rates now by which special needs are met by special 
 rates. I mean that a railroad under special conditions will establish a 
 very low rate to cope with the special commercial situation. That rate 
 is published; it is filed with the Commission; it is open to the Com- 
 mission at once to inquire. "Is this right? Is this a discrimination 
 against anything else?" If it is wrong the Commission can stop it; 
 but if it is not, let it go on, and then wnen the conditions change the 
 railroad can take that out, and it is not erecting a standard which will 
 be a criterion for all rates. 
 
 Mr. Stevens. Suppose you make an abnormal rate and continue it 
 for any purpose of your own motion, or perhaps it is done by the 
 Commission, or in some other way. What is the eflect in the course of 
 time for furnishing facilities to the public, in the way of depot facili- 
 ties, track, equipment, train facilities, and one thing and another ? Does 
 that make any difference? 
 
 Mr. Hines. The low rate of course encourages business; it is gener- 
 ally put in for that purpose; and then facilities have to be provided. 
 
 Mr. Stevens. So the public would not suifer in the low rate so 
 provided? 
 
 Mr. Hines. The railroad would suffer. 
 
 Mr. Stevens. I supposed so; but would that have any reflex action 
 on the public? 
 
 Mr. Hines. Necessarily it would in the long run. 
 
 Mr. Stevens. In what wayl 
 
 Mr. Hines. That is the tendency, to reduce rates. It is the tendency 
 of ever}" commission, and the only reason that it has not had a greater 
 damaging effect upon the railroads is that 75 or 80 per cent of their 
 business is interstate business, and the State commissions can not 
 touch that.. Then you do in the long 'run hamper the railroad and 
 prevent them from furnishing the character of facilities and the quan- 
 tity of facilities which the public would want. You do that by lower- 
 ing rates. 
 
 I c L— 05 13 
 
194 PROPOSED AMENDMENT OF INTERSTATE-OOMMEBOE LAW. 
 
 Mr. Stevkks. Why? 
 
 Mr. Hikes. It would not have the money to buy them; it would 
 have, to cut down its operating expenses; it would have to cut down 
 everything. So the public is interested in having the railroads receive 
 a fair or even liberal protit on their investment. 
 
 Mr. Stenens. Could you not give them as many passenger trains as 
 they need with the increased business which would come Dy reason of 
 the lower rate ''. 
 
 Mr. HiNES. If we made the money, it would paj^ for itself; but if 
 the low rate, which docs increase business, is made a criterion to 
 make low rates in other cases where no business is brought Wy reasoi 
 of the low rate, there would be an impairment of the railroad revenue, 
 and it would not be able to serve the public adequately. 
 
 Mr. Stevens. \^'ould that impair the condition of the rolling stock 
 and depots, and so on 'i 
 
 Mr. HiNES. Necessarily it would. In times of depression the rail- 
 roads have to diminish their expenditures for these things; they have 
 to diminish all expenditures, they have to cut down wages. When 
 times are good they spend more on these things and pay higher wages. 
 They hav^e to adjust those things to commercial necessities. 
 
 Mr. Makn. With reference to the case that was involved in the 
 Maximum Rate case, the distance from Chicago to Atlanta is 588 miles; 
 from Boston to Atlanta, i>12 miles, or 324 miles farther. The rate on 
 one class from Chicago to Atlanta is 71 cents (the shorter distance) 
 and on the same class from Boston to Atlanta it is 60 cents. Now, of 
 course, I understand that the reason of that is because of water trans- 
 portation. 
 
 Mr. HiNES. Yes. 
 
 Mr. Mann. But if the rate from Boston to Atlanta by rail at 60 
 cents for the 912 miles is profitable, should not some one have the right 
 to say whether the railroad should require 71 cents to carry similar 
 freight 588 miles? 
 
 Mr. HiNES. The Interstate Commerce Commission has that right 
 now. If that rate is unreasonable in itself it can declare it so and 
 order its discontinuance. 
 
 Mr. Mann. They have the right to declare the 71 cents rate unrea- 
 sonable and order its discontinuance? 
 
 Mr. HiNES. Yes. 
 
 Mr. Mann. But the claim is made that that course would involve 
 litigation to the Supreme Court of the United States, which would re- 
 quire several years to dispose of, and at the end of that time if the 
 Commission was sustained the railroad might say that the rate should 
 be 70 cents from Chicago and 59 cents from Boston, leaving the con- 
 dition in discrimination exactl}^ the sairie. 
 
 Mr. HiNES. That claim is incorrect. I had intended to take that up 
 a little later, but I will be very glad to take it up now, take up the 
 status of the present law and take that case as an illustration. 
 
 Mr, LovEiiiNG. Are those actual rates, Mr. Mann? 
 
 Mr. Mann. Yes. 
 
 Mr. LovERiNO. On the same class of goods? 
 
 Mr. Mann. On the same class of goods. 
 
 Mr. HiNES. Take that case as an illustration. It deals simply with 
 the reasonableness of the rate from Chicago to Atlanta. The theory 
 presented by the interstate-commerce act was that the courts should 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 195 
 
 prevent the continuance of unreasonably high rates. The Commission 
 was not created as an independent tribunal to dispose of this question 
 itself. It was simply an auxiliary to the court, to g-et up the informa- 
 tion and make out a prima facie case. It was believed to be a valuable 
 auxiliary. Now, if the Commission investigates that case, and finds 
 that that rate is unreasonably high, it can enter an order that the car- 
 riers shall cease and desist from charging that rate. It can iile a peti- 
 tion in equity in the circuit court. It can tix the time in which that 
 order is to be obeyed, and if it is not obeyed in that time, ten or twenty 
 days, or any other time the Commission Hxes — that is my recollection — 
 it can file a petition in the circuit court. 
 
 The expedition act, passed in 1903, provided that the Attorney- 
 General can certify that a case under the interstate-commerce act 
 involves a matter of public importance, and the act requires that that 
 must be heard as soon as practicable before three circuit judges. The 
 Elkins Act applies that provision to cases brought by the Interstate 
 Commerce Commission. If the court believes that that rate is too high 
 it can issue an injunction at once. It can do it in thirty days after the 
 case is brought before it.' or two months, or whatever time is possible, 
 in view of the fact that the law says that it must be done as soon as 
 practicable. 
 
 Mr. Mann. Right there, would that injunction order i-emain in force ? 
 
 Mr. HiNES. I was coming to that. When that injunction is issued 
 the carrier can appeal directly to the Supreme Court. The appeal 
 does not suspend the going into effect of the injunction. The circuit 
 court decides that question, and if the circuit court, composed of three 
 judges, says, " We believe that the public interest will be more subserved 
 by suspending this injunction pending this appeal than by letting it go 
 into effect," it seems to me that is a reasonable protection to the pub- 
 lic. On the other hand, if the court says, " We are so clear that this 
 is unreasonable that this injunction ought not to be suspended," it will 
 go into effect at once, and no appeal by the carrier and no delay by 
 the carrier can postpone for a single da^^ the going into effect of that 
 injunction. 
 
 Then we come to the other point. The claim is made that the rail- 
 roads would make simply a technical compliance with that provision. 
 Now, the interstate-commerce act has been in effect eighteen years, 
 and not a single instance can be cited in that time where any railroad 
 has undertaken to comply in that technical sense with the order of the 
 Interstate Commerce Commission. 
 
 In reading Mr. Bacon's argument before the committee the other 
 day I saw it stated that he would file a memorandum of cases which 
 he understood were cases of that character. I have not seen that 
 memorandum, but I feel perfect^ safe in saying that Mr. Bacon has 
 been misinformed on that point. I do not know of a single case, and 
 I do not believe there is one; and from what I know of the railroad 
 companies and from m}' own experience I know that when a circuit 
 court of the United States issues an injunction and says that a certain 
 rate is unreasonable that that necessarily carries with it some light as 
 to what the circuit court thinks should be done in order that the law 
 be substantially complied with, and while it has the advantage of not 
 fixing an ironclad rate which the court must administer for the future, 
 it leaves the railroad where it can and where it will substantially 
 comply with that order and make a substantial reduction in the rate. 
 
196 PEOPOSED AMENDMENT OF INTEESTATE-COMMEECE LAW. 
 
 There is one other procedure I want tp refer to there. In March, 
 1903, I think it was, or at least early in 1903, the Supreme Court held 
 that under the Elkins Act any complaint of discrimination between 
 localities (of course that means by a single railroad, because the present 
 act does not undertake to keep one railroad f-rom doing more for its 
 communities than another railroad does for its communities), an^' dis- 
 crimination in tariff rates between communities could be made the 
 subject of a bill in equity in the first instance without going to the 
 Commission at all. The Commission can make a summary investiga- 
 tion; that is, announce that on the face of the tariff's they are unfair. 
 It can tell the district attorney to bring suit at once and have the 
 investigation in the circuit court, thus saving the time necessary for 
 an investigation by the Commission. 
 
 That is another way delaj' can be avoided; and I wish to say again, 
 and to say with emphasis, that there is no case in m}^ opinion where a 
 circuit court would enter an injunction in a case of that sort that it 
 would not be Substantially complied with by the railroad company. 
 Now, at any rate, a thing of that sort ought not to be left to the jury. 
 I say that that is a conservative method of railroad regulation and 
 when it has not been proved inefficient it is unwise to confer the rate- 
 making authority. 
 
 Mr. Mann. I would like to ask a question on that same line. Is it 
 your judgment as a former traffic manager and railroad attornej' that 
 if a merchant of Chicago should file a petition with the Interstate Com- 
 merce Commission, alleging that the rate from Chicago to Atlanta was 
 too high, that the Commission on hearing would order the railroads to 
 cease and desist from charging that rate? 
 
 Mr. Hikes. It has that power. 
 
 Mr. Mann. And if that order was upheld by the court that those 
 railroad companies would make a substantial reduction of the rate? 
 
 Mr. HiNES. I am satisfied of it. 
 
 Mr. Mann. Has any such petition, so far as you know, ever been 
 filed with the Commission since the Maximum Rate case was tried? 
 
 Mr. HiNES. 1 am not advised of any. 
 
 Mr. TowNSEND. That question was along the same line of a question 
 I would like to ask. Do you claim that the Supreme Court has ever 
 directly held, where the question was raised, that this Commission had 
 the power to declare a rate unreasonable ? 
 
 Mr. HiNES. Yes. 
 
 Mr. TowNSEND. In what case ? 
 
 Mr. HiNES. In the Chicago Live Stock Yards case. 
 
 Mr. TowNSEND. Did they hold that in the Maximum Rate case ? 
 
 Mr. HiNES. That question was not presented there. 
 
 Mr. TowNSEND. Did not Judge Brewer in that case specify what 
 were the powers of the Interstate Commerce Commission? 
 
 Mr. HiNES. He did not undertake to specify all of them, but he did . 
 specify numerous powers. 
 
 Mr. TowNSEND. And he did not include this one, did he? 
 
 Mr. HiNES. I do not recall that he did. He did say that they had 
 the power to prevent unjust discriminations. 
 
 Mr. TowNSEND. Will you tell me again what that case was? 
 
 Mr. HiNES. Yes; I will explain the situation. That was the case of 
 the Interstate Commerce Commission against the Chicago, Burlington 
 and Quincy Railroad and other railroad companies, involV-ing a termi- 
 
PROPOSED AMENDMENT OF INTEKSTATE-COMMERCE LAW. 197 
 
 nal charge at Chicago on live stock from the Southwest. The Com- 
 mission neld that that rate was unreasonably high and ordered the 
 carriers to cease and desist from charging it. The point was made on 
 demurrer that the Commission did not have that power, that that was 
 in fact making a rate indirectly for the future. The circuit court 
 overruled that demurrer and held that the Commission did have that 
 power. On final hearing in the circuit court the circuit court held, on 
 the facts presented, that the rate was reasonable. 
 
 The case went to the circuit court of appeals and was affirmed on 
 the facts. It then went to the Supreme Court of the United States, 
 where it was thoroughly ai-gued, and the court pointed out that the 
 Commission had held the terminal charge unreasonable because it was 
 added to the rate previously in eflect, which had theretofore covered 
 the terminal service, and was presumptively reasonable compensation 
 for the ti'ansportation, including the terminal service; that the Commis- 
 sion had justified itself on that ground, that it was an addition to a rea- 
 sonable rate already in effect without any addition to the service; and 
 it appeared that after that order was made it had been made to appear 
 to the Commission that on a very large part of that traffic there had 
 been a reduction on the through rates of about |16 per car, and the 
 Commission had refused to modif j' its order, holding the $2 terminal 
 charge unreasonable. 
 
 Now, the court said that the Commission reached its conclusion only 
 on the ground that the through rate was reasonably high and included 
 the terminal charge; so that theory clearly could not apply where there 
 had been a reduction in the through rate, much greater reduction than 
 the $2 terminal charge amounted to; and it reversed the case, not 
 because the Commission did not have power to make an order to 
 cease charging an unreasonable rate, but because of the refusal of the 
 Commission to consider those matei-ial facts. However the court 
 reversed the case with the power to reopen it and make an order based 
 on those facts; and the Commission has that case before it now. 
 
 So, I say, that case establishes the proposition that the Commission 
 has the power to order the discontinuance of a rate that is said to be 
 unreasonably high. 
 
 Mr. TowNSBND. Where is that case? 
 
 Mr. HiNES. The Interstate Commerce Commission against the Chi- 
 cago, Burlington and Quincy Kailroad. 
 
 Mr. Bond. 186 U. S., 330. 
 
 Mr. HiNES. That is the Supreme Court report. 
 
 Mr. Bond. Yes. 
 
 Mr. HiNES. 1 was looking for reference in the Federal Reporter. 
 
 Mr. Bond. 98 Federal, 173. 
 
 Mr. HiNES. Yes; that is the one in the Federal Reporter. 
 
 Mr. Mann. They have exercised that power in a few recent cases, 
 have they not? 
 
 Mr. Hines. The Commission has exercised that in a number of cases, 
 and in a number of them it has been substantially complied with. 
 
 Mr. Mann. There has been a case in the past year, the case of the 
 rate of fruit from New York to Chicag^o, fruit coming from the South. 
 
 Mr. Hines. Yes, sir. It was exercised in that case, and I wish to 
 refer to that case. The Commission there held that the rate from 
 New York to Boston on peaches was unreasonably high and ordered 
 the discontinuance of that rate. The rate was f80 a car. The Com- 
 
198 PROPOSED AMENDMENT OF INTEBSTATE-COMMEKCE LAW. 
 
 mission suggested in its order that $50 a car would be a reasonable 
 rate. The railroad company reduced the rate to $65 a car. Now, the 
 Commission had fully investigated that matter, had all the facts before 
 it, and it was open to the Commission the day after the railroad com- 
 pany reduced that to |65 to have a summary hearing or to bring a 
 suit in the circuit court, without hearing, and ask for a further reduc- 
 tion in the rate if thej^ did not think it was reasonable. I take it that 
 the fact that the Commission has acquiesced in the $65 rate is due to 
 the belief that they could not sustain the position that the $65 rate 
 was unreasonable, because, if they believed they could, the way was 
 open under the present law to do it. 
 
 Mr. Mann. Upon that point, Mr. Hines, with regard to the question 
 of construction, is it not provided by the statute, and is it not abso- 
 lutely plain, that the Interstate Commerce Commission is given the- 
 power to order a railroad company to cease and desist from charging 
 an unreasonable rate? 
 
 Mr. Hines. That is the express language of the statute. 
 
 Mr. Mann. Is it not as plain as language can be written ? 
 
 Mr. Hines. Yes. And it is made the duty of the court to enforce 
 those orders unless they are unreasonable or unlawful. I can not 
 escape the conclusion, gentlemen, that the power of the Commission 
 under this rate-making grant of authoritj' that is being discussed can 
 not possibly be exaggerated. Their power over the earnings of the 
 railroads and over all the capital invested in the railroads is almost 
 absolute. The power they are given over the commerce of the country 
 and the apportionment of that commerce is, it seems to me, absolute. 
 And I understood from Mr. Staples, who was very frank about it, that 
 that is what he thought there should be; that there ought to be a 
 tribunal with that power. 
 
 In view of that tremendous power, I think it can be properlj^ said 
 that it would have more power than anv other tribunal in this country; 
 that it would have more power than could be imagined. And in that 
 connection I would ask you to consider that a majority of that Com- 
 mission can be appointed by every President that is in the White 
 House for four years or, in fact, for a little over three years.' A 
 majority of them are appointed every three years. So at any time, if 
 a President of radical tendencies should be in the White House, he 
 could change the character of that Commission and change the whole 
 linancial and commercial situation of this country so far as railroads 
 are concerned. Now, if that were necessary in order to prevent some 
 overpowering abuses, perhaps the risk ought to be taken. But the 
 point I wish to make is that it is not necessary, because no such abuses 
 exist, and the abuses that do exist are fully susceptible of correction 
 under the laws that exist. 
 
 Mr. Richardson. Do you think that the enforcement of the present 
 statute is in all respects sufficient to protect the interests of the public 
 and the interests of the railroads'^ 
 
 Mr. Hines. There has been absolutely nothing to show it is insuflS- 
 cient. If there are any amendments needed to increase that efficiency 
 along the lines of the present law, that is all right; but you have 
 simply got that distinct line of cleavage before you. Here is one 
 method of corrective regulation by which you can substantially pre- 
 vent any oppressive or unjust action on the part of the railroad and at 
 
I'EOPOSED AMENDMENT OF INTEKSTATE-COMMEKCE LAW. 199 
 
 the same time leave a reasonable degree of initiative and the manage- 
 ment of railroad aflfairs for the future with the railroads. With the 
 other you have a system of affirmative regulation for all time to come 
 of every rate that the Commission takes hold of. 
 
 Now, if there is anj'thing that can be done to increase the corrective 
 power under the present theory, of course there can be no dispute as to 
 the propriety of that, because that theory of regulation has been fully 
 adopted by Congress. But the question before the committee now is 
 whether that theor^^ will be thrown aside and the theory of affirmative 
 management of railroad properties adopted in its stead. 
 
 Mr. Richardson. The real question now, as I understand, is to give 
 the Commission effectiveness — that is, to give it power to enforce 
 legislation that already exists. 
 
 • Mr. HiNES. That can be done. That is already provided for in the 
 present law. 
 
 Mr. TowNSEND. You have shown that you have made a careful 
 study of this and I ask this question for information. The Commission 
 during the first years of its existence exercised the right of rate 
 making. The first order or two it made were with reference to the 
 establishment of a rate, were they not^ 
 
 Ml-. HiNES. It made a good many rates. 
 
 Mr. TowNSEND. During that time can you recall any instances where 
 the Commission abused that right and brought about any conditions of 
 which you are complaining now? 
 
 Mr. HiNES. I think it will be found on investigation that certain 
 rates the Commission made were not observed by the carriers because 
 they did not believe the Commission had the power, and the Commis- 
 sion did not take it to court. 
 
 Mr. TowNSEND. Was that ever questioned in any court trial up to 
 the Maximum Rate case? 
 
 Mr. HiXES. It was questioned in a good many court trials before that. 
 In a case against the Lehigh Valley Railroad, in 1891, and in a case 
 against the Louisville and Nashville Railroad, in 1893, the point was 
 made. 
 
 Mr. TowxsEND. And how was it disposed of '. 
 
 Mr. HiNES. In favor of the railroad in the Louisville and Nashville 
 case, in 189.3. That went to the court of appeals ^nd was affirmed. 
 That was the Social Circle case. Then it went to the Supreme Court 
 and was affirmed in 1896. Some sweeping orders were made with which 
 the railroad did not comply. M}' information is that iu 1890 the Com- 
 mission issued an order reducing the rates on grain to eastern points. 
 My information is that that order was not complied with, and the Com- 
 mission did not file any proceedings to compel compliance. That was 
 in 1890. 
 
 Now, coming more directly to an answer to your question, I gaj'^ 
 this was rather a progressive thing, naturally. Take a tribunal, assum- 
 ing that it has this power, it has a disposition to start out cautiously, 
 especially when the power is not directly granted bj' the statute. I 
 say that that Social Circle case was an abuse of that power. The 
 Commission held on the testimony of a single witness, who said that a 
 rate of $1.01 would be a reasonable rate from Cincinnati to Atlanta, 
 that instead of $1.07, the existing rate, that the rate should be reduced 
 to$l; and it made an order that the first class from Cincinnati to 
 
200 PROPOSED AMENDMENT OF INTERSTATE-COMMEBCE LAW. 
 
 Atlanta should be |1. That would have pulled down the rate from 
 every point on the Ohio River to Atlanta and every other basing point 
 in the South, and would have made a reduction qf 7 cents on all traffic 
 moving from the Ohio River to basing points in the Southeast. 
 
 One witness expressed the opinion that' a rate of fl.Ol would be 
 proper; a good many railroads in the South were in the hands of 
 receivers and unable to pay fixed charges, and yet that reduction to fl 
 was made. And in the Maximum Rate case very substantial repre- 
 sentations were made by southern railroads that it would bankrupt 
 them to have to put those rates into effect. 
 
 Mr. Richardson. Who were the Commissioners? 
 
 Mr. Hikes. I do not know. 
 
 Now, going to another point. In its last annual report the Inter- 
 state Commerce Commission points out that it is proper for it to exer- 
 cise its rate-making power, becausie the proceeding in which it would 
 do it is essentially judicial. It says there must be complaint and notice 
 and full hearing. I wish to point out to the committee, with all due 
 respect to the Commission, that while the form and character of 
 the proceeding may be judicial the form and character of the tri- 
 bunal is not judicial. The Interstate Commerce Commission is charged 
 with a great many important duties that are utterly inconsistent with 
 the exercise of any judicial function. It is its duty to seek out and 
 prosecute for every violation of the Elkins Act or any other secret con- 
 cession from a rate. 
 
 It necessarily, in that respect, must occup3^ the attitude of a detective 
 and a prosecutor. It is perfectly proper for it to do it. It is its express 
 statutory duty to do it. It has to perform such duties in respect to 
 safetj' appliances on railroads through its detectives or inspectors who 
 are traveling all over the United States and searching out violations of 
 that law, and where car couplers de not come up to the requirements 
 of the act, and where trains are not equipped with air brakes so as to 
 comply with the act, it is its duty to institute prosecutions against the 
 railroads. That is entirely within the statute requirements, and some- 
 body has to do it. 
 
 There is.no complaint that that is not a proper exercise of the duty 
 of the Commission. We find them having monthly accident reports 
 from the railroad companies all over the United States which enable 
 them to say what the cause of the accident was, to see if the railroads 
 were in fault, and to see how the matter can be corrected, and of 
 course a great deal of veiy valuable information is gotten together in 
 that way. We find it instituting complaints before itself; and that is 
 proper. It is supposed to represent the shippers. That is what it 
 was created for. It institutes these complaints and is avowedly the 
 shippers' champion in these matters. The idea is that the interest of 
 any particular shipper is so small as compared with the railroad inter- 
 ests on the other side that the shipper needs the aid of a Govern- 
 ment tribunal to assist him in his case against the railroad company. 
 Nobody denies the propriety of that. 
 
 But the point that I make is that a tribunal properly charged with 
 detecting violations of the rebate law and prosecuting those viola- 
 tions, and detecting violations of the safety -appliance law and prose- 
 cuting on them, and charged with the duty of scrutinizing all the rail- 
 road accidents in the country and supervising those matters, and call- 
 ing attention to all cases of improper management on the part of rail- 
 
PROPOSED AMENDMENT OF INTEESTATE-COMMEKOE LAW. 201 
 
 roads, and acting as the champions of the shippers, and appearing as a 
 party complainant with the shipper, and appearing as the attorney of 
 the shipper, has not a single vestige of the iudicial character about it. 
 It is no reflection upon the court or on the gentlemen who compose 
 the Commission. It is simply putting into effect the principles of 
 republican government that any body who exercises those functions 
 can not be judicial. 
 
 Judge Crump, from Virginia, of the Virginia Railroad Commission, 
 very frankly stated to you yesterday how his commission was organ- 
 ized. They had to make a new constitution in Virginia to do that. It 
 has the constitutional privilege of exercising the legislative, judicial, 
 and executive powers. Judge Crump, for whom I nave the highest 
 respect, said to you that he thought that was proper. He was very 
 frank about it. Of course if that is proper it means that the princi- 
 ples of republican government, on wliicn this country has been con- 
 ducted, need revision. 
 
 Now, it has always been said that a benevolent despotism is the best 
 form of government, and I am sure that Judge Crump is a very benevo- 
 lent despot; but the point I make is that it is improper to provide for 
 a tribunal of that sort, and to give to it these inquisitorial and prose- 
 cuting duties, and to give to it also any dutj^ that calls for a judicial 
 proceeding or calls for the judicial temperament. The Commission 
 recognizes the proprietj- of the iudicial attitude toward these things 
 by making that an argument; and I say with all respect that no tribu- 
 nal could be imagined that could be further from being judicial in its 
 form than the Interstate Commei'ce Commission, charged as it is with 
 these other duties so important to the (Tovei'nraent, and which need 
 such vigilant, unrelenting attention to secure their full enforcement 
 against the railroad companies. 
 
 Mr. TowNSEND. You favor the establishment of a special court? 
 
 Mr. HixEs. I say that if anything of this sort is established it cer-. 
 tainly should not be vested in a body that has these functions. It 
 ought to be a separate tribunal and not charged with any of these 
 functions. 
 
 Mr. Richardson. Is your argument along the line that the raiii'oads 
 themselves ought to have the entire power of making rates? 
 
 Mr. HiNES. No, sir; they ought to be regulated. I say they ought 
 to be regulated. 
 
 Mr. Richardson. By whom :■ 
 
 Mr. Hikes. By the Government. They can be regulated now by 
 the courts at the instance of the Interstate Commerce Commission. 
 
 Mr. Richardson. By act of Congress, or by the courts, or bj' the 
 Commission? 
 
 Mr. HiNES. I say they can be regulated now. 
 
 Mr. Richardson. 1 am asking you for your idea. You are very 
 well informed about it. Should it be by act of Congress, or by the 
 Commission, or by a courts 
 
 Mr. Hikes. You have necessarily to have an act of Congress, of 
 course. They can not be regulated by an act that will apply to all 
 conditions. You have to make a law and then provide a tribunal to 
 enforce the law. My idea is that these duties of the Commission are 
 proper; they ought to hunt out these violations and then enforce the 
 law, but they ought not to do that themselves, and it ought not to be 
 assumed that they are capable of discharging these judicial functions 
 
202 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 when they have thpse other functions to perform which are so incom- 
 patible with the judicial functions. 
 
 Mr. Adamson. You think the judicial functions ought to be disasso- 
 ciated from the operations of inspection and prosecution'^ 
 
 Mr. Hikes. Yes; and I think anything that requires a judicial atti- 
 tude ought to be disassociated from these other duties. They are all 
 important duties, and it is inconceivable to me how they can be cen- 
 tered in one person without interfering with the judicial attitude which 
 the case requires. 
 
 Mr. KicHARDSON. Do you think that the interstate court — the judi- 
 cial court, 1 mean — should be clothed with the power to say absolutely 
 and unqualifiedly what a rate should be? 
 
 Mr. HiNES. No, sir. M\' idea is that at least until the present law 
 is found inadequate there should be no tribunal erected to make and 
 regulate the railroad rates of this country. 
 
 1 say that the law now in force should be enforced, and I think it 
 would be adequate. 1 do not mean that ideal conditions would be 
 produced, because no condition is perfect, but I mean that there would 
 be a substantial correction of everj^ ti'aihc abuse that exists as far as 
 any law of any sort can be enforced. 
 
 Mr. Richardson. As I understand your answer, it is based on the 
 idea that a judicial body, a court, ought not to be clothed with the 
 legislative authoritj^. 
 
 Mr. HiNES. 1 do not think you can clothe a court with legislative 
 authority. You might call it a coui't, but it would not be a court; in 
 the nature of the case it would not be. It might be constituted as a 
 court, but it would not be if it had legislative authority. I say that 
 the Commission plan calls, and the Commission recognizes that it calls, 
 for the judicial attitude, and that that can not be expected where 
 these other functions are combined with it. 
 
 The Chairman. If you can finish in the morning, Mr. Hines, we 
 will let you occupy twenty minutes in the morning. 
 
 Mr. Hines. Very well, Mr. Chairman. 
 
 (Thereupon the committee adjourned until to-morrow, Fridav, Janu- 
 ary 20, 190.5, at 10.30 o'clock a. m.) 
 
 ACTION ON THE INTERSTATE-CO.MMEKCE LAW BY THE NATIONAL BOARD OF TRADE, 
 ; JANUARY 18, 1905. 
 
 The National Board o£ Trade, believing that the interests of the people demand not 
 only that rates of transportation should be reasonable and that there should be no 
 unjust discriminations or preferences, but also that there should be a more effective 
 governmental supervision of all transportation agencies, expresses the earnest hope 
 that Congress will in its wisdom, and as speedilj' as possible, enact such legislation as 
 will with justice to all interests concerned secure a more speedy and more effectual 
 correction of any abuses in transportation methods or operations which may, upon 
 due inquiry, be found to exist, and to that end that power be given to the Interstate 
 Commerce Commission to revise any rates found to be unreasonable or discriminat- 
 ing; the revised rates not to go into effect until the action of the Commission shall 
 have been, upon review, confirmed by the circuit court of the United States of 
 competent jurisdiction. 
 
 Resolved, That the National Board of Trade earnestly advocates legislation by Con- 
 gress to amend the interstate-commerce law so as to permit reasonable traffic agrees 
 ments by railroads, under the supervision and control of the Interstate Commerce 
 
PROPOSED AMENDMENT OV INTEBSTATE-COMMEECE LAW. 203 
 
 Commission, to the end that unjust discrimination may be prevented and reasonable, 
 uniform, and stable rates be established. 
 
 Resolved, That the act to regulate interstate commerce be amended, to wit, that 
 private car lines and terminal or originating railroads engaged in interstate commerce 
 be considered as common carriers and subject to the interstate-commerce act. 
 
 (The above was submitted by the chairman for the record January 
 19, 1905.) 
 
 Friday, Ja?i uary W, 1905. 
 The committee met at 10.30 o'clock a. m., Hon. William P. Hep- 
 burn in the chair. 
 
 STATEMENT OF WALKER B. HINES, ESQ.— Continued. 
 
 The Chairman. Mr. Hines, will you proceed? It has been sug- 
 gested by Mr. Hines and by one or two other gentlemen that they 
 would be glad if interruptions would not be made during their state- 
 ments, but that the members should make notes of whatever they 
 desire to inquire about and at the conclusion of a statement to make 
 those inquiries. Of course I do not want to dictate to any member of 
 the committee, but it is thought expedition might be secured if we 
 adopt that plan. 
 
 Mr. Hines. Mr. Chairman and gentlemen of the committee, I pro- 
 pose to devote the brief time allotted to me this morning to a discus- 
 sion of the judicial review that is practicable and proper in the event 
 any rate-making power is conferred upon any tribunal. The exercise 
 of a rate-making power by any tribunal will involve two steps. The 
 first is essentially judicial and is the decision whether or not the rate 
 or rate adjustment complained of i« unjust or unjustly discriminatory. 
 A decision as to whether an existing condition is reasonable or unrea- 
 sonable is in its nature judicial and has been so recognized b}^ all the 
 courts. 
 
 The second step in this exercise of the rate-making power is, when 
 the existing rate or adjustment has been found unreasonable, the fixing 
 of a rate for the future. The Federal courts ha^'e gone no further in 
 clearing up the law on that point than to hold that that is a legislative 
 and not a judicial act. The Federal courts have not thrown any light 
 on how far the courts can consider on review the reasonableness of a 
 legislative act. Of course difficulties in the way of an adequate review 
 of that question are obvious, and, I think, have been frequently sug- 
 gested to the committee. 
 
 Now, what the Federal courts will hold as to the extent of that 
 review is of course a matter of speculation, and I do not find in the Fed- 
 eral decisions anything that affords a satisfactory basis for a reasonable 
 prophecy on that point. I wish to suggest this idea, however, for the 
 consideration of the committee. There are undoubtedly instances in 
 which courts do pass on the reasonableness of legislative acts. A 
 familiar, illustration of that is when a court considers the reasonable- 
 ness of an ordinance of a city council. The doctrine on that point 
 seems to be that where the legislature has expressly authorized- the 
 municipality to do by ordinaince a specific thing, and the citj' council 
 
■204 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 does ordain that specific thing, the courts can not review the reason- 
 ableness of that thing, because it is the legislature itself that has deter- 
 mined that that thing is reasonable in authorizing the municipality to 
 do it. 
 
 But when the legislature delegates in general terms a power to a 
 municipality not to do a specific thing but to do generally things in the 
 discretion of the council, then the courts do consider the reasonable- 
 ness of the ordinances that are passed. I had a copy made of section 
 328 of Dillon's Municipal Coi'poration, fourth edition, and the latter 
 part of that section reads as follows: 
 
 What the legislature distinctly says may be done can not be set aside by the courts 
 because they may deem it to be unreasonable or against sound policy. But where 
 the power to legislate on a given subject is conferred, and the mode of its exercise is 
 not prescribed, then the ordinance passed in pursuance thereof must be a reasonable 
 exercise of the power or it will be pronounced invalid. 
 
 That is on the city council. I simply suggest that as an analogy 
 that may be of some assistance to the committee, and it does show 
 that in some instances courts do undertake to consider the reasonable- 
 ness of legislative action by a subordinate tribunal, although they do 
 not undertake to consider the reasonableness of legislative action by 
 the supreme legislative body itself. 
 
 Now, it is mere speculation to say to what extent, if at all, the 
 courts of the United States would apply that rule to the judicial review 
 of the reasonableness of an act'of a commission in fixing a rate for the 
 future. But 1 suggest that analogy for what it is worth in view of 
 the fact that there is so much uncertainty as to what the court could 
 or would do in that dii'ection. I suggest that in the event any rate- 
 making power is conferred, certainly the courts ought to be given 
 expressly the power to review that part of the proceeding which is 
 essentially judicial and concerning which the courts can undoubtedly 
 exercise a power of review, and that is to review the decisions of the 
 rate-making tribunal upon the preliminary question whether the rate 
 or adjustment complained of is reasonable or unreasonable. 
 
 That is a jurisdictional question and can properly be submitted to the 
 coui-t for consideration, and undoubtedly ought to be so submitted in 
 view of the grave doubt as to the extent to which the courts would 
 feel authorized to exercise a power of judicial review as to the reason- 
 ableness of a rate fixed for the future. 
 
 There is a practical question involved here. All the gentlemen of 
 the committee doubtless fully appreciate that the courts are extremely 
 reluctant to interfere with the findings of tribunals on questions of 
 fact. Whether an existing rate is unreasonable or whether a rate is 
 reasonable for the future is unquestionably a question of fact. Courts 
 do not overturn the findings of juries on questions of fact except in 
 cases of gross palpable mistake on the part of the jury. 
 
 Courts of equity, when matters have been referred to a referee for 
 investigation and report on the facts, do not overturn those findings 
 without the clearest evidence of mistake. If the Congress shall declare 
 that any tribunal is a proper tribunal to decide whether an existing 
 railroad rate is unreasonable and what shall be the reasonable rate for 
 the future, thereby showing the confidence of Congress in the ability 
 of that tribunal to pass correctly on that delegated question of fact, 
 clearly the courts by analogy to those principles that I have referred 
 
PROiPOSED AMENDMENT OF INTEESTATE-COMMEECE LAW. 205' 
 
 to as obtaining in regard to common law in equity courts, and in def- 
 erence to the views of Congress, will not attempt to interfere with the 
 decisions of that tribunal unless such decisions are clearly, and I might 
 say palpably, incorrect. 
 
 Some of the questions involved are of the most complicated charac- 
 ter, and the courts always are reluctant to take upon themselves the- 
 heavy burden of going through a vast mass of detail for the purpose- 
 of finding that a tribunal specially selected for deciding the facts has 
 decided those facts improperly. So that there is a practical difficulty 
 in the waj' of any judicial review that may be adopted, and the prob- 
 ability is that every doubt will be resolved in favor of the finding of 
 the tribunal primarily authorized and required to make a finding. 
 The necessity for a judicial review of any rate made by any rate-making-^ 
 tribunal has, 1 think, been recognized throughout all the discussion 
 that has taken place on the question. 
 
 Nobody has suggested that any commission ought to make rates 
 which could not be judicially reviewed. That being true, it wouldi. 
 seem necessarily to follow that in view of the doubts concerning any 
 judicial review that can be provided Congress ought to make it just as 
 full as possible, and when it has done that, even then every doubt is 
 going to be resolved in favor of the rate-making ti'ibunal. To make 
 it as full as possible it seems to me it is absolutely necessary to pro- 
 vide that the court shall review the jurisdictional question whether- 
 the rate complained of is reasonable or unreasonable, for that is the 
 only essentially judicial question in the proceeding. It is absolutely 
 certain that the court can review, although even then it will resolve 
 every doubt in favor of the finding of the lower tribunal. 
 
 The remaining question to be considered is as to whether it shall be 
 considered before or after the execution of the finding of the tribunal. 
 It would seem at first blush that to state that question was to answer 
 it; that in a country where due process of law is the corner stone of 
 the government, it would not be necessary to ask the question whether 
 the decision shall be put into effect before or after a judicial consider- 
 ation of it. But it has been urgently insisted that the decision of this 
 rate-making tribunal should go into effect at once and let the judicial 
 review take place afterwards. In its essence that is obnoxious to the 
 principles of the government that seeks to accomplish due process of 
 law. It is particularly obnoxious in this case because, as I pointed out 
 yesterday, the present Commission, or anj'' tribunal that is likely to 
 be given the rate-making power, is so constituted and has such duties 
 imposed on it that it is essentially a nonjudicial tribunal and exercises 
 functions which make it almost impossible to assume a judicial attitude. 
 Without enumerating those functions in detail, it is sufficient to say 
 again that the Commission acts as detective, prosecutor, plaintiff, attor- 
 ney for the plaintiff, and is throughout regarded as the champion of 
 the shippers. 
 
 Now, to say that a commission so constituted shall determine the 
 preliminary question, which is essentially judicial, that a rate com- 
 plained of is unreasonable, and upon that determination shall take the 
 power to fix a rate for that service out of the hands of the railroad 
 company and substitute therefor a rate made by the commission 
 itself, and that that determination shall be put into execution before 
 there is any opportunity for any real court to give a judicial considera- 
 
20(i PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 tion to those questions, it seems to me is utterly inconsistent with 
 everything that is fair and just in a free government. 
 
 Moreover, it is not merely the direct loss which the railroad com- 
 
 gany would suffer pending" a judicial consideration of the question, 
 •ther rates would be involved which are not directly affected by the 
 order, and there would be direct losses to them. And in addition to 
 that, pending this judicial review, commercial conditions would adjust 
 themselves to the new rate put into effect, and after that judicial review 
 had taken place it might be impossible, even though the courts decided 
 that the Commission was wrong throughout, for the railroads as a prac- 
 tical matter to restore the status that existed before the (Commission 
 decided that that old rate was unreasonable, and thereupon took the 
 rate-making power out of the hands of the railroad company. And 
 this is a matter which is not only of vital importance to the railroads, 
 but it is of vital importance to communities. 
 
 If the relative commercial importance of communities is to be fixed 
 by the orders of this Commission, they are vitally interested ia having 
 the matter judicial!}^ determined before a decree is put into effect which 
 may for all time affect their relative commercial status, no matter 
 what the court may afterwards decide upon it. The time for the judi- 
 cial review is when that judicial review will be undoubtedly effective, 
 and the time for due process of law is befoi'e and not after execution. 
 The latest expression on the part of any commercial body that has 
 come to my attention on this question is the expression of the National 
 Board of Trade which was given in this citj^ a day or two ago after a 
 full discussion of both sides, and that board then adopted a resolution 
 that the rates made by the Commission ought not to go into effect 
 until after a judicial review. 
 
 Those are the only two points that 1 will undertake to cover, in 
 view of the brief time that 1 have. I feel that 1 have already tres- 
 passed too long on the time of the committee and trespassed too much 
 on the time of other gentlemen who desire to be heard. 
 
 Mr. TowNSEND. I would like to ask you one question. I do not 
 know what you said before I came in, but you claim that if a review 
 is to be had by the court of the rate it should also have power to 
 determine the reasonableness of a rate as found by the Commission. 
 Have you thought anything about the question as to whether the 
 court, if one is established, should have the power to determine a rate 
 other than that fixed by the Commission or that stated in the tariff 
 schedule of the road? 
 
 Mr. HiNES. I believe that question is probably disposed of bj^ the 
 decision of the Supreme Court in the maximum rate case, where they 
 held that fixing a rate for the future was a legislative function. Now, 
 any modified rate which the court would fix for the future would be 
 fixed by the exercise of a judicial function, and I am afraid that the 
 court would hold that a court could not exercise that power. 
 
 Mr. Mann. On the question of the review of the action of the Com- 
 mission by the court, suppose we enact a law providing a method of 
 review as set out in the law, is it your judgment that the companies 
 affected would be obliged to follow that method or would they have 
 the right to file the ordinary bill in equity asking for an injunction on 
 the ground that the rates complained of were in violation of the Con- 
 stitution of the United States? 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 207 
 
 Mr. Htnes. I have not given that question mature consideration, 
 because it has not before been presented to me. My offhand suggestion 
 is that the courts would be inclined to say that the provision I'or review 
 in the law was conclusive. 
 
 Mr. Richardson. Has not the Supreme Court of the United 
 States, in reference to where such commissions placed a rate too high 
 or so high that there was not a fair profit on the property of the rail- 
 road or its investments, and so forth— the equipment, and so forth— 
 invariably held where such a rate as that was iixed that it was confis- 
 catory and that they would set it aside ( 
 
 Mr. HiNEs. The only cases that have arisen that the Supreme Court 
 has passed upon are cases where the rates iixed by the State commission 
 did not yield enough to pay operating expenses. 
 Mr. Richardson. Well? . 
 
 Mr. HiNES. Now, how far the court would go in determining what 
 margin of profit would be allowed is of course speculative. They say 
 that a fair margin of profit ought to be allowed. 
 
 Mr. Richardson. Did not the court in doing that exercise its judg- 
 ment as to whether the rate was reasonable or unreasonable? 
 Mr. HiNES. It did to that extent. 
 Mr. Richardson. Yes. 
 
 Mr. HiNES. As to whether it was so unreasonable as to confiscate 
 the company's profit. 
 
 Mr. Wanger. I understood you to say yesterday, that where the 
 Commission found a certain rate to be unjust and unreasonalile, and. 
 enjoined the railway company to desist from charging that particular 
 rate, and also suggested what the just and reasonable rate ought to be, 
 that if the carrier reduced the rate from what it was charging, but did 
 not get down to the rate suggested by the Commission, the Commis- 
 sion might go into the circuit court and ask for an injunction to 
 restrain the company from collecting the new rate which it had fixed. 
 Did 1 understand you correctly? 
 
 Mr. HixES. Yes, sir; that was my statement of the law. 
 Mr. Wanger. Under what section of the act is that power conferred ? 
 Mr. Hines. Under the Elkins law the Commission has the power to 
 request the district attorney to bring a suit in the circuit court in the 
 first instance to-enjoin any form of discrimination, not merely a dis- 
 crimination by giving a secret rebate, but a discrimination between 
 tariff' rates. That was decided by the Supreme Court in March or 
 April, 1903, in the case of the Missouri Pacific Railroad Company 
 against the Commission. 
 
 Now, any injustice in rates can undoubtedly be established on a 
 relative basis. That is, if the adjustment is unjust, it can be estab- 
 lished as an unjust discrimination between that commodity and 
 some other commodity' or between that localit}' and some other localitj^ 
 Therefore, in my opinion, in anj' such case the Commission can exer- 
 cise the power which is given by the Elkins law to go direct into court 
 and seek to enjoin the continuance of that discrimination. 
 
 In addition to that, in any case where the Commission has had a 
 hearing and has decided that an existing rate is unreasonable, and has 
 ordered its discontinuance, and the carrier has reduced the rate, but 
 not to the point which the Commission has fixed, then as the Commis- 
 sion has ah-eady all the facts, it could have a summary hearing, and in 
 
208 PROPOSED AMENDMENT OF INTEKSTATE-COMMEECE LAW. 
 
 ten, twenty, or thirty days it could make a new order and institute 
 proceedings on that," and follow precisely the procedure outlined in 
 the old bill with practically no delay, and secure the discontinuance of 
 the new rate. 
 
 Mr. Stevens. I do not know whether the question was asked before 
 I came in on the question of the power of the court to fix a rate for the 
 future. Supposing that a bill something like one of these pending 
 before the committee was passed and a rate of 12 cents a hundred was 
 in existence between two points and complaint was made of that rate : 
 by the shipper and reparation was demanded for unjust charges and a 
 hearing was had and a rate of 8 cents was fixed by the Commission ; 
 and an order for reparation made. Then suppose the railroad, feeling j 
 itself aggrieved, took proceedings for review before the court, and ! 
 the court adjudged that S cents was too. low and that 10 cents a hun- 
 dred was a just and reasonable rate, and made an order for its estab- 
 lishment, would the court, in that same proceeding, if the petition of 
 complaint was broad enough, also give an injunction against the con- 
 tinuance of anv rate over and above 10 cents? 
 
 Mr. HiNES. I am afraid that the decision of the Supreme Court in 
 the Maximum Rate case would be in the way and it would result that 
 fixing the rate at 10 cents for the future would be decided to be a leg- 
 islative function which the court would not exercise. 
 
 Mr. Stevens. The court of review held that 10 cents was a just and 
 reasonable rate, as shown by that litigation in that case. 
 
 Now. would not the court, if the papers and proof authorized it, 
 issue a mandatory process against charging more than a reasonable 
 rate? 
 
 Mr. HiNES. It might issue a general injunction against anyone 
 charging more than a reasonable rate. 
 
 Mr. Stevens. If it found 10 cents was a reasonable rate and ordered 
 reparation on that basis, would not that fix 10 cents as the resonable 
 rate? 
 
 Mr. HiNES. I am afraid it would not. I am afraid that point was 
 prett}"^ prominently involved in the Maximum Rate case, and that could 
 not be done by a coiirt. 
 
 Mr. Mann. That is, that the court would not say that a rate to-day 
 of 10 cents would necessarily be a reasonable rate to-morrow? 
 
 Mr. HiNES. I think that is practically decided in the maximum-rate 
 case. 
 
 Mr. Stevens. It would hold that 10 cents was a reasonable rate 
 between those parties in those circumstances? 
 
 Mr. Mann. That is, after to-day ? 
 
 Mr. Stevens. Yes, sir; that is shown in the occasion for which this 
 legislation arises, of course. But this is a continuing rate and it 
 includes a continuing wrong, and can not the court guard against a 
 continuance of that wrong, and prevent a multiplicity of actions by an 
 injunction against that wrong? 
 
 Mr. HiNES. If it does that, it seems to me that it is making a rate 
 for the future. 
 
 Mr. Stevens. It does not make a rate for the future; it enjoins 
 against a wrong that has existed. 
 
 Mr. HiNES. If it enjoins against the charging of more than 10 cents, 
 it seems to me that is fixing 10 cents as the maximum rate for the future. 
 
 Mr. Mann. Do you think there is any doubt about our power — the 
 
PROPOSED AMENDMENT OE' INTERSTATE-COMMERCE LAW. 209 
 
 legislative power — to say that when the court ascertains that 10 cents 
 is a reasonable rate to-day, that rate shall be a reasonable rate for a 
 certain time in the future, and to direct the court to fix it ? 
 
 Mr. HiNES. That is a new aspect of the matter that has not been 
 presented to the Supreme Court. It seems to me that there is a rea- 
 sonable basis for a distinction there; that it is in the power of the leg- 
 islature to declare that a rate that is reasonable to-day shall not be 
 exceeded for a specific length of time, and that the legislative act there 
 would be by virtue of an act of Congress and not necessarily by virtue 
 of a decision of the court. I think there is room for a distinction 
 there. I have not had opportunity to think that over, but I do not 
 think thaA question is foreclosed by the maximum-rate case. 
 
 Mr. TowNSEND. You and Mr. Spencer both have claimed, as I under- 
 stand you, that if the railroads sustain a loss during the lean years, or 
 during depressed years, they would have a right to recoup damages 
 for that loss, or to recover that loss by extra charges thereafter or 
 during prosperous years. Am I correct about that? 
 
 Mr. HiNES. I do not claim that the railroad companj^ has an abso- 
 lute right of that sort, and it certainly has no right to prepare for lean 
 years by charging unreasonabl}^ high rates in prosperous years. But 
 I sa^^ that the fact that a railroad compan}'^ makes a reasonabl}'^ large 
 or considerable return on its investment in prosperous j'ears is no rea- 
 son why its return for those A'ears should be reduced, provided its rates 
 are reasonable and not extortionate, and there is a verj^ strong, practi- 
 cal reason for that, which arises out of common justice, that a railroad 
 company which has to take all the risks for lean years should be 
 allowed to make as large profits in the prosperous years as can be done 
 by charging just rates. 
 
 Mr. TowNSEND. On what are you going to figure the profits — on the 
 actual capitalization of the road? 
 
 Mr. HiNES. The Supreme Court of the United States has held that 
 the actual present fair value of a property is the basis for a considera- 
 tion of these questions. 
 
 Mr. TowNSEXD. In the case of the Southern Railway Company, that 
 was mentioned by Mr. Spencer, that system is composed of a number 
 of roads that were bankrupt, which were absorbed b}^ this system when 
 they were in a bankrupt condition, resulting from tie depressed condi- 
 tions of trade during the lean years, as we call them. Now, do you 
 maintain that the people should allow the Southern Railroad system 
 to recover its losses based on the original capitalization of those bank- 
 rupt companies? 
 
 Mr. HiNES. I do not know anything about the facts of that particular 
 case, but I do not maintain that rates must be high enough to pay a profit 
 necessarily on the original capitalization. The Supreme Court has 
 held that that is a. question that is entitled to fair consideration under 
 the facts of each case. 
 
 Mr. TowNSEND. This loss that was sustained by the railroads during 
 these years was not the only loss that was sustained. The people gen- 
 erally who patronized the I'ailroads sustained losses during those same 
 years ? 
 
 Mr. HiNES. Yes, sir; but the people get the chance to make that 
 up in the prosperous years, and my contention is that the railroads 
 ought to have, within fair limitations, the same chance. 
 
 I c 1^-05- — 14 
 
210 PBOPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 Mr. TowNSEND. They would not have a chance to make that up 
 from the railroads if the railroads were to increase their rates for 
 transportation ? 
 
 Mr. HiNES. I do not think that follows. If you will allow me to 
 give an illustration 1 would like to do so. Take the production of 
 iron. The rate on iron moves up or down with some relation to the 
 pi'ice of iron. During the depression in the iron business, about 1895, . 
 1896, and 1897. the rate on pig iron from Birmingham, Ala., to Louis- 
 ville, Ky., which is the basis rate, was reduced to f2 a ton, which was 
 the lowest rate in its history. The iron business began to improve by 
 leaps and bounds, 1 think, about 1899. That rate was then raised to 
 $2. 50, which was the standard rate. Then iron went up to a, phenome- 
 nal price, and the ironmasters were making tremendous profits. Every 
 steel rail that the railroad companies were buying was costing a great 
 deal more, than it was in the previous years, and all sorts of materials 
 into which iron entered were costing the railroads more. 
 
 They then raised the rate from Birmingham, Ala., to Louisville, 
 Ky., to f3. That did not prevent the ironmasters from making an 
 enormous profit. That gave the railroads a slight share in the great 
 prosperity. As soon as the iron business began to get slack again and 
 iron went down, that rate went down to $2.50 a ton, which is the stand- 
 ard basis, and if any severe depression should come it would probably 
 fall to $2; and if the railroads increase rates to a reasonable degree in 
 times of unusual prosperity, such an increase does not absorb any great 
 part of the profit the people make in those times. It is simply shar- 
 ing, in a very modest manner, in the profits the people make in those 
 prosperous times. 
 
 Mr. Richardson. It seems to me, and it struck me more forcibly 
 than any other part of your statement, from the answer you made to 
 Mr. Mann's question asked a few moments ago, and I want to under- 
 stand you fully on that subject if 1 can. Your answer to that question 
 involved this idea, that the Maximum Rate case tended to show that the 
 Supreme Court would not fix a rate for the future, but that the 
 hypothesis which Mr. Mann made presented a new view, and a doubt- 
 ful one, and he thought possibly it might get rid of that view of the 
 Supreme Court for fixing a rate for the future. Give me, if you 
 please, as far as you can — and I know you can do it f ullj', on this mat- 
 ter of the hypothesis presented by Mr. Mann, and the view of the 
 Supreme Court heretofore as to fixing a maximum rate — or rather a 
 rate for the future. 
 
 Mr. HiNES. I have not had occasion to consider that point until the 
 suggestion was made this morning, but the distinction, it strikes me, 
 is this. If an act is passed which says in general terms that the court 
 shall fix what it terms a reasonable rate for transportation by rail, 
 then the Maximum Rate case comes in and says that fixing that rate for 
 the future is a legislative function which it can not exercise. 
 
 Mr. Richardson. If Congress should pass an act saying that what- 
 ever I'ate the revising court fixed should be the rate and stand as the 
 ■ rate, that, you think, would get rid of the difficulty of the court acting 
 in a legislative capacity? 
 
 _ Mr. Hines. Yes, sir; I think that. The Maximum Rate case estab- 
 lishes the_ fact that the determination of what is a reasonable rate to-day 
 is a judicial question. 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 211 
 
 Mr. Richardson. Would not that encounter this objection, that 
 whatever could not be done directly could not be done indirectly? 
 
 Mr. HiNES. That is an entirely different question, I think, Judge 
 Eichardson. The difference impresses me in this way. It seems to 
 me that it is entirely competent for Congress to declare, subject, of 
 course, to the limitation that it should not result in confiscation of 
 property, but only subject to that limitation, that the existing rates 
 in this country to-day shall not be exceeded for twelve months. That 
 would be a legislative act. Now, it seems to me, if Congress can do 
 that, it can say that the existing reasonable rates in force to-day shall 
 not be exceeded for twelve months, and leave it to the courts to deter- 
 mine the essentially judicial question, what is the existing reasonable 
 rate to-day. 
 
 Mr. Adamson. Then if Congress enacts that a rate adjudged by a 
 court to be a reasonable rate shall remain the rate, it will not be obnox- 
 ious to the theory that it is vesting the one tribunal with the double 
 authority, legislative and judicial ? 
 
 Mr. HiNES. Offhand, that is my opinion. As I say, I never had 
 occasion to consider that question until this morning, but it seems to 
 me that makes a distinction. 
 
 The following was submitted for the record by Mr. Adamson Jan- 
 uary 19, 1905: 
 
 New York, N. Y., January 16, 1905. 
 Hon. W. C. Adamson, 
 
 Member of Congress, Washington, D. C. 
 My Dear Sir: Referring to my conversation with you on Saturday last, at which 
 time you furnished me copy of the "Hearing before the Committee on Interstate and 
 Foreign Commerce of the House of Representatives on January 9 and 10, 1905," I 
 note with particular interest the testimony in regard to the peach shipments from 
 Georgia. 
 
 A large majority of the peaches forwarded from the Southern States originate on 
 the lines of the Central of Georgia Railway, and during my connection with that 
 company, as vice president and president from the latter part of 1896 to the last 
 month of 1903, nothing was left undone by myself or other officials of the company 
 to foster and encourage the peach industry in Georgia and Alabama. 
 
 The peaches shipped from that section and the orchards containing millions of 
 trees that were planted along the lines of that railway will bear testimony as to what 
 was accomplished during that period. 
 
 The difficulties encountered in shipping the crop of 1896 was detailed to me by 
 the operating officials, and it was decided after an exhaustive study of the situation, 
 at which time the views and suggestions of the principal growers were obtained, that 
 it was to their interest as well as from the railway standpoint that an agreement 
 should be made with a company who would guarantee the furnishing of the proper 
 cars, including labor and ice, and see that each and every car was projierly attended 
 to, not only at the originating point, but at certain intermediate stations up to its 
 point of destination. 
 
 The Armour Car Lines were selected, and at all times performed their part of the 
 agreement with satisfaction. 
 
 During certain years, owing to shipments exceeding the estimates, they were 
 obliged to transport ice from points in Illinois and Indiana; again, ice was brought 
 from the coast of Maine by vessels to Savannah and thence by rail to the peach- 
 shipping stations. One year, after careful preparations were made to handle the 
 crop, owing to climatic conditions there was not a car of peaches forwarded. 
 
 From my knowledge of the situation I can positively state, first, a bulletin was 
 posted each morning by the railroad company, stating the number of cars forwarded 
 the day before, and their destination, so that each shipper would know the exact 
 situation. 
 
 Second. The Armour Car Line people, or Armour & Co., did not purchase any of 
 the peaches, and were in no manner interested in the purchase and sale of same. 
 
 Third. They had no voice in the distribution or allotment of the cars that was 
 within the province of the railway company through its authorized agents. 
 
212 PROPOSED AMENDMENT OE' TWTEBSTATE-COMMEECE LAW. 
 
 Fourth. The tariff schedules for refrigeration, which included all cost for that 
 service, covering the icing of the car for the purpose of cooling same before placing 
 the fruit in it and all icing and care of cars at all intermediate stations to its terminal 
 point, was placed on the waybill by the originating line, and settlement made 
 with them to the Armour Oar Line, not by the terminal line, as indicated in the 
 testimony. 
 
 Having familiarized myself with the cost of refrigeration by the Armour Car Line, 
 I have no hesitation in saying that in my opinion the same is fair and reasonable, as 
 well as the charges made by the railway for transportation. The canteloupe and 
 plum shipments are included with the peaches. 
 
 The movement of the peach crop is a transportation problem peculiar to itself. 
 It occupies the space of time from a month to six weeks' duration. Li my judgment, 
 the enactment of any legislation effecting the present arrangements that the railways 
 are able to make with the car line would result in the latter withdrawing from that 
 service. They can not afford to decrease the cost of refrigeration and give satisfactory 
 service. 
 
 The railways are unable to own and furnish the special equipment to handle the 
 crop within the limited time. Consequently to curtail the existing satisfactory 
 arrangements or detract from it in any manner would prove an injustice and financial 
 loss to the southern producer of fruits and stop the rapid progress now being made. 
 
 The interest I feel in the success of that industry owing to my past connection 
 with it, and the kind treatment accorded me at all times by the producers, is my 
 excuse for inditing this appeal to you. 
 
 Thanking you for the opportunity, I remain, dear sir, yours, very truly, 
 
 JoHM M. Egan. 
 
 STATEMENT OF H. L. BOND, JR., ESa. 
 
 Mr. Chairman and gentlemen, as I labor under the disability of 
 being a railroad attorney, perhaps I ought to say that I do not repre- 
 sent more than one railroad, and possibly in some matters do not 
 reflect the opinion of other railroad counsel. Possibly the committee 
 will hear me on the theory that I have never been in the legislature or 
 held any public ofiice, and therefore, under Judge Crump's definition, 
 am one of those entitled to speak on these matters — at least in Virginia. 
 [Laughter.] 
 
 Now, I want to avoid, as far as I can, a repetition of what has been 
 so well stated by Mr. Hines. 1 want to say that in my opinion, and I 
 think in the opinion of every other railroad lawyer, he has not in any 
 respect exaggerated the importance of the matters here, or the diffi- 
 culties of the jjroposed centralization of rate making. I think I can 
 perhaps add to what he has said only by calling the attention of the- 
 committee to specific instances. 
 
 Mr. TowNSEND. What company do you represent? 
 
 Mr. Bond. 1 am second vice-president of the Baltimore and Ohio 
 Railroad Company. I hold in my hand the official record of the 
 Maximum Rate case — by the way, the only copy the Commission had. 
 The order of the Commission in that case was made on the complaint 
 of the Chicago Freight Bureau against 35 railroads. The order is as 
 follows: 
 
 It is ordered and adjudged that the above-named defendants, and each of them, 
 engaged or participating in the transportation of freight articles enumerated in the 
 Southern Railway and Steamship Association classification as articles of the first, 
 second, third, fourth, fifth, or sixth class, do, from and after the 10th day of July, 
 1894, wholly cease and desist, and thenceforth abstain from charging, demanding, 
 coUectmg, or receiving any greater aggregate rate or compensation per hundred 
 pounds for the transportation of freight in any such class from Cincinnati, in the 
 State of Ohio, or from Chicago, in the State of Illinois, to Knoxville, Tenn., Chatta- 
 nooga, Tenn., Home, Ga., Atlanta, Ga., Meridian, Miss., Birmingham, Ala., Annis- 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 213 
 
 ton, Ala., or Selma, Ala., than is below specified in cents per hundred pounds under 
 said numbered classes', respectively, and set opposite to said points of destination, 
 that is to say 
 
 And here follows the complete tariff for the six classes, and then 
 the order continues: 
 
 And said defendants and each of them are also hereby notified to further readjust 
 their tariffs of rates and charges so that, from and after said 10th day of July, 1894, 
 rates for the transportation of freight articles from Cincinnati and Chicago to south- 
 ern points, other than those hereinabove specified, shall be in due and proper relation 
 to rates put into effect by said defendants in compliance with the provisions of this 
 order. 
 
 And it is further ordered, That a notice embodying this order be forthwith sent to 
 each of the defendant corporations, together with a copy of the report and opinion 
 of the Commission herein, in conformity with the provisions of the fifteenth section 
 of the act to regulate commerce. 
 
 Mr. Spencer has told you that that affected two thousand rates. I 
 have the estimate of the traffic officers of some of the southern roads — 
 informal, of course — that that order would have meant a loss of revenue 
 of at least $3,000,000 per annum; or, let us say, it would have destroyed 
 the borrowing power of those railroads to the extent of $50,000,000. 
 
 Now, we must admit, I think, that a $50,000,000 case is an impor- 
 tant matter. It may have been only a coincidence, but this order was 
 passed, as you will remember, in 1894, when these railroads were flat 
 on their backs and a large part of the mileage of the present Southern 
 Railway was in the hands of receivers. The decision of the Supreme 
 Court in the Maximum Rate case, which has been so bitterly com- 
 plained of as depriving the Commission of this power, was made in 
 1897; and it was onh^ following that decision that the revival in the 
 railroad prosperity and credit of this country took place. That may 
 be only a coincidence, but in the minds of a great many railroad peo- 
 ple, investors and jmanagers, it is more than a coincidence. They think 
 that that decision of the Supreme Court removed a cloud fi-om the 
 credit of the railroads of this country, and that the legislation pro- 
 posed here is legislation that will recreate that cloud on the railroad 
 credit. Now, that is a view. But, whether we may agree with that 
 or not, I think the committee must agree that these matters are of 
 great importance. 
 
 Let us look at it, then, from the point of view of the public, and 
 not simply of the railroads. In the first place, what is the situation 
 of the railroads of this country to-day? It is only two years ago that 
 every one of the trunk lines was refusing to take cars, refusing to 
 accept freight from its western connections. Why was that? Obvi- 
 ously because the railroads of this country had not kept up with the 
 growth of the countrj'; and the reason they had not kept up with the 
 growth of the country was because of the depression that existed from 
 1893 on to 1899 or 1900. Now, unless these railroads have credit it 
 is impossible for them to keep up with the growth of this country, 
 for the only way they can get the money to keep up with that growth 
 is to get it either 'on stocks or bonds; and if you deprive the rail- 
 roads of this country of their credit the growth. of the country will 
 stop. It is a physical impossibility for the country to grow without 
 improved transportation facilities. It is not a question of rates, it is 
 a question of facilities. There is not a merchant in the country who 
 will not tell you that two years ago he did not care what rate he 
 was charged if he could only get a car. 
 
214 PROPOSED AMENDMENT OF INTEESTATE-COMMEECE LAW. 
 
 Now, in another aspect let us look at the public importance of these 
 matters. In 1890 the New York Board of Trade and Transportation 
 filed a complaint with the Interstate Commerce Commission that the 
 railroads running from the ports of the Atlantic seaboard and of the 
 Gulf were charging less on imported merchandise from Europe car- 
 ried on through bills of lading than they charged on merchandise 
 originating at the seaboard, and that that was an unjust discrimination 
 under the interstate-commerce law. Among the defendants were prac- 
 tically all of the great trunk lines and a great many of the other roads; 
 among the others were the roads from the port of New Orleans, at 
 least the Texas and Pacific. The Commission decided January 29, 
 1891, that that method of making rates was illegal — was discrimi- 
 natory — and they proceeded, by a bill in equity in the circuit court in 
 New York, to enjoin ail the defendants. They did not catch some of 
 the defendants in New York, but they caught the Texas and Pacific 
 Railway, and thej'' obtained an injunction against the Texas and Pacific 
 to restrain that company from charging less on import trafiSc than it 
 charged on traffic originating in the port of New Orleans — in the city 
 of New Orleans. 
 
 That case was affirmed by the circuit court of appeals, sitting in 
 New York, June 3, 1893, and it went to the Supreme Court of the 
 United States and is reported in 162 U. S., 197. The Supreme Court 
 (March 30, 1896) held that the present act to regulate commerce was 
 an act for the promotion of commerce and not for its restriction and 
 destruction; that under the terms of that act, under the third and 
 fourth sections of the act, the commercial conditions affecting this 
 import traffic could be considered and must be considered, and that the 
 failure of the court of appeals and the circuit court and the Interstate 
 Commerce Commission so to consider it required a reversal. Now, 
 what did that do for the port of New Orleans ? It kept open that port. 
 It was that decision that made the growth of that port possible. The 
 Commission had it closed. If the provisions of the Quarles-Cooper 
 bill had then been law the port would have been closed to imports from 
 1891 to March 30, 1896. Of course, the trunk lines were not sorry to 
 have it closed, but lam just giving that as an illustration of the impor- 
 tance of these decisions, the far-reaching effect on railroads, and not 
 merely on railroads but on the communities. 
 
 It is not so much the possibility of any bias against railroads on the 
 part of the Interstate Commerce Commission or any other commission 
 that creates apprehension with those who think — who have to think — 
 about these matters. You take any set of men and you give them an 
 occupation that takes all their thought and mind, and the stronger- 
 minded those men are the more apt they are to evolve some theory; 
 the more apt to want to shape the world to suit what they believe — and 
 sincerely believe — to be the right course. Why, even as I may say in 
 confidence to the lawyers present, we sometimes believe whena mem- 
 ber of the bar is elevated to a court beyond which.there is no appeal, 
 that his views on political economj^ and government generally have 
 some effect on his views of the law. Much more is that the case and 
 it is bound to be the case with any commission that is appointed to deal 
 with such a matter as the transportation of this country. Andweare 
 not speaking now from any theory; we have only to look at the history 
 of the subject. 
 
PROPOSED AMENDMENT OF INTERSTATE-OOMMEECE LAW. 215 
 
 Take the very first case that went to the Supreme Court from the 
 decision of the Commission, which was the Party Rate case. The 
 Commission in that case decided that it was a violation of the law for 
 the Baltimore and Ohio Railroad Company to sell tickets to parties of 
 ten or more at 2 cents a mile, because it was a discrimination against 
 the first-class passenger. Of course the Supreme Court, when the case 
 got there, decided that there was no justification in the law for any 
 such opinion. The Commission's decision, as you will perceive, was 
 not in any way, shape, or form directed against the carrier. It was a 
 decision that absolutely would have driven out of business every small 
 traveling theatrical company in this country, and would have stopped 
 your baseball nines. 
 
 Mr. Mann. That would be an attack upon all our institutions. 
 
 Mr. Bond. Yes; our national game. But that fact did not appeal 
 to the Commission, although it was ur^ed on them with tears. They 
 had conceived a theory as to how passenger rates must be adjusted in 
 the country, and had decided that they must be spread evenly over all 
 the passengers, and that if I, as a member of a baseball club, traveled 
 in the same car with you, who were a first-class passenger, I was some- 
 how injuring you if I did not pay 3 cents a mile and you had to pay 3 
 cents a mile. Now, that was a pure theory, and that is not the onlj^ 
 instance. This instance of the decision as to the import rates was just 
 simply another theory. They thought — they found — that unless they 
 restricted the carriers to the same rate on imports that they charged 
 on local business from the seaports that there was nothing, as they 
 said, in the act to cover the business, and they could not control it, 
 the whole theory being that they had to spread this act so as to control 
 everything. That was purely a theory. 
 
 The same wa}' in all these cases on the long and short haul. Long 
 after the courts had decided that the commercial conditions affecting 
 the traffic, the competition of markets, the competition of other car- 
 riers — although they were rail carriers— long after the courts had 
 decided that those matters were circumstances and conditions to be 
 considered under the fourth section of the act, the Commission went 
 on and tried to distinguish the cases and say that this case or that case 
 was not covered by the decisions of the court. Thej^ just hung on to 
 that theory to the bitter end; and it was only in 1902 that Chairman 
 Knapp told you here that these decisions had practically destroyed the 
 fourth section of the act. Now, that was a theory — in perfect good 
 faith, of course, but still a theory — that would have destroyed the 
 whole fabric of the business of the South. The whole South is built 
 up on the other theory, and no business man in the South would have 
 known whether he was located in the right place or the wrong place. 
 Now, theorizing is a quality of the human mind; it is not confined to 
 any body of men, it is universal; and it is one of the serious things to 
 guard against in this matter. 
 
 Mr. TowNSEND. Is not that also possessed by the railroad men who 
 fix tariffs ? 
 
 Mr. Bond. There seems to be an entire misconception of how rates 
 and tariffs are fixed by railroad men. Of course the tariff's are a his- 
 torical fabric; but the tariffs of this country to-day, all the tariffs that 
 are made to-day are made bjj^ the shippers and the railroads together. 
 They are made by two sets of people who. have one common interest 
 
216 PROPOSED AMENDMENT OF INTEKSTATE-COMMEECE LAW. 
 
 and that common interest is that the traffic shall move. Unless the 
 traffic moves, there is nothing in it for the railroads. Unless the 
 traffic moves there is nothing in it for the shippers; and they have 
 got to come together on a proposition that will enable the traffic to 
 move; and that is the distinction, and the vital distinction, between 
 the making of rates as they have been made in this country, by the 
 shippers and the railroads in conference, and the making of rates by a 
 governmental board that sits up and evolves a theory of how the laws 
 of trade should operate, what community should have an advantage, 
 and how much of an advantage, and then tries to demonstrate that 
 theory despite the laws of trade. 
 
 Now, that is the vital and essential dijBference. And when you hear 
 people talking of railroads sitting up and making rates, they are talk- 
 ing about something they know nothing about. The railroads do not 
 sit up and make rates^, they can not sit up and make rates; they are 
 absolutely in the power of these commercial laws. They have got ,to 
 make rates that will get the commodities to market, that will enable 
 the commodities to move in competition with the same commodities 
 moving from some other source of supply, and what they have to do 
 is to agree with the shipper as to what rates will move the traffic. 
 
 And I want to say that it is not because we have not had able men 
 on the Commission, because we have had great ability on the Commis- 
 sion ; that their record in the courts is twenty -two misses to one bull's- 
 eye and two in the next ring. That is their record. [Laughter.] 
 That is not because they are not able men. It is because they are able 
 men, because they have been strong-minded men. But being strong- 
 minded men they would evolve a theory by which the business of this 
 countr}' was to be governed, and, unfortunately for them, the Supreme 
 Court said that there was no such theory in the law, and that the 
 theories they evolved were contrary to the spirit of our institutions. 
 
 I think that the committee must have appreciated from the state- 
 ment of Mr. Hines the further difficulty of the physical disability — 
 impossibility — of bringing to one central office in the city of Wash- 
 ington the questions which are under daily and hourly discussion by 
 thousands of railroad traffic men and shippers b};^ railroad throughout 
 this country. What he said there as to the changing of a rate, one 
 rate bringing all the others in, is illustrated by the order in the Maxi- 
 mum Rate case, which I have read to j'ou, and is absolutely true, as 
 he so graphically stated it. The rates in this country are not a set of 
 independent lines; they are a fabric. They are so interwoven every- 
 where that if you shorten one thread you will make a kink in that 
 fabric that may run almost anywhere. And there is not anybody in 
 the railroad world who can tell where it is going to run. 
 
 I want to call the attention of the committee to the fact that since 
 the passage of the act to regulate commerce the lines that use the offi- 
 cial classification have found it necessary to promulgate 26 of these 
 documents [indicating book]. 
 
 Mr. Mamn. Might I ask you if you could furnish to the committee 
 some copies of the official classification, of the last edition, and also 
 some copies of your schedule of rates? 
 
 Mr. Bond. I shall be very happy to do so. The schedule of rates, 
 if you cover all the commodity rates, would probably be something of 
 a volume, but I shall be glad to furnish it if you want it. As a mat- 
 
PROPOSED AMENDMENT OF INTEESTATE- COMMERCE LAW. 217 
 
 ter of history, perhaps of curious history, I have attached to this offi- 
 cial classification extracts from the acts relating to the Baltimore and 
 Ohio Railroad Company, the first railroad of any size in this country, 
 which show the rates and classifications in force on tliat road by virtue 
 of the statutes down to 1840. The final wind up, I will say, was that 
 with the exception of flour, marble, granite, soapstone, limestone, and 
 lime, the rate per ton per mile on the Baltimore and Ohio Railroad for 
 all articles was 8 cents per ton per mile, and prior to that time some 
 other articles, including whisky, had been transported at the rate of 
 ■t cents per ton per mile. The present official classification contains 
 9,800 articles. 
 
 The Chairman. That paper you have referred to there is so detached 
 that it could go into the minutes of this meeting. 
 
 Mr. Bond. Yes, sir. 
 
 The Chairman. Let it go in the record, then. 
 
 Mr. Bond. Very well. 
 
 The extract referred to is here printed in the record as follows: 
 
 CLASSIFICATION AND RATES — BALTIMORE AND OHIO RAILROAD. 
 
 (1826, chapter 123, sec. 18, original charter. ) On all goods, produce, merchandise 
 or property of any description whatsoever, transported by them from west to east, 
 not exceeding one cent a ton per mile for toll and three cents a ton per mile for 
 transportation; on all goods, produce, merchandise, or property of any description 
 whatsoever, transported by them from east to west, not exceeding three cents a ton 
 per mile for tolls and three cents a ton per mile for transportation. 
 
 (1830, chaptei 117.) The company may contract for transportation of mail: "and 
 said company shall have power to make special contracts with any authorized officer 
 or agent of the State of Maryland, or of any other of the United States, or with any 
 corporation, copartnership or individual, for the exclusive use of any car, or part of 
 a car, or wagon on, said road, for a limited time or distance, and for the transporta- 
 tion thereon of horses and other living animals, and of carriages, furniture, plate, 
 jewelry, and machinery of any description, on such terms as may be agreed on by 
 the parties. 
 
 "That it shall be lawful for the president and directors of the Baltimore and Ohio 
 Eailroad Company aforesaid, or a majority of them, to regulate and fix, from time to 
 tirae, the price or sum to be charged and taken by the said company for receiving, 
 weighing, delivering, and storage of merchandise, produce and other articles; and 
 for the transportation of any single bale, box, or parcel of merchandise or other 
 articles not exceeding two hundred and fifty pounds." 
 
 ( 1836, chapter 261. ) In lieu of the charges for toll and transportation authorized by 
 act of 1826, chapter 123, section 18, "the said company shall have power to charge 
 on all goods, produce, merchandise, or property of every description whatsoever 
 transported by them upon their said railroad, not exceeding eight, cents per ton of 
 two thousand pounds per mile, provided that the maximum of charge per ton per 
 mile upon the said road upon the articles of flour, grain, corn, oats, tobacco, whisky, 
 coal, iron, lime, ore, lumber, plaster, stone and wood, fish, and salt shall not exceed 
 the rates allowed by the said act of incorporation. 
 
 "That in all cases where the weight of any article shall not exceed five hundred 
 pounds the said company shall have power to charge, at their discretion, either by 
 bulk or by weight, on their said road and its branches, estimating fifty cubic feet as 
 equivalent to a ton. 
 
 " By the act of 1840, chapter 86, grain, corn, oats, tobacco, whisky, ore, iron, and 
 lumber are taken out of the exception made by the act of 1836; ten barrels of flour 
 are to be taken for a ton, and the charges upon marble, granite, soapstone, limestone, 
 and lime are to remain as authorized by act of 1826, chapter 123." 
 
 Mr. Stevens. Hf^ve yoa anj^ estimate of the proportion on that 
 road of the traffic moving by commodity rates as compared with that 
 moving by class rates ? 
 
 Mr. Bond. 1 have not, although the Baltimore and Ohio Railroad is 
 
218 PROPOSED AMENDMENT OF 1NTEE8TATE-C0MMEECE LAW. 
 
 a very large bituminous-coal road. Bituminous coal does move in 
 carloads under a commodity rate practically. 
 
 Mr. Stevens. So that what might be true of your road would not 
 be true of all ? 
 
 Mr. Bond. Might not be true at all of other roads. 
 
 Without repetition I can hardly dwell further on the general prop- 
 ositions involved, but 1 want to try to make' some suggestions which 
 possibly may be helpful. The line of distinction, of course, is the 
 line that must be drawn between the theory of regulation under the 
 present act, which is a theory of regulation by an administrative body 
 all of whose acts shall be subjected to the decision of a court before 
 they can be put into effect, and the proposed theory of regulation by 
 which this administrative body shall be vested with a power — a legis- 
 lative power — that makes it — to a certain extent, at anj" rate — inde- 
 pendent of and superior to the court in the matter of rates. 
 
 As soon as you cross that Rubicon, no matter how you may hedge 
 in that legislative power, you have made a vital step, a step not in the 
 mere matter of procedure, but in the matter of principle of regulation. 
 And it is that fact which has excited so much interest, and possibly, I 
 may s&y, opposition to the proposed legislation. It is not because the 
 carriers, or anyone, would deprive the Commission of any eflScient 
 procedure under the present theory of regulation, but it is because in 
 the estimation of a great many people, and particularly of the lawyers, 
 this change— this proposed legislation — is a radical step, a change of 
 principle; and however it may be hedged in, it is regarded by them as 
 threatening and dangerous. In my opinion no such change of princi- 
 ple is necessary to meet all the requirements of the situation and all 
 the requirements of the public. But before I come to that, I should 
 like to refer a little to the existing state of the interstate commerce 
 law, because without some statement of that sort a good deal that I 
 maj^ want to say would not appear relevant. 
 
 The law was reinforced most stronglj', and I might almost say 
 revivified, by the passage of the act of 1903, that is, the Elkins Act. 
 The mistake that had been made in the effort to enforce the law as 
 against rebates and discriminations was the mistake of endeavoring to 
 enforce the second section of the act. There seemed to be no appre-. 
 elation of the importance of the sixth section, which required all the 
 rates to be published and the schedules to be filed. Now, it is one 
 thing to find that a railroad company has charged two different men 
 two different fates under substantially the same circumstances and con- 
 ditions, even of transportation. That is one thing, and that is a very 
 difficult thing, because they do not do it. It was perfectly easy to 
 give one's own shippers the advantage over the shippers by another 
 line without any discrimination among one's own, and unless the car- 
 rier could give its shippers that advantage without such discrimination 
 it would make no cut in rates. That is the whole secret. But when 
 the carrier must make all rates public and then keep to those public 
 rates, you have a case that can be proved absolutely and easily, and, 
 further than that, you accomplish the result of pi-ev'enting discrimina- 
 tion through the mathematical proposition that things that are equal 
 to the same thing are equal to each other. 
 
 Now, that is the key to the enforcement of the law to-day. Further 
 than that, the Elkins Act gave a clear remedy b}^ injunction, which was 
 
PEOPOSED AMENDMENT OP INTERSTATE-COMMERCE LAW. 219 
 
 the thing that was absolutely' and crjangly needed for years. What- 
 ever may be thought of government by injunction it is the only gov- 
 ernment to accomplish results, such as you wish to accomplish in this 
 case. 
 
 The Commission, if it has any i-eason to believe that any common 
 carrier is not charging the published schedule rates, can apply for an 
 injunction and get an injunction of the most sweeping kind, and there 
 is not a railroad carrier in this country or any other country that 
 would dare to violate such an injunction. So that that provision now 
 is the key of this whole act. Despite the advice of raUroad counsel, 
 the Commission were a long time finding it out; but they have it now, 
 and there is nothing that j'^ou could do tnat could add to the eiEciency 
 of the present remedies against discriminations and rebates. But that 
 enforcement is an enforcement which under the act can only be had 
 by and through the Commission, and it is of vital interest to the car- 
 riers as well as to the public that the Commission should continue to 
 have the time and to have the disposition to enforce the provisions of 
 the sixth section through the Elkins Act. 
 
 That act has changed the situation in a way that seems hardly to have 
 been considered in the draft of some of these measures. The act says: 
 
 Whenever any carrier files with the Interstate Commerce Commission or pubUshes 
 a particular rate under the provisions of the act to regulate commerce or acts amenda- 
 tory thereto, or participates in any rates so filed or published, that rate as against 
 such carrier, its ofiicers, or agents in any prosecution begun under this act shall be 
 conclusively deemed to be the legal rate, and any departure from such rate or any 
 offer to depart therefrom shall be deemed to be an offense under this section of this 
 act. 
 
 In other words, under this act it is an essential part now of your 
 whole system of regulation that these published schedules are the evi- 
 dence and the only evidence of what the rate is. You have got a com- 
 plete, absolutely efficient system, as I saj^ if it is enforced, to make 
 your rates uniform as bet^^■een shippers — that is to say, to secure the 
 observance of the published rates. 
 
 Now, of course the question is, suppose those published rates are not 
 right? Suppose the}- violate the third or the first or the fourth sec- 
 tion, what is to be done? Well, as the act stands to-day, the Commis- 
 sion can institute an investigation on its own account, or anybody can 
 file a complaint with the Commission, which it will investigate. And 
 after it has investigated, it can enter its finding as to the validity, the 
 lawfulness, of those tariflF rates, so far, and it can get an injunction if 
 they are thought to be unlawful, restraining the further continuance 
 of those rates. That puts it up to the carrier, of course, to publish a 
 new and a different rate, because he can not carry the traffic at all under 
 the Elkins law unless he has a schedule in effect covering the rate, and 
 if the charging of that particular rate has been enjoined he has to 
 publish a new schedule. 
 
 The complaint, as 1 gather, is that under that system there is too 
 much delay; that the carriers can litigate the question when the Com- 
 mission goes into court to get the order; that the litigation as the law 
 stands maj' be carried to higher courts, and so on. And that com- 
 plaint is always presented as though it were the case of some single 
 shipper about some single rate, and without any very grave considera- 
 tion of the importance of these cases or of the enormous amounts 
 involved in them to the carriers and to the communities. 
 
220 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 Mr. Knapp, when he appeared here before this committee in 1902 
 on the Corliss-Nelson bill, stated the question to be this: 
 
 If, after complaint and notice and due hearing and opportunity for the carriers to 
 show every fact upon the question presented, if those facts establish with reasonable 
 certainty that charges complained of are wrong, the question is, shall the Commis- 
 sion have authority to say what the carriers are to do to correct the wrong? That is 
 all there is of it. 
 
 And, according to the opinion of the New York Herald, that situa- 
 tion has not changed. I read from an editorial in that paper of this 
 morning: 
 
 The proposition against which strongest objection is made is that described as 
 delegating the tremendous power to fix the railway rates of the country, and it is 
 urged that this would inevitably lead to operation of the roads by the Government. 
 The phrase is grossly misleading. The manufacturing, commercial, and agricultural 
 organizations, and individual shippers conducting tjie agitation do not ask that any 
 Government authority shall take the "fixing " of rates out of the hands of the rail- 
 way managers. It is urged merely that the authority now exercised bj; the Com- 
 mission to hear and investigate complaints as to the injustice of a particular rate 
 shall be extended, so that a rate which the Commission may prescribe as reasonable 
 shall be substituted and become effective, but subject to revision by the courts. 
 This is the power the Commission was supposed to possess during the fourteen years 
 of its existence and until otherwise decreed by a judicial interpretation of the inter- 
 state-commerce act. 
 
 Now, if that is all, as Chairman Knapp says it is, and as I believe it 
 is myself, to revolutionize your whole theory of regulation, to cross 
 this Rubicon of vesting in a commission legislative power, in order to 
 accomplish those results, is about equivalent to blowing up this Capi- 
 tol building with dynamite in order to dislodge the English sparrows 
 that build their nests in the eaves. There is no necessity for it, and 
 the means are absolutely unjustified by the end. 1 confess that per- 
 sonally — and I do not, in this, voice the opinion of a great many rail- 
 road counsel — I have always had sj- mpathy with the view of the Com- 
 mission to the effect that they ought to have the chance to say what, 
 in their opinion, the changes should be in order to bring rates in line 
 with the law, and that there ought to be some way of giving that opin- 
 ion of theirs some legal effect. 
 
 Mr. Stevens. Would you make it advisory'^ 
 
 Mr. Bond. No, sir; I would not. I would adopt the suggestion 
 that has been made here. I think that is a perfectly feasible sugges- 
 tion. 
 
 Thereupon the committee took a recess until 2 o'clock p. m. 
 
 Saturday, January ^i, 1905. 
 The committee met at 10.30 o'clock a. m., Hon. William P. Hepburn 
 in the chair. 
 
 STATEMENT OF MR. H. L. BOND, Jr.— Continued. 
 
 The Chairman. You are to proceed for twenty minutes, Mr. Bond. 
 As our time is limited you will not feel aggrievecl if 1 call time on you. 
 
 Mr. Bond. Very well, Mr. Chairman. Gentlemen, I am far from 
 wishing to suggest legislation. I believe individually that the inter- 
 state-commerce act as it is, if it is worked out now with the aid of the 
 
PROPOSED AMENDMENT OF INTEBSTATE-COMMEKCE LAW. 221 
 
 Elkins Act, and in the light of the decisions of the Supreme Court, 
 which have settled the main principles of the law, is a perfectly feasi- 
 ble and competent law. But I realize that what you gentlemen may 
 wish to know is how far it is possible to comply with thd wishes 
 expressed by the chairman of the Interstate Commerce Commission 
 and by others, without taking the radical step of departing from the 
 whole scheme of the present interstate-commerce act. 
 
 You may also wish to know what is the utmost that can be done to 
 expedite the final decision of controversies as to rates that may arise 
 between business interests and the railroads. "With a view to answer- 
 ing those questions for myself alone, because I have had no oppor- 
 tunity to consult other railroad counsel on this matter, and as I felt if 
 I appeared here 3^ou would have a right to any knowledge or sugges- 
 tion that I could impart, 1 have sketched a plan by which I believe 
 3'ou can accomplish ever3rthing that is asked and accomplish it much 
 more efficiently than it would be accomplished by any pending bill. 
 This plan is as follows: 
 
 1. Establish a special court of eqiiitj' composed of circuit judges so 
 assigned that they be not confined to the one class of work, but par- 
 ticipate in work on circuit and in circuit courts of appeal. 
 
 2. Provide a larger Interstate Commerce Commission. 
 
 3. Provide that when the Commission in a regular proceeding on 
 petition finds any rate unlawful the Commission shall find also what 
 change is at that time necessary to make the rate lawful. 
 
 4. Provide that in such case the Commission forthwith tile a peti- 
 tion in the court, accompanied by its findings, record of testimony, 
 etc. , and praying an adjudication of the matters embraced in the find- 
 ings as against the defendants. 
 
 6. Provide that thereupon the court issue process with copy of the 
 petition attached, notif jing each defendant to appear on a day named 
 for hearing of the matter not less than thirty daj^s after service of 
 process, and to file an answer ten days before such hearing. In 
 default of answer and appearance let the court decree the matters as 
 found by the Commission. If a defendant appear and answer, have a 
 speedy hearing, without formal pleadings, etc., on the record filed by 
 the Commission (unless the court provide for additional evidence), and 
 have the court decree what, on the law and the facts, is lawful and 
 equitable as the present rate. 
 
 6. Provide that the court's decree be conclusively binding on the 
 defendants for one year thereafter; and the carriers defendant be 
 bound to publish and file schedules in confoTmitj' therewith, compli- 
 ance to be summaril}^ enforced. 
 
 Mr. TowNSEND. Is not that making a rate for the future ''. 
 
 Mr. Bond. No, sir; it is deciding, as I see it, what every court would 
 be called upon to decide to-day in a suit of a shipper under the eighth 
 section of tlie present act, who alleged in his suit that the rate charged 
 him was unreasonable and asked damages. The court would be called 
 on to decide as of that time whether the rate was unreasonable, and if 
 so, how far unreasonable, because the measure of damages would be 
 how far it was unreasonable. In this case that decision is given effect 
 for the future, not by virtue of the decree of the court, but by virtue 
 of the act of Congress, which says that after a rate has been so adju- 
 dicated there shall be a conclusive presumption as against the carriers 
 
222 PROPOSED AMEIfDMENT OF INTEJSSTATE-COMMEKCE LAW. 
 
 who are parties to that proceeding that that rate is reasonable, and that 
 conclusive presumption shall continue for the space of one year. I 
 regard that as a reasonable regulation. 
 
 Now, if there is any question arising in anybody's mind that it is not 
 a reasonable regulation, or that the time is too long, because in that 
 time there mignt be a change of circumstances, any such technical 
 defect— for it is nothing more than that— can be readily cured by pro- 
 viding that any carrier feeling aggrieved by this provision of the law 
 because of some change in circumstances that renders the rate unjust 
 and unreasonable as to him, can apply to the court for a readjudica- 
 tion in the same proceeding; and then' provide that when that readjudi- 
 cation is had the rate so readjudicated shall continue for a year from 
 that date. I think you will find that no carrier would ever come in 
 and ask for a readjudication. 
 
 Mr. Mann. You give the shipper the same right, I suppose? 
 
 Mr. Bond. And give the shipper the same right. 
 
 Mr. Stevens. That would only bind parties to the litigation, 
 would it? 
 
 Mr. Bond. You can not bind anybody but the parties to the litiga- 
 tion. And in working out the details of any such proceeding there 
 ought to be a provision that the court could admit any party interested . 
 or claiming an interest as a defendant. So that if a community found 
 that there was a proceeding of this kind pending in which its interests 
 were vitally involved, it could apply to the court. 
 
 Mr. Shaoklefokd. Would your scheme provide for the instituting 
 of a through rate otherwise than by the agreement of the carriers? 
 
 Mr. Bond. You mean in case there was an existing through rate? 
 
 Mr. Shaoklefokd. No; if the Commission wanted to prescribe a 
 through rate where more than one carrier was involved, would your 
 scheme permit that to be done? 
 
 Mr. Bond. You mean to provide a through rate where there is none 
 existing or to change one already in existence? 
 
 Mr. Shacklefoed. To change one or institute one, either? 
 
 Mr. Bond. It has never been decided whether the Commission could 
 institute a through rate or whether the law could institute one. It 
 has been decided that where there is one in existence it is subject to 
 regulation, and after that regulation one of the carriers can not change 
 the character of the transaction by withdrawing from the through rate. 
 
 Mr. Shaoklefokd. Where there is not a through rate, can your sug- 
 gestions be broadened enough to authorize the Commission or the court 
 to institute a through rate? 
 
 Mr. Bond. No, sir; and I do not think that there is any pending leg- 
 islation that does do that which is constitutional. 
 
 Mr. Mann. Suppose the Interstate Commerce Commission under that 
 plan should still fix the rate that each carrier should charge on a through 
 bill of lading, which would practically make a through rate? 
 
 Mr. Bond. Yes, sir. 
 
 Mr. Shaoklefokd. Would that compel the connecting carriers to 
 receive goods from one another and carry them through to their desired 
 destinations ? 
 
 Mr. Bond. That is compelled, so far as it can be, by the third sec- 
 tion of the act now. But if you have in mind now the provisions of 
 pending legislation that the Commission where it disturbs a joint rate 
 
PKOPOSED AMENDMENT OF INTEESTATE-OOMMEEOE LAW. 223 
 
 has a right to decide what proportions of that joint rate shall be taken 
 by the parties to it, I would like to point out that the defect of that pro- 
 vision as it stands— I mean in the Cooper-Quarles bill and other bills- 
 is that you do not provide any hearing for the carrier on that part of 
 the proceeding, and that is just as much a matter on which the carrier 
 is entitled to a hearing in court as any other, and if that is the exclu- 
 sive method of determining that fact, then your bill is defective, and 
 if it is not the exclusive method of determining the fact, then you are 
 not accomplishing what you are after. So that there is not any exist- 
 ing measure which provides a practical way to do that. 
 
 My suggestion as to the only way to handle a through rate in that 
 case is to enact right from the shoulder that the new rate shall be 
 divided on the same basis as the old one. Then you have a rule, any- 
 way, and if any carrier can say that that rule is not fair, then you 
 have the exceptional case to take care of, whereas if you leave it purely 
 as a matter of agreement, and then leave the Commission to decide in 
 the absence of an agreement, you have not any rule established and 
 the whole thing is in the air. 
 
 The Chairman. That scheme of yours would recognize and legalize 
 the wrongs complained of in the Harvester case, where the switch 300 
 feet long connecting with another road received 25 per cent of the rate ? 
 
 Mr. Bond. How was that? 
 
 The Chairman. If you simply legalized that division or recognized 
 that division you would simply perpetuate that form of contract, would 
 you not? 
 
 Mr. Bond. It is the question in the Harvester case whether it is a 
 division in fact at all, or whether it is a mere device to give a discrim- 
 inating rate. If it is a division at all, then there is not any provision of 
 the law, nor is there any provision that you can enact, that will ena- 
 ble you, without providing a hearing, to say what that division shall 
 be. Now, there is a great deal of misunderstanding about those ter- 
 minal-road cases. If the committee would like to hear anything about 
 them I should like to give my views about them. There are terminal 
 roads and terminal roads. The question is now as to such a case as 
 the chairman presents, whether that is really a railroad at all with 
 which there should be any prorate. That is a question that can be 
 absolutely tested under the Elkins law, because if the sharing of the 
 rate with that road is a mere device, if that road does not in fact per- 
 form a part of the transportation which entitles it to a share of the 
 rate, then it is clearly within the provisions of the Elkins Act. 
 
 There are terminal roads, that are entirely different from that. Let 
 me cite an instance without ijaming any names. Suppose there is a 
 road, say 40 miles long, and the stock of that railroad is owned by a 
 manufacturing company, say engaged in the manufacture of steel, 
 and under the charter of that manufacturing company that company 
 is authorized to hold the stock of that railroad company and that rail- 
 road connects with three or four trunk lines. All the supplies of the 
 manufacturing company must go over that railroad. The railroad is 
 40 miles long. The railroad company says, "We must have YO cents 
 on every ton of coke and coal. If you do not give us the 70 cents, you 
 do not get the freight, because this railroad will not accept any less, and 
 all the supplies going to this manufacturing plant must go over the 
 railroad." Now, the officers of that railroad company take the position 
 
224 PROPOSED AMENDMENT OF INTERSTATE-COMMEKOE LAW. 
 
 that that is an advantage which, under the laws of the State, they are 
 entitled to. Let me say that the 70 cents does not exceed the local 
 charge per ton per mile which they are authorized to make under the 
 State law: but it may be at least 20 cents a ton higher than would 
 ordinarily be given a railroad as a prorate of the through rate. What 
 are you going to do ? That railroad says, " We have a position of com- 
 mercial advantage. We can get our local rate, or very near it, and 
 we are going to take it;" and they further politely remark, "If you 
 three or four railroads get together and say that you will not give us 
 that, we will have vou indicted under the antitrust act. " 
 
 That is a perfectly fair view for them to take. Are they not entitled 
 to that, as a matter of law ? How are you going to meet that situation ? 
 We can not meet that situation just because you gentlemen here have 
 suspended the laws of trade, have suspended the law that makes the 
 self-interest of one man keep the self-interest of another man from 
 gobbling- things up; and those railroads can not protect themselves 
 against that proposition because you have suspended their right of 
 agreement with one another, and that would be the only way to meet 
 it. Congress can not meet it. 
 
 Mr. Mann. You have instanced the Illinois Steel Company's case as 
 a suppositious case'^ 
 
 Mr. Bond. I do not say that, whether I have oi- not. 
 
 Mr. Mann. That is a case that is in my Congressional district, and 
 1 am perfectly familiar with it. Can not we meet that by giving the 
 Interstate Commerce Commission the right to say what shall be the 
 respective proportions of the through rate? 
 
 Mr. Bond. I do not think you can. 
 
 Mr. Mann. Of course it is a delicate position for j^ou to be in, 
 because you carry most of the freight. 
 
 Mr. Bond. I wish we did. 
 
 Mr. Mann. I know you do. 
 
 Mr. Bond. But it is a verj^ serious question: I mean from a rail- 
 road standpoint; because you once admit that that is a sound legal 
 position that they have got, and it is a sound legal position 
 
 Mr. Mann. As the law now stands. 
 
 Mr. Bond (continuing). As the law now stands. 
 
 Mr. Mann. I have no doubt of it. 
 
 Mr. Bond. And I have verjr serious doubts whether you can amend 
 the law so as to meet it unless you discriminate against the railroad 
 company whose stock is owned ,by a manufacturing company, and I do 
 not believe that you can make any such discrimination in the law. 
 You have the situation as it is, and it is a very serious one from the 
 railroad standpoint. 
 
 What ai-e we going to do with it? The. same thing spreads all over 
 the country, and if j^ou are going to tie these railroads up and sus- 
 pend their rights of contract and let any manufacturing plant that 
 owns a railroad have that advantage over them the result will be that 
 you will force all large manufacturing plants in this country into the 
 railroad business. They have got to go into the railroad business. 
 
 Mr. SiiACKLEroED. Would it not be better to force all of them out 
 of it? 
 
 Mr. Bond. That is a very serious question whether j'ou can. That 
 is a question which I do not believe this committee is prepared to 
 
PEOPOSKD AMENDMENT OF INTEKSTATE-COMMERCE LAW. 225 
 
 ^landle under this law. I have not heard anj' discussion of an_ything 
 or heard anything suggested in the way of a practical sche'me of 
 meeting it. 
 
 Mr. TowNSEND. Suppose the Commission were allowed the fixing 
 of rates? 
 
 Mr. Bond. How are you going to do that? Vhere is the bill that 
 does that? None of the bills proposed now, or here tpf ore, meet the 
 case at all. The powers conferred to fix rates and to divide joint rates 
 will not enable the Commission to accomplish what they wish in this 
 case. 
 
 Mr. TowNSEND. Suppose we make that. Suppose we give the Com- 
 mission the power to fix the rate on that road, which it is to charge? 
 
 Mr. Burke. Suppose the rate is a reasonable rate, Mr. Townsend. 
 
 Mr. Townsend. I am suppodng that it is not. He has shown that 
 it is not. 
 
 Mr. Bond. I have not shown any such thing, I am only stating 
 the position. 
 
 Mr. Btjrke. Suppose it is shown by the railroad commission to be 
 a reajonable rate? 
 
 Mr. Bond. They are within their legal rights, absolutely. 
 
 Mr. Mann. As a matter of fact, that little railroad — it is only 40 
 miles long, along the southern shore of Lake Michigan — is one of the 
 most expensively constructed roads in the United States. 
 
 Mr. Bond. Absolutely. And I think their legal proposition is 
 sound. And I have been up against it. [Laughter.] 
 
 I ^nted simply to point out that this suggestion of mine, if it is a 
 quesflon here of saving time and getting a final decision in these" mat- 
 ters, is practicable; that whereas under the Cooper-Quarles bill you 
 must have forty days before the case can possibly stand for hearing, 
 with the utmost possible dispatch, and whereas your order without 
 any contest does not go into effect for thirt}^ days, and in case of con- 
 test it does not go into effect for sixty days, even if the court does not 
 suspend it — and let me say that under your lawg the court has got to 
 suspend it, and you make the act unconstitutional if you say that it 
 can not suspend it, and if it be suspended the whole effect of the act is 
 destroyed — whereas under the Cooper bill you can not have any order 
 go into effect in the first place, even if the court does not suspend it, 
 within less than sixty days. Under the section that I have suggested 
 you will have an adjudicated rate within sixty days, because this court 
 can decide these cases a great deal faster than the Commission can send 
 them to it. The Commission has to do all the preliminary work, 
 and what is more, it has to investigate cases where it finds that there 
 
 no unjust discrimination or unjust rate, and it is only the other class 
 of cases, those in which there is an unjust rate or discrimination, which 
 go into the court. 
 
 The reason you save time is because under all the pending bills there 
 is a complete reversal of the positions of the parties. You start in 
 practically with the Commission or the complainant before the Com- 
 mission in the position of plaintiff, and then you reverse the whole 
 situation and make the railroad the plaintiff'. Now, that is lost motion, 
 waste of time, and that method was onlj' adopted to meet a view of 
 the Commission that if they had to go into all the circuit courts they 
 were not in a dignified position, if they had to go in as plaintiff to 
 
 I c L-»05 — -15 
 
226 PROPOSED AMENDMENT OF INTEItSTATE-COMME:{CE LAW. 
 
 enforce their own orders. Now, if j'ou have a special court, that lost 
 motion is done away with, and there is no use in reversing the situa- 
 tion of the parties, and you can go right into court, and then you have 
 all your records in one place; and j^ou are in the further situation 
 that if vou find in th^ future that this plan does not work fast enough, 
 then you can dispense altogether with the preliminary trials before 
 the Commission, and you can let the Commission go into court simply 
 on their own examination to see if there is something wrong, and fur- 
 ther expedite it in that way; and you have ail your records as to what 
 has been adjudicated in one place. 
 
 I have exceeded my time, Mr. Chairman, I am afraid. I thank you 
 very much. 
 
 STATEMENT OF MR. DAVID WILCOX, PRESIDENT OF THE DELA- 
 WARE AND HUDSON RAILROAD COMPANY. 
 
 Mr. Wilcox. If I can have onljr the hour that remains, Mr. Chair- 
 man, I will endeavor to comply with the desires of the committee, of 
 course. 
 
 Mr. Chairman and gentlemen, the Delaware and Hudson Company, 
 of which I have the honor to be president, was incorporated by the 
 State of New York in 1823 for the purpose of bringing a supply of 
 hard coal — as they called it in those days, " stone coal " — from Penn- 
 sylvania to New York. Its rights were confirmed by the legislature of 
 Pennsylvania very shortly thereafter. I may say. that it antedates 
 the law to amend charters, and comes under the rules laid dsWn in 
 the Dartmouth College case, so that it has its interests. 
 
 The company has been carried, on since that time continuously with- 
 out a receiver or a reorganization, and as I have occupied my office 
 but a very short period of time — being, in fact, like, I believe, most of 
 the committee, a lawyer — -I may say that its conservative management 
 has led to its continued prosperity. During that time it has paid out 
 in wages between, probably, four and five million dollars; in divi- 
 dends, between sixty and seventy million dollars. It has now about 
 23,000 employees. The company and its leased companies have about 
 6,000 security holders. Therefore I may say that there are 29,000 
 people who are interested, and, with those who are dependent upon 
 them, it is not too much to say that there are 100,000 people who are 
 interested in the continued prosperity of this property. The stock 
 of the Delaware and Hudson Company is very widely distributed. 
 There are 3,800 stockholders, and the average holding of each one of 
 them is $11,000 at par. 
 
 "When I applied to the chairman of this committee for a hearing, I 
 did not apply on behalf of the Delaware and Hudson Company, out 
 on behalf of its employees and security holders and on behalf of those 
 who are dependent upon them. My constituency, I may say, is per- 
 haps 1 00,000 ; probably that. What has been the cause of "the pros- 
 perity of this property and upon what depend its 100,000 people? 
 TTpon nothing else in the world but the income of the property. 
 Without the income the property is of no value. Without the income 
 there would be no -incentive to operate it; and therefore, necessarily, 
 any proposition which tends to place in the hands of the Government, 
 however ably administered, the question as to whether or not this 
 
PROPOSED AMENDMENT OF INTBKST ATE- COMMERCE LAW. 227 
 
 substantial mass of projjertj'^ shall earn anything, which tends to 
 qualify or limit its earning capacity, affects not the company, for 
 these companies, gentlemen, are of very little real importance. They 
 are artificial persons. Thfey are the means by which the property of 
 the owners is held together and is made productive. That is all there 
 is of it. 
 
 If the American people so wish, the corporations may die. But 
 what is to become of the people who are interested in them? What is 
 to become of this enormous mass of property, upon which rests the 
 prosperity not merely of the class whom I have named, but also of 
 those who sell supplies to them, and of the communities through 
 which they pass, and of the communities which will be built up by 
 their extension? It seems to me that that is the serious question, 
 "VSTiat effect is what you may do here going to have upon the future 
 welfare, productiveness, and value of the greatest single industrial 
 interest of the country? It is a great responsibility, gentlemen. I 
 do not come here as an extremist. If you can devise anything which 
 will be to the benefit of the country as a whole, who will welcome 
 it more than those who are interested in the railroad property? 
 Why should they not? As I said a moment ago, it is the greatest 
 single interest there is in the country. It has eight to ten thousand 
 million dollars' worth of the country's accumulated wealth. As the 
 Delaware and Hudson Company has grown to become a favorite 
 object of investment with estates and institutions which have a more 
 or less fiduciary character, so is it the case with the very large mass 
 of this property generally. 
 
 Now, -gentlemen, great as I feel, my own responsibility with refer- 
 ence to the company with which I am connected, I realize that the 
 responsibility of this committee is very, very much more serious. It 
 may pass an act which shall put it in the power of those who, how- 
 ever well intentioned they are — and I do not wish to join the super- 
 heated gentlemen who sometimes want to have the Interstate Com- 
 merce Commission abolished because they are not doing anything, 
 and I -will say that they are not railroad men, that I ever heard of — 
 yet, having the power, may do great harm. I do not share in that 
 feeling toward the Commission. But, as I say, gentlemen, you may 
 pass an act that will so compromise the value of the property, and the 
 prosperity of the comnmnities of the country, that it will bring wide- 
 spread disaster. On the other hand, you may pass an act which will 
 fail of operation. Some people say that the present act has not 
 accomplished what was hoped, although I do not agree with that 
 exactly. But you may do the same thing, not intentionally but unin- 
 tentionally, and the act which you may pass may become a gold brick 
 in legislation. And there are those two great possibilities. You 
 may pass an act which will so coijipromise the value of the greatest 
 mass of accmnulated resources of the country that its eiEciency will 
 in a measure cease, or at any rate become less, or you may pass an act 
 which will fail of accomplishing the desired results, and this agita- 
 tion may go on, stimulated and kept on foot in the methods which 
 you gentlemen know so Avell, apparently ad infinitum. 
 
 What I say, gentlemen, is that it is a very, very serious moment 
 when an Anglo-Saxon government undertakes the charge of people's 
 money and says how much they shall earn by the exercise of their con- 
 
228 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 stitutional rights of liberty and property. And it should be recog- 
 nized that possibly we are at the parting of the ways, and that if this 
 be done it will go on until those constitutional guaranties have but 
 little value, and the only profession worth exercising in the country 
 will be that of holding office in some administrative board. 
 
 I do not want to exaggerate, but the committee is certainly aware of 
 the fact that Congress has no special power over carriers. What the 
 Constitution provides is that Congress may regulate commerce among 
 the States or with foreign nations. The shipper is engaged in inter- 
 state commerce just as much as the carrier. The manufacturer who 
 ships is engaged in interstate commerce equally with the carrier, and 
 if the plan is to be adopted that the earnings of those who are engaged 
 in this interstate commerce are to be regulated by a governmental 
 and administrative board, it applies just as much to the shippers as 
 to the carriers. There is no substantial difference between them. It 
 applies to everybody. So that it is, as I say, a question that affects 
 the entire community. 
 
 The Chairman. You think there is no difference in the legal status 
 of a common carrier and a shipper ? 
 
 Mr. Wilcox. Of course, Mr. Chairman, I trust that I have practiced 
 law long enough to have some idea of what the difference is. 
 The Chairman. You said no substantial difference. 
 Mr. Wilcox. No, sir ; there is no substantial difference in the power 
 to regulate. The common carrier is bound to charge reasonable rates 
 and not to discriminate. Now, when you have got beyond that T 
 do not think there is a great deal of difference. The common carriers 
 do not derive their franchises from the Federal Government after all ; 
 they derive them from the States, and I do not believe that there is 
 any substantial reason for discriminating between a corporation 
 which is engaged in interstate commerce and anybody else who is 
 engaged in interstate commerce. In fact, I think the right to liberty 
 and property, which is guaranteed by the fifth amendment, is a right 
 'of a corporation as much as an individual, and my impression is that 
 it has been settled by the Supreme Court of the United States. 
 
 Mr. Shackleford. This legislation is not aimed at corporations 
 ■any more than individuals, if individuals are engaged as carriers in 
 interstate commerce, is it? 
 
 Mr. Wilcox. I think it is a fair comment ; but really I think your 
 idea agrees with mine — that is, that corporations and individuals 
 stand on the same footing. 
 
 Mr. Abamson. Does not the power of Congress over commerce 
 belong equally to anything and anybody engaged in interstate com- 
 merce? 
 Mr. Wilcox. I have not the slightest doubt about it. 
 Mr. Adajmson. Whether they mse wagon teams or railroads, or 
 whether they are individuals or corporations? 
 Mr. Wilcox- Yes, sir. 
 
 Mr. Mann. But there is a distinction between the power to regu- 
 late the rates of common carriers or common warehousemen and the 
 power to say what persons shall sell their goods for? Is not thai 
 distinction drawn by the courts? 
 
 Mr. Wilcox. If the gentleman please, I thought that I made that 
 clear, or tried to, that the carriers are bound to exercise their public 
 
PEOPOSED AMENDMENT OF INTERSTATE- COMMERCE LAW. 229 
 
 employment at reasonable prices. But now we have the new doctrine 
 \vhich has recently arisen, that to engage in interstate connnerce gen- 
 erally is to be a privilege. If that is so it completely obliterates any 
 such distinction. 
 
 Mr. Mann. I do not think there will be any such result as that, 
 fortunately. 
 
 Mr. Wilcox. Well, what I say on that is merely in the nature of 
 pointing out that that was what you are coming to. This is simply 
 the beginning. 
 
 Mr. Adamson. Is not the just and practical criterion as to ^^'hat 
 prices are charged under similar circumstances at other places? 
 
 Mr. Wilcox. I think that is probably the best test, although the 
 Interstate Commerce Commission seems to think otherwise. 
 
 My time is brief, and I will pass on. I will say that Mr. Spencer 
 and myself have prepared a brief, which I will file with the commit- 
 tee, which I shall venture to hope that the committee will read, be- 
 cause it endeavors to set forth consecutively our views on the whole 
 subject in a manner which it would be tedious to pursue here in 
 argument, even if it were not impracticable for lack of time. 
 
 The Chairman. What business is the Delaware and Hudson Com- 
 pany engaged in? 
 
 Mr. Wilcox. In the railroad business and in mining coal. 
 
 The Chairman. In what proportions ? 
 
 Mr. Wilcox. You mean the proportions of 
 
 The Chairman. What proportion of its revenue comes from the 
 production of coal and what proportion from its carrying of coal or 
 from its business as a connnon carrier? 
 
 Mr. Wilcox. Of course it does a large general business in addi- 
 tion to the coal over its railroads. 
 
 The Chairman. Yes. 
 
 Mr. Wilcox. And I should say that from the mining of the coal 
 its revenue is a little over 40 per cent, and the balance is from its 
 business generally. 
 
 The Chairman. You spoke of the value of this property as from 
 eight to ten thousand millions. 
 
 Mr. Wilcox. No, sir. The value of the railroad property of the 
 country is from eight to ten thousand millions, I said. 
 
 The Chairman. I thought you said the value of this railroad 
 property. 
 
 Mr. Wilcox. No, sir; we are not as rich as that, Mr. Chairman. 
 That is what I put the value of the railroad property of the country 
 at. Of course the securities outstanding are $12,000,000,000, but 
 there is more or less duplication by reason of the treasury assets held 
 by the company, so that I think it would be fair to say $12,000,000,000 
 as the outstanding securities. • 
 
 I will just venture to say this, gentlemen, that when I took office as 
 president of this company, which was less than two years ago, I had 
 been practicing law then for thirty years, and I suppose that I am 
 still a good deal more of a lawyer than a railroad man. I believe 
 most of the committee are lawyers, and therefore we may sympa- 
 thize with each other. When I took up the office various gen- 
 tlemen who had been engaged in the railroad service for a great 
 many years, whom I met, said : " Now, we have one piece of advice 
 
230 PROPOSED AMEJSTDMENT OF INTERSTATE-COMMERCE LAW. 
 
 to offer to you, and only one." I said: "That is very kind. I 
 should be glad to have more, but I should be obliged for the one. 
 What is that?" They said: "Go slow." And, gentlemen, I have 
 found that the most valuable piece of advice that I could pos- 
 sibly have had. So I want to say to the committee, not merely 
 as a railroad man or as a lawyer, but as an American citizen, 
 that inasmuch as this matter has been forced upon the committee by 
 an agitation which has been largely based, as I conceive, upon mis- 
 apprehension, and if I had the time I think I could demonstrate that 
 to the committee — I want to urge the committee with the utmost ear- 
 nestness which is in mj power to go sloMdy about this thing, because 
 a step once taken can not be retraced, and unless it is the right step, 
 as I said a while ago, it may lead to great disaster or it may lead to 
 cruel and exasperating disappointment. Do not do anything until 
 you are sure that you are gomg to do something effective. That is 
 what the railroad owners of the country would say to you. Do not 
 be in a hurry and do not pass statutes because you think people 
 want something done. Be sure that you are doing something for the 
 good of the country as a whole, not merely for the good of the special 
 regions which are particularly exasperated. 
 
 And I will say here we know very little of these conditions in the 
 East — almost nothing. Do not do something merely for the sake of 
 doing something. This is too serious a question for that sort of treat- 
 ment. If you do anything, if in your ripe judgment, in your wisdom, 
 you conclude that it is desirable to do something, do something which 
 will have value, not something with which your names will be asso- 
 ciated either as a failure or as a disaster. 
 
 I said that I was not one of those who believe in abolishing the 
 Interstate Commerce Commission. Of course the great benefit of 
 that Commission has been the settlement of claims Avithout contro- 
 versy. In that manner it has settled over 90 per cent- of the claims 
 which have come before it. That is the business way of carrying on 
 business, for the parties to settle. T do not know of any business, 
 gentlemen, which is carried on successfully by third parties who have 
 no interest in the ultimate result, and no business which is carried on 
 by lawsui-t. Business by lawsuit would be a thing to be abhorred, a 
 thing which would be impossible. That is where the Interstate Com- 
 merce Commission has been useful. The difficulty has arisen out of 
 the other 10 per cent. I do not think so because they quote what 
 Judge Schoonmaker said as showing that the Commission then real- 
 ized that it had not power to fix rates. That was the construction 
 given to the language of Commissioner Schoonmaker by Judge 
 Brewer. 
 
 I suppose that the committee, by the discussions that have been had, 
 has been fully advised of the fact that upon the record there is no 
 question of the reasonableness of rates per se. Upon a brief which 
 I shall have the pleasure of filing that matter is fully argued out. It 
 'admits of no question. Even as those advances from 1899 until 
 1903, regarding which the Commission reported last year to the Sen- 
 ate — even as to them the Commission itself says that it does not claim 
 that they were unreasonable. In an article in the North American 
 Review, which was written by one of the most productive of the Com- 
 missioners last June, the same statement was repeated, that he did 
 
PROPOSED AMENDMENT OF INTERSTATE- COMMERCE LAW. 231 
 
 not claim that they were unreasonable, but simply that jthe Govern- 
 ment ought to have the right to fix them. That is simply and baldly 
 that the Government should fix future rates. ' There, is nobody com- 
 plaining ; there is no case and there has never been a case, as I have 
 no doubt that the committee has been informed over and over again, 
 of unreasonable rates which has been sustained ; but the position of 
 the Commissioner who wrote this article was that, as a matter of right, 
 the Government should always intervene in these circumstances. 
 
 Now, that advance in rates amounted to what? Thirty -nine thou- 
 sandths of a cent per ton per mile. And it is interesting to notice 
 that in the report for 1902, in commenting upon the relation of rates 
 between 1898 and 1902, the Commission uses the expression that the 
 rates were about the same. Now, the difference between those two years 
 consisted of a difference of forty-one thousandths of a cent, and the 
 Commission said that the rates were about the same, and the Commis- 
 sion said that the increase in gross earnings was due to the increased 
 volume of traffic. When they- came to comparing the rates of 1899 
 and those of 1903, the difference was thirty-nine thousandths of a cent, 
 two thousandths of a cent less than they had been between 1898 and 
 1902, when the Commission said they were about the same. Neverthe- 
 less, this difference of thirty-nine thousandths of a cent was described 
 as having made enormous additions to the expenses of railway trans- 
 portation, although a difference of forty-one thousandths of a cent, tak- 
 ing the two previous corresponding years for purposes of comparison, 
 was described as leaving the rates about the same. I suppose that the 
 committee has also been fully advised of the fact that the Elkins law 
 covers the subject of rebates. The Interstate Commerce Commission 
 has so said in its last two annual reports, that that subject is fully 
 covered. So that I shall not stop to talk about that. 
 
 But the matter to which I wish to call the attention of the commit- 
 tee is the matter of discrimination between localities. As to that 
 question of discrimination between localities, that is a matter, gentle- 
 men, which you will always have with you. It is a question that 
 arises naturally from the desire for commercial advancement. It is 
 the natural result of commercial rivalry. I have no doubt j'ou 
 remember the language of the Supreme Court, in which it points out, 
 with a great deal of elaboration and vigor, that it is not all discrimi- 
 nations and all preferences which establish a cause of complaint, but 
 that they must be undue or unjust, and that the existence of prefer- 
 ences can never be overcome. Claims that preferences exist or are 
 undue or unjust, as I have just said, arise from the feeling which 
 everyone has that he desires equal treatment with his neighbor, and 
 that his place desires equal treatment. They are difficult questions. 
 They give the railroad companies a great deal of concern. They are 
 questions between the localities rather than with the railroads, and 
 they are questions which affect the railroads only, as they almost 
 invariably lead to a reduction of their revenue. 
 
 The efforts of the traffic officials of the road to meet the necessities 
 of the shippers and to enable their manufacturers and shippers to 
 ship to farther mai;kets all the time are what have led, more, in my 
 belief, than anything else, to the downward course of rates, which 
 has been practically continuous. When you consider the increase in 
 the cost of materials in the past few years, it is not too much to say 
 
232 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 that that has been a continuous course. The traffic official is con- 
 stantly endeavoring to enable his own patrons to reach farther mar- 
 kets. Now, there can not be any question that that encourages compe- 
 tition, enab]es the consumer to have the benefit of constantly increas- 
 ing sources of supply, and yet, naturally, when the dealers in the 
 farther markets find that a new element of competition has entered 
 they claim that they are prejudiced, and that the first market is 
 receiving an undue preference. 
 
 On this subject it is worth while to see what the Interstate Com- 
 merce Commission has said. They say : 
 
 In view of their opportunities and the temptations to which their traffic offi- 
 cers are exposed, it is perhaps not too much to say that the obligations of neu- 
 trality in' this regard are usually observed, and that discriminations of this 
 character are not often the subject of complaint 
 
 That is from the report of the Commission for 1895. They say 
 further : 
 
 It is worth observing that some, at least, of the most important controversies 
 involving the rates and methods of railway carriers are rather between compet- 
 ing communities or producing regions than between rival lines of railway. 
 Railway development has extended far beyond the point at which any of the 
 greater systems find their interests so identified with a single community as to 
 feel wholly indifferent to the demands and needs of all competing communities. 
 Indeed, there may be entire sincerity in the contention, on the part of the officers 
 of a great system, that any adjustment which satisfies the rival communities 
 which it serves can not be seriously objectionable from its own point of view. 
 In such degree as this contention may be sincerely advanced the carrier becomes 
 a relatively unimportant factor in the struggles of rival localities. 
 
 That is from the report of 1904, page 28. But the difficulty about 
 it is that these struggles constantly lead to the tearing down of the 
 revenues of the carriers, and therefore it can scarcely be said that the 
 carriers are relatively an unimportant factor, from their own point of 
 view, because when the Commission finds that a rate is of such a char- 
 acter as to establish a preference, it never raises a rate, but always re- 
 duces one or the other rate. I have often thought that that is a serious 
 constitutional question. When they find, for example, that a rate 
 from A to B is reasonable, but that the rate from C to B is lower, 
 they lower the rate which has already 'been found to be reasonable — • 
 that from A to B — and in that manner they compel the carrier to 
 take what is less than a reasonable rate. It is a question which will 
 arise at some time, and it seems to me raises the question whether the 
 carriers are receiving the returns to which they are entitled. 
 
 Mr. Shackleford. In such a case do you think it would be fair to 
 the public and the producers and the shippers to compel a carrier 
 to raise a lower rate if it were a remunerative rate at the time ? 
 
 Mr. Wilcox. I think it is taking the property of the carriers with- 
 out due process of law, to compel it to accept an unreasonable rate 
 in the first instance. 
 
 Mr. SHACKLKroBD. Would it not be quite as unjust to compel 
 another carrier to raise a remunerative rate to solve the situation? 
 
 Mr. Wilcox. I do not think it would. 
 
 Mr. Shacklefoed. Would it not be unjust to compel one carrier 
 to divide its traffic with another carrier that could not secure that 
 traffic by fair competition? ' 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 233 
 
 Mr. Wilcox. I think it is the constitutional question of taking 
 property without due process of law. 
 
 Mr. Adamson. If one rate is not unreasonably high, and the other 
 is not unreasonably low, they are both reasonable, are they not ? 
 
 Mr. Wilcox. Yes, sir; but that does not make the iirst rate, the 
 first unreasonably high rate, as reduced, unreasonable. 
 
 Mr. Adamson. And yet it might be sufficient to deter a court or 
 tribunal from compelling a carrier, against its own sound judgment, 
 to depart from a rate which it finds profitable and on which it can 
 hold its business. 
 
 Mr. Wilcox. It is a pretty difficult question. 
 
 Mr. Adamson. I think that' is an easy question. 
 
 Mr. Wilcox. You think it is an easy question? 
 
 Mr. Adamson. Yes, sir. 
 
 Mr. Wilcox. What is it you want me to answer? Do you want 
 me to answer it ? 
 
 Mr. Adamson. I replied to your suggestion that it might be suffi- 
 cient to deter a court from compelling a carrier, against its judgment, 
 to raise a rate. 
 
 Mr. Wilcox. I think the court would very likely come to that con- 
 clusion. But would it be sufficient to prevent it from lowering a 
 rate which the court had found to be reasonable? At best I can not 
 see how. Really, the serious question is how this change will oper- 
 ate as a future system. And now I want to read to the committee 
 a few expressions of the Commission, and in reference to me opera- 
 tion of this system in the future: 
 
 To give each community tlie rightful benefits of location, to lieep different 
 commodities on an equal footing, so that each shall circulate freely and in 
 natural volume, and to prescribe schedule rates which shall be reasonable, just 
 to both shipper and carrier, is a task of vast magnitude and importance. 
 
 That collection of phrases I have no doubt the members of the 
 committee are very familiar with. It first made its appearance in 
 the report of 1893, and has gone on echoing down the corridors of 
 time until its last appearance was in an address Av£ich the President 
 delivered before the economic association in Chicago this season. 
 What does it mean. I find sometimes, when I have been sitting up 
 , in the lone hours of night with my conscience and a cigar, perhaps, 
 and the Quarles-Cooper bill, this come before me, and I have thought 
 of littel Alice in Wonderland when the form of Jabberwocky had 
 been repeated to her, when she said " It sounds verv pretty and seems 
 to fill my head with ideas, but I don't know exactly what they are." 
 So it is with this. It says " To give each community the rightful 
 benefits of location." The reasonable rule is that there shall be no 
 preferences. 
 
 Mr. Adamson. The fundamental error, in my mind, is that it ought 
 to have said " take away from those communities a natural benefit " 
 
 Mr. Wilcox. The gentleman differs from the Interstate Commerce 
 Commission immediately. It says " to keep different commodi- 
 ties on an equal footing." "What commodities are to be kept on an 
 equal footing? Are molasses and pig iron to be kept on an equal 
 footing, or what does that mean ? It says " so that each shall circu- 
 late freely and in natural volume." That is to say, that the Interstate 
 Commerce Commission or some other branch of the Government is to 
 
234 PROPOSED AMENDMENT OF INTERSTATE COMMERCE LAW. 
 
 determine what is the natural volume in which commodities are to 
 circulate. Do you think it is possible for anything to determine that 
 except the natural laws of supply and demand, and do you think there 
 would be much profit in an effort of that kind? Suppose anyone 
 were charging a jury in a case where there was no question of facts, 
 .ind it would be a question of law as to what should be the natural 
 volume in which commodities were to circulate; do you not think 
 you would have diiBculty in framing that charge? The expression 
 of the Commission as to commodities circulating freely has an anom- 
 alous sound, but I suppose it means keeping theni circulating without 
 restraint — without charge. 
 
 The Commission goes on in the report' for 1895 to say : 
 
 No one who understands the intricacies of transportation would care to assert 
 that the determination of a just rate, or the decision as to what constitutes dis- 
 crimination, is an easy task. To some extent the principles upon which taxa- 
 tion rests must be allowed in fixing a just rate ; to some extent the result of the 
 rate upon the development of industries must be taken into the account in all 
 decisions which the Commission is called upon to make ; to some extent every 
 question of transportation involves moral and social considerations, so that a 
 just rate can not be determined independently of the theory of social progress. 
 
 The committee will observe that there is nothing said there about 
 reasonable compensation to the owners of the railroads, or the reve- 
 nues of the compjiny. Now,- gentlemen, is that practical ? Is the fix- 
 ing of rates in that method one which would be safe ? They say " to _ 
 some extent the principles upon which taxation rests must be allowed 
 in fixing a }ust rate." But does anyone know what the principles are 
 upon which taxation rests ? I think there are about as many as there 
 are States in the Union. I never was able to find that it rested upon 
 anything but the construction of the statutes where the tax was im- 
 posed. 
 
 Mr. Shacklefoed. And the necessity for revenue ? 
 
 Mr. Wilcox. Yes, or the amount of taxation that they could stand. 
 That seems to be a factor as much as anything. They say, " To some 
 extent the result of the rate upon the development of industries must 
 be taken into the account." That is what traffic officials are always 
 taking into account, the development on their own lines. But hero 
 you have one object, that is to develop the industries of the country. 
 If you should develop on one line, you would probably dwarf those 
 indiistries upon another line. The development of what industries 
 is to be considered? Is there anything definite about that way of 
 putting it? 
 
 Again they say, " To some extent every question of transportation 
 involves moral and social considerations." Now, gentlemen, this is 
 a question of taking people's property. Are moral and social condi- 
 tions to govern? We all, I have no doubt — I know I do — rvalue 
 moral and social considerations at their proper valuation and recog- 
 nize where they apply ; but do they apply to the constitutional guar- 
 anty" of property? 
 
 Again, they say, " so that a just rate can not be determined inde- 
 pendently of the theory of social progress." What in the world does 
 that mean? Wliat is "the " theory or social progress?" Is it Henry 
 George's theory of social progress or the socialist's theory of social 
 progress, or the Middle Age theory of social progress ? What does 
 it mean, anything? It means nothing tangible. 
 
PROPOSED AMENDMENT OF INTEESTATE-COMMEKCE LAW. 235 
 
 I must hurry along. Again, the Commission says : 
 
 Within certain limits, it is good policy for the railway manager to increase 
 
 his tonnage, even at the expense of reducing the rate per ton. Just how far 
 
 this rule applies no one can tell. 
 
 How far it is good policy to increase the tonnage at the expense of 
 reducing the rate per ton no one can tell. Then they say further : 
 
 The merchant who buys an article for a definite price knows when he sells 
 it whether he makes or loses by the transaction ; and the manufacturer, as a 
 rule, has a pretty accurate idea of the cost of production, but the railroad 
 operator can not ordinarily say ^^■hether he should or should not as a matter of 
 policy take traffic at a certain price. 
 
 If that be so, can the lawyers who constitute the Interstate Com- 
 merce Commission say so? Can they say whether the interests of the 
 property owners which will be in their hands will be served by taking 
 traffic at a certain price if even the railroad operators can tell it only 
 by certain rules which govern the transaction of business generally? 
 They further say : 
 
 . The freight rate is a complex problem when applied to almost all competi- 
 tive traffic. Very few people not acquainted with the subject have any idea 
 how difficult the solution of that problem is. 
 
 And then the report for 1903 of the Commission says this : 
 
 It is often difficult to say what constitutes a reasonable rate, and more diffi- 
 cult to give in detail the reasons that lead to the conclusion reached ; although 
 the Supreme Court of the United States has given certain rules by which to 
 test the reasonableness of transportation charges, and although the Commission 
 has endeavored to apply those rules, yet whenever it has interrogated railway 
 officials as to whether or not they are governed by them when rnaking rates 
 of transportation, they have invariably answered in the negative and said that 
 to do so would be impracticable. The carriers do not apparently possess the 
 necessary data for that purpose, and there is at present no other source -from 
 which the Commission can obtain such data. 
 
 As to that I would say that asking the traffic officials whether they 
 ' were taking their own property Avithout due process of law seems 
 a little absurd, because the rules which were laid down by the Su- 
 preme Court were to prevent property from being taken in invitum 
 without due process ox law. A man can give away his own property, 
 and that question does not arise; but when the rates are sought to 
 be made by superior force, then the question does arise, and then 
 the Commission says it is impossible to follow the rules which the 
 Supreme Court has laid down. Now, that is an extraordinary sit- 
 uation. Just imagine, brethern of the bar, what a field of litiga- 
 tion that would be. Because these decisions of the Interstate Com- 
 merce Commission will be thoroughly probed, and then it would 
 appear that according to their own statement they had no relation 
 whatever to the rules that the Supreme Court has announced on that 
 subject. 
 
 Mr. TowNSEND. May I ask you a. question ? 
 
 Mr. Wilcox. Yes, sir. 
 
 Mr. TowNSEND. Do you believe that the Government, through a 
 commission, or any other body, should have the right to inquire into 
 the reasonableness of a rate? 
 
 Mr. Wilcox. Yes, sir; certainly. I said on the start that I be- 
 lieved in a commission. 
 
 Mr. TowNSEND. That the Commission should have that power? 
 
 Mr. Wilcox. Yes, sir 
 
236 PROPOSED AMENDMENT OF INTEBSTATE-COMMEECE LAW. 
 
 Mr. TowNSEND. Should they have the right in determining that 
 to inquire into the earnings oi the road to determine what the road 
 is earning? 
 
 Mr. Wilcox. Mr. Committeeman, I would plant myself on what 
 Judge Harlan said in the case of Smith v. Ames on that subject. 
 That is the most thorough statement I know on the subject, and I 
 believe what he said. I will read it if you want to hear it. 
 
 Mr. TowNSEND. You could answer my question if you understand 
 him as you do, just as I have put it to you. 
 
 Mr. Wilcox. The earnings of the road ? 
 
 Mr. TowNSEND. Yes, sir. 
 
 Mr. Wilcox. That is my view, certainly. That is what the case 
 of Smith V. Ames said. I wanted to answer your question compen- 
 diously by referring to that. 
 
 Mr. TowNSEND. I do not care for you to go into that. 
 
 Mr. Wilcox. Taking into account the earnings of the road? I 
 suppose so. 
 
 Mr. TowNSEND. What would be necessary in order to fix a reason- 
 able rate ? 
 
 Mr. Wilcox. That is a question how far that would control in 
 cases of roads which do not have earnings. There has got to be an 
 original uniformity of rates. 
 
 Mr. TowNSEND. That would involve the question of taxes that 
 you have referred to, whether they were paying a proper proportion 
 of their taxes. 
 
 Mr. Wilcox. 1 do not know whether it would or not ; the systems 
 of taxation are so different. 
 
 Mr. TowNSEND. And that would iuA'^olve a question of the faith- 
 fulness of the reports of the railroads as to their distribution of their 
 earnings and operation, and so forth. 
 
 Mr. WiLCbx. Yes, sir; and would probably involve an inquiry as 
 to what are betterments and what are renewals. 
 
 Mr. TowNSBND. Is it your opinion that the railroads are fair with 
 the people in making those statements of the apportionment of 
 earmngs ? 
 
 Mr. Wilcox. My judgment would be that too many things are 
 called betterments which are really renewals. I do not think that 
 they are conservative enough about it. 
 
 Mr. TowNSEND. You think they are* treating themselves unfairly 
 in those reports ? 
 
 Mr. Wilcox. Yes, sir ; every man who makes a report likes to show 
 that he has strengthened the property. In that respect I think they 
 call things betterments which are probably merely renewals. 
 
 Mr. TowNSEND. Now, one more thing, which is not just pertinent 
 to this, but in order to understand your relation to this I will ask 
 you this question: You have been quite interested in opposing the 
 enlargement of the powers of the Interstate Commerce Commission, 
 and especiallv as representing the principles set forth in the Quarles- 
 Cooperbill? 
 
 Mr. Wilcox. Y^es, sir. 
 
 Mr. TowNSEND. And you had something to do with getting the 
 withdrawal of indorsements of people who had signed the petition 
 of "Freight?" 
 
PE0P08ED AMENDMENT OF INTEESTATE-COMMEBCE LAW. 2H7 
 
 Mr. "Wilcox. Yes, sir ; I had something to do with that. 
 
 Mr. TowNSEND. "VVliat did you do in connection with that ? 
 
 Mr. Wilcox. Well, let me see. Perhaps I ought to say this, that 
 I have always lived in New York, so that I know a number of these 
 gentlemen myself, and I suggested to gentlemen who knew them, 
 M'hom I did not know, that they should bring the matter to their 
 attention, and made suggestions to them on the lines that I have sug- 
 gested this morning. 
 
 Mr. TowNSEND. And there was a formal effort made to get them to 
 Avithdraw their names'? 
 
 Mr. "Wilcox. There was not a formal effort. I think that I have 
 told you what I did. There was one of those concerns which was a 
 shipper on our line, and I had never heard any complaint from them, 
 aiid I Avrote them and asked them whether they had any complaint. 
 That is one of the most important concerns in the State of New York. 
 They wrote that they had not any complaint, and very strongly 
 commended our station agent and said that he was a first-rate man, 
 and they hoped that he would continue there; and they said on 
 further consideration they believed that the legislation proposed 
 would be undesirable, and they did not "believe, in Government action 
 on these matters. 
 
 The war that I came to take that matter up was this: I received 
 from Freight a letter addressed to myself, inclosing a copy of the 
 petition with the request that I would sign the petition and subscribe 
 to the paper. I did subscribe to th^ paper, and when ^ read the 
 Quarles-Cooper bill I thought that it was very undesirable. I make 
 no question about saying that; that is what I came here to say. I 
 found' also the petition contained a misstatement to the effect that 
 the object of the Quarles-Cooper bill was to restore the Interstate 
 Commerce act to the condition in which it was originally passed. 
 Now, that was an entire misconception, because there had never been 
 any change in the commerce bill, and the result of the judgments 
 of the Supreme Court was to construe it, and we all know that— you 
 are a lawyer, are you not ? 
 
 Mr. ToAVNSEND. A kind of a lawyer. 
 
 Mr. Wilcox. Like myself. That did not emasculate the act or 
 eliminate sections or anything of that kind. It construed the act as 
 ■Congress originally passed it. This petition also stated that the 
 object of the bill was to restore the interstate act to its original con- 
 dition. 
 
 Mr. TowNSEND. You understood that it was to restore these rate- 
 making powers to the Commission as they have been originally given 
 in the act ? You understood it that way ? 
 
 Mr. Wilcox. It did not say so. 
 
 Mr. TowNSEND. You understood it that way, did you not, that it 
 was to restore these rate-making powers, as the Commission supposed 
 it had those rights, as it has shown by attempting to exercise t^ose 
 powers ? 
 
 Mr. "W^iLcox. If you could have explained that as the meaning of 
 the petition I think they would have understood it more fully than 
 it was possible under the circumstances for them to understand it. 
 Have I answered all that you wanted me to ? 
 
 Mr. TowNSEND. Yes, sir ; thank you. 
 
238 PROPOSED AMENDMENT OF INTER8TATE-0OMMEE0E LAW. 
 
 Mr. Wilcox. The most dangerous thing about this matter, it seems 
 to me, is the provision as to fixing the just relation of rates. Before 
 I take that up, however, I assume that the committee is thoroughly 
 aware now that the bill gives the Commission the power to fix rates, or, 
 as was said in the maximum-rate case, all rates could be fixed in one 
 proceeding. It is therefore inconsistent with the language of the 
 President's message, which is to the effect that it is not desirable to 
 give a general rate-making power to the Commission. It has been 
 claimed in recent publications by Mr. Bacon and Mr. Moseley that 
 nothing of the sort was sought, and yet we have the language of Judge 
 Brewer, holding, in terms, that that would be the necessary effect of 
 this change. 
 
 Now, you take the just relation of rates. The illustration of that in 
 the differential case, I believe, has been presented to the committee, 
 where the Commission wrote an opinion saying that the question was 
 how far New York was entitled to its commercial supremacy — how far 
 it was to be permitted to retain it — and stating that the policy of the 
 country was that the trade should be distributed in different ports, 
 and the Commission proceeded to make an award affirming the 
 differentials in part, in the :^ce of that constitutional provision that 
 no regulation of commerce or revenue shall give any preference 
 between different parts of the United States. 
 
 In absolute flat disregard of that, just lately, the Commission has 
 said that it is no part of its functions to equalize natural advantages 
 by adjusting rates. So that .those varying rules could be applied, 
 apparently, according to the fancy of the Conamission, as occasion 
 might arise. In one case it might be held that the commerce of a 
 place like Chicago, for instance, was to be distributed, and in another 
 case it might be held that it was not within the function of the Com- 
 mission to equalize natural' conditions, because it is on record both 
 waj's. Suppose it could do this; suppose that it could equalize such 
 advantages? Is there anything that would stop competition more 
 than that? Is there anything that would limit the productive activ- 
 ities of various commercial centers more than the effort to give to each 
 one some little territory in which it had a natural advantage, because 
 it was near at hand, perhaps, and to keep everybody else out? Be- 
 cause that would be the effect of it if such a system could be carried 
 out. I doubt whether it could be, but if it could be carried out it 
 would absolutely limit competition and prevent the process which is 
 going on all the time of developing business, so that manufacturers 
 and carriers can reach farther markets. That will be at an end. So, 
 too, under the.Quarles-Cooper bill, a condition of ridigity of rates 
 would arise as soon as the Commission had acted, because the rates 
 under the provisions of that bill can not be changed except by the 
 action of the Conamission itself — not by the court even, but only by 
 the action of the Conraiission. 
 
 And that condition would constantly go on. Rates would gradu- 
 ally become fixed everywhere, and the enterprising manufacturer 
 who wanted to reach another market would be shut out from doing so. 
 
 The Chairman. The hour has arrived at which we must adjourn. 
 This committee is not allowed to hold its sessions during the sitting of 
 the House. 
 
 Mr. Wilcox. I am greatly obliged to you and the gentlemen of the 
 
PROPOSED AMENDMENT OF INTEESTATE-COMMEECE LAW. 239 
 
 committee, Mv. Chairman, for hearing me, and, as I have said, I ex- 
 pect to file a brief with you right away. 
 
 Thereupon (at 12 o'clock m.) the committee adjourned until Mon- 
 day, January 23, 1905, at 10.30 o'clock a. m. 
 
 The interstate commerce act — The legislation now proposed is unnecessary 
 awl, if effectine, would be very dangerous — The remedy for any grievance 
 lies in thorough enforcement of the law rather than in further experimental 
 statutes. 
 
 THE SCOPE OF THE INTERSTATE COMMERCE ACT HAS NEVER BEES DIMINISHED BT 
 
 THE COURTS. 
 
 It IS sometimes said tliat the preliminary debates in Congress indicate au 
 intention tliat the scope of the interstate commerce act should be either broader 
 or narrower than that which it now has. But it has often been ruled by the 
 Supreme Court of the United States that expressions used in such debates 
 have no force in determining the meaning of statutes — that meaning is to be 
 gathered solely from the language of the statute as finally enacted (3 How., 
 224) . Accordingly, nothing of the sort ever had the slightest bearing upon the 
 meaning of the inter.state commerce act. The powers of the Commission which 
 it created were those only which were specified by the language of the statute. 
 
 The act provided that rates should be reasonable and there should be no 
 preference, and it was made the duty of the Commission to enforce these rules. 
 Under settled principles of construction these provisions referred to action 
 regarding existing conditions, and not to establishment of rates or regulations 
 for the future. Accordingly, promptly after the act became effective, the Com- 
 mission decided that it had no power or jurisdiction regarding future con- 
 ditions. Commissioner Walker said as to the suggestion that the Commission 
 could "construe, interpret, and apply the law by preliminary judgment" (1 
 I. C. R., 19), that " a moment's refiection will show that no such tribunal could 
 be properly erected. Congress has not taken the management of the railroads 
 out of the hands of the railroad companies. It has simply established certain 
 general principles under which interstate commerce must be conducted." (Id., 
 20.) Commissioner Cooley said that in case the Commission had preliminary 
 power to suspend the long and short haul provision it " would, in effect, be 
 required to act as rate makers for all the roads and compelled to adjust the 
 tariffs, so as to meet the exigencies of business, while at the same time endeav- 
 oring to protect relative rights and equities of rival carriers and rival localities. 
 This, in any considerable state, would be an enormous task. In a country so 
 large as ours, and with so vast a mileage of roads, it would be superhuman. 
 A construction of the statute which should require its performance would 
 render the due administration of the law altogether impracticable, and that fact 
 tends strongly to show that such a construction' could not have been intended. 
 * * * No tribunal is empowered to judge for it until after the carrier has 
 acted, and then only for the purpose of determining whether its action consti- 
 tutes a violation of law." (Id., 280, 281.) Commissioner Schoonmaker said 
 that the Commission had no power in any case to fix rates for the future, but 
 " its power in respect to rates is to determine whether those which the roadfe 
 impose are for any reason in conflict, with the statute." (1 I. C. R., 357.) 
 This language was later cited by the Supreme Court (367 U. S., 570) as showing 
 that the Commission at first did not deem itself to be possessed of rate-making 
 power. 
 
 After a time the Commission changed its attitude in the matter and made 
 various attempts to regulate future conditions. This course natusally led 
 to litigation. It is frequently said that the Commission exercised this power 
 for ten years without objection or suggestion that its course was unauthorized 
 by law."" (Annual report of the Commission for 1897, p. 11.) This statement 
 
 "As for example, too, in The Transportation Tax, issued by the Cattle Growers' 
 Interstate Committee, Denver, Colo., 1904, p. 26. 
 
240 PROPOSED AMENDMENT OV INTERSTATE-COMMERCE LAW. 
 
 As will be shown below at length, when the Commission made the attempt to 
 establish future rates by wholesale (4 I. C. R., 592), that attempt was promptly 
 resisted in the courts, and as soon as the courts could act tlie Commission was 
 held to have exceeded its authority. (162 U. S., 184; 167 U. S., 511.) The 
 rules thus laid down by the Supreme Court were foreshadowed at circuit as 
 early as 1889 and 1890. (37 Fed. Rep., 567; 43 Fed. Rep., 37.) 
 
 It was settled in 1889, by a judgment of the eminent Judge Howell E. Jacli- 
 son (37 Fed. Rep., 567), that the Commission had none of the character of a 
 court and its decisions could be enforced only through aid of the judicial 
 tribunals, and in this view the Supreme Court, through Justice Harlan, later 
 concurred. (154 U. S., 485.) 
 
 It is interesting to recall the language of Judge Jackson, which was as fol- 
 lows : 
 
 " The functions of the Commission are those of referees or special commission- 
 ers appointed to make preliminary investigation and report upon matters for 
 subsequent judicial examination and determination. In respect to interstate 
 commerce matters covered by the law, the Commission may be regarded as the 
 general referee of jeach and every circuit court of the United States, upon which 
 the Jurisdiction Is conferred of enforcing the rights, duties, and obligations rec-, 
 ognized and imposed by the act. It is neither a Federal court under the Con- 
 stitution, nor does it exercise judicial powers, nor do Its conclusions possess the 
 efficacy of judicial proceedings." (37 Fed. Rep., 613.) 
 
 An effort was made in the Fifty-second Congress (Senate bill No. 892) to 
 change these rules by giving the Commission judicial character, but the effort 
 was not successful. Shortly (in 1894) the Commission sought to fix future 
 rates upon an extensive scale (4 I. C. R., 592) and brought suit to enforce this 
 action. In due course this suit reached the Supreme Court of the United 
 States. A decision upon the subject was first made on March 30, 1896. (162 
 U. S., 184, 196, 197.) The court said: 
 
 " It is argued on behalf of the Commission that the power to pass upon the 
 reasonableness of existing rates implies a right to prescribe rates. This is not 
 necessarily so. The reasonableness of the rate in a given case depends on the 
 facts, and the function of the Commission is to consider these facts and give 
 them their proper weight. If the Commission, instead of withholding judgment 
 ill such a matter until an issue shall be made and the facts found, itself fixes a 
 rate, that rate is prejudged by the Commission to be reasonable. * * * Sub- 
 ject to the two leading prohibitions that their charges shall not be unjust or 
 unreasonable, and that tbey shall not unjustly discriminate so as to give undue 
 preference or advantage to persons or traffic similarly circumstanced, the act to 
 regulate commerce leaves common carriers as they were at the common law, 
 free to make special contracts looking to the increase of their business, to clas- 
 sify their traffic, to adjust and apportion their rates so as to meet the necessities 
 of commerce, and generally to manage their important interests upon the same 
 principles which are regarded as sound and adopted in other trades and pur- 
 suits." 
 
 The last sentence was quoted from a case decided by Judge Jackson at cir- 
 cuit on August n, 1890 (-13 Fed. Rep., 37), and affirmed by the Supreme Court 
 in 1892 (145 U. S., 263). 
 
 The question was again before the Supreme Court upon May 24, 1897, in an 
 action brought by the Commission. (167 U. S., 479.) Regarding the claim 
 that the Commission had power to fix rates for the future in a ease where it 
 had held the existing rate unreasonable, the court said (p. 509) ; "The vice of 
 this argument is that it is building up indirectly and by implication a power 
 which is not In terms granted." Accordingly it repeated the language quoted 
 just above and said further : 
 
 " Our conclusion, then, is that Congress has not conferred upon the Commis- 
 sion the legislative power of prescribing rates, either maximum or minimum or 
 absolute. As it did not give the express power to the Commission, it did nbt 
 intend to secure the same result indirectly by empowering that tribunalto de- 
 terming what, in reference to the past, was reasonable and just, whether as 
 maximum, minimum, or absolute, and thus enable it to obtain from the courts 
 a peremptory order that in the future the railroad company should follow the 
 rates thus determined to have been in the past reasonable and just." 
 
 In response to the suggestion that this construction of the act rendered the 
 Commission useless, the court said (p. 506) : 
 
 " But has the Commission no functions to perform in respect to the matter of 
 rates ; no power to make any inquiry In respect thereto? Unquestionably It has. 
 
PROPOSED AMENDMENT OK INTERSTATE-COMMERCE LAW. 241 
 
 aud iDosT important duties in respect to this matter. It is charged with the 
 genera) duty of inquiring as to the management of the business of railroad 
 companies, and to lieep itself informed as to the manner in which the same is 
 conducted, and has the right to compel complete and full information as to the 
 manner in which such carriers are transacting their business. And with this 
 knowledge it is charged with the duty of seeing that there is no violation of the 
 long and short haul clause ; that there is no discrimination between individual 
 shippers, and that nothing is done by rebate or any other device to give prefer- 
 ence to one as against another ; that no undue preferences are given to one place 
 or places or individual or class of individuals, but in all things that equality 
 of right which is the great purpose of the interstate-commerce act shall be 
 secured to all shippers. It must also see that that publicity which is required by 
 section 6 is observed by the railroad companies. Holding the railroad com- 
 panies to strict compliance with all these statutory provisions and enforcing 
 obedience to all these provisions tends, as observed by Commissioner Cooley in 
 In re Chicago, St. Paul and Kansas City Railway (2 Int. Com, Com. Rep., 231, 
 261). to both reasonableness and equality of rate contemplated by the 
 interstate-commerce act." ' 
 
 In these constructions of the interstate-commerce- act all of the justices of the 
 Supreme Court concurred at various times, with the exception of Justice Harlan. 
 
 It has since been pertinaciously asserted that these decisions either read 
 into the act something which was not in it or read out of it something which it 
 originally contained. Apparently in order to lend eraphasis to this claim, 
 terms grotesque in the discussion of judicial decisions have generally been em- 
 ployed. Thus a recent writer in the North American Review speaks of the 
 Supreme Court as having " annulled " and " set aside " the act and " eviscer- 
 ated " the Commission ; it has frequently been said that the court " emascu- 
 lated " the statute ; the Commission speaks of the courts having made " dis- 
 coveries " contrary to the general understanding (Annual Report for 1897, pp. 
 6. 9), by which sections of the statute were "eliminated" and "stricken from 
 the act" (Id., p. 43), and refers to the effect of these adjudications "in defeat- 
 ing the purposes of the act" (Annual Report for 1898, p. 5; Annual Report for 
 1901, p. 5), and the Commissioner of Corporations, in his recent report, says that 
 " the force of the interstate-commerce act has been seriously weakened by 
 judicial interpretation." 
 
 These fashions of speech, if serious, are founded upon misconception of the 
 processes of jurisprudence. The act contained no provisions in terms author- 
 izing action in regard to future conditions. Accordingly, the Commission 
 ' promptly held that it had no power in that regard. Thereafter the Commission 
 adopted a contrary view and sought to exercise control over future rates. 
 Thus it became necessary for the Supreme Court to decide which view was 
 sound. It decided that the view first adopted by the Commission was the 
 correct construction of the statute. This, of course, settled by authority the 
 meaning of the act as originally passed. It took nothing therefrom and added 
 nothing thereto. The court decided merely that nothing contained in the stat- 
 ute as it was passed in 1887 conferred any power regarding future rates ; no 
 more and no less. 
 
 It is therefore idle and foolish to speak of these decisions as having in any 
 way qualified the act as Congress passed it. 
 
 PROPAGANDA FOK FUBTHEK LEGISLATION. 
 
 The action of Congress as thus finally construed was not accepted in all 
 quarters as sufficient. A propaganda was at once set on foot for further legis- 
 lation increasing generally the powers of the Commission. The statement has 
 often been made that this movement originated largely with and has been kept 
 alive by the Commission itself. This statement is supported by the facts that 
 in each of its annual reports since these decisions of the Supreme Court the Com- 
 mission has vigorously criticised those rulings and urged legislation for the pur- 
 pose of enlarging its powers, and has generally submitted drafts of statutes for 
 that purpose ; that at each session of Congress one or more acts of the sort have 
 been introduced, with its approval ; that members of the Commission have ap- 
 peared before Congressional committees and strongly advocated such legisla- 
 tion, and have urged the same in numerous articles, addresses, and interviews ; 
 that one of the Commissioners attended and urged such action and submitted 
 a draft of an amended statute at the formation upon November 22, 1899, of what 
 
 I c L— 05 16 
 
242 PROPOSED AMENDMENT OE INTERSTATE-COMMERCE LAW. 
 
 is now known as tbe Interstate Commerce Law Association — the organization 
 wliicli is principally active in support of tlie legislation now proposed, and that 
 by formal order on December 8, 1899, the Commission instructed its secretary to 
 " cooperate assiduously " with any mercantile or agricultural organizations in 
 efforts to secure the result sought and especially the passage of the bill to which 
 reference has just been made (Senate bill 1439, 56th Cong., 1st sess.). 
 
 By a circular letter dated February 3, 1900, the secretary of the Commission 
 .lecordlngly stated that said bill was designed to give to the Commission "the 
 authority intended to be conferred by Congress when the bill was originally 
 enacted ; that the shippers of the country, with the approval of the Interstate 
 Commerce Commission, seek such an amendment as will empower the Commis- 
 sion to proceed on the lines and to the ends contemplated by the original act; 
 that it is respectfully suggested that (the person addressed) take action express- 
 ing (his) approbation and support to the Senators and Representatives from 
 (his) State, and to the Committees on Interstate Commerce, and that the secre- 
 tary would be pleased to be advised of anj' action taken in the premises." Such 
 action has followed naturally from the view that the " purpose of the act was 
 to provide a means by which the public could array itself against the carrier." 
 (Annual Report for 1897, p. -19.) 
 
 The Commission, too, has every year taken Congress and the courts severely 
 to task for failing to agree with its views. The decisions regarding the statute 
 have rendered " its enforcement as a remedial statute practically impossible." 
 (Annual Report for 1897, p. 6.) 
 
 "Nearly every essential feature of that act has failed of execution." (Id., 
 p. 37.) 
 
 " By virtue of judicial decision, it (the Commission) has ceased to be a body 
 for the regulation of interstate carriers." (Id., p. 51.) 
 
 " The requests of the Commission for needful amendments have been sup- 
 ported by petitions, etc. * * * yet not a line of the statute has been changed 
 and none of the burdensome conditions which call for relief have been removed 
 or modified." (Annual Report for 1899, p. 5.) 
 
 " Until further legislation is provided the best efforts of regulation must be 
 feeble and disappointing." (Id., p. 5.) 
 
 "This (the power to make future rates) is the point to which the attention 
 of the Congress has been repeatedly called ; this is the defect in the regulating 
 statute which demands correction. In previous reports this question has been 
 frequently and fully discussed. We have commented at length upon the weak- 
 ness and inadequacy of the law as its provisions have been construed by the 
 courts." (Annual Report for 1903, p. 12.) 
 
 " The popular demand may eventually take that form (the original rate- 
 making power) under the stress of continual delay in remedying ascertained 
 defects in the present plan of regulation." (Annual Report for 1904, p. 8.) 
 
 It would be impossible to state in detail the efforts which, incidentally to this 
 propaganda, have been made to stimulate public feeling. One or two instances 
 must suffice. Thus the expression "transportation tax" (Annual Report for 
 1900, pp. 9, 13, 24; Annual Report for 1903, pp. 14, 15, 17) has been habitually 
 applied to the charges of the carriers, apparently for the purpose of arousing 
 the same sort of prejudice against the payment of such charges as is felt by 
 manj' against the payment of taxes. The expression, of course, has no more 
 accuracy than would such an expression as the " wheat tax," or the " beef 
 tax," or the " corn tax," or the " clothing tax," or the " newspaper tax " have 
 in describing what is currently paid for those articles of general use. The indi- 
 vidual consumer has no more to do with fixing the prices thereof than with 
 fixing the charges of tlie carriers. And those prices are far more of a universal 
 burden than are transportation charges ; for. as the Commission said in its 
 annual report for 1900 (p. 9), " generally a slight increase in the rate does not 
 materially affect the price to the consumer ;" and, again, iu its annual report 
 for 1903, " so, too, with the great volume of trafTic, the cost of transportation is 
 not a sufficiently large factor iu the total cost of the article to the consumer, so 
 that a reduction of the freight rate would stimulate consumption to a sufficient 
 degree to justify the reduction " (p. 16). 
 
 " Perhaps in most instances the freight rate is so small a part of the total 
 cost of a commodity that the consumer is unconscious of the increase in rate." 
 (Id., p. 32.) 
 
 But the general body of the consumers creates the demand which settles the 
 nmonnt of the transportation charge quite as much as the price of the goods 
 
PROPOSED AMENDMENT OP INTERSTATE-COMMERCE LAW. 243 
 
 transported. Indeed, the most potent cause of the downward course of rates 
 In the past has been the commercial necessities of shippers and consumers and 
 the efforts of traffic officials to meet them. 
 
 So, too, the Commission, in its annual report for 1903 (pp. 13-15), and one or 
 more of its members in various published statements, have asserted with empha- 
 sis that rates as a whole have greatly increased. In an article recently pub- 
 lished in the North American Review one of the Commissioners goes so far as to 
 say : " Within the last five years rates upon every important commodity in every 
 section have been advanced. » * * 'We are confronted with increasing mo- 
 nopoly, with advancing freight rates, and with no probable relief in sight." Yet 
 in 1898 the average freight rate per ton per mile was 0.753 cents or 7.53 mills, 
 and in 1903 it was 0.763 cents or 7.68 mills (infra, p. 14). So that the increase 
 upon which are founded these lugubrious views amounted, in a time of generally 
 rising prices, to ten thousandths of a cent per mile, or 10 cents per ton for each 
 thousand miles. Moreover, as will shortly be shown, almost no cases of unrea- 
 sonable rates have ever been established before the Commission and none what- 
 ever in the courts, and the cost of materials between 1898 and 1903 rose out of 
 all proportion to transportation charges. 
 
 Still further, on March 11, 1904, tlje Senate requested the Com.mlssion to re- 
 port the principal changes in tariff rates since June 30^ 1899, with " an estimate 
 of the effect of such changes upon the gross and net revenues of the railway cor- 
 porations during each fiscal year since then * * * and also to report the 
 changes in cost of operation and maintenance of the railways for said years." 
 The Commission reported on April 7, 1904, that, comparing 1899 with 1903, there 
 was, from this cause, an addition to the gross earnings amounting to $155,475,502. 
 It omitted to answer the request for information regarding the net revenues and 
 cost of operation and maintenance on the ground " that the returns for the fiscal 
 year 1903 have not yet been compiled, and the figures relating to the cost of 
 operation and maintenance for that year must, therefore, be omitted, * * * " 
 but said that its " method of computation was not without value as indicating 
 enormous additions in recent years to the cost of railway transportation to the 
 people of the United States." 
 
 Yet the figures as to operating expenses were in possession of the Commission 
 quite as much as those as to gross earnings ; they were contained in the same 
 official reports of the railway companies to the Commission. In the preliminary 
 report of their statistician, dated December 12, 1903, and again in the. regular 
 annual report of the Commission for 1903, dated December 15, 1903, those figures 
 had already been stated for 98 per cent of the mileage of the country at 
 $1,248,520,483, which was an increase of $620 per mile over 1902. The advance 
 in operating expenses from 1902 to 1903 is stated in the report of the statistician 
 for 1903 (p. 85) to have been $141,290,105 and in the report of tlie Commission 
 for 1904 (p. 112) as $141,193,494, and the increase in taxes and Interest was 
 $13,262,391, making the total increase in expense of the business in that one year 
 $154,455,885. It will shortly be shown, too, that the Commission's figures indi- 
 cated that from 1899 to 1903 the increase in both gross earnings and net reve- 
 nue had not been as great relatively to the volume of business as the Increase in 
 expenses of operation. These facts the Commission did not mention, although 
 the Senate resolution called for information on the precise subject of operating 
 expenses and net revenue. 
 
 The Commission's annual report for 1900 (p. 9) stated that "generally a 
 slight increase in the rate does not materially affect the price to the consumer," 
 but that " since every such advance adds to the net revenues of the railway, a 
 very slight increase in all rates, if it should be permanently maintained, would 
 enhance enormously the value of railway securities." 
 
 The view of this report of March 11, 1904, apparently was that any such 
 result would necessarily be a calamity. The results for 1904 show how com- 
 pletely increasing expenses have exhausted Increased gross earnings of the rail- 
 roads. Their gross earnings increased, over 1903, to the amount of $65,188,714, 
 hut the net earnings decreased $6,393,265, as compared with the previous year. 
 Operating expenses increased $250 per mile over 1903, and the operating ratio 
 increased from 66.16 per cent to 67.75 per cent of gross earnings, or an increase 
 of 1.59 per cent on the entire amount of gross earnings. (Annual Report for 
 1904, p. 106.) 
 
 It is much to be regretted that the action has been taken which is indicated 
 by these Illustrations. The shippers and the carriers stand in relations to each 
 other very similar to those of merchants and their customers. The effort of all 
 parties Interested in the general welfare should be toward closer and more har- 
 
244 PEOPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 monious relations between them. In investigating grievances presented to them 
 and bringing the parties together, the Commission has done a great and benefi- 
 cent vyorii, and that has been and always will be by far its most important func- 
 tion. (Annual Report for 1893, p. 14 ; Annual Report for 1895, p. 48 ; Annual 
 Report for 1897, pp. 32, 51.) In its Annual Report for 1904, pages 36, 73, it 
 appears that 487 complaints were filed with the Commission, of which 425 were 
 settled by correspondence with the carriers and only 62 were made the subject 
 of contest, " the greater number of these complaints having been settled to the 
 satisfaction of all concerned" (p. 73). It is unfortunate that the dignity and 
 usefulness of the Commission in this regard have been. In a measure, compro- 
 mised by grasping for powers to control the future such as are possessed by no 
 branch of the Government, and probably could never be successfully exercised. 
 
 PROPOSITIONS TO IWCEEASE THE COMMISSION'S POWER, INCLUDING PENDING 
 
 LEGISLATION. 
 
 The changes in the law which have been urged upon Congress have varied 
 considerably from time to time. Shortly after the Supreme Court decisions 
 above stated a bill was introduced substantially conferring general original rate- 
 making power upon the Commission. When this failed a bill followed providing 
 that the carriers should make the rates in the first instance and the same should 
 thereafter be subject to general revision by the Commission, which would thus 
 really have been the rate makers. On the failure of this. It is now proposed 
 that when the Commission has decided that an existing rate offends against the 
 statute it shall have power to establish a rate for the future, thus giving it 
 complete control over all rates. This proposition is embodied in the bill now 
 pending before Congress known as the Quarles-Cooper bill, from the names of 
 the Senator and Representative by whom it was introduced. 
 
 The provisions of the pending bill are in brief as follows : 
 
 (1) Where the Commission has made an order declaring any rate, regulation, 
 or practice to be unjustly discriminative or unreasonable, and declaring what 
 rate, regulation, or practice would be just and reasonable, and requiring them 
 to be substituted therefor, such order shall become operative and be observed by 
 the parties at the expiration of thirty days, or in case of proceedings to review, 
 at the expiration of sixty days ; but such order may at any time be modified, 
 suspended, or revoked by the Commission upon full hearing of all parties in 
 interest. 
 
 (2) In case the rate substituted by the Commission is a joint rate, and the 
 carriers fail to agree as to division thereof, the Commission may make the divi- 
 sion ; moreover, the Commission may establish " the just relation of rates " to or 
 from common points on the lines of the carriers and prescribe the rates to be 
 charged by either or all of the parties to or from such common points when the 
 carriers fail to agree. 
 
 (3) Every such 6rder as to its justness, reasonableness, and lawfulness shall 
 be reviewable by the circuit courts on petition filed within twenty days. There- 
 upon the record before the Commission shall be certified to the court. The court 
 shall proceed to hear the case on this record ; or, in its discretion, may, in such 
 manner as it shall direct, cause additional testimony to be taken. If, after hear- 
 ing, the court shall be of opinion that the order was made under some error of 
 law or is, upon the facts, unjust or unreasonable, it shall modify, set aside, or 
 annul the same by appropriate decree ; otherwise the petition shall be dismissed. 
 Pending the review the court may, if in its opinion the order is clearly unlawful 
 or erroneous, suspend the same. Within thirty days after rendition of any final 
 decree of the circuit court, any party may appeal to the Supreme Court, but there 
 shall be no stay on appeal. 
 
 (4) The defense of all such cases shall be carried on by the United States 
 attorney, under the direction of the Attorney-General, and the Commission may 
 with his consent employ special counsel. If any party bound thereby shall 
 neglect to obey or perform any order of the Commission, obedience thereto shall 
 be summarily enforced by writ of injunction or other proper process, mandatory 
 or otherwise, which shall be issued by any circuit court upon petition of the 
 Commission or any party interested, accompanied by a certified copy of the 
 order and evidence of the violation, and in addition the ofCending party shall be 
 subject to a penalty of $5,000 per day recoverable by the Commission in an 
 action of debt for the use of the United States. 
 
 These provisions are certainly both novel and drastic. The burden is very 
 strongly upon those who urge such methods of dealing with the greatest indus- 
 
PROPOSED AMENDMENT OF INTEBSTATE-COMMBRCE LAW. 245 
 
 trial interest of tlie eountrj- to establisli tliat (1) tliey are required by pruswir 
 conditions; (2) they are judicious as a future svstein; (3) tliey are warranted 
 by the Constitution of the United States, and (4) they would be liliely to 
 accomplish the desired results. But the affirmative can be established as to not 
 a single one of these propositions. 
 
 (1) THERE IS ?«0THIXC IN' PRESENT C0.ND)TI0?<S WAEKANTINC THESE DRA.STIC 
 
 INNOVATIONS. 
 
 The substantive provisions of the act are that (a) rates shall be reasonable 
 and (7)) rates sJiall not discriminate unjustly and there shall be no undue or 
 unreasonable preference between persons or localities or classes of traffic. 
 (162 U. S., 197.) Th(! forujer provision concerns the public generally and the 
 latter the persons or localities directly affected. (43 Fed. Rep., 48.) 
 
 (o) The existing rates arc reasonable in themselves. — The past course of 
 freight rates throughout the country has shown that there is no ground for com- 
 plaint in this respect. It has been as follows, according to official figures, using 
 those of the Interstate Commerce Commission since it was established. It 
 should be borne in mind that these figures include local as well as interstate 
 business, and that if the two were separated the interstate rates would be con- 
 siderably le.ss. 
 
 The average rate per ton per mile was. in — Cents. 
 
 1870 1. 990 
 
 1882 1. 240 
 
 1887 ]. 030 
 
 1888 1. 001 
 
 1889 . 922 
 
 1890 .941 
 
 1891 .895 
 
 1892 . 898 
 
 1893 . 879 
 
 1894 . 860 
 
 1895 . 839 
 
 1896 . 806 
 
 1897 J . 798 
 
 1898 . 753 
 
 1899 . 724 
 
 1900 . 729 
 
 1901 . 750 
 
 1902 . 757 
 
 1903 . 763 
 
 Thus the average in 1870 was more than two and one-half times that in 
 1903. The freight earnings for 1903 were $1,338,020,026. (Annual Report 
 for 1904, p. 111.) On the basis of 1870 they would have been approximately 
 $3,408,497,432. Upon the basis of 1870 the gross freight earnings would, 
 therefore, have been greater by $2,070,790,646 than they in fact were in 1903. 
 When the Interstate Commerce Commission was established, in 1887, the 
 rate was 1.03, and in 1903 it was 0.763 — a difference of nearly 26 per cent. If 
 the rates of 1887 had applied to the traffic of 1903 the earnings would have 
 been about $468,109,714 greater than they were in fact. Ten years ago, in 
 1893, the rate was 0.878, and in 1893 it was 0.763 — a difference of 13 per cent. 
 If the rates of 1893 had been applied to the traffic of 1903 the earnings would 
 therefore, have been about $201,620,288 greater than they were in fact. 
 
 Upon the general course of rates the following remarks of the Commission 
 are pertinent : " Where changes of any importance have taken place in the 
 freight rates of any section, either for local or competitive traffic, in nearly 
 all cases lower rates are now charged than prior to the date of the act to 
 regulate commerce." (Annual Report for 1894, p. 50.) 
 
 " Only from an extended .inquiry would it be possible to accurately estimate 
 the total reduction effected since the passage of the act to regulate commerce, 
 but that it has been very considerable is well known. * * * Comparing 
 the amounts received by the railways for transportation with amounts which 
 they would have received on the volume of traffic carried from 1889 to 1893, If 
 the average receipts per mile for 1888 had been maintained during the subsequent 
 five years, it appears that the public would in such case have paid for freight 
 and passenger transportation by railroad from 1889 to 1893, inclusive. 
 
246 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 $525,-159.587 more than was actually paid for such transportation during 
 that period." (Id., p. 51.) 
 
 The foregoing figures as to the rates for each year show that the downward 
 course of rates has continued since these remarks were made. 
 
 As already said, some comment has been made upon the fact that between 
 1899, the lowest point ever reached, and 1903, in a time of generally rising 
 prices, the mileage rate increased thirty-nine hundredths of a mill, or thirty- 
 nine thousandths of a cent. In reply to a resolution of inquiry from the 
 Senate the Commission reported in March, 1904 (Senate Doc. No. 257), that, 
 comparing 1899 with 1903, this increased gross earnings, in the amount of 
 $155,475,502, but professed its inability to say how much it had added to 
 net earnings. Yet the Commission's final report for the year ending June 
 30, 1903, proved that this had not increased net earnings at all relatively 
 to the volume of traffic. The operating expenses established thereby showed 
 that, comparing 1899 with 1903, gross earnings per mile increased 31.1 per 
 cent, while operating expenses increased 34 per cent ; that the operating 
 ratio of expenses to earnings increased from 65.24 per cent to 66.16 per cent; 
 that the number of employees Increased from 928,924 to 1,312,537, namely, 
 383,613, or 41.3 per cent, and their compensation from $522,967,896 to 
 $775,321,415, namely, $252,353,579, or 48.2 per cent. From 1902 to 1903, alone, 
 operating expenses, taxes, and interest increased $154,455,885. (Annual Report 
 for 1904, p. 112.) The figures for 1904 show that, comparing with the previous 
 year, gross earnings increased $65,186,714, but net earnings decreased $6,393,265 ; 
 that operating expenses increased $250 per mile; that the operating ratio 
 rose from 66.16 per cent to 67.75 per cent, or 1.59 per cent of the entire gross 
 earnings, and that the operating ratio was 2.21 per cent of the entire gross 
 earnings above the operating ratio of 1899. (Annual Report for 1904, p. 106.) 
 These figures show that the slight increase in rates from 1899 to 1903 has been 
 totally absorbed by the increase in expenses of operation. 
 
 It is interesting, in this connection, to notice a comparison made by the 
 Commission between the business of 1897 and that of 1902, as follows : 
 
 "As the rates, broadly speaking, were about the same in both years, it fol- 
 lows that the large increase in earnings resulted mainly from the increased 
 volume of traflic." (Annual Report for 1902, p. 5.) 
 
 The mileage rate in 1897 was 0.798 cent and in 1902 was 0.757 cent. The 
 difference was, therefore, 0.041 cent, and the Commission described the rates 
 as " about the same." But in 1899 the mileage rate was 0.724 cent and in 
 1903 the rate was 0.763 cent. The difference, therefore, was 0.039 cent, or pre- 
 cisely 0.002 cent— two one-thousandths of a cent less than that when the Com- 
 mission had described the rates as "about the same." Yet the Commission 
 spoke of the latter difference as establishing " enormous additions in recent 
 years to the cost of railway transportation." (Senate Doc. No. 257.) When 
 the difference in rates was 0.041 cent they were described as " about the same ; " 
 a slightly smaller difference amounting to 0.039 cent can not, therefore, be con- 
 sistently described as having made " enormous additions to the cost of trans- 
 portation." 
 
 Again, the average rate in 1897 was 0.798 ; in 1899, by reason of unfavorable 
 commercial conditions, but especially of excessively low rates on bituminous 
 coal, the average rate declined to 0.724 ; in 1903 it rose to 0.763— not as high 
 as it had been six years previously, and an increase of 0.039 cent. This fluctua- 
 tion clearly came within the expression of the Commission that " when reduc- 
 tions have been made on account of commercial depression, it is difficult to see 
 why corresponding advances may not properly be made with the return of busi- 
 ness prosperity." (Aimual Report for 1903, p. 48.) 
 
 Indeed, there has been no such rise in railway rates as has occurred in the 
 case of commodities generally. The recently published bulletin of the Depart- 
 ment of Labor (No. 51), with reference to the general course of prices, shows 
 that, taking 100 as the average for the period from 1890 to 1899, the price of 
 all commodities in 1902 stood at 112.9, or 12.9 per cent above the average of the 
 preceding decade. Applying the same treatment to railway rates, they stood in 
 1902 at 90.2, or 9.8 per cent below the average of the preceding decade. This 
 shows that railway rates had greatly declined, while prices in general had 
 greatly advanced.* 
 
 The rates are about one-third the average in England and France, and about 
 
 |» This has been conclusively demonstrated in pamphlets recently published by 
 Mr. H. T. Newcomb, of Washington, and Mr. Slason Thompson, of Chicago. 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 247 
 
 one-half the average in Germany. A slight efEort has been made to discredit 
 the mileage basis as a proper test ; the claim made in that connection is that 
 the average has been affected by a disproportionate increase of low-grade 
 freight. The suggestion that in a country constantly developing, industrially, 
 raw materials increase disproportionately to finished products is manifestly 
 without merit. Accordingly, the facts are to the contrary. In 1899 the percent- 
 age of low-grade freight was 70.81 of the whole; but in 1902 it decreased 
 to 75.87, and the higher-class commodities correspondingly increased. The 
 mileage basis is generally accepted as the only practicable standard for measur- 
 ing general conditions. " The rate per ton per mile rule brings rates down to 
 the narrowest point of scrutiny, and for that purpose is valuable," although 
 not absolutely controlling upon individual cases where circumstances are excep- 
 tional. (Annual Report for 1899, p. 37.) It may be added that the reductions 
 in rates have been approximately similar in the different parts of the country. 
 
 Very few substantial controversies have ever arisen regarding the reasonable- 
 ness of rates, and the Commission has frequently stated, in substance, that 
 there is no ground therefor. It has from time to time discussed in its reports 
 "unreasonably low rates." (Annual Report for 1893, pp. 38, 39, 220, 221; 
 Annual Report for 1894, p. 60; ,\nnual Report for 1897, pp. 24, 25.) In its 
 annual report for 1893 the Commission stated that " to-day extortionate charges 
 are seldom the subject of complaint (p. 12). * * * We are not troubled 
 with the question (under consideration in England) that rates * * * are 
 too high. (Id., p. 17.) It is significant that during the period of commercial 
 development and railroad extension, which have brought communities into such 
 close business relations and made slight differences in transportation rates on 
 competitive commodities a matter of serious import, there has been, under the 
 operation of the interstate-commerce law, a steady decrease of complaints based 
 on charges unreasonable in themselves. The concession is quite general among 
 shippers that, with some exceptions, rates as a whole are low enough, and they 
 often express surprise that the service can be rendered at prices charged. (Id., 
 pp. 218, 219.) Traffic for very many competing localities is being carried at 
 rates which do not yield a due proportion of the necessary net revenue which 
 carriers must have." (Id., p. 221.) 
 
 In its annual report for 1897 the Commission said (p. 14) : 
 
 " Rates to competing and distributing centers are not for the most part 
 unreasonably high. They are frequently quite low. * * * Many rates in 
 this country are undoubtedly too low." (Id., p. 2.) 
 
 These facts are of general application, because nearly every city in the coun- 
 try of any " considerable size is both a commercial and a railroad center, there- 
 fore a competitive point in both respects." (Annual Report for 1896, p. 39.) In 
 its annual report for 1898 (p. 27) the Commission said : " It is true, as often 
 asserted, that comparatively few of our railway rates are unreasoaable in and 
 of themselves — ^that is, without any reference to other charges made by the 
 same carrier or to those of other carriers "—but they may operate to create a 
 preference between localities. * * * '■ xhe cases are exceedingly rare in 
 which unreasonableness has been found merely from the amount of the rate 
 itself as laid upon the particular traffic and the distance it was carried " (p. 27). 
 
 On March 18, 1898, the chairman of the Commission testified before the Sen- 
 ate Committee on Interstate Commerce that the question of excessive railroad 
 charges — " that is to say, railroad charges which in and of themselves are extor- 
 tionate — is pretty much an obsolete question." At that time the rate per ton 
 per m'.le was within one one-hundredth of a cent of that in 1903, when the 
 chairman described the rates as having made " enormous additions to the cost 
 of railway transportation." The foregoing table of rates in each year shows 
 that since these numerous statements were made the rates have been and now 
 are much lower. 
 
 Accordingly, litigated cases in which rates have been shown to be unreason- 
 able in themselves are practically unknown. In reply to a resolution of inquiry 
 passed by the Senate on April 16, 1900, the Commission reported (Senate Docu- 
 ment No. 319, 56th Cong., 1st sess.) regarding contested cases which had been 
 before it during ten years prior to that date. It appeared from this report 
 that during that time it had found very few cases of unreasonable rates. As 
 the chairman said, that question had become "obsolete." In 1900 and 1901 
 there were but three cases of unreasonable rates sustained by the Commission. 
 An independent examination shows that from 1887 until the present time 
 the Commission has found 26 cases of rates unreasonable in themselves, or about 
 one and one-half annually. Further than this, not one of these decisions was 
 
248 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 sustained by the courts, and tjiere has not been a single case of rates unreason- 
 able in themselves established in the courts since the Interstate Commerce act 
 was passed. 
 
 The record, therefore, proves clearly that the provision of the act that rates 
 shall be reasonable in themselves has been fully observed. The remedies pro- 
 vided by the act have shown no insufficiency. There are no facts establishing 
 the necessity of further power for this purpose in the Commission. The Com- 
 mission itself suggests no such facts. Even as to the advances claimed to have 
 been made since 1899, amounting to thirty-nine thousandths of a cent per ton 
 per mile, it does not show that they have been unwarranted or excessive. In 
 its annual report for 1899 it said: "It is not intended to intimate that these 
 advanced rates are unlawful," but " the injustice which may result must be 
 without available redress " (p. 8). In its report for 1903 the Commission said: 
 " It would be both unwise and unjust upon the part of the public to prevent 
 them, if they are reasonable under all the circumstance (p. 15). * * * jf 
 they are just and reasonable, they ought not to be prevented " (p. 17). So, too, 
 in a recent article in the North American Review, to which reference has been 
 made, one of the Commissioners said : " I do not charge that any part of this is 
 unjust, but that some way should be devised by which the reasonableness of 
 these charges should be passed upon by the Governtnent." 
 
 The claim is, therefore, not that any injustice has been done in respect to rea- 
 sonableness of rates — there is no one asserting that he has been damaged and the 
 Commission does not assert the existence of any injustice and has never taken 
 action against the rates thus criticised — but merely and baldly that rates gen- 
 erally should be fixed by the Government. (Annual Report for 1898, pp. 20, 2-i; 
 Annual Report for 1900, p. 21.) That claim is put forward without support of 
 anything save the opinion of the Commission. As no injustice is shown arising 
 from the present method, such expressions of opinion can not be deemed to war- 
 rant such a fundamental change. 
 
 (6) The latomalcing pou-er has dealt fully unth preferences l)etireen Indi- 
 viduals. — Preferences between individuals have been alleged to arise principally 
 if not wholly from secret rebates. There has been nmch resounding talk upon 
 this subject, yet here, too, the record both of the Commission and the courts 
 embraces few adjudicated cases, when the extent of the railway traffic of the 
 country is considered, and nothing further upon this subject can be accom- 
 plished by statutoi-y enactment. " The power of the statute in this direction was 
 practically exhausted in creating the offense. When that was done, when cer- 
 tain acts were declared misdemeanors, the subsequent perpetrators of those acts 
 became at once liable to criminal prosecution in like manner and by the same 
 agencies as other offenders. Nor can Congress provide any summary or excep- 
 tional methods for preventing or punishing this class of transgressions. * * * 
 Theoretically, at least, the existing system of laws applicable to the wrongdoing 
 now referred to is complete and ample. It is not lacking in strength or cer- 
 tainty." (Annual Report for 189.3, p. 7.) 
 
 " No amendment of this statute, therefore, is necessary or suitable with the 
 view of giving greater power to the Commission in enforcing its penal pro- 
 visions." (Id., p. 8.) 
 
 In addition to this if secret rebates existed, rates made by the Commission 
 wouid be as much subject thereto as any others ; so that conferring rate-making 
 power upon the Commission would not be an appropriate or effective remedy. 
 
 However, in 1903 the Elkins Act was passed without opposition by any 
 interest, under which the Commission has power to obtain injunctions from the 
 courts prohibiting secret rebates or rate cutting. This was a step in the right 
 direction, as it provided for direct application by the Commission to the courts 
 to enforce the act. It is conceded that the Elkins Act has been generally effect- 
 ive. In its annual report for 1903 (pp. 10, 11), the Commission said : 
 
 " No one familiar with railway conditions can expect that rate cutting and 
 other secret devices will immediately and wholly disappear, but there is basis for 
 a confident belief that such offense.*; are no longer characteristic of railway 
 operations. That they have greatly diminished is beyond doubt, and their recur- 
 rence to the extent formerly known is altogether unlikely. Indeed it is believed 
 that never before in the railroad history of this country have tariff rates been so 
 well or so generally obser-s-ud as at the present time. * * * in its present 
 form the law appears to be about all that can be provided against rate cutting 
 in the way of prohibitive and punitive legislation ; unless further experience dis- 
 closes defects not now percei\ed, we do not anticipate the need of further amend- 
 ments of the same character and designed to accomplish the same purpose."' 
 
PROPOSEB AMENDMENT OF IXTEKST AXE-COMMERCE LAW. 2-49 
 
 In its annual repprt for 1904 (p. 6), the Commission has just said: 
 
 "As to that branch of regulation which deals with the publication and 
 invariable application of tariffs, the act as amended by the Elkins law of 
 February 19, 1903, appears to be operating successfully as applied to carriers 
 subject to its provisions." 
 
 So, too, one of the Commissioners in the article in the North American 
 Review, to which reference has been made above, has said that " the effect of 
 the Elkins bill and the injunction proceedings has been to secure the mainte- 
 nance of rates : that condition will probably continue." 
 
 Secret rebates and preferences to individuals have, therefore, been fully 
 dealt with, so far as concerns the lawmalcing power. If they reappear, it can 
 be due only to failure by the executive branch of the Government to enforce 
 the existing statutes. 
 
 (c) The matter of alleged preferences between localities and classes of 
 traffic is much exaggerated; such claims will ahrays exist, and the present 
 ■statute furnishes ample means of dealing ivith them. — Nothing covered by the 
 substantive provisions of tlie interstate-commerce act remains to be cqnsidered 
 save the malrter of alleged unjust or unreasonable discriminations or prefer- 
 ences between localities and classes of traffic. This is the matter with which 
 the contested cases before the Commission are principally concerned. It is 
 important to remember that, in the language of the Supreme Court : 
 
 "It is not all discriminations or preferences that fall within the inhibition 
 of ihe statute: only such as are unjust and unreasonable. (145 U. S., 284.) 
 Commerce, in its largest sense, must be deemed to be one of the most important 
 subjects of legislation, and an intention to promote and facilitate it, and not 
 to hamper or destroy it, is naturally to be attributed to Congress ; the very 
 terms of the statute that charges must be reasonable, that discrimination must 
 not be unjust, and that preference or advantage to any particular person, firm, 
 or corporation, or locality must not be undue or unreasonable, necessarily 
 imply that strict uniformity is not to be enforced; but that all circumstances 
 and conditions which reasonable men would regard as affecting the welfare 
 of the carrying companies, and of the producers, shippers, and consumers should 
 be considered by a tribunal appointed to carry into effect and enforce the 
 provisions of the act. (162 U. S., 218.) The mere circumstance that there is, 
 in a given case, a preference or an advantage, does not of itself show that such 
 preference or advantage is undue or unreasonable within the meaning of the 
 act." (162 U. S., 220.) 
 
 Claims that preferences exist and that they are unreasonable arise from the 
 spirit of business rivalry, which is always natural, and from the general desire 
 to secure equal advantages with others. Indeed, it may be said of the ship- 
 pers, with very rare exceptions, that they do not deem the rates too high, and 
 do not wish to force them unreasonably low, but wish merely to secure equality 
 of treatment. 
 
 "Shippers mainly agree that unstable rates are injurious to business 'indus- 
 tries and to commerce genei'all.y. They claim that reasonable rates that are 
 stable are better than sporadic low rates that are below what is just and 
 reasonable." (Annual Report for 1893, p. 39.) 
 
 " The rate is of very little consequence to the merchant, provided it is the 
 same to his competitors as to himself." (Annual Report for 1897, p. 18.) 
 
 As the New York Board of Trade and Transportation said in its recent report 
 upon the subject: 
 
 " Tf the carriers are held rigidly to their tariff rates, it matters not much 
 what those tariffs are if all shippers are charged and required to pay alike, 
 and excessive tariff rates are no longer to be accounted with to the same extent 
 as formerly." 
 
 The efforts of traffic officials to meet the necessities of shippers and con- 
 sumers in these regards have had more to do than any other cause with the 
 reduction of rates and their proper adjustment as between different localities. 
 That will continue to be the case. 
 
 " In view of their opportunities and the temptations to which their traffic 
 officers are exposed, it is perhaps not too much to say that the obligations of 
 neutrality in this regard are usually observed, and that discriminations of this 
 character are not oftesp the subject of complaint." (Annual Report for 1895, 
 p 17.) "The carriers are better qualified to adjust such matters than any 
 court or board of public administration and, within the limitations suggested, 
 it is safe and wise to leave, to their traffic managers the adjusting of dissimilar 
 
250 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 circumstances find conditions to their business." (Circui.t court of appeals, 
 cited in Annua] Report for 189ti, p. 32 ; also, 5 1. O. R., 697.) ^ , ^ 
 
 " It is worth observing that some, at least, of the most important contro- 
 versies involving the rates and methods of railway carriers are rather between 
 competing communities or producing regions than between rival lines of rail- 
 way. Railway development has extended far beyond the point at which any 
 of the greater systems finds its interests so identified with a single community 
 as to feel wholly indifferent to the demands and needs of all competing com- 
 munities. Indeed, there may be entire sincerity in the contention on the part 
 of the officers of a great system that any adjustment which satisfies the rival 
 communities which it serves can not be seriously objectionable from its own 
 point of view. In such degree as this contention may be sincerely advanced 
 the carrier becomes a relatively unimportant factor in the struggles of rival 
 localities." (Annual Report for 1904, pp. 28, 29.) 
 
 But if these struggles are permitted to constantly pare down the carrier's 
 revenue, they are a most important factor in the success of the carrier's 
 hnsiTiGSS 
 
 This demand for absolute equality among localities can never be entirely 
 satisfied. If under any conceivable form of statute the Commission could 
 accomplish this it would still be very questionable whether that result would 
 be altogether desirable, as it would tend to destroy the active spirit of enter- 
 prise which is necessary to commercial success. 
 
 "It is idle to look forward to an adjustment of rates which, as applied to 
 localities and differently circumstanced persons, will bear no heavier upon one 
 than upon another. Such mathematical equality is manifestly unattainable 
 through human endeavor. Not even common control of all railways through 
 consolidated ownership or Government purchase could accomplish suoh a task 
 of equalization for thousands of places and millions of persons. Certainly the 
 much-vaunted theory of uniform charges for all traffic would, under the greatly 
 diversified conditions which now prevail throughout the country, have the oppo- 
 site effect and inflict greater discriminations than arise under the existing gen- 
 eral practice of fixing charges which attract traffic to the various lines. Uni- 
 form rate per mile on all traffic for any distance would arbitrarily limit com- 
 merce to sections and greatly restrict production." (Annual Report for 1893, 
 p. 218.) 
 
 " Trade is no longer limited to circumscribed areas ; distance hardly ever 
 bars the making of commercial bargains between widely separated parties, and 
 almost every article of commerce finds the competing product of another region 
 in any place of sale. The consequence is that products of the farm, the forest, 
 the mill, and the mine are continually demanding from carriers rates adjusted 
 to values in particular markets. It is this competition of product with like 
 product, of market with market, that has induced carriers, in their eagerness 
 to increase the values of their traffic, to continually reduce their rates to mar- 
 ket points. Such competition is the competition of commerce itself ; the strife 
 between competing industries which the public interest demands should be left 
 free from fettering laws and uncontrolled by restraining combinations." (Id., 
 p. 219.) 
 
 As an Illustration may be quoted what the Commission has said regarding 
 rates upon flour : 
 
 " To an extent the rate upon flour to the foreign market must be higher than 
 that upon wheat. This Is decreed by physical conditions which no statute and 
 no commission can alter." (Annual Report for 1901, p. 16.) 
 
 Moreover, in States where railroad commissions have power over future rates, 
 questions of alleged discriminations between localities and classes of traffic are 
 as frequent and acute as ever. 
 
 Like all commercial questions, these matters are best settled between the 
 parties. The foregoing expressions show that the carriers, in general, use their 
 best efforts to adjust them properly. And the pats record proves that the reme- 
 dies provided by the interstate-commerce act have not been insufficient to en- 
 force its provisions in this regard. The Commission's report to the Senate of 
 1900 (Senate Doc. No. 319), to which reference is made above, showed that 
 during the preceding ten years it had sustained only 31 cases of discrimination 
 between localities or classes of traffic, and of these only 4 were sustained by 
 the courts, which was about one for every two and one-half years, and 3 of 
 these were subsequently reversed. Indeed, it will shortly be shown that since 
 the passage of the act contested cases of all sorts have been comparatively few 
 
PROPOSED AMENDMENT OP INTERSTATE-COMMERCE LAW. 251 
 
 in number, and that, with two exceptions, the Commission has been reversed in 
 all of its decisions as to rates which have been passed upon by the courts. 
 
 It is very evident, therefore, that the changes in the statute now urged are not 
 required by present conditions and would not remedy anything objectionable 
 therein. Considering that the subject-matter is so vast, the provisions of the 
 act have been very closely observed. 
 
 (2) THE CHANGE PBOPOSEn IS NOT DESIEABLE AS A FTJTUBE SYSTEM. 
 
 Nothing can be gained by comparing this country with others. In many other 
 countries the railroads are largely owned by the government, and the princi- 
 pal object of controlling rates is to prevent the private roads from making lower 
 rates than the government roads ; the matter is really a branch of the system 
 of taxation. The result is that the rates are much higher than here and, still 
 further, pooling is recognized as lawful, and in some jurisdictions compulsory, 
 so that the roads participate proportionally in these high rates. Even in Eng- 
 land, where the roads are privately owned, the rates are about three times as 
 high as they are here. In addition, half the railroad mileage of the world is in 
 this country, so that there is little profit in considering methods applying 
 throughout the world to the other half of such mileage, under conditions and sys- 
 tems of government varying almost totally from those prevailing here. So, too, 
 there is nothing in the illustration often employed of the supervision exercised 
 by this country over its national banks. (Annual Report for 1895, p. 62.) That 
 supervision is entirely in.the interest of the stockholders and depositors and not 
 for the purpose of limit^g or in any way controlling the charges or earnings 
 of the banks. The system now proposed is anomalous, and must be judged upon 
 its own merits. 
 
 The views of the Commission in reference to the operation of such a system 
 are expressed to some extent in its annual reports. 
 
 ■ " To give each community the rightful benefits of location, to keep different 
 commodities on an equal footing, so that each shall circulate freely and in nat- 
 ural volume, and to prescribe schedule rates which shall be reasonable, just to 
 both shipper and carrier, is a task of vast magnitude and Importance. In the 
 performance of that task lies the great and permanent work of public regula- 
 tion." (Annual Report for 1893, p. 100.) 
 
 " No one who understands the intricacies of transportation would care to 
 assert that the determination of a just rate, or the decision as to what consti- 
 tutes discrimination, is an easy task. To some extent the principles upon which 
 taxation rests must be allowed in fixing a just rate; to some extent the result 
 of the rate upon the development of industries must be taken into the account in 
 all decisions which the Commission is called upon to make; to some extent 
 every question of transportation involves moral and social considerations, so 
 that a just rate can not be determined independently of the theory of social 
 progress." (Annual Report for 1895, p. 59.) 
 
 The considerations, it will be noticed, do not seem to include reasonable com- 
 pensation to the owners of the railroads. " Within certain limits it is good 
 policy for the railway manager to increase his tonnage, even at the expense of 
 reducing the rate per ton. ,Tust how far this rule applies no one can tell. The 
 merchant who buys an article for a definite price knows when he sells it whether 
 he makes or loses by the transaction ; and the manufacturer, as a rule, has a 
 pretty accurate idea of the cost of production, but the railroad operator can not 
 ordinarily say whether he should or should not as a matter of policy take traffic 
 at a certain price." (Id., p. 17.) 
 
 " The freight rate is a complex problem when applied to almost all competi- 
 tive traffic. Very few people not acquainted with the subject have any idea how 
 difficult the solution of that problem is." (Annual Report for 1898, p. 15.) 
 
 " It is often difficult to say what constitutes a reasonable rate and more diffi- 
 cult to give in detail the reasons that lead to the conclusion reached ; although 
 the Supreme Court of the United States has given certain rules by which to test 
 the reasonableness of transportation charges, and although the Commission has 
 endeavored to apply those rules, yet whenever it has interrogated railway offi- 
 cials as to whether or not they are governed by them when making rates of 
 transportation, they have invariably answered in the negative and said that to 
 do so would be impracticable. The carriers do not apparently possess the neces- 
 sary data for that purpose, and there is at present no other source from which 
 the Coinmission can obtain such data." (Annual Report for 1903, p. 54.) 
 
 " Discriminations between localities or classes of traffic can be redressed only 
 
252 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 by the exercise of sufficient authority to readjust rate schedules to be observed 
 in the future on the basis of relative justice." (Annual Report for 1904, p. 9.) 
 
 " The great bulk of our orders * * * must pertain to the future. They 
 will be orders fixing either a maximum or a minimum rate." (Annual Report 
 for 1897, p. 35.) 
 . " It is probably near the truth to say that the eases now pending before the 
 Commission directlv or 'indirectly afCect almost every locality and therefore 
 nearly all of the people of the United States." (Annual Report for 1904, p. 29.) 
 
 In connection with this vast programme of regulation of the affairs of the 
 country generally, it seems proper to mention that during the past year it has 
 been necessary to conduct an official examination of the office of the Commission 
 itself. 
 
 Early in the history of the Counnission Judge Cooley, its most eminent mem- 
 ber, said, regarding a suggestion which would require the Commission to " act as 
 rate makers for all the roads," that " this in any considerable State would be an 
 enormous task. In a country so large as ours and with so vast a mileage of 
 roads it would be superhuman." (1 I. C. R., 280.) This superhuman pro- 
 gramme regarding the future powers of the Commission is not consistent with 
 sound views of the functions of our Government. The Constitution would pre- 
 vent a considerable part of it by the provision (Art. I, sec. 9) that "no prefer- 
 ence shall be given by any regulation of commerce or revenue to the ports of one 
 State over another." So, too. President Jeft'erson in his first message (December 
 8, 1801) said: "Agriculture, manufactures, commerce, and navigation, the four 
 pillars of our prosperity, are most thriving when left most free to individual 
 enterprise." Again, one hundred years afterwards, President Roosevelt, in his 
 first message (December 3, 1901) said: " It must not be forgotten that our rail- 
 ways are the arteries through which the commercial life blood of this nation 
 flows. Nothing could be more foolish than the enactment of legislation which 
 would unnecessarily interfere with the development and operation of these 
 commercial agencies." 
 
 In deciding whether it is desirable to give the Commission power such as 
 this it is well to consider the record of the past. In its report of April 16. 
 1900 (Senate Doc. No. 319), to which reference has been made, the Commis- 
 sion stated the entire number of contested eases decided in the previous ten 
 ,1'ears as 180, or about 18 per annum. Of these, only 35 went to the courts, or 
 about 3i per annum. The result was that the Commission was sustained in 
 4 cases (2 of which were subsequently reversed), reversed in 17 cases, 12 were 
 still pending, and 2 were withdrawn ; that is to say, about 1 ease in every two 
 and one-half years was sustained by the courts, and slightly more than 80 per 
 cent of the Commission's decisions which had been passed upon were reversed. 
 This the Commission seeks to explain by the fact that it had misconstrued the 
 extent of its powers. (Senate Doc. No. 319.) But there could be no more 
 fundamental or regrettable error than for any tribunal to constantly exceed 
 its jurisdiction. In point of fact, too, the results seem to have been about the 
 same since 1897, when the Supreme Court authoritatively ruled as to the 
 jurisdiction of the Commission as they were before that time.o 
 
 An independent .examination of the records which has just been made 
 makes a showing even less favorable. From its creation, in 1887, until 
 October, 1904, the Commission rendered 297 formal decisions involving rates 
 or discriminations, covering 353 cases, as in some instances cases were heard 
 together. This was a period of seventeen years, and the decisions, therefore, 
 averaged about 17J per annum. Action favorable to the complainants was 
 taken in 194, or 54.96 per cent of the cases decided. So that the complaints 
 coming before it which the Commission held to be well founded averaged Hi 
 per annum. In the great majority of cases the carriers complied with the 
 Commission's decision. Since 1887 43 suits have, however, been Instituted to 
 enforce final orders of the Commission as to rates. This is an average of 
 about 2i per annum. The net result of the action of the courts has been that 
 in 1 of these cases the Commission was sustained in part by the Supreme 
 Court, and in 1 was sustained by the circuit court, and there was no appeal. 
 These were both cases of discrimination between localities. In 30 cases the 
 Commission was reversed. Two cases were withdrawn; 5 have been long 
 pending, but have not been pressed for hearing, and 4 are still pending. This 
 
 "The facts as to this matter have been worlied out with much clearness and 
 detail in several pamphlets published by Mr. Joseph Nimmo, jr., of Washington. 
 They seem never to have been questioned. 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 253 
 
 shows 2 affirmances and 30 reversals. In other words, about 93 per cent of 
 the decisions of the Commission which were passed upon by the courts were 
 iield to have been erroneously decided. 
 
 The pending act proposes that the orders of the Commission shall be oper- 
 ative until they are set aside by the courts — they are to have the force of 
 statutes. The Commission describes itseU as "the special tribunal created 
 by Congress and exercising its power." (Annual Report for 1895, p. 17.) 
 
 " If the Commission establishes a rate that is tantamount to an act of the 
 legislature." (Annual Report for 1897, p. :!7.) 
 
 As one of the Commissioners expressed the matter at a hearing before the 
 Senate Committee on Interstate Commerce on February 21, 1900 (p. 118) : 
 
 "The prescribing of a rate is, under the decisions of the Supreme Court, 
 a legislative, riot a judicial, function, and for that reason the courts could not, 
 even if Congress so elect, be invested with that authority." 
 
 The importance and effect of the Commission's action are stated as follows : 
 
 " One of the peculiar features of Federal regulation is that every case 
 before the Commission, however trivial it may appear, involves in its dispo- 
 sition the formulation of principles under the law which have important 
 bearing upon the business of carriers and the commerce not only of the imme- 
 diate locality, but often of the entire country." (Annual Report for 1893. 
 p. 1.3.) 
 
 But, as just said, over 90 per cent of such decisions have ultimately been 
 overruled. So far as experience is a guide, such a provision as that now pro- 
 posed would, therefore, probably accomplish injustice in over 90 per cent of 
 the cases affected until the courts granted relief. For this injustice there 
 would be no remedy, because no recovery could be had from the shippers 
 whose goods had been carried upon unjustly low rates. Still further, in case 
 of an appeal to the Supreme Court, the statute expressly provijjes that there 
 shall be no stay under any circumstances. After long litigation, therefore, the 
 carrier would, in over 90 per cent of the cases, succeed in setting aside the 
 order of the Commission, and would have no remedy whatever for the wrong 
 accomplished by that order. 
 
 The substantial and valuable work of the Commission in behalf of the prin- 
 ciples laid down by the statute has been in the way of aiding adjustment between 
 the parties. (Annual Report for 1893, p. 14 ; Annual Report for 1896, p. 55 ; 
 Annual Report for 1897, pp. 32, 51.) In its annual report for 1901 it says 
 (p. 19) : 
 
 " The great mass of complaints are handled and disposed of by the Commis- 
 sion by preliminary investigation and correspondence or conference with car- 
 riers and shippers." 
 
 " It may be true that the people who complain of excessive rates are more un- 
 reasonable in the making of this complaint than the carriers are in the making 
 of their rates. That possiblj^ is so. But it arises from the lack in these people 
 of a knowledge of the actual situation." (Aimual Report for 1897, p. 22.) 
 
 The total nmnber of complaints during the year 1903 was 546, but only 84 for- 
 mal proceedings were instituted before the Commission (Annual Report for 1903, 
 p. 38) and only 16. cases were decided by the Commission, or in the proportion 
 of 1 decision to 46 complaints (id., pp. 46-65, 276, 282). In 1904 there were 
 487 complaints, but only 62 formal proceedings (Annual Report for 1904, pp. 
 36-39), and 25 decisions were rendered, several of which were in the nature of 
 rehearings (id., pp. 42-46). Since it was created over 90 per cent of the com- 
 plaints filed with the Commission seem to have been disposed of informally. 
 The only question at present is how the remainder shall be passed upon. It has 
 been already pointed out that past experience does not warrant or require any 
 enlargement of the Commission's powers in that respect. 
 
 Nevertheless the present bill seeks to provide that whenever a rate has been 
 held to be unlawful the Commission may prescribe a rate which shall prevail 
 thereafter. It is sometimes said that the original rate-making power is not 
 sought. (Annual Report for 1895, p. 18 ; Aimual Report for 1897, p. 15.) 
 
 " No such power has been asked by or is seriously sought to be conferred upon 
 the Commission." (Annual Report for 1904, p. 8.) 
 
 The President's recent annual message said : 
 
 " I am of the opinion that at present it would be undesirable if it were not 
 impracticable finally to endow the Commission with general authority to fix 
 railroad rates." 
 
 Yet it is obvious that the provisions of the bill would have the effect of giving 
 the Commission complete power over all rates ; for, after all, the real rate-mak- 
 
254 PROPOSED AMENDMENT OF INTEESTATE-COMMEROE LAW. 
 
 iug power lies witli tbose who pass upon the rates finally, rather than with those 
 who propose them in the first instance. The Commission itself, or any person 
 whomsoever, whether or not he have any interest in the subject-matter and 
 whatey.er his motive, whether he be a genuine shipper, a public official, a cranlj, 
 or a biaclimailer, may institute a proceeding which may include an unlimited 
 number of carriers and attacls; innumerable rates. (194 U. S., 25.) Upon the 
 institution of such a proceeding the Commission would be bound to proceed and 
 would have complete power in the premises. This would make all rates subject 
 to its decision. 
 
 This point does not admit of argument, because it has already been adjudi- 
 cated. In its annual report for 1904 the Commission says (p. 8) : 
 
 " The- amendments now recommended by the Commission as to authority to 
 prescribe the reasonable rate upon complaint and after hearing would confer in 
 substance the same power that was actually exercised by the Commission from 
 the date of its organization up to May, 1897, when the Supreme Court held that 
 such power was not expressed In the statute." 
 
 The precise effect of this power was clearly stated by the Supreme Court as 
 follows : 
 
 " There Is nothing in the act requiring the Commission to proceed singly 
 against each railroad company for each supposed or alleged violation of the act. 
 In this very case the order of the Commission was directed against a score or 
 more of companies and determined the maximum rates on half a dozen classes 
 of freight from Cincinnati and Chicago, respectively, to several named southern 
 points and the territory contiguous thereto, so that if the power exists, as Is 
 claimed, there would be no escape from the conclusion that it would be within 
 the discretion of the Commission of its own motion to suggest that the interstate 
 rates on all the roads of the country were unjust and unreasonable, notify the 
 several roads of such opinion, direct a. hearing, and upon such hearing malie one 
 general order reaching to every road and covering every rate." 
 
 Illustrations of the truth of this are that the Import Rate case, decided in 
 1894 (2 I. C. R., 658; 3 Id., 417), involved the rates upon all shipments from 
 abroad to any interior points tliroughont the country; and the Supreme Court 
 said that the orders therein — 
 
 " Instead of being regulations calculated to promote commerce and enfoi'ce the 
 express provisions of the act, are themselves laws of wide import, destroying 
 some branches of commerce that have long existed, and undertaliing to change 
 laws and customs of transportation in the promotion of what is supposed to be 
 public policy." (162 U. S., 234.) 
 
 The Maximum Rate case (4 I. C. R., 592, 617), decided in 1894, involved in one 
 proceeding practically all rates on south-bound business east of the Mississippi 
 River, and the Business Men's League case (9 I. C. R., 318), decided in 1902, 
 involved substantially all rates from the Mississippi to the Pacific Ocean. As 
 the Commission said, in language which has been already quoted from the 
 annual report for 189.3 (p. 13) : 
 
 " Every case before the Commission, however trivial it may appear, involves 
 in its disposition the formulation of principles under the law which have impor- 
 tant bearing upon the business and the commerce not only of the immediate 
 locality, but often of the entire country." 
 
 The extent of this power- may be judged from the fact that the report of the 
 Commission for 1904 (p. 64) states that there were then 2,358,960 tariffs on 
 lile, the annual average being over 130,000, and more than one-third of the 
 Commission's clerical force — which third would apparently he about thirty 
 clerks (Annual Report for 1903, pp. 128-131) — was constantly occupied in the 
 work of filing, indexing, and furnishing information in reference to them (Id., 
 p. 65), and from the facts that the gross earnings of the railroads last year 
 were $1,906,633,821 (Annual Report for 1904, p. ,105) and the capitalization 
 §12,599,990,258 (Annual Report for 1904, p. 109), which is dependent for its 
 value wholly upon earning power, and that the internal commerce of the 
 country during the last year has been recently estimated at $22,000,000,000 in 
 value. 
 
 As the Commission said in its annual report for 1897: 
 
 "The amounts involved in the reductions asked for are enormous (p. 22) ; 
 * * * the amount of money involved would be much greater than that 
 involved in the decisions of any trial court in the United States. The results 
 would naturally be of more consequence to the litigants than those of any such 
 -court" (p. 26). 
 
 It might well have said than all the courts together. It should, therefore, 
 
PROPOSED AMENDMENT OV INTERSTATE-COMMERCE LAW. 255 
 
 be plainly understood that the proposed act places all rates under the full and 
 discretionary control of the Commission. 
 
 In the execution of this power it will shortly be seen that the Supreme Court 
 has stated certain rules as following from the guaranty of property contained 
 in the Constitution. It has already been seen that the Commission has stated 
 its inability to apply the same (Annual Report for 1903, p. 54), and has 
 admitted practically that it has no definite principles of rate making, but is 
 controlled among other things by " moral and social considerations " in 
 determining these vast rights of property. (Annual Report for 1895, p. 59.) 
 This condition of things is not surprising. Every varied and complicated 
 business must be treated as a whole. It is impossible to dissect it and treat its 
 numerous parts separately in accordance with abstract rules. If the future 
 of the business is to be subject to the control of those who have no interest 
 therein, it would be better that such action should affect the business as a 
 whole than that its income should be cut down by piecemeal without respon- 
 sibility for the final result Nothing, therefore, could be more dangerous to 
 the value of railroad property than the system now proposed of committing its 
 future to the control of persons without interest therein, or responsibility for 
 the results of its operation. 
 
 Furthermore, the act contemplates c6nferring upon the CcJmmission entirely 
 new powers. It is now empowered merely to prevent preferences upon lines 
 formed by a single railroad or by agreement of two or more for joint rates 
 (sees. 1, 3). 
 
 " There is one class of discriminations which we have never possessed the 
 power to effectually correct, even while we assumed the right to fix the maxi- 
 mum rate. We refer to 'that class of cases where the differential in question is 
 to be maintained by independent lines as well as by a common line." (Annual 
 Report for 1897, p. 24.) 
 
 " The Commission is not empowered to fix a minimum rate when that remedy 
 is found necessary to correct wrongful discriminations between localities." 
 (Annual Report for 1898, p. 23.) 
 
 " This Commission has no authority to require carriers to make a through 
 route or establish joint rates." (Annual Report for 1893, p. 16.) 
 
 And there is no^- no power over divisions of joint rates. (Annual Report 
 for 1901, p. 28.) 
 
 But the proposed act provides that the Commission shall have power to settle 
 both divisions of joint rates and the " just relation of rates " by different lines 
 at common points. 
 
 It needs no argument to show that this would concentrate in a single board 
 power to determine the commercial and Industrial future of all the various 
 localities throughout the country. ' 
 
 " Every community and every pursuit is so dependent upon the agencies of 
 transportation, so directly affected by the cost of this necessary service, that 
 an inequitable adjustment of rates between competing towns or commodities 
 may produce serious and widespread disaster." (Annual Report for 1893, 
 p. 0.) 
 
 Its conception of the use of such a power was shown in the Differential 
 Case (7 I. C. R., 669, 670). After pointing out the degree of New York's com- 
 mercial importance the, Commission said : 
 
 " A question is hov/ far is this port of New York ' entitled,' or how far can 
 that port expect to continue to enjoy that commercial supremacy? Plainly not 
 to the same extent. It would be in accordance neither with the theory of our 
 institutions nor with the history of the development of our nation to permit 
 any one port upon our vast extent of seacoast to monopolize the trade with 
 foreign nations. Within recent years the United States Government has ex- 
 pended large sums in improvements of other ports. These vast sums have not 
 been appropriated and expended certainly upon the theory that it was desirable 
 for the foreign trade of the country to flow through the port of New York alone. 
 Rather does this recognize it as the policy of our Qovernment that its foreign 
 commerce should be distributed between various ports." 
 
 The Commission accordingly sustained these differentials against New York, 
 notwithstanding the constitutional provision that " no preference shall be given 
 by any regulation of commerce or revenue to the ports of one State over those 
 of another." (Art. I, sec. 9, subd. 5.) Yet singularly enough the Commission 
 has just held that " it is no part of its duty to equalize differences in the natu- 
 ral advantages of localities through the adjustment of tariff rates." (Annual 
 Report for 1904, p. 45.) 
 
256 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 These varying principles may equally be applied to any locality in the coun- 
 try as may suit the fancy of the Commission. Paraphrasing the Commission's 
 language this statute would " put into its hands the power to determine what 
 localities shall pay and what receive tribute." (Annual Keport for 1897, p. 45.) 
 As over 90 per cent of the Commission's orders as to rates which have gone 
 before the courts have been overruled, it is impossible to foretell what havoc 
 would follow from the exercise of such powers. 
 
 This would be merely a further step toward general governmental regula- 
 tion of commerce. Congress is not given by the Constitution any special power 
 over the carriers. The provision is that it shall have " power to regulate com- 
 merce v.'ith foreign nations and among the several States." (Const, Art. I, 
 sec. 8, subd. 3.) But the shipper of goods is engaged in interstate commerce 
 equally with the carrier of the goods shipped. (175 U. S.* 211; 193 U. S., 38.) 
 The shipper and his business are, therefore, quite as much within the power of 
 Congress as the carrier and its business. Accordingly, the antitrust act passed 
 July 2, 1890, provides that all goods that are the subject of combinations in 
 restraint of trade may be forfeited in transit. 
 
 In the Fifty-seventh Congress an act (H. R. 117) was introduced with the 
 approval of then ^ttorney-General Knox, and passed by the House, prohibiting 
 transportation of goods manufactured' by combinations which could not be 
 reached directly by the Federal statute. The Supreme Court has held in the 
 lottery case (188 U. S., 321) that it is competent for Congress to prohibit trans- 
 portation of lottery tickets as merchandise, and two former Assistant Attorneys- 
 General of the United States have since published articles in the reviews vigor- 
 ously asserting that this establishes the power of Congress to exclude from 
 interstate commerce whatever it sees flt. The last Democratic platform declared 
 that " any trust or unlawful combination engaged in interstate commerce which 
 is monopolizing any branch of business or production, should not be permitted 
 to transact business outside of the State of its origin; whenever it shall be 
 established in any court of competent jurisdiction that such monopolization 
 exists, such prohibition should be enforced through comprehensive laws to be 
 enacted on the subject," and the Commissioner of Corporations is suggesting 
 that a Federal license shall be required as a condition of engaging in interstate 
 commerce — in other words, that engaging in interstate commerce as a means 
 of livelihood shall no longer be a right, but a privilege to be enjoyed only by 
 those possessing a license upon such terms as the Government shall see fit to 
 prescribe. This makes it clear that the method of governmental regulation 
 proposed would apply to all the operations of interstate commerce and would 
 be equally dangerous to all engaged therein. The pending bill, If successful, 
 would be merely one step in the direction of general socialism, which would 
 afiCect mariufacturers, shippers, and carriers alike, and would subject to govern- 
 mental control the question what the citizens of the country shall be allowed 
 to earn by the use of their constitutional rights of liberty and property. 
 
 Finally, the bill would establish rigid methods of transacting business which 
 would tend to arrest commercial progress. The most effective cause of reduc- 
 tion of rates is the effort of traffic officials to enable their respective shippers to 
 extend their business and constantls' reach further markets and consumers. 
 
 " The location of new business enterprises is frequently settled since the pas- 
 sage of the act to regulate commerce, as well as beforte, not so "much by the 
 wishes of those who control them and the advantages for economical produc- 
 tion or trade afforded at particular places as by the favorable transportation 
 rates which railway managers can be induced to put in force." (Annual Report 
 for 1894, p. 57.) 
 
 This process of development can be continued only through gradual reductions 
 of rates, and in its continuance shipper, carrier, and consumer are alike inter- 
 ested. ISut this process of development will be arrested if the rates are finally 
 subjected to the veto of a body having no substantial interest in the success, of 
 the transportation business or of the industries upon the line. Moreover, after 
 a rate is once established ynder the proposed statute it will continue in effect 
 until changed by the Commission, " upon full hearing of all parties in interest." 
 As to who would be a "party in interest" the act contains no indication. As 
 anyone can institute a proceeding (194 U. S., 25), it would apparently be the 
 public at large. Such change of a rate once established could not be accom- 
 plished by act of the courts, but only of the Commission. 
 
 Every rate once fixed would thus be incapable of change without a proceed- 
 ing before the Commission as dilatory as a lawsuit, and as the Commission 
 proceeded the scope of this rigid condition of rates would constantly extend. 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMEBCE LAW. 257 
 
 Every practical man must realize that business is carried ou successfully by 
 negotiation and agreement of the parties rather than by the judgment of any 
 ti-ibunal. There is no successful branch of business in which the general future 
 relations of those engaged therein are regulated by third parties, whether au 
 administrative commission or a court of justice. 
 
 If, indeed, a condition of absolute equality among different localities could be 
 established at a particular moment of time, it would be temporary only. Indus- 
 try in this country is intensely progressive, and the perfect equality of one day 
 would probably be the grossest inequality of another. The absence of elasticity 
 in a system of Government rate making is one of its most serious faults ; thus 
 the rate-making State commissions have had to fall back on distance tariffs ou 
 account of their inability to make those delicate adjustments which are con- 
 stantly made by railway traffic officers. Such rigidity is a bar to industrial 
 progress, and probably accounts, in a large measure, for the fact that in the 
 States which have rate-making commissions the rates are higher under similar 
 circumstances and conditions than in other States wliich have left the contract 
 of transportation to unrestricted negotiation between the parties. 
 
 These considerations establish that such a system would be full of danger, the 
 extent of which can scarcely be judged. 
 
 (3) SUCH A DRASTIC SYSTEM WOtTLD FAIL PRACTICALLY BY REASON OF THE 
 PROVISIONS OP THE CONSTITUTION. 
 
 It may well be doubted, however, whether the proposed Quarles-Cooper bill 
 would prove any more enforcible than is the case generally with unnaturally 
 drastic statutes. It has been already pointed out that the Commission has no 
 judicial quality, so that its decisions would always have to be enforced by the 
 judicial tribunals. The procedure would therefore be as slow and complicated 
 as at present. 
 
 The proposed act would probably not be held to confer affirmative power to 
 establish rates for the future. Its provision in that regard does not purport 
 in express terms to confer any new power upon the Commission. It is that any 
 order " declaring any existing rate or rates * * * or any regulation or 
 l)ractice affecting such rates or facilities afforded in connection therewith to be 
 unjustly discriminative or unreasonable, and declaring what rate or rates, reg- 
 ulation, or practice affecting such rate or rates would be just and reasonable, 
 and requiring them to be substituted therefor, shall become operative and be 
 observed by. the parties against whom the same shall be made within thirty days 
 after notice, * * * but such order may at tny time be modified, suspended, or 
 revoked by the Commission upon full hearing of all parties in interest." 
 
 It will be observed that this section does not state that orders so made by the 
 Commission shall be operative " tor the future." The bills as originally drawn 
 contained these words, but their authors had them stricken out, apparently fear- 
 ing that they would make the act subject to doubts as to its constitutionality. 
 This, of course, leaves it a question of construction whether the substituted 
 order would have future effect or would not be merely, as at present, an order 
 witli reference to past conditions. The only affirmative provision of the act 
 fixes the date when the order shall become operative ; it does not purport to 
 grant authority to roaljc a new species of order. It has been held by the 
 Supreme Court (167 U. S., 479) that the Commission has no power to make an 
 order as to the future, but, of course, has power to make orders as to the past. 
 Can it be seriously claimed that a provision fixing th^ time when the Commis- 
 sion's orders shall become operative confers upon it the entirely new legislative 
 power of making orders as to the future which it does not now possess? 
 
 The claim that power over future rates was conferred upon the Commission 
 by implication and deduction was exactly what led to its grave error in attempt- 
 ing to fix future rates, and sueh methods of construction were strongly disap- 
 proved by the Supreme Court. 
 
 " The grant of such a power to fix rates is never to be implied. The power 
 itself is so vast and comprehensive, so largely affecting the rights of carrier and 
 shipper, as well as Indirectly all commercial transactions, the language by which 
 •the power is given had been so often used and was so familiar to the legislative 
 mind and is capable of such definite and exact statement that no just rule of 
 construction would tolerate a grant of such power by mere implication." (167 
 U. S., 494.) 
 
 The power to prescribe a tariff of rates for carriage by a common carrier " is 
 a legislative and not an administrative or judicial function, and having respect 
 to the large amount of property invested in railroads, the various companies 
 
 I L— 05 17 
 
258 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 engaged therein, the thousands of miles of road, and the millions of tons of 
 freight carried, the varying and diverse conditions attaching to such carriage is 
 a power of supreme delicacy and importance. That Congress has transferred 
 such a power to any administrative body is not to be presumed or implied from 
 nny doubtful or uncertain language." (Id., 505.)- 
 
 To restate the matter, the Commission now has authority to make orders as 
 to the past, but has no such authority as to future rates ; the proposed statute 
 provides that if the Commission makes an order adjudging against a prevailing 
 rate or practice and providing what shall take its place, the same shall become 
 operative within thirty days ; the statute does not provide in terms that this 
 shall control future conditions, and the Supreme Court has held that no power 
 in the Commission over future conditions can be established by implication. It 
 is perfectly clear, therefore, that a statute providing merely when an order of 
 the Commission shall become operative would be held to apply solely to an 
 order which the Commission had substantive power to make; no additional 
 substantive power could be held to arise from uncertain- implication from pro- 
 visions as to when an order should become operative. That method of estab- 
 lishing power in the Commission was precisely what was so vigorously disap- 
 proved by the Supreme Court. It is not too much to say, therefore, that this 
 statute would probably not confer upon the Commission any additional power 
 as to future rates. 
 
 But even if the statute conferred power of making future rates upon the Com- 
 mission, various difficult constitutional questions would arise. The power to 
 regulate commerce has, indeed, been said to be " plenary " — a word of no exact 
 .luridical meaning. But, " like the other powers granted to Congress by the 
 Constitution, the power to regulate commerce is subject to all the limitations 
 imposed by such instrument, and ahiong them is that of the fifth amendment." 
 (148 U. S., 312, 336.) " It is scarcely necessary to say that the power given to 
 Congress to regulate interstate commerce does not carry with it any power to 
 destroy or impair those guaranties." (154 U. S., 447, 479; 9 Wheaton, 1, 196; 
 2 Peters, 627, G57.) The provision of the fifth amendment is that "no person 
 shall be deprived of * * * liberty or property without due process of law, 
 nor shall private property be taken for public use without just compensation." 
 It is well settled that the carrier is entitled under such constitutional guaran- 
 ties to receive compensation which is reasonable (169 U. S., 466), and that, rule 
 is adopted by the proposed act. 
 
 The character of the questions which would be open in every such litigation 
 is stated by the Supreme Court through Justice Harlan as follows (169 U. S., 
 546) : 
 
 " It can not be assumed that any railroad corporation, accepting franchises, 
 rights, and privileges at the hands of the public, ever supposed that it acquired, 
 or that it was intended to grant to it, the power to construct and maintain a 
 public highway simply for its benefit, without regard to the rights of the public. 
 But it is equally true that the corporation performing such public services and 
 the people financially interested in its business and affairs have rights that may 
 not be invaded by legislative enactment in disregard of the fundamental guaran- 
 ties for the protection oif property. ■ The corporation may not be required to use 
 its property for the benefit of the public without receiving just compensation for 
 the services rendered by it. How such compensation may be ascertained, and 
 what are the necessary elements in such an inquiry will always be an embar- 
 rassing question. * * * We hold, however, that the basis of all calculations 
 as to the reasonableness of rates to be charged by a corporation maintaining a 
 highway under legislative sanction must be the fair value of the property being 
 used by it for the convenience of the public. And in order to ascertain that 
 value the original cost of construction, the amount expended in permanent 
 improvements, the amount and market value of its bonds and stock, the present 
 as compared with the original cost of construction, the probable earning capacity 
 of the property under particular rates prescribed by statute,, and the sum 
 required to meet operating expenses, are all matters for consideration and are 
 to be given such weight as may be just and right in each case. We do not say 
 that there may not be other matters to be regarded in estimating the value of 
 the property. What the company is entitled to ask is a fair return upon the 
 value of that which it employs for the public convenience. On the other hand, 
 what the public is entitled to demand is that no more be exacted from it for the 
 use of a public highway than the services rendered by it are reasonably worth." 
 (Id., 546, 547.) 
 
 Whenever, therefore, a rate should be established by the Commission, it would 
 necessarily be subject to review on the issues thus stated, and the findings of 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 250 
 
 the Commission would probably not have even prima facie force, because the 
 question of reasonableness would be jurisdictional and could be determined only 
 by judicial decision. (134 U. S., 618; 169 U. S., 466.) The Commission has 
 stated that It Is unable to apply these constitutional rules (Annual Report for 
 1903, p. 54), but that "to some extent every question of transportation Involves 
 moral and social considerations, so that a just rate can not be determined inde- 
 pendently of the theory of social progress." (Annual Report for 1895, p. 59.) 
 These considerations and theories have never been defined by the Commission, 
 and they are not embraced within the matters enumerated by the Supreme Court 
 as bearing upon the question whether rates are reasonable within the purview 
 of the Constitution. No argument is needed to show how difficult and over- 
 whelming would be the litigation arising from such a situation. ' , 
 
 Still further, as already said, the Constitution provides (Art. I, sec. 9, subd. 
 5) that " no preference shall be given by any regulation of commerce or revenue 
 to the ports of one State over those of another." But ports now exist, by stat- 
 ute and usage, not only at the seashore but throughout the country. On that 
 issue also practically every decision of the Commission establishing a future 
 rate would be subject to review, for anything of the sort varying natural condi- 
 tions would be a "^regulation of commerce" giving "a preference to the ports 
 of one State over another." It is clear that very few would stand the test of 
 this provision. 
 
 Incidentally it may be observed that the court is to hear the ease on the record 
 before the Commission and that the introduction of further testimony rests in 
 the discretion of the court. It certainly is a startling novelty to provide that 
 the evidence upon which judicial action Is to be based shall be taken by a quasi 
 prosecuting body which has no judicial character and is not bound by the rules 
 of evidence (194 U. S., 25), and that it shall be discretionary with the court 
 whether to receive evidence upOn the main Issue which it is to try, and which 
 will raise a jurisdictional and constitutional question. It can not be that such 
 a proceeding would be due process of law, for at no stage would the evidence 
 have been taken by a judicial body. 
 
 The proposed act provides, further, that after an order has been made by the 
 Conunission it may be enforced by injunction and by action of debt for the pen- 
 alties which It establishes. It is clear, however, that upon an application for 
 an Injunction the question of reasonableness of the rates would be open to liti- 
 gation for the reasons stated above. Indeed, the Supreme Court has held 
 exactly that upon any application to the courts for enforcement of an order of 
 the Commission the merits of such order are fully open to litigation. Failure 
 to obey the Commission's order can not give rise to any penalty. (154 U. S., 
 479, 485, 489. ) " No question of contempt could arise until the Issue of law In 
 the circuit court Is determined adversely to the defendants and they refuse to 
 obey, not the order of the Commission, but the final order of the court." (Id., 
 489; see also 37 Fed. Rep., 614, 615.) This provision, requiring the courts to 
 lenforee by injunction the orders of the Commission, is therefore wholly illusory 
 and would prove nugatory. Those "orders would have no greater force than at 
 present. There could be no proceedings for contempt until the defendant had 
 refused to obey " not the order of the Commission, but the final order of the 
 court." 
 
 The situation would be similar in any action of debt. In the latter ease the 
 further question would arise whether the statute does not contravene the sev- 
 enth amendment to the Constitution, providing that " the right of trial by jury 
 shall be preserved." The proposed statute seeks to make the finding of the 
 Commission as to the reasonableness of the rate conclusive upon the jury — that 
 is to say, the jury is sought to be deprived of the opportunity to pass on the 
 credibility of the evidence and of the power to decide the crucial facts. "This 
 obviously would not be preserving but rather destroying the right to trial by 
 jury. 
 
 These brief suggestions, which could be greatly amplified if necessary, make 
 it clear that under the Quarles-Cooper bill there would be quite as much litiga- 
 tion as at present, and it would be quite as difficult to reach results. 
 
 (4) SUCH A SYSTEM WOULD NOT ACCOMPLISH THE DESIEED RESULT. 
 
 It seems unlikely that more drastic legislation would result in anything save 
 annoyance and disappointment 
 
 The Interstate commerce act Itself is a fair illustration of this. Its substan- 
 tive provisions are that rates shall be reasonable, and there shall be no unjust dis- 
 crimination or undue or unreasonable preference ; everyone has always agreed 
 to their justice. The procedure for their enforcement is now absolutely com- 
 
260 PROPOSED AMENDMENT OF INTEESTATE-COMMEECE LAW. 
 
 plete. Anyone can file a complaint: the findings of the Commission are prima 
 facie evidence of the facts found ; the courts act on as short notice as they deem 
 proper, and proceed speedily as a court of equity, but without formal pleadings 
 or proceedings ; the constitutional protection from self-crimination has been 
 removed by statute, so that anyone can be compelled to testify ; cases arising 
 under the statute have preference over everything ; individuals and corporations 
 violating the act, whether carriers or shiijpers. are subject to heavy fines ; the 
 provisions of the act may also be civilly enforced by decree in equity with subse- 
 quent contempt proceedings, invoh'ing fine and iniprisonmeiit, in case of disobe- 
 dience, and appeals lie directly to the Supreme Court in all cases (194 U. S., 25). 
 In reference to no other subject-matter does such drastic procedure exist under 
 Anglo-Saxon ^jurisprudence — it has no further resources. Yet at the end of seven- 
 teen years the Commission says that all this has accomplished little or nothing, 
 and that it must, as far as possible, be made independent of the courts, appar- 
 ently because they have overruled more than 90 per cent of its decisions which 
 Ihave been litigated. But this is a great mistake. The approximately 90 per 
 ■cent of complaints settled between the parties show where the act has been 
 •effective; its provisions which represent ordinary business methods have been 
 eminently successful. As to the remaining cases, however, experience has, 
 in great measure, demonstrated the failure of unnaturally drastic methods. 
 
 The antitrust act has had a similar result. After giving to its first section the 
 startling construction that it prohibited all conti'acts in restraint of trade, al- 
 though they might be perfectly reasonable, the Supreme Court has been slowly 
 but inevitably receding from that construction. No one has ever tried to 
 enforce the other i)rovisions of the act — their weakness has been too manifest. 
 The historian Lecky well says that most of the great reforms of English liistory 
 were accomplished by repealing statutes, not by enacting them. 
 
 The lesson of all this is that the constant eiTactment of new statutes is a very 
 crude expedient for meeting the difficult situations in life. Any real remedy 
 must always come from the slow but inevitable working of natural laws and 
 from improved conditions in business and society. In the present case these 
 natural methods have already largely done away with unreasonable rates and 
 with preferences between individuals. As regards the remaining matter of 
 alleged preferences between localities and kinds of traffic, the record shows 
 that few such claims are well founded. Indeed, but two such cases have been 
 established in the courts during seventeen years. In the face of this it is 
 idle to claim that any good would result from still more drastic methods. 
 
 THE REMEDY CONSISTS IN PKOMOTION OF BETTER KELATIONS BETWEEN THE PARTIES 
 AND ENFORCEMENT OF THE EXISTING LAW IN THE COITRTS. 
 
 This is the proper function of the Interstate Commerce Commission. As 
 already said, it has done admirable work in promoting better relations by aiding 
 in the settlement without controversy of more than 90 per cent of the complaints 
 which have come before it. Quite possiblj' this better understanding might he 
 aided, too, by the voluntary organlKation" of joint committees of shippers and 
 traffic officials, who would consider informally matters of joint interest and 
 make recommendations which both sides would almost certainly adopt. The 
 parties would thus come together originally, and the Commission be relieved 
 of much detail. This has been already suggested by the Commission, which 
 said in its annual report for 1S98 (p. 22) that such a course " might do much 
 to promote just conduct and harmonious relations between the railways and 
 the public, and thus prove mutually beneficial to a high degree." In some parts 
 of the country, as Ohio and Kansas, a successful beginning has been made in this 
 direction." 
 
 " Hather curiously the efficacy of this method is fully recognized in " the trans 
 portation tax," to which reference has been made above (p. 48). The cattle 
 growers' committee reports that it has conferred with the railroad officials and 
 " has been met by the railroads in a very friendly and courteous manner. Tht 
 committee has succeeded in accomplishing very much in the way of immedialf 
 and temporary relief. Service has been greatly improved, and in some instances 
 rates have been adjusted upon a more satisfactory basis, while the railroad 
 officials with whom the committee has met have shown a disposition to treni 
 the cattlemen with the greatest fairness. The committee has realized, however 
 that relief granted must be of a temporary nature. * * * Through its officers 
 and subcommittees it hopes to continue the present cordial relations with t^h( 
 railroad officials to the end that business may be conducted with as little 
 friction as possible." 
 
PROPOSED AMENDMENT OF INTEESTATE-GOMMBECE LAW. 261 
 
 As to the litigated cases, however, the remedy must be in t"lie rourts as It is 
 when property rights generally are alleged to have been infringed. The stat- 
 utes now provide that the hearing of such eases shall have preference in the 
 courts over everything. The present expense and delay are due to the prelimi- 
 nary hearings before the Commission. Those hearings are entirely anomalous 
 in their character and should cease, save so far as may be necessary to advise 
 the Commission sufficiently to determine whether to institute judicial proceed- 
 ings. The Commission would thus be relieved of attempting to reconcile the 
 wholly inconsistent functions of prosecutor and judge. At present it defines 
 itself as " not a court ; it is a special ti'ibunal engaged in an administrative and 
 semijudicial capacity Investigating railway rates and practices." (Annual 
 ■ Report for 1S9G, p. 71; Annual Report for 1903, p. 33.) 
 
 " Congress has not seen fit to grant legislative power to the Commission." 
 (162 U. S., 216.) " The power given is the power to execute and enforce, not to 
 legislate." (167 U. S., 501.) 
 
 To this it is now proposed to add the legislative function (167 U. S., 505, 506) 
 of making rates for the future. 
 
 Such a combination is not recognized by American constitutional principles. 
 It has always been a fundamental rule that the executive, legislative, and judi- 
 cial functions can not be exercised by the same persons. (Federalist, 47, 66, 71.) 
 
 " The legislature maizes, the executive executes, and the judiciary construes 
 the law." (10 Wheaton, 46.) 
 
 " It is believed to be one of the chief merits of the American system of written 
 constitutional law that all the powers entrusted to government, whether State 
 or national, are divided into the three grand departments, the executive, the 
 legislative, and the judicial. That the functions appropriate to each of these 
 branches of government shall be vested in a separate body of public servants, 
 and that the perfection of the system requires that the lines which separate and 
 divide these departments shall be broadly and clearly defined." (103 U. S., 190.) 
 
 If the bill should become a law the Commission would be in the unique posi- 
 tion of exercising all three of these powers. 
 
 As the courts have to pass ultimately upon contested cases, the preliminarj/ 
 hearing before the Commission is merely dilatory in its effect. As the Com- 
 mission said in its annual report for. 1897 : 
 
 .1 * * * What is the effect of the order thus made? Really nothing 
 whatever (p. 31) ; the trial before the Commission, with all its attendant ex- 
 pense and consumption of time, goes practically for nothing (p. 33 ) ; our order 
 v^'hen made binds nobody (p. 32). Nobody is compelled to obey it. Nobody 
 suffers any penalty for refusing to obey it " (p. 33). 
 
 It is useless to compare conditions imder the English act. (Annual Report for 
 1893, p. 16.) There Parliament is supreme because there Is no written consti- 
 tution. But here, by reason of the provisions of the Constitution, no form of 
 statute can be devised which will give the Commission's orders any validity as 
 adjudications. (154 U. S., 485.) 
 
 The justices of the circuit courts are constantly passing upon such questions, 
 and in many cases would have the advantage of a liuowledge of local conditions 
 which the Commission can not possess. So, too, they are judicial oflicers ap- 
 pointed for life and habitually occupied with the disposition of varying ques- 
 tions of law and fact, while the Commission is an administrative body, the 
 members of which hold oflice for a term of years only, are frequently changed, 
 and generally have little experience before their appointment. However, it is 
 perhaps Invidious and certainly unavailing to make comparison between the 
 two bodies. As already said, no decision of the Commission can be enforced 
 unless it is confirmed by the courts. " Without the aid of judicial process of 
 fjoiue kind, the regulations that Congress may establish in respect to interstate 
 commerce can not be adequately or e-fficiently enforced." (154 U. S., 485.) 
 
 It may lie doubted whether anything substantial would be gained by estab- 
 lishing a special court for this purpose. The existing judicial machinery is 
 ample to deal with the subject, and the statutes secure an immediate hearing. 
 In the last seventeen years there have been but thirty-two cases under the act 
 which have been brought to a final hearing. A special court with less than two 
 cases a year seems unnecessary. Its experience would probably be similar to 
 that in England where a special tribunal was established after much agitation 
 and was astonished to find that it had little to do. 
 
 So, too, probably little would be gained by authorizing pooling, even if that 
 were possible. Such conti-acts could not be made compulsory, and it would be 
 as diflicult to negotiate a pooling contract as to secure voluntary maintenance 
 
262 PROPOSED AMENDMENT OF INTERSTATE-COMMEEOE LAW. 
 
 of rates, and for much the same reasons. Sucli contracts, too, greatly en- 
 courage the construction of unnecessary roads for tbe purpose of forcing en- 
 trance to the pool, with the effect that the public is burdened with excessive 
 capitalization. 
 
 But what possible advantage can there be in the Commission's preliminary 
 hearings? As already said, time and expense would be saved by going im- 
 mediately to the circuit court — the tribunal which must decide at last. The 
 (jonmiission will find ample and most useful employment in the administrative 
 duties imposed upon it by statute (154 U. S., 447), the volume of which will 
 constantly increase. "The burdens imposed upon (the Commission) under the 
 law are quite sufficient to satisfy the most grasping ambition." (Annual Re- 
 port 1893, p. 22.5.) It will have the time and opportunity to investigate such 
 complaints as it can not settle and to seek the aid of the courts when it deems 
 that course desirable. P.ut the tedious delay will be avoided which is incident 
 to a formal trial before the Commission, involving prolonged arguments both oral 
 and wi'itten, and a subsequent opinion and order of the Commission. All of 
 this it truly says "goes practically for nothing" (Annual Report for 1807. 
 p. 21), and in more than 90 per cent of the cases which have been litigated the 
 order thus made has been overruled. 
 
 Under section 12 'of the interstate commerce act, " the Commission is author- 
 ized and required to execute and enforce the provisions of this act," and it is 
 the duty of any United States attorney to institute proper proceedings on its 
 request. It was, accordingly, held at circuit that the Commission might, without 
 formal order upon its part, apply directly to the courts to enforce the statute 
 (65 Fed. Rep., 903), and the Commission expressed approval of this method as 
 iLseful in very many cases. (Annual Report for 1894, p. 7; Annual Report for 
 1895, p. 80; Annual Report for 1896, pp. 15, 89.) Whatever doubt may have 
 existed as to this power has been removed by the Blkins law, so far as concerns 
 any alleged discrimination. (189 U. S., 274.) Under this the Commission 
 makes such investigation as it sees fit, and resorts directly to the courts when it 
 deems the law to be violated. As the Commission states In its annual reports 
 for 1903 and 1904, that method has proved effective. Its scope can easily be 
 enlarged, if necessary. This would simplify the present procedure and that 
 indicated in the Quarles-Cooper bill ; it would terminate the vain attempt to 
 blend administrative and judicial duties. It would leave the Commission free 
 to investigate to whatever extent it deemed necessary, and to enforce the law 
 promptly through the courts, which alone can act effectively, and to which, 
 under the Constitution, the Commission must always resort at last. 
 
 This is the orderly manner in which all other governmental functions are 
 administered. Under the American constitutional system the prosecutor can 
 never be a judge in the cause. No reason has been suggested, and certainly 
 experience has indicated none, why this great subject of Federal power should 
 be alone subjected to dilatory preliminary proceedings, in which the prosecutor 
 goes through the motions of possessing judicial character which it does not in 
 fact possess (154 U. S., 479, 485, 489), and makes decisions which, as it says 
 itself, " bind nobody and go for nothing." No useful purpose can be served by 
 such empty procedure. The great cause for complaint is lack of dispatch in 
 these matters. The most effective remedy would be to simplify the procedure 
 by doing away with these useless preliminaries and going at once to the courts 
 upon the merits of the questions involved. The present statutes provide for all 
 possible dispatch in the courts consistent with the constitutional guaranties of 
 liberty and property. 
 
 So far as the present law has failed, it has been because the executive 
 branch of the Government has not vigorously enforced it. The remedies are 
 ample as regards existing conditions, yet the executive branch has not made, 
 effective use of the power which it possesses, but has constantly demanded more 
 power. Before anything is done in that direction the existing power should be 
 vigorously used. This is especially the case, because, under the present system, 
 the country generally is at peace. There is little force in the suggestion that in 
 many States commissions have power over future rates. Where that is so the 
 claim of preferences between localities and kinds of traffic is as acute as it ever 
 was. On the other hand, the most intelligent State in the country is Massa- 
 chusetts, the most populous and richest is New York, one of the greatest in 
 every way is Ohio, yet their commissions have no power over rates. The second 
 State in population and the greatest In industrial activity is Pennsylvania, one 
 of the most prosperous is Indiana, but they have no commissions whatever ; yet 
 in these States, generally speaking, there is peace, and they contain about one- 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 263 
 
 third of the population of the country. Indeed, more than one-half of the popu- 
 lation of the country lives in States where there are no rate-making commis- 
 sions. On the other hand, nearly or quite the first State to endow a railroad 
 commission with full power over rates was Illinois ; yet its shippers constantly 
 Inveigh against the action of the commission, both as to reasonableness of local 
 rates and preferences between localities. Indeed, whatever difficulties exist as 
 to both local and interstate traffic center mostly about Chicago and points 
 dependent thereon. But there is no good reason why the whole country should 
 be subjected to such a dangerous and socialistic change because of such local con- 
 ditions. If the law be vigorously enforced, they will cease to exist there as they 
 have throughout the country generally. Failure to use existing power, whether 
 locally or generally, does not warrant granting additional power. 
 
 The true remedy, therefore, is to ameliorate, rather than exasperate, the rela- 
 tions of tl\e parties, and, discontinuing idle preliminaries, to apply at once to 
 the courts for relief whenever the law is violated. This is the method of 
 enforcing both private and public rights which has been adopted by Anglo-Saxon 
 methods of government. No good reason can be given for departing from it. 
 This course would have the immense advantage of securing immediate relief 
 wherever it is needed, while any novel system would be experimental at the 
 best, and must equally depend for success upon the manner in which it is admin- 
 istered. The suggestion of additional power has little merit in the face of 
 omission to assert powers already possessed. 
 
 Dated January, 1905. 
 
 Respectfully submitted. 
 
 Samuel Spencer. 
 David WiiLcox. 
 
 Monday, January ^S, 1906. 
 The coimnittee met at 10.30 o'clock a. m., Hon. William P. Hep- 
 burn in the chair. 
 
 STATEMENT OF MR. A. C. BIRD. 
 
 Mr. Chairman and gentlemen, I want to preface what I may say 
 with a short statement. 
 
 Mr. TowNSEND. For whom do you appear ? 
 
 Mr. BiED. No one railroad in particular, rather myself, or as one 
 having some experience who wishes to submit practical questions to 
 the committee. 
 
 Mr. Mann. Just tell us who you are. 
 
 Mr. BiED. I am the vice-president of each of the railroads known 
 as the Gould system — ^the Wabash, Missouri Pacific, Iron Mountain, 
 Denver and Kio Grande, International, and Northern Texas and 
 Pacific. 
 
 It is far from my purpose to attempt to obstruct or delay legisla- 
 tion or to oppose any wise measure for the proper and just regulation 
 of great interests. I have no ready-made remedy or substitute for 
 any of the bills which have been presented to you for consideration. 
 My only purpose is to try to show to you some of the practical fea- 
 tures of the subject. In fact, I think I should say, and may say 
 fairly, that I am disposed to be strongly in favor of wholesome 
 regulation, such regulation as is necessary to the prosperity of the 
 couiitry, just such prosperity as is necessary to the success of the 
 railroads. 
 
 I candidly believe that the popular demand, if there be such a 
 thing, for new legislation is based upon a misconception of the facts. 
 So far as I see, so far as I know by actual contact with the people, 
 
264 PROPOSED AMENDMENT OF INTtRSTATE-COMMERCE LAW. 
 
 with the commercial cities, distributing centers, shipping communi- 
 ties, the great hue and cry, well justified perhaps, is for measures 
 which wul utterly extinguish the practice of secret preferential 
 rates, and it has been so in my belief from the beginning, going back 
 into the year 1902, when I had the honor to appear before this com- 
 mittee. And it seems to me that the tendency, the sum and substance, 
 and the spirit of the bills which have been suggested in nowise touch 
 upon the subject which underlies and gives rise to all the public 
 opinion there is on this subject. None of the measures which have 
 been presented, so far as I have been able to learn, in any degree 
 whatever touches upon the main question. I think this was so two or 
 three years ago. 
 
 You will find by the records of the Interstate Commerce Commis- 
 sion and by utterances of many public men who have been well in- 
 formed that unreasonable rates per se have practically disappeared. 
 That has been announced on many occasions, and the announcement 
 is sustained by the records of the Interstate Commerce Commission. 
 The interstate-commerce act has been in effect about eighteen years. 
 I do not call to mind a single case where the courts have sustained any 
 action of the Commission with reference to the reasonableness of 
 rates per se. I think there is no such case on record. Some say that 
 99 per cent of the cases taken before the Commission are cases which 
 involve the relative reasonableness of rates. In railroad parlance 
 we say " the differential " is involved. 
 
 Mr. TowNSEND. May I ask you this, Mr. Bird: As I understand 
 3'ou, you say that there is no case on record where the Interstate 
 Commerce Commission has been sustained on its ruling as to the un- 
 reasonableness of a rate per se. 
 
 Mr. Bird. That is my understanding. 
 
 Mr. TowNSEND. Has that question ever been, squarely before the 
 courts, and have they ever reversed the Commission on that point ? 
 
 Mr. Bird. I do not know. But it is of record that the courts have 
 not passed upon that question and that there are no claims — practi- 
 cally none — that bear specially upon that point. It is a fact that 
 a very large percentage, a very large proportion, of all the claims 
 or complaints that have gone before the Commission involve solely 
 the question of differentials; some say as high as 99 per cent. I 
 have stated it frequently at 75 per cent, and I think 75 per cent is a 
 very conservative estimate, perhaps too low. 
 
 Whatever demand there may be for power of the Commission to 
 make rates has its source, its rise, its growth, its whole existence in 
 the innumerable controversies between locations, between rival mar- 
 kets. The Commissioners themselves, who seek more power, state 
 that unreasonable rates per se have practically disappeared. And 
 it is a logical conclusion that the power is wanted solely to enable the 
 Commission or some power to adjudicate between rival communities, 
 rival markets. And I believe that it is safe for this committee and 
 all who deal with the question of legislation to start out with the 
 proposition that the only purpose, the only reason, the only justifi- 
 cation for clothing anybody with this power is that they may settle 
 these questions of differentials. 
 
 The interstate commerce act, with its amendments, and with, in 
 addition, the Sherman antitrust act are the laws which are brought 
 to bear now, and the only ones that as T can see bring to bear any 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 265 
 
 power over the subject of transportation ; and running through every 
 feature, everj- section, every clause of those laws is made most mani- 
 fest this demand on the part of the people crystallized into an act 
 of Congress, that there shall be nothing which shall impede the force 
 of legitimate competition; it is the underlying principle; it is the 
 very corner stone of everything which has been done in respect to 
 the regulation of railroads. The competition between, say, two lines 
 running between two given points is but a drop in the bucket com- 
 pared to the competition between rival markets. It may be possible 
 for rival carriers to in some sort harmonize their differences as 
 between two given points, for they serve indentical interests; but 
 no power has yet been devised to satisfy, allay, control, or regulate 
 the competition of rival markets. Every large city, every manu- 
 facturing city, every town where there is a jobber, is organizing, and 
 all such places have been organizing for years and establishing 
 boards of trade, merchants' associations, and manufacturers' asso- 
 ciations, and the likcj and the sole purpose is to maintain the 
 supremacy of the town which thej' represent. 
 
 There is a constant struggle, a never-ending struggle, and it is that 
 which has given life to the competition of the day, perhaps the most 
 wholesome competition, the best of its kind, that which has the best 
 results to the people at large ; and it is this competition that you are 
 asked to regulate and control. In its wisdom Congxess had enacted 
 laws which have been construed by the highest courts as practically 
 prohibiting the rejjresentatives of competing railways or any rail- 
 ways from sitting down together and discussing the merits and the 
 demerits of certain rates and agreeing upon rates which shall be 
 charged. It is a serious question whether any two men maj'^ 
 safely undertake that work; and in saying this I want to be con- 
 servative, and I want to speak within reasonable limits. I believe 
 that is true. We have been warned, cautioned, time and again 
 against it, and in many investigations which I have attended great 
 pains have been taken to make it manifest that the railroads had 
 agreed upon rates, so that it is very plain, and must be plain to 
 everyone, that the purpose of every law which has been passed upon 
 the subject is to secure to the people all of the results of ungoverned, 
 unrestrained competition. 
 
 Nothing has been suggested recently in the way of proposed legis- 
 lation but that which overturns completely every fundamental prin- 
 ciple that has been established or sought to be established by law up 
 to this day. So that it seems to me the trend of affairs here is of a 
 revolutionary character rather than evolutionary. We have been 
 working for eighteen years, more or less, under the interstate act, 
 always governed by the underlying principle of " no obstruction to 
 the force of competition." I want to make it plain to you, if I can, 
 that all that has been proposed so far is the direct opposite of all that 
 has preceded. It may be demonstrated, possibly it can be, that the 
 railroad companies have failed to make a proper distinction between 
 the rights of various communities. In other words, they may not 
 have succeeded in establishing a reasonable differential base as between 
 various competitive localities. Certainly they have made mistakes; 
 but I think it no wonder when the law prohibits them from the very 
 measures which are necessary to more correct and better advised 
 action. 
 
266 PROPOSED • AMENDMENT OF INTEESTATE-OOMMEKCE LAW. 
 
 Mr. TowNSEND. That is the interstate law ? 
 
 Mr. Bird. The interstate laAv. Running through the interstate law 
 is the declaration, again and again, in various forms, against the sup- 
 pression of competition ; but running through the Sherman Act. that 
 is clearly prohibitive of any combination whatever. 
 
 Mr. Shacklefoed. You mean the opposition to pooling ? 
 
 Mr. Bird. The opposition to pooling is only one manifestation of 
 that. It is a serious question, I think, Mr. Chairman and gentlemen, 
 first, because it appears and is evident, I think, that in dealing with 
 the railroad question the public and you gentlemen of Congress make 
 the mistake sometimes of regarding the railways of the country in the 
 aggregate, as an entity, something that acts and moves under the con- 
 trol of a single mind and pursues a single policy. The question 
 before us, I think, is one largely whether the measures proposed are 
 the measures which you want, or if the effect of the proposed measures 
 is what the people of this country want. E.very guard has been made 
 against combinations of railroads; prohibitions have been made 
 against combinations or agreements, so that there may be free scope 
 to market competition. 
 
 Mr. TowNSEND. Is there free scope? Are there no combinations? 
 
 Mr. Bird. Perhaps. But the point I wish to make is this : That the 
 proposition submitted, so far as I have seen, absoutely ends competi- 
 tion. Now, as a railway official, it is not worth while for me to waste 
 any time on the proposition that competition may be eliminated. As 
 a practical matter of everyday work, the measures which have been 
 proposed will remove from the traffic manager one-half or more of 
 his greatest burdens. 
 
 The Chairman. Let me ask you a question there, Mr. Bird. You 
 say — not in words, but I suppose mean to say — that giving to the 
 Commission, under circumstances, a power to fix a rate, is the over- 
 turning of all of the policy to leave competition to do its work 
 with reference to all of the contests of markets? 
 
 Mr. BiKD. That is so, sir. 
 
 The Chairman. Is that true ? Have you seen any proposition that 
 gives to the Commission the power to fix a rate until after an investi- 
 gation and after they have determined the rate proposed to be 
 changed to be unreasonable? Now, in determining that question 
 of unreasonableness, will not all of these questions of the compe- 
 tition of markets come in for their full share of review and consid- 
 eration? ^ 
 
 Mr. Bird. I think not. I think it is impossible that they should 
 come in. I most decidedly think so. It has been said of the meas- 
 ures proposed that it was not intended to give to any commission 
 the power to make all rates, but to make a rate only after an investi- 
 gation of a specific complaint. But I wish to say 'this, and I believe 
 it to be a fundamental truth, that there can be no power to make 
 any rate unless that power extends over it all ; .not all at once, but it 
 must ultimately lead to that. 
 
 The Chairman. I do not believe you caught the idea that I tried 
 to embody in that question. . The Commission would not be permitted 
 to change a rate or to fix a rate until after they had determined 
 that the rate was unreasonable, not simply unreasonable, perhaps, 
 with reference to that particular commodity and that particular 
 town and that particular distance,, but unreasonable in the view of 
 
PROPOSED AMENDMENT OF INTERSTATE -COMMERCE LAW. 267 
 
 an officer called upon to look over the whole subject of transportation ; 
 and would he not be required in the discharge of that duty to look 
 to all of these laws of commerce and these necessities of localities 
 and this principle of competition between markets in determining 
 that question? 
 
 Mr. BiHD. Theoretically, yes, sir; practically, I think he could 
 not do it. 
 
 Mr. Shacklefoed. Let me ask you just one question there. If 
 that were to be done, would not that be substituting the discretion 
 of the Commission for the laws of trade and the laws of nature, which 
 largely determine those matters ? 
 
 Mr. Bird. Yes, sir; that is the vital point. What I want to make 
 clear, Mr. Chairman and gentlemen, is the fact of this intense rivalry 
 between localities, these sectional questions. Take, if you please, the 
 long controversy between the cities of Chicago and New York regard- 
 ing the traffic, and rates charged thereon, to the territory south of the 
 Ohio River and east of the Mississippi River. There is an intense 
 rivalry. Neither party believes itself justly treated. Take, if you 
 please, the intense rivalry between Chicago and St. Louis on traffic 
 to and from beyond the Mississippi River. The whole face of the 
 map is covered • with such rivalries. The very moment that the 
 power is vested in a commission to definitely settle those questions 
 there will be such an avalanche of inquiry and complaint as was never 
 known. I know hundreds of cases which are awaiting just such a 
 proposition. 
 
 Mr. Mann. Would you take the specific case of the grain export 
 trade by way of Chicago and New York, on the one hand, and by way 
 of New Orleans or Galveston, on the other, as an example ? 
 
 Mr. BiED. Certainly. It is about 900 miles from Kansas City to 
 New Orleans on the west bank of the Mississippi River. It is 500 
 miles from Kansas City to Chicago and it is something over 900 
 miles from Chicago to New York. The question is. How shall that 
 
 frain from the Missouri Valley, from Kansas and Nebraska, reach 
 oreign ports, whether through Galveston and New Orleans, or 
 whether through Chicago to the Atlantic seaboard? Now, we may 
 hstve a rate, it may be necessary to make a rate, from Kansas City to 
 New Orleans which by itself would scarcely be found compensatory. 
 The conditions of trade generally in that district must be understood 
 and must be investigated to ascertain whether such rates can be made 
 profitably. We find lying along the Texas Pacific and the Iron 
 Mountain road vast bodies of timber that seek a northern market 
 from the very territory in which this grain is produced. Taking the 
 two articles of trade in connection, one north bound and the other 
 south bound, rates may be found which will move the grain to those 
 ports with some profit, and which may move the lumber back into 
 the grain-producing territory with some profit; but in the absence of 
 , either the other would not be profitable. And a rate is found to move 
 that grain perhaps. 
 
 I happen to Icnow, as my attention was called to this matter last 
 summer, when there was a large movement of wheat, a large produc- 
 tion of wheat, in Kansas and Nebraska and Indian Territory, and not 
 one carload of that grain was moved to the Gulf during the year 
 1904 — I mean the crop of 1904. The lumber traffic at the rate which 
 prefailed, and which still prevails, became very burdensome to the 
 
268 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 carriers. Cars to move that lumber were carried necessarily from 
 500 to a thousand miles empty. You see how burdensome a traffic 
 may be at some times which at other times is profitable. The great 
 demand of New York and other Atlantic ports is that that grain 
 shall be exported by way of the Atlantic ports, while on the other 
 hand the people of the South are determined that their traffic shall 
 be built up. The movement of grain by the Gulf of Mexico is com- 
 paratively in its infancy, and the people demand reasonable rates 
 that it may move in that way. That is the status of the controversy, 
 which is far-reaching in its effects. It was only a few days ago that 
 the trunk lines from Chicago running to the Atlantic coast sought a 
 means of enforcing local rates from Chicago to New York on export 
 grain, sought to abandon the method which had previously existed, 
 to make the basing rate from the Mississippi River, probably with 
 good intention, and for the purpose of protecting the commission mer- 
 chant's or middlemen's trade in the city of Chicago. There could 
 be no just criticism of their effort; but the tendency was to increase 
 the rate to the East, to the eastern seaboard. 
 
 It is the old question of rivalry; but above all things the greatest 
 source of dissatisfaction originates and comes from the middleman. 
 It is not the producer, it is not the consumer; the middleman is the 
 man who makes the trouble. -I do not deny that the middleman has 
 a perfect right to be heard, a perfect right to demand and receive a 
 reasonable comparative rate, and all that; but it may be worthy of 
 remembrance that the producer does not complain because he has 
 two, or three, or four available markets. The whole contention is 
 from the middleman, the distributer of the goods, and these com- 
 plaints must come to the Commission, or whoever is to control this 
 matter, must come from all over the land, and I say, in answer to the 
 question of the chairman, that theoretically the Commission will in- 
 vestigate, they will take into account all the circumstances so far as 
 it is possible for human nature to do it. 
 
 Mr. Stevjins. In answering Mr. Mann's question you considerted 
 the movement of grain from the Southwest either by way of the Gulf 
 or the seaboard. Would there also necessarily be considered in con- 
 nection with settling of that question the movement of the competing 
 grain from the Northwest, the Dakotas and Minnesota and those 
 States, to the seaboard by way of the lakes and the North ? 
 
 Mr. Bird. Certainly. 
 
 Mr. Stevens. Would there be any competition between those two 
 territories that would necessaxily be considered in determining that 
 question ? 
 
 Mr. Bird. I think very likely all the facts relating to the grain 
 trade, all the questions relating to supply and demand, and so on, must 
 be taken into account; the question involves the whole country, and 
 also the question of production and exporting. 
 
 Mr. SHACKLEroRD. If full power were given to the Commission to 
 adjust these matters and preserve the just relation of rates, as they 
 call it, is it probable that they would have to do it by raising the rates 
 to the Gulf ports rather than by reducing rates to the Atlantic ports ? 
 
 Mr. Bird. Possibly, yes theoretically ; but judging by our experi- 
 ence equalization would come by reduction. 
 
 Mr. Stevens. I am not judging by experience ; I am judging by the 
 quantum of power that would be conferred on the Commission. * 
 
PEOPOSED AMENDMENT OP INTEE8TATE-CUMMERCE LAW. 269 
 
 Mr. Bird. If the higher rate would probably be reasonable in itself 
 the only way to remedy it would be to advance the lower rate. 
 
 Mr. Stevens. Say that the rate from Chicago to the Atlantic sea- 
 board is now as low as it could be reasonablv required ? 
 
 Mr. Bird. Yes. 
 
 Mr. Stevens. And let us suppose that the grain rate to the Gulf is 
 lower than the rate to the Atlantic seaboard, but within itself that it is 
 remunerative to the carrier to engage in it. Now, how could that 
 matter be adjusted by the Commission otherwise than compelling the 
 carrier to the Gulf ports to raise their rates that are, per se, remunera- 
 tive, up to the point where they will permit the roads to the Atlantic 
 ports to participate in that traffic ? 
 
 Mr. Bird. The Commission would have to do just as the railroads 
 have been trying to do for the last twenty years, to compromise, to try 
 to please everybody. 
 
 Mr. Adamson. What would be the effect of the rate by way of the 
 Erie Canal upon the rates to the North Atlantic ports ? 
 
 Mr. Bird. It has the effect of establishing the rates the railroads 
 can charge. 
 
 Mr. Adamson. Grain can be sent cheaper by that canal than the 
 rate to the Gulf, and does not that lower the rate ? 
 
 Mr. Bird. In the summer time, not in the winter. 
 
 Mr.. A DAMSON. In the winter it does not compete? 
 
 Mr. Bird. No, sir. 
 
 Mr. Mann. Suppose the Interstate Commerce Commission should, 
 after a hearing, fix the rate on grain from Iowa points to New Or- 
 leans and Galveston, and in the same order fix the rate -on grain to 
 New York, Philadelphia, Baltimore, Newport News, and other Atlan- 
 tic ports in such a way that either they would establish the actual 
 rate or else establish the actual differential, so that that rate could not 
 be varied without a further hearing and order of the Commission, 
 which might or might not be had within a shorter or longer length of 
 time ; what effect would that have upon the communities and the ship- 
 ment of grain and the routes ? 
 
 Mr. Bird. It depends largely upon which side of the question 
 j^ou are looking at it. I do not think it is in the power of anyone — 
 the Commission or any body of men — to fix an arbitrary differential 
 which shall govern matters of that importance that will not involve 
 great hardships to the producer. Conditions change rapidly. A rate 
 that might be a reasonable rate from St. Louis or Kansas City to New 
 Orleans to-day might become very burdensome in a few months. The 
 point I am trying to make and will bring out in answer to your ques- 
 tion, perhaps in a roundabout way, is this. The burden of com- 
 plaint will be in regard to differentials. I think that is admitted. 
 That is the chief cause for demand for regulation — the regulation of 
 differentials. There is no power that can establish and maintain a 
 differential unless it has control over both the high rate and the low 
 rate. Please to keep that prominently in view ; they must have com- 
 j)lete power or they will be ineffective'. They must have the power to 
 prohibit reduced rates. They must have the power to compel an 
 advance of rate; or they can have no jpower over the establishment 
 of a differential. 
 
 Mr. Mann. I understand you to mean that they must have the 
 power either to absolutely fix two rates to two different points, or else 
 
270 PROPOSED AMENDMENT OK INTEE8TATE-C0MMER0E LAW. 
 
 to establish relatively the actual differential, not merely to establish 
 a maximum rate ? 
 
 Mr. Bird. The differential, yes ; but in order to have the power to 
 establish a differential they must have the power to advance or de- 
 crease a rate as they think best; they must have power in both 
 cases or else they will have no power. 
 
 Mr. TowNSEND. I think I understood you, in answer to the chair- 
 man's question, to say that you did not think that even after a full 
 hearing, as contemplated by the various bills, the Commission could 
 fix an equitable or reasonable rate. ITirst, you said, in answer to his 
 question, because it involved the consideration of so many other things 
 and other rates it would affect ; and, secondly, because they could not 
 fairly accomplish that thing thej' could not take that into considera- 
 tion. Now, when the railroads change a rate, does it not likewise 
 and in the same manner affect hundreds of other ratps? 
 
 Mr. Bird. It does. 
 
 Mr. TowNSEND. And if you raise a certain rate by the railroads is it 
 not liable in the same manner to raise unreasonably the hundreds and 
 thousands of other rates that depend upon that ? 
 
 Mr. Bird. It might be possible. 
 
 Mr. TowNSEND. You admit that the Government has a right to 
 regulate, do you not, and that the Government is interested for the 
 people in the fixing of these rates ? 
 
 Mr. Bird. It is. 
 
 Mr. ToAVNSEND. But you condemn giving to a commission the 
 power which you admit ought to be possessed by the railroads ? 
 
 Mr. Bird. Not altogether so. I want to make it as plain to this 
 committee as I can that the passage of such an act as is proposed 
 would result in its becoming inoperative largely, difficult, and bur- 
 densome, because no such number of men can administer the affairs 
 of this country in respect to the great traffic of the country. 
 
 Mr. TowNSEND. Do the railroads of this country have any fixed 
 scheme or method which they follow in fixing a rate — ^in raising or 
 lowering a rate ? 
 
 Mr. Bird. No, sir ; but there are so many diverse interests, so many 
 elements of competition, that in fixing and attempting to adjust 
 their rates the tendency is always downward. We do not glory 
 in that as representing the railroads, but it is a fact. Please keep 
 in mind that I have no purpose of obstructing any plan which this 
 committee in its wisdom may report to Congress. I think the situa- 
 tion is so grave, the interests at issue are so numerous, that this com- 
 mittee should have its attention called to the practical difficulties. 
 That is the only purpose I have in my mind to relate to you some of 
 my experiences, which ought to have a bearing upon this question. 
 We do not oppose, I do not oppose, the regulation. On the contrary, 
 I think that wise legislation ]s what we do want. It should be rea- 
 sonable and it should be protective to all the interests, not only to 
 one. And you can not remove from the shoulders of the traffic men 
 of this country the burdens that lie upon them so effectually as to put 
 into the hands of a commission the power to control absolutely the 
 question of differentials. It underlies a very large proportion of 
 the cares that beset the traffic manager. I am not concerned espe- 
 cially about the disappearance of competition. That is your affair; 
 it is in your charge; but I take it you want to understand the diffi- 
 
PROPOSED AMENDMENT OF INTEESTATE-COMMERCE LAW. 271 
 
 culties that attach to these questions. May J cite again, Mr. Chair- 
 man, a question referred to' ver}- frequently, and originally by myself 
 m 1902, and, I understand, subsequently by Mr. Bacon ? 
 
 The Chairman. Do you prefer the"se interruptions or not? If 
 you prefer to continue your argument without interruption, very 
 well. 
 
 Mr. BiED. I very much prefer not to have interruptions, because 
 I am not a trained speaker and I lose the thread of my argument. 
 
 The Chairman. Very well, you may proceed without interruption. 
 
 Mr. Bird. Let me illustrate the point I want to make by reference 
 to a subject which has acquired some notoriety. I mean the case 
 that came up between the Milwaukee Chamber of Commerce and the 
 Minneapolis Chamber of Commerce. The main issue was relative 
 rates between certain points in Minnesota and Iowa and other places 
 to Minneapolis against rates to Milwaukee. The case was heard, 
 perhaps, three times — at least twice. It was thoroughly discussed 
 m a liberal manner, in a friendly spirit, between the Commissioners 
 and the railroad people. There was no bitterness manifested. 
 There was bitterness, however, between the rival chambers of com- 
 merce. ■ It was a fight for supremacy; it was a fight which is going 
 on all over this broad land. Finally, the railroad companies told 
 the Commission : " We can not do it ; you have laid down a rule for us 
 to determine the differential. We are perfectly satisfied to accept 
 your rule, but we can not apply it practically. There are difficulties 
 with the geography of the railroads that prevent a reasonable adjust- 
 ment of the rate, prevent such an adjustment as everybody has a 
 right to expect. Therefore, if the Commission will fix the tariffs 
 from all this producing country to Milwaukee and Minneapolis, 
 respectively, we will put them into effect ; we. will put in force those 
 rates." And the Commission said they were not competent to do 
 that. 
 
 Kow, following that, the railroad companies made another propo- 
 sition. " We will select one or two or three members from each of 
 these boards of trade or chambers of commerce, and if they will agree 
 upon these tariff rates we will adopt those rates." And the effort 
 was made. That committee did agree in a restricted territory. I 
 think the Chairman will remember my referring to this once before 
 and to the fact that the accuracy of my statement was disputed. He 
 will also remember that the chairman of the Interstate Commerce 
 Commission was present at the time I referred to it and L asked him 
 to correct me if I was wrong. The chairman will remember that no 
 such correction was made. The fact is that that* joint conmiittee 
 of arbitration between those two trade bodies did agree in a restricted 
 territory, but they utterly failed in the whole territory, and neither 
 was satisfied and nothing was done and that case has not been settled. 
 
 That illustrates the point I am trying to make. Complicated ques- 
 tions, one at a time, here and there might be settled. I do not speak 
 slightingly of the power of the Commission, of its ability, of its 
 desire to do the right thing at the right time; it is only a question of 
 possibilities. I want to impress upon your minds, and repeat in every 
 possible way, the fact that the whole country, from ocean to ocean 
 and from the Gulf to the northern boundaries of the country, is cov- 
 ered with trade bodies, each one fighting for supremacy — ^not what 
 
272 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 the law grants to them, but what they think they can get by overper- 
 suasion, by ingenious argument. There is just as much cruelty, ju^t 
 as much lack of honor, just as much lack of interest in other people's 
 rights between communities as there is anywhere between individ- 
 uals ; they are the same kind — selfish — each seeking his own point of 
 view. Now, the passage of this law would open the box. The coun- 
 try would be covered from ocean to ocean by these complaints, and I 
 say that it is not in the power of any commission that may be ap- 
 pointed to justly adjudicate or attempt to settle these questions with- 
 out working an evil upon the commerce of this country. They must 
 have the power to regulate rates and prevent competition. They 
 must give what the law regards, as near as can be — what? A rela- 
 tively just rate; fair differentials. Who knows what those just dif- 
 ferentials are? A¥ho can tell what is % fair differential between a 
 rate from Kansas City and St. Louis on corn to Liverpool and a rate 
 on corn from Chicago to Liverpool? Who can tell what the rate 
 should be on corn from Kansas City to Is'ew Orleans and to Belgium, 
 and the rate to Liverpool ? Who can tell these things ? 
 
 It may be practicable, proper, under the circumstances that exist, 
 to move grain from Chicago, New York, or Baltimore at a compara- 
 tively low rate; there may be a great incoming tide of traffic in the 
 opposite direction that makes a low rate profitable. Shall the people 
 of the United States be deprived of the benefit which would accrue 
 under those circumstances? Because there is a large amount of tim- 
 ber and lumber from the Southern States and Texas and Louisiana 
 and Arkansas to the Northwest, must the grain growers of Kansas 
 and Nebraska be deprived of the benefits o£ that movement ? These 
 are questions which they must consider. I only want to make it as 
 plain as I can, if such be the case, that there are an army of traffic 
 men, owners of railroads, officials of high standing present — ^those 
 who are charged with the welfare of their properties, who study daily 
 and hourly to see how cheap they may move the traffic of the country 
 with some profit to themselves. There are many circumstances and 
 conditions which affect the subject, peculiar conditions existing to-day 
 which to-morrow may be gone, or which exist to-day and which do 
 not apply through a season, and which should not govern or regulate 
 in other seasons. Is it proper to deprive anyone, any community, any 
 other producers, of the benefits which may be derived from a tem- 
 porary condition of affairs ? Not long ago — not many years ago — the 
 principal, movement of white pine lumbef in the Middle West was 
 from north Wisconsin and Minnesota. The cars had to go south 
 loaded. The n:(ferchandise tariffs made at the time were remunerative 
 because the cars had to go. The white pine timber is now cut out ; it 
 has almost disappeared; there is not more than two or three years 
 more of that timber to be cut in northern Wisconsin. 
 
 Now, the railroad rates, established under very favorable circum- 
 stances at that time, are still in effect. They have not been advanced, 
 but they are very much more onerous now than when they ^' were 
 established. The fact that those rates remained the same for some 
 years is urged as prima facie evidence that they are now extortion- 
 ate rates. The fact is just the opposite. Now, conditions are chang- 
 ing in the opposite direction. There is now a large movement of 
 lumber and forest products from the South that makes it compara- 
 tively easy to move grain to the South. For a long time yellow- 
 
PROPOSED AMENDMENT OF INTEESTATE-COMMEECE LAW. 273 
 
 pine timber was the competitor of the northern white pine. It 
 was a struggle of many years standing, until at last the white pine 
 of that particular part of the North became about exhausted. Now 
 comes the enemy of the yellow pine, a wonderful production of 
 pine on the northern Pacific coast. It is being moved to the East, 
 down to the Middle States. Very soon you will find that in order 
 to maintain the rates profitably there must be a movement of grain 
 for export by the Pacific coast. Who shall tell whether the rate 
 on grain to foreign ports from Minnesota by way of the Pacific 
 is a fair rate; who shall tell what is a fair rate from Chicago to 
 New York as against the rate to Baltimore or Boston? Conditions 
 change. Conditions which vitally affect rates are changing all the 
 time : they change daily, they change every season more or less and 
 make a rate that was possible yesterday impossible to-day, or vice 
 versa. 
 
 These questions are all to be submitted to a commission of five 
 or more commissioners, and their decision shall.be practically final. 
 'It is proposed that when a rate has been found reasonable by those 
 men that it shall be in effect for a period of years, I think. I 
 believe there is no limit. At any rate, when they fix a rate it can 
 only be reviewed or revised by that commission. Perhaps it would 
 be wiser if that rate should be made to run a given number of years 
 or given time before it could be revised, say a year. There are many 
 reasons why it should be so. There are many men handling large 
 traffic on contracts for a term of years. Take the coal business, 
 for instance. They must know what the rate is going to be to make 
 their contracts. And when you provide for such interests perhaps 
 you will provide then for a continuation of a great burden upon the 
 people. 
 
 I do not know that I have anything further to say to take up your 
 time. If there are any questions, I would like to answer them if I 
 can. 
 
 Mr. Steveks. You stated, Mr. Bird, that the decision of the Com- 
 mission would be final. Now, what you meant was that their decision 
 would be final on differentials,, provided it did not confiscate the 
 property of the railroads. 
 
 Mr. Bird. I do not know that the proviso was considered. 
 
 Mr. Stevens. It would have to be considered, would it not? If a 
 rate were confiscatory then it would be unlawful. If a rate were not 
 confiscatory then the decision would be final, as between the parties? 
 
 Mr. BiED. I think so ; I think that is the general trend. 
 
 Mr. Adamson. I was asking you just now about the movement of 
 grain from the northwest by the noi-thern water route. You said the 
 water route made a rate in the winter time but not in the summer? 
 
 Mr. BiED. My answer was hardly correct. The grain moves in the 
 summer time, but there is a period of closed naAdgation when the lakes 
 still make the rate to within two or three months before the opening 
 of navigation. The elevators are filled and they are subject to the 
 rates which will be made in the spring ; such rates are the controling 
 factor. 
 
 Mr. Adamson. You mean the railroads must come somewhere near 
 the water rate to participate in the business? 
 
 Mr. Bird. Yes. 
 I c L— 05 18 
 
274 . PROPOSED AMENDMENT OP INTERSTATE-COMMERCE LAW. 
 
 Mr. Ajdamson. There are four or five railroad lines, are there not, 
 that can be used to reach the eastern North Atlantic seaboard ? 
 
 Mr. Bird. Yes, sir ; five or six. 
 
 . Mr. Adamson. Theil it would appear, if there were no further facts, 
 that the railroads simply carry it cheap while they are compelled to 
 meet the water rate, and as soon as that is removed they take advan- 
 tage of the opportunity to raise their rate; and is there any reason 
 why it is worth more to haiil grain in the winter time than in the sum- 
 mer time ? 
 
 Mr. Bird. Yes. 
 
 Mr. Adamson. What are the reasons ? 
 
 Mr. Bird. Climatic conditions. It is easier to operate a railroad in 
 good weather than in bad weather. 
 
 Mr. Adamson. At the time when the navigation is closed and the 
 railroads take all the traffic there is a very much larger volume that 
 they carry, is there not ? 
 
 Mr. Bird. I think not. 
 
 Mr. Adamson. Do you think not ? 
 
 Mr. Bird. I think on the contrary. 
 
 Mr. Adamson. Most of it is moved in the summer. 
 
 Mr. Bird. That raises a question. If you will permit me, the great 
 grain . market^ — the flouring market for wheat — is at Minneapolis. 
 The prices made by the miller dominate the whole territory of the 
 spring-wheat belt. Now, there are two ways of getting that grain 
 to foreign markets — by rail south from MinneaiDolis, and east through 
 Chicago; or over the Lakes, using the State railroads between Min- 
 neapolis and Duluth. That is within one State. There it takes the 
 water rate. Those conditions do result in a lower rate than would 
 dtherwise prevail from Minneapolis to the East — a very much lower 
 rate. It is 400 miles from Minneapolis to Chicago. Shall the rail- 
 roads running due west from Chicago, running out 400 miles, make a 
 rate that has a just relation to the rate from Minneapolis ? For the 
 conditions that affect Minneapolis do not affect Iowa or eastern 
 Nebraska. Those things are to be considered. 
 
 Mr. Shackleford. Under this power given to the Interstate Com- 
 merce Commission by these bills would not the Commission have 
 authority to tell those water lines to raise their rates to a point to 
 permit the railroads to'compete? 
 
 Mr. Bird. I am not familiar enough with this bill or any particu- 
 lar bill to answer that question in the light of its provision. 
 
 Mr. Stevens. Suppose the Interstate Commerce Commission has 
 no jurisdiction at all over water lines, as they ought not to have? 
 
 Mr. Bird. Wholly by water ? 
 
 Mr. Stevens. Yes. What then ? 
 
 Mr. Bird. Then the water rates would dominate the situation. 
 
 Mr. Stevens. Supposing that there was a through water line from 
 Duluth to Montreal under one control, as there is, operated by a man 
 who owns it, a first-class man. Would not that, then, practically 
 control the situation in that territory ? 
 
 Mr. Bird. Yes. 
 
 Mr. Stevens. Would not that have an effect as to the southwestern 
 territory, then, in this way: In wheat for milling there is required 
 to be a mixture of the hard wheat of the north and the soft wheat of 
 the southwest? 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 275 
 
 Mr. Bird. Yes. 
 
 Mr. Stevens. Would not the market for that southwestern wheat 
 then be fixed by the demand for it by mixing with the hard wheat of 
 the North? , 
 
 Mr. Bird. Yes. 
 
 Mr. Stev:ens. And that the price of that mixture would be deter- 
 mined by the water rate to the continent of Europe? 
 
 Mr. Bird. Yes; that is a fact. 
 
 Mr. SHAGKLEroED. Then ought not the Commission to have power 
 over that water rate to so regulate it that Chicago could get into the 
 competition ? 
 
 Mr. Bird. They ought to have power, and if they are to control 
 the rates of the country they must have it. 
 
 Mr. Shacklei'Oed. Has it not been suggested here to put the water 
 transportation under the control of the Commission, the same as the 
 railroad transportation? 
 
 Mr. Bird. T was not aware of that. I have understood that when 
 transportation is part by rail and part by water it is under the law 
 and is subject to the supervision of the Commission; but when it is 
 wholly by water I do not understand that the Commission had ajiy- 
 thing to do with it. But it is a fact that in order to control rates 
 at aU, to regulate diiferentials, the Commission must have power over 
 all rates, whether high or low; they must have power to sa.y that 
 tJiis rate is too low and you must raise it, or that this rate is too 
 high and you must reduce it ; although the tendency from our experi- 
 ence is that they would reduce the higher rate even although it was 
 reasonable per se. . 
 
 Mr. Shackleford. If the Commission had this power to adjust 
 rates, if they were given full power to preserve the just relation of 
 all rates, would they not be just as apt to say that rates were too low 
 in some cases as too high in others ? 
 
 Mr. Bird. I think not. 
 ■ Mr. Shackleford. Is not that a part of the power the Interstate 
 Commerce Commission is seeking to have conferred ■ upon them in 
 order to preserve just relations of rates; that is, the power to increase 
 the rates that they think are too low as well as the power to reduce 
 rates they think are too high? 
 
 Mr. Bird, Yes ; but the point in my mind is this. That care has 
 been exercised heretofore to prevent any restriction of competition- 
 it underlies all the acts that have been passed. 
 
 Now, here is a measure which is the very opposite. Is it the inten- 
 tion of this committee and of Congress to pass an act which is 
 revolutionary? I am speaking only as an individual, interested in 
 the prosperity of the country. This is in the trend of suggested 
 legislation. It is to create a monopoly greater than the world has 
 ever known; to put the traffic of this country into the hands of half 
 
 a dozen men. ,. » » , .» , 
 
 Mr. Shackleford. Would there not be a relief from that if the 
 railroads sought to have a law passed authorizing them to pool ; mak- 
 ing the Commission act as the trustee not only for the unified rail- 
 roads, but also for the people at large ? -, „ . , 
 
 Mr. Bird. I do not know that the pooling of railroad freights is 
 essential. It may be in some cases. I do not know but what in the 
 long run it would be beneficial. I am in doubt about it, but I am 
 
276 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 inclined to favor it. But what is the use of a pool if the rates are less 
 than cost ? _ , 
 
 Mr. Shacrlefoed: But could not the Commission compel them to 
 be about cost, so that they would be fairly remunerative? If all the 
 railroads were pooled and the Commission were given the right to 
 raise or lower the rate — that is, to administer that trust in the interest 
 of all the people, would not the Commission see to it that the railroads 
 would earn fair dividends ? 
 
 Mr. Bird. Well, if any means can be debased to enable the roads to 
 earn a fair dividend, then I think it would commend itself to the rail- 
 road people very strongly. 
 
 Mr. Lamae. You say that quite a number of the rates are too law? 
 
 Mr. Bird. Undoubtedly. 
 
 Mr. Lamar. "\^Tiy do not the railroads raise them ? 
 
 Mr. BiED. How can they ? Under competition I may be making a 
 rate that compels my competitor to put his rate down below what is 
 reasonably profitable. So I go to my competitor and we agree on a 
 rate, and then if we do and it is proved on us we go to jail. 
 
 Mr. Lamar. \Vhat I mean is this : Those that are fixed too low are 
 fixed by competition ? 
 
 Mr. BiED. Competition among themselves or competition between 
 rival raarkets. 
 
 Mr. Lamae. Does it almost necessarily follow that if railroads 
 fighting among themselves have to in business make quite a number 
 of rates too low, that then in order to even up they will make quite a 
 number of rates which are too high ? 
 
 Mr. Bird. That is a popular fallacy. 
 
 Mr. Lamar. Suppose it is the fact and not a fa^'Uacy. Who is to 
 determine whether or not that rate is to exist, the railroads or a board 
 of commissioners? 
 
 Mr. Bird. I hope I have not made myself understood as opposing 
 wise restrictive legislation. 
 
 Mr. Lamar. But, Mr. Bird, I would like you to confine your answer 
 to that question. If the public believes — and there is a thorough 
 conviction in the minds of the public on that question — that not 
 only hundreds, but thousands of rates may be too low, made in the 
 struggle for business, on the other hand, the railroads have, in 
 order to compensate themselves, made thousands of rates too high. 
 Now, the public wants the rate reduced. The railroad will not 
 reduce it. Who is going to settle that question? The railroad will 
 not reduce the rate, the public wants it reduced ; the railroad thinks 
 it is about high enough, the public thinks it is too high. Wlio is 
 going to settle that question ? 
 
 Mr. Bird. We have the courts, and the courts would settle it. 
 
 Mr. Latv^ae. Take, for instance, cantaloupes and watermelons, straw- 
 berries, and other fruits shipped from my State in large quantities. 
 Those people may ship by virtue of being JDuyers from the middleman 
 or speculator. Thousands of them may pool together in carloads 
 among themselves. They think the carload rate is entirely too high. 
 The railroad says it is not excessive. ^Yho is going to settle that 
 question ? 
 
 Mr. Bird. The court. 
 
 Mr. Lamar. The court ? 
 
 Mr. Bird. How else can it be settled ? 
 
PROPOSED AMENDMENT OF INTEBSTATE-COMMEKCE LAW. 277 
 
 Mr. Lamar.' You mean bj' each shipper going in and bringing a 
 suit ? 
 
 Mr. Bird. No; not necessarily a shipper; anybody that is in- 
 terested. 
 
 Mr. Lamar. A suit for damages ? 
 
 Mr. Bird. Yes; anybody that may be injured. 
 
 Mr. Lamar. That is exactly the point; that is -what the people do 
 not want to be subjected to. They object to interminable suits for, 
 damages, individually or collectively. Thejr want to give to the 
 intermediary hodj the power to fix the rate in this fight between the 
 railroads and the ]3eople as to whether a rate is reasonable or not., 
 Nobody wants an unreasonable rate imposed, but there is an irre- 
 pressible conflict between the railroads who fix rates on the one side, 
 who believe them to be fair, and the public on the other side, who, 
 believe the rates to be excessive. And there you are. And if this 
 body does not exist you will have suits with all the delays incident 
 to them and trouble in solving the question. I am speaking on the 
 point of the absolute right to fix a rate vesting in the railroad com- 
 panies or the public through an intermediary body of some kind. 
 I appreciate your argument from your standpoint, that it is too vast, 
 too complex, ahnost too disastrous a power, you might say, to confide 
 to men that you believe, I may say plainly, to be incompetent to do 
 the business. 
 
 Mr. Mann. May I ask you one or two questions in reference to the, 
 subject of differentials, as a practical railroad man? 
 
 There are several or a number of roads carrying grain, say, between 
 Chicago and New York and other Atlantic ports. Between Chicago 
 and New York there are several roads that I think they call direct 
 roads, or some term of that sort ; and other roads that run in a more 
 roundabout way. The roundabout roads get a differential, T under- 
 stand ? 
 
 Mr. Bird. So called. 
 
 Mr. Mann. That is, they are permitted to carry grain for a httle 
 less price than the direct roads ? 
 
 Mr. Bird. I do not think that is so in regard to the carrying of 
 grain; there is a difference in passenger rates. I think there is a 
 difference in the merchandise rates. 
 
 Mr. Mann. Yes. I suppose, as a matter of railroading, it costs lesS' 
 to carry the freight on the direct road than it does on the roundabout, 
 road? . 
 
 Mr. Bird. Possibly not; it depends on the circumstances. But as a 
 general proposition, certainlv it does cost less for the shorter haul.; 
 But there may be conditions" which make it profitable for the longet; 
 road to carry it for a little less. ■ ■ <■ -, q 
 
 Mr. Mann. The roundabout road carries it tor less ( ■ 
 
 Mr. Bird. Yes. . ,, x ^^^ i. ,x, ^ n. ■ x,*. 
 
 Mr Mann. Have not the public a right to say that that freight 
 shall be carried in the cheapest manner possible, and to require that 
 the rates shall be made on the basis of the cost of carrying it by the 
 
 most direct road ? ■ 3 ^ ■ t >. 
 
 Mr Bird T think it may be so. I want to avoid confusion of terms 
 in the use of the word " differential." There is a differential between 
 the same points, between different railroads, to the effect that the road' 
 giving inferior service is authorized to charge a little less. But the 
 
278 PROPOSED AMENDMENT OF INTEESTA'TE-COMMBEnE LAW. 
 
 broad proposition in its general use is a differential, say, between St. 
 Louis and Chicago and Kansas City and Chicago. There is a differ- 
 ence against St. Louis that is a trade differential. 
 
 Mr. Mann. Take the roundabout road. It carries merchandise 
 from Chicago to New York. It must be supposed to make some 
 profit or it would not carry the merchandise. Now, if it can afford 
 to carry it at the rate it does carry it, ought not the direct road be 
 compelled to carry it at a less rate than they charge, which is higher 
 than the charge demanded by the roundabout road ? 
 
 Mr. Bird. I hardly think so. Assuming that the rate by the 
 direct line is a reasonable rate in the first place, the circumstances 
 may be such as to justify a longer road, a road giving inferior serv- 
 ice, in performing that service for a little less money, because of this 
 proposition: that there is nothing so disastrous to a railroad as no 
 traffic; it is worse than having traffic at low rates. The making of 
 rates is not an exact science. There is not a tariff in the United 
 States, according to my best belief, that has been made on any 
 scientific basis. No one has been found that knows enough to make 
 such a tariff. The fact is that rates are made by comparison, com- 
 promise, and competition, and those are the underlying forces that 
 determine what the rate shall be. 
 
 Mr. Burke. What effect does the cost of service have upon rates? 
 
 Mr. Bird. I do not think that anyone can make a tariff with sole 
 reference to the cost of service. 
 
 Mr. Mann. You speak of the inferior service in carrying by the 
 roundabout road. 
 
 Mr. Bird. Yes; I mean the longer time required. 
 
 Mr. Mann. The goods get there, and it does not make any differ- 
 ence, unless the man wants them by a certain timfe. . But if the 
 roundabout roads can afford to carry merchandise for, say, 70 cents 
 a hundred from Chicago to New York, why should the direct road, 
 with the shorter haul, be permitted to charge 75 cents a hundred? 
 
 Mr. Bird. I think the answer must be qualified. To restate it, 
 if the higher rate over the short line is reasonable there may be 
 circunastances, and often are-circumstances, that justify the inferior 
 route in hauling the same traffic for a little less money. 
 
 Mr. Stevens. That is, to instance a case, the Baltimore and Ohio 
 Railroad is a roundabout route, but hauls an immense amount of 
 coal west, and they could afford to haul a certain class of freight 
 cheaper to the east on that account? 
 
 Mr. Bird. Yes, sir; they could afford to do it cheaper on that 
 account. I know of a case where limestone of high quality is car- 
 ried in large quantities to Pittsburg at a very low rate. Notwith- 
 standing the rate is very low, it is profitable, because those cars are 
 used, primarily, for hauling coal to tide water, and if they do not 
 load back with something it costs nearly as much to carry them 
 empty as it does loaded. 
 
 Mr. Burke. What per cent of business is handled by a railroad 
 company where the rate is not remunerative? 
 
 Mr. Bird. I do not know, and I do not know anybody that does 
 know. 
 
 Mr. Burke. Is it not a fact that there is a certain per cent of freight' 
 handled by a railroad company at a loss ? 
 
PROPOSED AMENDMENT OE INTERSTATE-COMMERCE LAW. 279 
 
 Mr. Bird. I think I know some rates about which there is a ques- 
 tio^ I do not think it is safe to say that there is a large per cent of 
 traflic hauled at less than cost. 
 
 Mr. Burke. At the same time you expect to meet competition. 
 
 Mr. Mann. May I ask if this is the basis upon which you fix freight 
 tariffs, or many freight tariffs: That after absorbing your natural 
 territorial freight business 
 
 Mr. Bird. Local business ? 
 
 Mr. Mann. Well, your natural territorial freight business— that 
 you then propose to make a rate upon other commodities which would 
 not naturally go over your road, wherever you can obtain freight 
 enough to more than pay operating expenses? 
 
 Mr. Bird. I thinlc there was a time when that was a dominating ' 
 condition, but I think in the last ten or twelve years it has been fading 
 away and there is less of it, and that there is very little of it to-day. ! 
 It has been found that the policy works both ways, and it is disap- 
 pearing. ' 
 
 Mr. Lamar. One more qu.estion and I will not interrupt you any 
 more. I would like to ask for my own information as to how you 
 make_ rates, the principle upon which you inalre them, leaving out the 
 questions of whether a particular rate is just or unjust or the trouble ' 
 of the railroads between themselves ; leaving out all these questions, 
 is not one of the basic principles of rate making on a railroad, with- 
 out reference to any particular railroad, based on the relation of the 
 rates fixed for producing earnings to the capitalization of a road; 
 in other words, will rate making on any road bear a direct relation 
 to the capitalization of the road ? 
 
 Mr. Bird. I never knew a case in forty years' experience. I have 
 never known a case where in the adjustment of rates the capitalization 
 of a railroad Avas taken into account. 
 
 Mr. Lamar. How does the question of paying a profit on the capital ' 
 invested enter into the question of making rates? Suppose a railroad 
 is capitalized at $25,000 a mile and another railroad at $50,000 a mile. 
 I would not put a dollar in a railroad unless I expected a dividend 
 on it. 
 
 Mr. Bird. A good many people have. 
 
 Mr. Lamai!. If that be true, how would j'^ou invest except on the 
 theory that the rates which the men controlling the railroad and, 
 operating it would make would earn a dividend on the stock and 
 interest on the bonds 1 
 
 Mr. Bird. So far as I know about railroads I do not think I would 
 invest a dollar in one. I do not think it is a good investment, as a 
 rule. I think it may be very poor ; it may not. 
 
 Mr. Lamar. Some good business men have invested in them and 
 built them. 
 
 Mr. Bird. Building them is another proposition. 
 
 Mr. Kyxe. You can build them and sell them. 
 
 Mr. Lamar. I would like to have an answer on that question. 
 
 Mr. Bird. I will endeavor to answer it. 
 
 Mr. Lamar. I am a little bit surprised at that if that be true — that 
 the fixing of rates does not have a direct relation to capitalization. 
 
 Mr. Bird. I do net think it has; I do not think that the bonded 
 and the stock debt of a railroad was ever taken into account in mak- 
 ing up a tariff. The making of rates is not a science. I think it 
 
280" PKOPOSED AMENDMENT OF INTEESTATE-COMMEKOE LAW. 
 
 can not be stated fairer than as I have stated it — that it is a matter 
 of comparison, compromise, and competition. I know railroads hun- 
 dreds of miles in extent where there are innumerable local stations, 
 and yet where there is no strictly local traffic. There is always some 
 other element than cost which fixes the rate. 
 
 Freight is classified in 10 classes, from 1 to 5 and from A to E, and 
 besides that there are a number of tariffs which are known as com- 
 modity tariffs. They are grain, coal, lumber, live stock, and ore, etc. 
 All freight has to be covered somewhere in that wide range of classifi- 
 cation. N^ow, there is not a man alive that can tell what freight a 
 particular class will furnish, how much a class will furnish, and you 
 can not fix a rate on any one article knowing what revenue it will 
 furnish. 
 
 Mr. Lamae. The reason I asked this question is that when I was 
 with the attorney-general in my State there was considerable litiga- 
 tion with the railroads, and the question came up, at least -ultimately, 
 as it seems to me it will always come up when rates are challenged, as 
 to whether the roads should not be permitted to earn compensation 
 upon their service rendered or money invfested, some form of ultimate 
 property rights; and in my State it has been determined time and 
 time again, the question has been settled, and the tailroads have 
 raised the question directly, not only while I was there, but since my 
 going out, the question has been raised with my successors in office, 
 as to reasonable compensation on the capital invested. That is about 
 the ultimate question. So I ask that with the view to the national 
 effect of challenging the rates on all the trunk lines of the country. 
 Is not that question of capitalization at least one of the basic princi- 
 ples ? I ask that because I state frankly in our State when they come 
 to tax the railroads we find they are worth $6,000 or $7,000 a mile and 
 they are capitalized at $40,000 or $50,000 or $60,000 a mile. I had 
 not quite reached that question when I was there, but we were coming 
 to it. 
 
 Mr. Bird. Take a railroad capitalized at $100,000, say, and it is 
 entitled to a fair return on that money if it is rightly located. Now, 
 how are they going to get any tariff rate that will produce approxi- 
 mately that profit? The revenue is derived' from thousands of items 
 in the classification. It is a mere matter of judgment what relation 
 the tariff on one class should bear to the tariff on another class. It 
 is unknown what relation fifth-class freight bears to the total freight 
 of the railroad or any other class bears to the total freight of the rail- 
 road. It is a matter of evolution, of continued experiment, but 
 underlying it all in fixing the rate on any classes of freight there is 
 a controlling power of competition somewhere, somehow, and I have 
 never yet in my forty years' experience been able to make a tariff 
 with any reference to what the service was worth. 
 
 Mr. Richardson. Right there in that connection, is it not com- 
 monly accepted and understood that if the Interstate Commerce Coni- 
 ■mission undertakes to fix what is called the reasonable rate, is it not 
 based on an examination of what the railroad cost, its buildings, its 
 expenditures for all of its betterments, and all of its equipment, arid 
 not only that, but its bonds, too ? 
 
 If the Interstate Commerce Commission did not take all those 
 things into consideration in fixing what it termed a reasonable rate, 
 could not the courts hold, would not the superior courts hold, and 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 281* 
 
 would it not be their duty to hold, that that was not a just, fair rate, 
 because they were entitled to a fair profit on the consideraion of all 
 those things? 
 
 Mr. Bird. I think so. I am not a lawyer and can not pass very 
 intelligently on these subjects. But I want to put the question in a 
 little different way, if I may explain. 
 
 Mr. EicHAEDsoN. Certainly. 
 
 Mr. Bnu). The court may hold that the railroad is earning more 
 than it is entitled to. The Commission may hold in the consideration 
 of a particular rate on a class of articles the fact that because the rail- 
 road is earning more than it ought. to that the rate on a particular 
 article is excessive, but that does" not give any light on that one sub- 
 ject. If you are investigating the rate on groceries, on sugar, the 
 fact that the defendant railroad is earning more than it ought to earn 
 or less than it ought to earn affords not one ray of light upon the rea- 
 sonableness of that one rate, because the charge for transportation 
 is spread out upon all the articles that are transported, it is distrib- 
 uted, and there are varying rates for each class of freight. Now, 
 what proportion is properly chargeable to sugar? 
 
 Mr. Richardson. That gets back to the quiestion of reasonable rates 
 fixed upon the cost of transportation to the railroads. 
 
 Mr. Bird. But what freights? Tt is very difficult to determine 
 that because a railroad is earning more than it should that the rate 
 on beeswax is too high, or because the railroad is not earning enough 
 that the rate on dry goods is too low. It is the whole traffic upon 
 which the transportation charge is levied by the railroads of the coun- 
 try in the adjustment of its tariffs and classifications. 
 
 Mr. TowNSEND. I would like to ask you one or two questions in 
 regard to the testimony you have given. Do you claim that there 
 are any unjust classifications in existence now ? 
 
 Mr. Bird. No, sir; I make no claims; but I must admit that there 
 are a great many claims that there are unjust classifications. 
 
 Mr. Townsend. But what is your opinion about that, whether there 
 are any? 
 
 Mr. Bird. I know some cases which I would adjust in a different 
 manner if I had the power. 
 
 Mr. TowNSEND. The railroads themselves have recognized that 
 there are unjust differentials existing? 
 
 Mr. Bird. I think they may admit that there are unwise differen- 
 tials. 
 
 Mr. Stevens. You might be wrong in your decision ? 
 
 Mr. Bird. Precisely. 
 
 Mr. Stevens. Or any other man might be ? 
 
 Mr. Bird. Probably ; it is a matter of judgment. 
 
 Mr. Townsend. Now, if there are any unjust differentials ought 
 not that to be included in the powers given to the Commission? 
 
 Mr. Bird. That is the whole thing. 
 
 Mr. Townsend. Will you just answer me what your opinion is? 
 Do you think, if there are any unjust differentials, that the Commis- 
 sion ought to have power to regulate differentials? 
 
 Mr. Bird. I have not expressed my opinion on that subject, but I 
 want to say this: The thing I am trying to get you to consider is 
 what power you should give to the Commission, if you give them that 
 po^er I do not deny or admit — I only want to point out the prac- 
 
"282 PROPOSED AMENDMENT OF INTEKSTATE-OOMMERCE LAW. 
 
 tical difficulties which are confronting you. If you do admit that 
 there are unjust differentials you must give somebody the power to 
 iix them, and you can not give them that power unless you give them 
 power over all rates, a power to advance the lower rates as well as to 
 depress the higher rates. 
 
 Mr. TowNSEND. Now, is it a fact that the railroads themselves have 
 been unable to settle that question of unjust differentials? 
 
 Mr. Bird. Because you gentlemen in your wisdom have said : " If 
 youi do you shall go to jail." Why? There is a penalty attached. 
 
 Mr. TowNSEND. You do not deny but what the railroads of this 
 country do make combinations, "notwithstanding the fact that they 
 are liable to go to jail ? 
 
 Mr. Bird. " The railroads " is a very broad term. 
 
 Mr. TowNSEXD. To your knowledge ? 
 
 Mr. Bird. I think they must. I think if not there would be more 
 or less rate anarchy all over the country. 
 
 Mr. TowNSEND. I want to ask 3^ou a question that I have asked 
 several other experts here. Is it a fact that the differentials exist- 
 ing between the ports of New York, Baltimore, Philadelphia, and 
 Boston is a matter that the railroads have been unable to settle 
 among themselves and have voluntarily submitted to the Interstate 
 Commerce Commission with an agreement to abide by the decision 
 of the Commission? 
 
 Mr. Bird. I believe that to be so. 
 
 Mr. TowNSBND. And is it not a fact that this Commission is em- 
 powered under these bills to obtain all the information that you 
 know ? 
 
 Mr. Bird. Yes. 
 
 Mr. TowNSEND. And this Commission is supposed to be on impar- 
 tial body ? 
 
 Mr. Bird. Yes. 
 
 Mr. TowNSEND. Now, would it not be safe to intrust these interests 
 to a commission having as much knowledge as you have, an impar- 
 tial commission, as it would be to trust the people's rights entirely 
 with the railroads? 
 
 Mr. Bird. That may be so ; I do not deny it. 
 
 Mr..ToAVNSEND. Now, do you know of any article that is carried 
 at a loss? 
 
 Mr. Bird. No, sir ; no more than I know of any article that is car- 
 ried at a profit. 
 
 Mr. TowNSEND. Yes ; you can not tell that ? 
 
 Mr. Bird. No. 
 
 Mr. Townsexd. So that if you are carrying or transporting any 
 product over your road it will be impossible for you to tell whether 
 you are carrying that at a loss or profit? 
 
 Mr. Bird. You can arrive at a very close approximation. 
 
 Mr. TowTsrsEND. Could not the Commission do the same thing ? 
 
 Mr. Bird. If there were hours enough in the day and days enough 
 in the year. 
 
 Mr. TowNSEND. There are as many hours for them as there are 
 for the railroads? 
 
 Mr. Bird. Oh, no. Railroads are operating in diversified parts 
 of the country—all over the country — independent of each other, 
 working out this question ; they cover it all. 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 283 
 
 Mr. TowNSEND. You spoke something about the courts. Do you 
 believe that there should be a separate court established to determine 
 these questions ? 
 
 Mr. BiKD. I hope you will excuse me from answering any questions 
 of a legal character. 
 
 Mr. TowNSEND. All right. 
 
 Mr. Richardson. I have not heard all of your statement, but right 
 here, i± you are willing to give it, I would like to have vour opinion 
 as to whether any legislation at all is needed on the subject of regulat- 
 ing railroads by the Government or any further legislation than we 
 already have. 
 
 Mr. Bird. I do not believe there is. 
 
 Mr. Richardson. You have read this, have you not? 
 
 The Government must in increasing degree supervise and regulate tlie work- 
 ings of the railroads engaged in interstate commerce; and such increased super- 
 vision IS the only alternative to an increase of the present evils on the one hand 
 or a still more radical policy on the other. In my judgment the most important 
 legislative act now needed as regards the regulation of corporations is this act 
 to confer on the Interstate Commercfe Commission the power to revise rates and 
 regulations, the revised rate to at once go into effect and to stay in efCect unless 
 , and until the court of review reverses it 
 
 That is the President of the United States. You do not agree with 
 him on that ? 
 
 Mr. Bird. I do not in detail 
 
 Mr. Stevens. I would like to ask one question. You stated that you 
 had no particular scheme in planning a system of rates. Do you have 
 precedents ? That is to say, because a certain rate was made at a cer- 
 tain time is that a precedent in the sense that a precedent is estab- 
 lished by the ruling of a court ; is that a precedent for making other 
 rates ? 
 
 Mr. Bird. I do not know that I have your question precisely in 
 my mind. 
 
 Mr. Stevens. You understand that courts very often in citing cases 
 establish precedents? 
 
 Mr. Bird. Yes. 
 
 Mr. Stevens. Do you have that in mind at all in making your 
 rates or changing your rates ? 
 
 Mr. Bird. We must be governed more or Ifes by precedent; but 
 precedent is a very dangerous thing unless all -the circumstances and 
 conditions which lead to it are duly considered. 
 
 Mr. Stevens. It always is, of course. 
 
 Mr. Bird. And the trouble is railroads have been making prece- 
 dents in that way which have been accepted by the courts and com- 
 missions as ones which afford a fair standard, whereas they may be 
 exceedingly unfair; the conditions may have changed. As I said 
 before, a rate on lumber from Texas to Chicago may be reasonable, 
 may be perfectly fair, if there is a compensating tonnage south bound ; 
 and if that south-bound tonnage disappears, then the rate which has 
 been established and has been made to appear as a precedent would 
 not longer be a fair precedent and it would not be fair to judge by it; 
 it would not be a fair standard any longer. 
 
 Mr. Mann. The Interstate Commerce Commission reports that in 
 the year ending November 30 last there were over 162,000 new tariff 
 schedules filed with that Commission, most of which, as they in- 
 
284 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 formed me, contained changes in tariff rates. From your own expe- 
 rience can you say in your case what proportion of those have been 
 made on the initiative of the railroad and what proportion have been 
 made at the request or suggestion or complaint of communities or 
 shippers ? 
 
 Mr. Bird. I have not been actively engaged up to within the last 
 year and a half or three-fourths in establishing tariffs or changing 
 them and have not been in touch with them all of the time. I beueve 
 that in most cases, a large percentage of the cases, it has been on pub- 
 lic demand. I think, in the very nature of the case, it may be taken 
 , for granted that a change of rate has been made to meet some local, 
 demand. 
 
 Mr. Stevens. Could j'ou give any estimate as to the proportion of 
 traffic on your line or the Northwestern Railroad which moves on 
 commodity rates and what proportion moves on class rates ? 
 
 Mr. Bird. You must understand that there is a commodity tariff 
 and a commodity rate. The commodity tariff is the grain tariff, 
 which is fixed, and so with live stock and lumber and coal, and so on. 
 They are all commodity tariffs. The rate that is made for some par- 
 ticular purpose, to meet some necessity, is called a commodity rate. I 
 could not begin to tell you what percentage is moved on commodity 
 rates, but it is not a very large percentage. It can not be. 
 
 Mr. Mann. It is the commodity tariffs I have in mind. 
 
 Mr. Bird. A commodity tariff should be regarded as in no respect 
 different from a tariff, because the tariff usually prescribes rates on 
 freight in classes 1 to 5 and A to E, and on the other side of the page, 
 facing it, is the rate on grain and lime, lumber, coal, iron, and live 
 stock, and so on. 
 
 Mr. Eyan. Carload lots or more ? 
 
 Mr. Bird. Yes. In the classification from 5 to E they are carload 
 lots; less than carload lots, from 1 to 4, inclusive. The commodity 
 tariff is one thing and the commodity rate is quite another thing, and 
 when one says the commodity tariff is quite a large percentage that is 
 true, but it conveys a wrong impresion. The commodity rate from 
 Chicago to Rockford on raw material for manufacturing purposes is 
 a commodity rate. 
 
 The Chairman. Our time is up. 
 
 Mr. Bird. I thank you, Mr. Chairman and gentlemen of the com- 
 mittee. 
 
 Thereupon, at 12 o'clock, the committee adjourned until to-morrow, 
 Tuesday, January 24, 1905, at 10.30 o'clock a. m. 
 
 Tuesday, January 24., 1905. 
 The committee met at 10.30 o'cloclf a. m., Hon. William P. Hep- 
 burn in the chair. 
 
 STATEMENT OF ME. A. C. BIRD— Continued. 
 
 The Chairman. You began on the explanation, or at least I 
 thought you did, of why a railway company would accept a rate or 
 establish a rate that was not a remnnerative rate. I wisli you would 
 explain why that might be. 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 285 
 
 Mr. Bird. A rate may be so low that it ^vill not contribute fairly 
 to the general expenses of the company. It may be so low that i'^ 
 applied as a basic rate the whole traffic would "be unremunerative, 
 but at the same time it might be big enough to more than pay the 
 actual cost incident to its own transportation, and thus contribute 
 something toward the general expenses of the company. It has 
 been held frequently, I think first by Judge Cooley when chairman 
 of the Commission, that that was a correct view of the subject. I 
 can not state cases in detail, but I am quite certain the same opinion 
 has been announced by some of the judges of the United States 
 courts. I am not sure on that point. It is a fact that the railway 
 companies have proceeded ou that theory, more in the past than 
 recently, and for this reason : Eates made under such circumstances 
 have been taken and have been regarded by the State and interstate 
 commissions as a voluntary act, and therefore a just criterion as to 
 their reasonableness and fairness, and such rates have been used 
 often for the purpose of making other rates, and the practice, 
 although it continues to such extent, is not as general as it was, 
 because it is considered hazardous to do so. There was one limita- 
 tion that I should have put upon that. The opinion among trans- 
 portation men has been that if the rate paid more than the actual 
 cost incident to its own transportation, and did not unfavorably 
 affect other rates, then such low rate might profitably be made. 
 
 Mr. EicHAKUSON. Bid I not understand you to say the other daj' 
 that the common popular idea that a railroad ever made low rates 
 was a fallacy? 
 
 Mr. Bird. What is that? 
 
 Mr. Richardson. Did not we understand you the other day, in 
 answer to Mr. Lamar, to state that the popular idea that a railway 
 ever established low rates for a certain purpose was a great fallacy ? 
 You used that language, did you not? 
 
 Mr. Bird. I do not recollect that exact language. I do not get 
 the connection in my mind as to what was being discussed. 
 
 Mr. Richardson. In answer to a question by Mr. Lamar, who was 
 sitting just to your right, as to whether, when a railroad made a low 
 rate, it did not make it sometimes for the purpose of discrimination, 
 you answered that. 
 
 Mr. Bird. I think that answer might be in the negative. I do not 
 know any case where rates have been made low deliberately and pur- 
 posely for the purpose of discrimination. I do not recall any. 
 
 Mr. EicHARDSON. I do not recall it distinctly myself. I was ask- 
 ing you for information. 
 
 Mr. Bird. I do not recall any place where the railroads inade a low 
 rate purposely and deliberately for the purpose of creating a dis- 
 crimination, but I think they have made rates low, as I have de- 
 scribed, which may have been considered by others as having- been 
 made for the purpose of discrimination. 
 
 The Chairman. Is it not true that the revenues of a railroad com- 
 pany are applied to four purposes, the payment of what you call fixed 
 charges the payment of maintenance of track and equipment, the cost . 
 of t& movement of freight, and the payment of dividends? 
 
 Mr. Bird. Yes, sir. 
 
 The Chairman. Do you not often speak of and treat almost as 
 thouo'h they were separate those four funds? 
 
286 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 Mr. Bird. I am not an expert in raihvay accounting, but I know 
 enough by induction to know that the expenditures of a company are 
 classified by the auditors under certain heads, such as payment of 
 interest, and so forth. 
 
 The Chairman. Is it not true, then, that a rate which would make 
 its contribution to two of those purposes, say maintenance and move- 
 ment of freight, might be desired, while it would not contribute at all, 
 or contribute its share, to fixed charges or to dividends ? 
 
 Mr. Bird. It is true. It might be narrowed closer than that. It 
 might contribute to only one, such as the cost of transportation. 
 That is one of the general heads of the expense account. It might 
 contribute more than its share to that item simply, but nothing to the 
 other three general heads. 
 
 The ChairmajST. By " cost of transportation " you mean those ex- 
 penses th^t are appropriated to the movement of trains? 
 
 Mr. Bird. Yes, sir. 
 
 Mr. Town SEND. Is it not true, also, that you keep, or should keep, 
 another account as well, namely, betterments, or whatever you choose 
 to call it? 
 
 Mr. Bird. I only have the most general knowledge of railroad 
 accounting. I know, as I have said, by hearsay and by being in 
 constant touch with the general affairs, that these accounts are kept, 
 and they are distributed primarily under three or four heads, per- 
 haps, and then redistributed under branches of each general head — 
 maintenance and betterment, and all that sort of thing; and those 
 accounts are all kept very carefully, and there are reports made 
 under each to the Interstate Commerce Commission, and just how 
 they are classified, and so forth. I think they are spread very fully 
 and explicitly on the records that are sent down to the Intei'state 
 Commerce Commission. 
 
 Mr. TowNSEND. According to your testimony yesterday — and I 
 believe it has been the testimony of others — you do not know exactly 
 how to go to work to fix a particular rate, not knowing what it costs 
 to move that particular product itself, so that at the end of the year, 
 or at the dividend period, whatever time that is, you look over and 
 determine whether you haAC made any money or not, and you deter- 
 mine by that whether your rates are sufficient or not? 
 
 Mr. Bird. "Whether the rates in the aggregate are sufficient. 
 
 Mr. TowNSEND. ^Vhether in the aggregate they are sufficient or 
 not. Now, if it is true that you have been carrying at a loss and 
 you have had a rate that is lower than it ought to have been, but you 
 still have made money, is it not true that you have had some products 
 that you have carried in excess of a reasonable rate? 
 
 Mr. Bird. It does not necessarily follow. It would depend largely 
 on the final result. If the final result showed that the property had 
 earned more than its value entitled it to, I think in that case" your 
 proposition would hold good. 
 
 I ask, Mr. Chairman, to correct one statement in what I said yes- 
 terday. Mr. Kichardson asked me a question and read from a paper 
 a certain extract from the message of the President, and asked me if 
 I disagreed with him. I answered simply in the affirmative that I 
 did. I want to amend that by adding the words " in some detail." 
 
 The Chairman. Very well. 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 287 
 
 STATEMENT OF MR. S. H. COWAN. 
 
 Mr. Cowan. I appreciate the position of the committee in respect 
 to time, Mr. Chairman, and if you will give me forty minutes I will 
 get as far as I can in the presentation of the arguments and facts 
 which I wish to produce before the committee, and then if there are 
 still further facts I want to lay before you I will call the attention 
 of the committee to it. 
 
 The Chaieman. With the number of gentlemen who are here this. 
 morning to be heard, we can give you only thirty minutes, I am afraid. 
 
 Mr. Cowan. I think, considering the great importance of the 
 interests I represent, and the great amount of freight which they 
 have to pay, I ought to have more time, but I accede to the commit- 
 tee's desire. 
 
 I understood that it would be necessary for the committee to limit 
 the time of the witnesses, not that they desired to prejudice anyone 
 at all, but because time is important. I therefore have prepared a 
 statement which goes into the matter somewhat in detail, but not 
 more so than ought to be done to present to you what ought to be 
 known to every member of this committee. I beg the attention of 
 the committee for the purpose of calling attention to the matters 
 which I have stated at length and more in detail in this paper than 
 I can state them here this morning, and I make the request that this 
 may be printed as my statement on these subjects ; and when I have 
 finished I will hold myself ready to answer any questions that any 
 gentleman desires to ask, if the time is given to do so. 
 
 I quite agree with Mr. Bird and a number of these railroad gentle- 
 men, that you have before you a very important question. I ha.ve- 
 had some experience in this matter. Not in the way of bragging 
 about it, but in the way of stating a fact, I will say that the Cattle 
 Eaiser's Association of Texas, which I represent, engaged in the 
 business of undertaking to bring before the Interstate Commerce 
 Commission, and to liave determined, the question as to whether or 
 not the terminal charge of $2 a car at Chicago, put into effect by an 
 agreement on the part of the railroads in 1894, was a reasonable 
 charge. The cattle producers and shippers in every Western 'State, 
 including all of the States in which that business is carried on in the 
 western part of the country, west of the Chicago meridian, were 
 interested to the extent that there have simply been added $2 a car 
 above a long prevailing rate for the delivery of their live stock at 
 Chicago, and some millions of dollars have been paid out on that 
 charge. 
 
 The Cattle Kaisers' Association of Texas undertook a prosecution 
 of a case before the Commission in 1896. I have had to do with that 
 subject since that date and have carried the case through the Com- 
 mission, through all of the courts, and then back to the Commission 
 again, 'it has been tried; the testimony has been completed and is 
 now ready to be briefed to be submitted to the Commission for deci- 
 sion. At the same time I have represented the Chicago Live Stock 
 Exchange in a case before the Commission involving the right of the 
 railroads to charge the shippers a higher or greater rate for the trans- 
 portation of cattle than they charge the packing houses on the Mis- 
 souri River for a longer distance. That case was decided a few days 
 
288 PROPOSED AMENDMENT OF INTEBSTATE-COMMEECE LAW. 
 
 ago, and it was held that such a discrimination was unjust and unlaw- 
 ful and that the shippers are entitled to a rate of 18| cents a hundred 
 pounds for the shipment of cattle to Chicago if the packers are enti- 
 tled to 18| cents per hundred pounds for the dressed product. The 
 decision was manifestly just and ought -to be enforced. 
 
 The Cattle Raisers' Association of Texas have deemed themselves 
 injured by the action of the railways in advancing the rates, and last 
 February they filed a case before the Commission, and that has in- 
 volved all of the southwestern rates and all of the rates from the 
 southwestern territory to the northern ranges, and therefore the cattle- 
 man in every State west of the Missouri River is vitally interested in 
 that case. It was filed in February, and the greatest expedition has 
 been practiced in the taking of the testimony, and all the evidence is 
 completed and ready to be submitted to the Commission. Several 
 hearings were held, at Fort Worth, Denver, at Chicago, and at St. 
 Louis. TAventy thousand pages of evidence have been taken, and that 
 evidence is now on file with the Commission, and it has taken not only 
 days, but weeks, to hear that testimony in a case that involves annu- 
 ally an expenditure for advance in rates alone of $3,000,000 for the 
 cattle interests situated south of the north line of South Dakota and 
 east of a common point in the State of Colorado — not $3,000,000 at 
 one time, but $3,000,000 for each year. 
 
 Now, the question is, when we have challenged these advances, if 
 the Commission shall find that they are not justified, shall that order 
 be put into effect or shall we continue to pay what a body appointed 
 by the law has said is an unjust and an unreasonable rate? The 
 great danger which confronts this committee is in speedily undertak- 
 ing to make a law without an efficient understanding of the present 
 law and its operation and effect and the practice under it. When I 
 say that it is a grave danger I speak deliberately, and I hope that the 
 committee will consider that it is a matter of great importance to 
 determine what rights the present law gives and what remedy the 
 present law gives. 
 
 I will not be able in the time that I have to follow the consecutive 
 order in which I have these things arranged here and state them sec- 
 tion by section so as to say all that I wish to say, but I desire to call 
 attention to the things which occur to me within the time that I have. 
 
 There is no basis for making a rate. That seems stfange to the 
 laity. It seems strange to persons who have not had experience 
 in it, and some of the gentlemen were astonished at Mr. Bird's 
 statement of yesterday that they could not fix a rate except upon 
 competition, compromise, and, I believe, he finally said a guess. It 
 is a guess. A rate on a particular commodity, so far as the matter 
 ' of reasonableness is concerned, is a guess. It is a guess because it 
 can never be known what profit it will produce. No man knows. 
 I offer here an exhibit from the testimony of traffic men represent- 
 ing the Burlington, the Chicago and Northwestern, the Santa Fe, 
 and some other lines to show the testimony that they have deliber- 
 ately given upon cross-examination as to how they can fix a rate, 
 and if they fix it upon the basis of the cost of the service. I asked 
 Mr. Gardner, the general traffic manager, of the Northwestern Rail- 
 road, in a case involving an advance in the grain rates between the 
 Missouri River and Chicago, if he could tell what it costs to handle 
 
PROPOSED AMENDMENT OF INTEK8TATE-0OMMEK0E LAW. 289 
 
 a ]3roduct like grain or live stock between the Missouri Kiver and 
 Chicago. He said he had been engaged in the business of handling- 
 freight for twenty years trying to ascertain that fact, and that he 
 was no nearer a conclusion to-day than when he began. I concur 
 with Mr. Bird exactly in that particular. I say that there is 
 no basis for rate making, and those of you who may suppose that 
 there is some peculiar knowledge in the mind of the traffic manager 
 whereby he is able to make a rate, that he has a rule and a mathe- 
 matical formula upon which he can fix a reasonable rate, are wrong, 
 and I desire to disabuse your minds of that impression. I believe 
 in no case before the Interstate Commission has there ever been a 
 traffic man or any other railway official who has testified that he has 
 any basis upon which to make rates. I take it to be a fact that the 
 purpose of the railroads of this country is to earn money, just what 
 I would do did I represent them, and just what you would do. 
 
 Therefore, carrying out the motive of making money, it is for the 
 purpose of accepting what they must, as circumstances and condi- 
 tions compel them, and taking all they can get, with the end in view 
 of making the most money in the long run. I say that is an estab- 
 lished fact, and I submit the testimony of principal traffic officials 
 of western railroads to prove it. I have not time to go into this 
 at length, but I will state that it is proven that it is demonstrable 
 that that is true. That being so, it is no argument to say that when 
 there is a dispute between the cattle raisers of the West and the rail- 
 roads as to whether we shall pay $20 a car more than we did in 1898, 
 whether we shall pay $20 a car more than we did for an average of 
 ten years previous to that time, whether reasonable or not, it is a 
 matter that can not be submitted to a commission. It must be sub- 
 mitted to somebody, else we must continue to psij the rate. 
 
 Now, who is to determine it ? Every traffic man who has testified 
 in that case, and possibly many of them have honestly believed it, 
 has testified that the cattle rates are still too low, notwithstanding the 
 advances which have been made. If so, may we expect that they will 
 reduce them? May we leave it to them, to their tender mercies, to 
 determine what we shall pay ? I say that through the entire South- 
 west, including the territory in a line drawn along the southern bor- 
 der of Montana, and also largely among the shippers in Montana who 
 ship from the South to that State, the universal opinion on the part 
 of the cattlemen is that the freight rates are too high. Railroads 
 have urged that they may be permitted to participate in the general 
 prbsperitv of this country. They have urged that on that account 
 they may be permitted to advance rates as prices go up. They have 
 urged that in every hearing. When objections have been made to 
 advances in making rates — in grain rates, in rates on class, goods and 
 commodities — they have testified that they advanced these rates in 
 part because they believe they are entitled to participate in the gen- 
 eral prosperity of the country. I will say that there is nothing to 
 the theory ; that it is a time-serving expression. But if there is any- 
 thing in the theory they should at least share in the adversity when 
 the adversity comes. . , , , , 
 
 They have said that they did do that when prices were low and 
 rates were low. I say if that be true, then the prices of cattle to-day, 
 the impoverished condition of the cattle raisers and the feeders 
 
 I c L— 05 19 
 
290 PROPOSED AMENDMENT OP INTEESTATE-COMMEEOE LAW. 
 
 through this broad land west of the Missouri River, call for the rail- 
 roads to reduce their rates instead of advancing them. But they havp 
 not done it. Not only that, but they SAvear that their rates are already 
 too low and that they would advance them were it not for the fact 
 that some of the lines would not agree that it may be done. Undoubt- 
 edly that is true, and that is what is coming, and the people need a 
 remedy more for what is coming than what is here. You may think 
 lightly of this, gentlemen. Go to the West and investigate, and you 
 will find that Avherever the people have taken the matter up for con- 
 sideration they have universally arrived at that conclusion. At every 
 live-stock meeting that has been held where the subject has come up 
 during the last four years resolutions have been passed asking Con- 
 gress to pass a law empowering the Commission to fix reasonable 
 rates; not that they wanted you to pass a law that will require car- 
 riers to haul traffic at less than a profit, but to the end that people 
 might have a fair opportunity in the race for life — as the President 
 says, for a " square deal." The hope is that such bill as is turned out 
 here will secure to the people that " square deal." 
 
 There have been a great many things said in the newspapers and 
 elsewhere, and there are expressions in some of the bills introduced 
 here, and it is talked uniA'^ersally, about the railroads giving a bond 
 to pay back to shippers. No more illusory thing was ever proposed. 
 Gentlemen, in view of the existing law, the common law, in view of 
 the existing remedies under the interstate-commerce act, it is perfect 
 folly to talk about such a thing, absolutely so. What railroad 
 company in this country is not solvent? AVill you name one; can 
 you name a single railroad company in this country that is not 
 solvent to-day ? Every one of the railroads in my coimtry is solvent 
 and good for every judgment that is rendered against it, and needs 
 no surety and no security. The common law for a hundred years 
 has said, as decided by the Supreme Court in the case of the Inter- 
 state Commerce Commission v. Texas and Pacific Railroad Com- 
 pany, that the railroads must provide fair, just, and reasonable 
 rates; and in the Call Publishing Company case the Supreme 
 Court held that a party has a right under the common law in a 
 State court to recover judgment for an unjust discrimination or 
 for an unreasonable rate charged. 
 
 Had you been aware, had you thought of the fact that that remedy 
 exists complete to-day, as established by the Supreme Court of the 
 United States, in every State court of this country having jurisdic- 
 tion of the subject-matter? Have the shippers asked that a rail- 
 road company be made to give a bond ? Have they ? What shippers 
 have requested that? If anyone has it is some man that is fool- 
 ishly ignorant of the situation in this country or who is foolishly 
 ignorant of the remedy provided by the common law, leaving out 
 the question of the interstate-commerce act. In addition to that, 
 the interstate-commerce act prohibits an unreasonable rate in the 
 same manner as the common law. ,It prohibits an unjust, discrim- 
 inatory rate, and according to the present decisions that is not 
 materially different from what the common law provides, as decided 
 in the Call Publishing Company case. It prevents undue prefer- 
 ences and advances. In other words, the common law intended 
 that in transactions of the common carrier every person should have 
 
PKOPOSED AMENDMENT OE INTERSTATE-COMMERCE LAW. 291 
 
 a fair show to get what is reasonable and iust and M'hat everybodv 
 else gets. "^ 
 
 In addition to the common law giving a remedy to recover in these 
 cases (I have cited you a case where the Supreme Court has, in a com- 
 paratively recent decision, so held) the interstate- commerce act says 
 I am entitled to recover for every damage and injury which may be 
 done to me by any common carrier in violation of the provisions of 
 that act, and that I have a right to go before any court and sue for 
 that and recover it in any circuit court of the United States. What 
 better remedy do you want than that? Why should there be a bond 
 provided which may, perchance, compel a shipper in California to 
 come to Washington for the purpose of prosecuting before the Inter- 
 state Commerce Commission a $50 claim? Therefore, so far as the 
 remedy is concerned with respect to recovery back of what is unlaw- 
 fully paid, the law now provides the complete remedy for such 
 recovery. And it is foolish to disturb that law. 
 
 Furthermore, the interstate-commerce act provides that the ship- 
 per may bring suit in the United States circuit court in the first in- 
 stance to recover his damages, or he may file his claim before the 
 Interstate Commerce Commission and have them hear the facts and 
 let them say what reparation they shall recommend. And when they 
 recommend reparation and the railroads are not a mind to pay it, 
 then he can file suit in the circuit court of the United States and the 
 findings of the Interstate Commerce Commission upon the facts are 
 prima facie evidence thereof. 
 
 We have, in order to show that the rates on live stock are unreason- 
 able from the Southwest, taken testimony that has cost the Cattle 
 Raisers' Association and the Cattle Association of the West $15,000. 
 There are 20,000 pages of the testimony were it' all written out. What 
 shipper can undertake such an unequal contest ; and any law that pro- 
 vides that he shall do it is but a pitfall and a snare that simply throws 
 a sop to the public without any expectation that it can be subject to 
 realization in furnishing an adequate remedy. 
 
 Therefore it is quite unimportant that the law shall provide, either 
 the common law, the interstate-commerce act, or any law you may 
 enact, that shippers may recover damages for the injury they have 
 sustained. 
 
 ,Let me call your attention to the fact that a merchant situated in 
 a little town east of a given commercial emporium in thousands of 
 cases in this country must pay the rate of freight to the farther dis- 
 tant point and the local rate of freight back. I was told yesterday 
 by a man from Nevada that when cattle are shipped from the coun- 
 try near Ogden, for example, into points in Nevada they must be 
 shipped on to Sacramento and then back again to Nevada, in order 
 to get that lower rate ; and through that whole territory in the Rocky 
 Mountains a rate of freight to a large extent is made from the east- 
 ern country as the rate to San Francisco plus the rate back. It is 
 true that a rate of freight should not be fixed merely upon the basis 
 of what division a railroad is expected to receive or on the lowest 
 rate that it may be willing to make in competition with water trans- 
 portation; but if they can afford to carry it at the cheaper rate it is 
 quite evident that that is an admission that at least it is not carried 
 at a loss. So you have at least that basis for determination. 
 
292 PBOPOSED AMENDMENT OF INTEESJATE-COMMEEOE LAW. 
 
 I heard Mr. Bird speak of the grain rates yesterday. Do you 
 know that it is a fact that people raising wheat around Wichita, 
 Kans., pay as much freight to Kansas City, 228 miles, as the shipper 
 in Kansas City pays to Chicago, 500 miles, and 2 cents more a hundred 
 pounds ? Do you know that it is a fact that the railroads ship from 
 Kansas City to New Orleans and Galveston, 228 miles farther than 
 Wichita, at 14 cents less than is charged from Wichita, Kans.? Do 
 you know that it is a fact that wheat going to Liverpool and shipped 
 from different points in Kansas must pay the local rate from that 
 point to Kansas City, plus that part of the export rate back to Gal- 
 veston over the same line? So that to-day from Wichita, Kans., 228 
 miles nearer Galveston, the rates of freight on wheat are 14 cents a 
 hundred pounds more (if I am mistaken the tariff will correct me — I 
 think it is either 14 cents or 14 J cents) than from Kansas City. I 
 have those rates here before me. Now, if it is going as export, how- 
 ever, it is shipped at a rate almost twice as low as is paid by the local 
 miller. There are thousands of those inequalities. I am not saying 
 that they may not be justified. I am not saying that a commission 
 may not find that circumstances justify them in many cases; but those 
 conditions exist. I mentioned them for the purpose of calling your 
 attention to the fact that the railroad company is no more capable of 
 making a just rate to the public than is a commission which is just 
 as well informed. 
 
 Now, the standards which the Supreme Court have marked out for 
 reasonable rates have been laid down in several decisions. You must 
 consider the fair value of the property, a fair return upon a fair 
 value of the property ; you must consider that you do not require the 
 performance of a public service without due compensation ; you must 
 take into consideration the welfare of the public, the shippers, and 
 the railways. You must take into consideration the cost of the serv- 
 ice, the value of the service ; and at last the courts have said that the 
 best test of what a reasonable rate is is one that is established under 
 free competition. Now, if that be so, I ask this committee if there 
 is any test for reasonable rates to-day? Do you know of a rate that 
 is established and fixed under free competition? They are not so 
 established in our country. In December, 1898, the railroad lines 
 serving southwestern territory met in St. Louis, at the office of the 
 southwestern traffic comjtnittee, a committee to which all the south- 
 western lines belong, and they agreed among themselves — and I use 
 the term advisedly — to raise the rates on live stock, and they did it, 
 and they all published it on the same day. Now, they say that it was 
 only a conference. What else does it amount to than an agreement? 
 They conferred together for the purpose of bringing the thing about. 
 Each one, they said, was acting independently. Be that true, they all 
 acted to the same end, with the same means for each, and achieved it; 
 and the exact results happened that each one expected would happen. 
 
 So, therefore, I say it is folly to talk about that not being an 
 agreement. A little over a year from that time, in the early part of 
 1900, another advance was made in the rate. In 1903 another 
 advance was made in the rate. And every one of them was made 
 precisely in the same manner, and they have been maintained in the 
 same manner. And there is to-day absolutely no competition with 
 respect to the matter of rates in the transportation of live stock from 
 the Southwest. That applies to class goods and commodities. For 
 
PROPOSED AMENDMENT OP INTERSTATE-COMMERCE LAW. 293 
 
 more than ten years previous, for twelve years previous to March, 
 1903, there had been a fixed rate upon all class goods from St. Louis 
 and all other points on the Mississippi River and east thereof to 
 Texas common points, which includes Texas commercially. In 
 March, 1903, the lines met, and after two or three days of parleying 
 and consideration they advanced those rates from 7 to 20 per cent. 
 Does that fix the standard of reasonableness? If so, then the 
 Supreme Court is mistaken. 1 have cited in my statement a copy 
 from the Supreme Court decision in the Joint Traffic case, in which 
 it says if competition is not given free play such rate can not be 
 used as the standard of reasonableness. 
 
 Now, I want to take up the subject with respect to who were 
 injured in that case where these rates were advanced to common 
 points. The rates were advanced on classes 1, 2, 3, 4, 5, A, B, C, D, 
 and E, and a great number of commodities. There are three com- 
 modities that I recall on which the rates were not advanced. One 
 was beer, another was vinegar, and the other was snutf. So I will 
 not speak of those. But- most of the other commodities were ad- 
 vanced, and all class rates, (yentlemen, who pays that? I suppose 
 that amounts to more than a million dollars a year to the people of 
 Texas. Somebody pays it. He who can name the price of his arti- 
 cles can always add the freight to that price. He always does do it. 
 Mark that, gentlemen. Every trust in this country can name the 
 price plus the freight for every article it sells. Every manufac- 
 turer who can name the jirice of "his article can add the freight to it. 
 So they do not suffer by it. It may be no wonder that they are not 
 here. 
 
 The railroads desire to participate in the prosperity of the country, 
 and they may srj to the steel company " Seeing you are so pros- 
 perous we will participate in it, we will add something to the freight 
 rate on steel rails." The steel trust says " Verj' well, it doesn't 
 matter to us, we sell f . o. b. ; " and so it is with respect to a great 
 many commodities. Sugar, for example; tobacco, for example; 
 agricultural implements, thousands of things that are produced in 
 this country, the seller can fix the price and add the freight. The 
 wholesaler undertakes to do that when he sells to the retailer, and the 
 retailer undertakes to do it, if he can, when he sells to the public. 
 The fluctuation in prices may load the freight off on the wholesaler 
 in one instance, the jobber in another instance, or the retailer in 
 another; but, as a rule, gentlemen, the consumer in the country pays 
 it in little dribs as he pays the price for articles he buys. So it is 
 with the man who produces wheat, corn, oats, cotton, live stock — 
 and fattens them in the country — ^lie can not fix the price of that 
 which he sells, and therefore he must stand for the freight. 
 
 How much wisdom, then, is there in providing or undertaking 
 to provide a method whereby the railroads, apparently undertaking 
 to. act fairly and pay back to the shipper that which he has lost, 
 can never find the injured party? He will not be found in 75 per 
 cent of the cases. There may be 25 per cent where you could fix 
 it that a certain person was injured by paying the freight. There- 
 fore, I say of the least consequence in this matter is your effort to 
 provide that the railroads will make a recompense to whoever is 
 injured. Take a merchant whose business has been destroyed. How 
 can vou pay him back for that? Not merely the rate of freight on 
 
294 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW 
 
 what he might have shipped! These things exist throughout the 
 entire country. You may believe it, they are not able to pay 
 money to come here before you; they can not come here and pay 
 hotel bills and their expenses; they can only send their representa- 
 tives. If you desired it I could have a hundred cattlemen here 
 from all over the Western country who would like to be heard. 
 Mr. Mackenzie is here and if you wish to ask him any questions, 
 he represents one of the largest ranches in this country, and he 
 has come here with me to present our side of the case. If you want 
 to hear him he is here. The fact that they do not appear is of no 
 significance, except to show that they are not able to appear and 
 that they have to depend on their Congressmen to represent them in 
 respect to these matters. 
 
 In the matters which I have presented here I have reviewed the 
 interstate-commerce act section by section and stated what each pro- 
 vides. I have undertaken to take up almost every subject that, in 
 my opinion, should be considered. ;ind I will ask that if it is printed 
 the members of the committee, if they see fit, will look it over, and 
 they may find some matters of interest in it. 
 
 It has been said that because the rate per ton per mile has gen- 
 erally decreased, therefore there has been a tendency downward 
 in rates. Gentlemen, that is not so in my country. There is an 
 exact method of determining whether the rates have declined or not. 
 Go to the files of the tariffs in the Interstate Commerce office and 
 see if rates have declined on live stock, if they have declined on wheat, 
 if they have declined on corn, if they have declined on coal, if they 
 have declined on lumber, if they have declined on hay. Have they 
 declined on fruits and vegetables? Name one of them, gentlemen, 
 on which the rates of freight in the Western country have declined. 
 Yet how silly it seems for men to come here and undertake to show 
 you that rate^ have declined because the rate per ton per mile has 
 declined. 
 
 That is a perfect fallacy. No man undertakes to make a rate on 
 a basis of a rate per ton per mile. The aggregate rates per ton 
 per mile upon an aggregate of all freight is a mere curiosity in 
 figures and of no practical impoilance. T^liile the rate per ton 
 per mile on a given commodity may have declined, the rate per ton 
 per mile on wheat, the rate per ton per mile on grain, on hogs, and 
 cattle, and especially on the classes throughout this Southwestern 
 country, instead of having declined, have increased in every instance ; 
 it has increased on those great commodities that furnish the railroad 
 companies their support in that entire country. And yet I have no 
 doubt the rate per ton ,per mile for the aggregate of freight shows 
 a decrease. And why? Because the increase in the amount of 
 freight in the way of lime, sand, brick, castings, machinery, stone, 
 and a thousand and one heavy articles that take a low rate of 
 'freight and a heavy car loading has been very great, and therefore 
 when you ascertain the rate per ton per mile by dividing the total 
 mile tonnage through the total receipts you can see what an enor- 
 mous amount this low-rate freight Avill be. 
 
 I have had made out, and it has cost me $10, a statement showing 
 what the comparative tonnage has been on six important lines in the 
 West since 1898, extending down to the present time. The total t'on- 
 nage has increased 40 per cent. So that whatever prosperity the rail- 
 
PROPOSEB AMENDMENT OF' INTERSTATE-COMMEBCE LAW. 295 
 
 roads are entitled to participate in should be limited to the increase 
 m the volume of traffic. That will always be automatic, and when a 
 country is prosperous the shipments will' be more frequent, and when 
 the country is less prosperous the shipments will be less frequent. It 
 will be automatic. But they should not be permitted simply from the 
 love of money to reach down into the pockets of the people and levy 
 a rate of freight whenever they please and where they please and take 
 away a large part of the profits which the producers of this country 
 are justly entitled to. 
 
 Now, another thing. Let us come to the cost of supplies and ma- 
 terial. There have been a lot of statements made and published — 
 statements in the newspapers, statements before this committee — in 
 regard to such a great increase in the cost of supplies, material, and 
 labor. In trying the case with respect to advances from common- 
 point rates from St. Louis, it being the basing point, and therefore 
 from all other eastern points to Texas, we took occasion to take exact 
 testimonj^ upon that subject, and we called such men as the vice-presi- 
 dent and the superintendent of the St. Louis Car and Foundry Com- 
 pany ; Mr. Nixson, the purchasing agent of the Missouri Pacific Eail- 
 road ; Mr. Thompson, engineer of the Texas railroad commission, and 
 the tie and timber agent of the Missouri and Pacific line, and we got 
 exact testimony on the subject instead of resting it on the proposition 
 that it has advanced such and such a per cent. I heard one railroad 
 man testify that lumber had advanced 70 per cent. That is entirely 
 a mistake. He did not know a thing about it. He simply had heard 
 somebodj' say that. The largest, heaviest timbers have advanced, but 
 ordinary lumber has advanced very little at the mills in Texas and 
 Arkansas and Louisiana. These gentlemen have selected the lowest 
 point of prices. They have not taken an average for twelve or fif- 
 teen years. They have selected the lowest point. Do you know 
 whether or not wages are higher to-day than they were in 1892 ? Do 
 you know, have you made any effort to ascertain, whether it is a fact 
 or not ? 
 
 Every railroad company files its annual report,, in which is 
 stated the number of days worked and the amount that is paid to 
 every different class of employee. In here we have a table, in the 
 brief that I am submitting as a part of my statement here, that 
 shows a table of the rate of wages that is paid by the Missouri, 
 Kansas and Texas Company, the St. Louis Southwestern Company, 
 the St. Louis and San Francisco Company, the Missouri Pacific 
 Company, the Texas and Pacific Company, the St. Louis, Iron 
 Mountain and Southern Company, the International and Great 
 Northern Company, the Atchison, Topeka and Santa Fe Company, 
 the Gulf, Colorado and Santa Fe Company, the Chicago, Eock 
 Island and Pacific Company, and the Chicago, Eock Island and 
 Texas Company, for all their different classes of employees, for 
 general officers, general office clerks, station agents, other station- 
 men, enginemen, firemen, conductors, other trainmen, machinists, 
 carpenters, other shopmen, section foremen, other traclonen, switch- 
 men, flagmen and watchmen, and telegraph operators and dispatch- 
 ers. You can see by this table the exact average of the day's work 
 from 1892 down to the present day. That is the way to ascertain 
 these facts ; the way is to get. at the facts and not take general state- 
 ments for them. 
 
 to 
 
296 PROPOSED AMENDMENT OF INTEKSTATE-COMMERCE LAW. 
 
 Now, again, copied in this brief is the testimony of such men as 
 I have mentioned with respect to the cost of supplies and materials, 
 naming the articles, naming the prices and what they cost and what 
 articles they use, and you can see what the truth is in regard to that 
 matter. • 
 
 Also, we show in these tables that to-day a dollar expended for 
 labor pulls more tonnage, earns more money, than it ever did in the 
 history of railroad operation in this country. A dollar expended for 
 coal to-day earns more money and draws more traffic than ever 
 before. There has been also a great increase in the density of traffic 
 on these railroads, and we have a table showing that. So that tKe 
 economies introduced by reason of the heavier car loading, by reason 
 of the heavier train loading, the greater density of traffic per mile 
 have more than offset all of the expense that has been added to the 
 railroads by reason of the increase in the cost of labor and material. 
 This is all plainly demonstrated by this brief which I have here, 
 which I will make a part of my remarks, and these facts are practi- 
 cally undisputed. I have heard the mistaken statement made by 
 gentlemen — gentlemen who are no doubt honestly mistaken, and 
 who believe what they have said — that the cost of repairs to cars 
 by reason of the safety appliances required has increased wonder- 
 
 I have taken occasion to have made out a statement which shows 
 the cost per mile of line and the outside cost of the repairs and re- 
 newal of cars, locomotives, and every other item (fifty-odd items in all) 
 of expense of railroad operation. If you want to see it you will 
 have it here. It does not cost as much to-day by considerable per ton 
 per mile hauled for repairs as it did in 1893, notwithstandmg the 
 supposition of some of these gentlemen to the contrary. In this case 
 we took evidence in respect to the actual valuation of these railroads, 
 and taking their earnings, we show what per cent they have earned 
 upon the actual A'alue of the property, plus the additions that have 
 been made since they were valued. There are a great number of mat- 
 ters of importance embraced in this that if the committee desires 
 to know about, or if the committee desires some of the material facts 
 with respect to railroad operation — the cost of supplies and materials 
 and labor, the amount of stocks and bonds per mile of road, and the 
 amount of earnings, gross and net, per mile— ^yoru will be able to find 
 the facts set forth in this brief. 
 
 Now, another thing: That the combination of railroads which ad- 
 vanced the rate to Texas did not stop with the railroads. I offer a 
 statement from Mr. Haile, the traffic manage'r of the Missouri, Kan- 
 sas and Texas Railroad, that they could not advance the rates unless 
 the steamship lines from New York agreed to it. Texas is far more 
 favorably situated for interstate rates than any of these interior 
 States away from water transportation. But they went to New York 
 and engaged with the steamship companies to advance the rate, and 
 they did. That Avas the result, and it was all put into effect at the 
 same time. You, who have not investigated it, do not know the 
 extent to which the railway companies of this country, in their de- 
 sire to make money, have combined for the purpose, not of making 
 rebates, not of making discriminations, but of unreasonably advanc- 
 ing the rates to the people of this country. The railroads are greatly 
 interested in having no rebates. The railroads are interested in 
 
PROPOSED AMENDMENT OP INTERSTATE-COMMEECE LAW. 297 
 
 having no discriminations. It is the people who pay the freight, the 
 producer and the consumer, who are interested in having a reasonable 
 amount only to pay. 
 
 Much has been said in regard to rebates. The newspapers are in 
 favor of stopping rebates. For whose benefit? For the benefit of 
 the railroads. It will save them millions of dollars. Mind you, 
 I do not believe in rebates. I think everybody ought to have a 
 square deal in the race for life. But imless some law which will not 
 only prohibit rebates and discriminations, but also urireasonalsle 
 rates, is enacted, there can be no fair deal in the race of life in this 
 country. 
 
 ^Vhen the railroads desired to raise the rates on grain from Kansas 
 and Nebraska, what did they do? They made an advance of a differ- 
 ential in the proportionate rate between the Missouri River and points 
 in these Eastern Stiites of 2 cents per hundred pounds, and that had 
 the effect of advajicing the rate 2 cents per hunderd pounds on 
 every bushel of grain raised in Kansas and Nebraska. What else 
 did they do ? They could not have done that unless they had raised 
 the rate to New Orleans and Galveston at the same time, which they 
 did. This Commission instituted an investigation into that at once. 
 ^Vhy? Not because the farmers complained, not because they came 
 forward and protested against it, because they probably did not 
 have the means to do that, and perhaps did not know about the 
 course to pursue; but because the Commission deemed it just and 
 right that such an increase in rates should be investigated. It was 
 an increase in rates to a higher point than had been actually charged 
 in a great number of years. It simply needs a careful, painstaking 
 investigation into the actual facts, gentlemen, to convince you what 
 your dutj^ is and how it ought to be performed. 
 
 I have seen in several bills the statement — and I think it has been 
 put in honestly, I am not criticising men, I am talking about meas- 
 ures; I am not criticising railroad officials either, I am simply talk- 
 ing about measures; it is the standard that they fix that I object to — 
 that the interstate-commerce court may pass upon the reasonable- 
 ness of the Commission's orders. I have no doubt that the gentlemen 
 who have appeared here and made statements in regard to this matter 
 have honestly believed that what they advocate is wise, and I say 
 again I am not criticising any of these gentlemen or criticising any 
 of these railroad officials ; if J were in their place I would do what 
 they are doing, and so would you. But is that right for the public? 
 They are looking out for their interests, and they move in mysteri- 
 ous ways their wonders to perform, but they generally perform the 
 wonders. As I have said, I have seen in some of the bills intro- 
 duced here — I have no doubt it is put in la perfect honesty, put in 
 with the belief that it ought to be in; but T warn this committee 
 against it — that the interstate-commerce court may pass upon the 
 reasonableness of the Commission's orders. I say that you might 
 as well not enact any laws ; I say that when you do that you abso- 
 lutely destroy the effectiveness of any law; because if the court is 
 to substitute its judgment for what is reasonable and the Commis- 
 sion shall have found that a rate is too high by 1 cent a hundred, 
 may not the court arrive at a different conclusion as to reasonableness 
 iind thus substitute its own judgment for that of the Commission? 
 Having done so, what would be the result? The court, under the 
 
298 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 law, could not fix a rate for the future. It will be destructive of the 
 Commission's power and yet not constructive of anything in lieu 
 thereof. 
 
 I am giving you warning about that because I fear it is so. I know 
 it is not so intended. I know it is put in there with honest intent and 
 the belief that the court ought to pass on the reasonableness of the 
 Commission's findings. It will never do to do it. Let the court pass 
 on the laAvf ulness of the Commission's findings, and then if the Com- 
 mission shall not have pursued its methods according to the law creat- 
 ing, it the court will set its findings aside. If it has taken private 
 property without due process of law it will set its findings aside; if 
 it has required the performance of public service without just com- 
 pensation it will set its findings aside. Why? Because those things 
 are violative of the Constitution. But if you substitute the judgment 
 of the court for the judgment of the Commission on the facts you ab- 
 solutelj' destroy the effectiveness of the legislative, body fixing a rate 
 for the people. 
 
 I ask careful consideration by the committee of that and I believe 
 you will honestly give it. 
 
 I say another thing : That every inquiry in regard to a rate should 
 be prosecuted by the Government. Are you going to require a citizen 
 to undertake the herculean task of filing a complaint and carrying on 
 the prosecution of it? In the first place, he must incur the enmity 
 of the railroads with which he does biisiness by such a procedure. 
 Thousands of people can not afford that ; they can not undertake the 
 task of litigating with a half-dozen railroads; they have' not the 
 money to pay lawyers' fees or the expenses. Therefore any remedy 
 which falls short of putting it to the Government to determine, first, 
 whether the complaint is justifiable, whether it is probably a correct 
 one, and, second, if it is, to prosecute that complaint, will be no remedy 
 at all to the people. Mark it; that is the way it will turn out. 
 
 To-day it is said that no complaint is made of unreasonable rates, 
 and there are very few. "Whj'? Simply because no man feels that 
 his interest is so great that he can undertake it. Yet in the aggregate 
 there are millions of men who feel that they have cause for complaint. 
 It so happens that with the cattlemen they are organized sufficientljf 
 to undertake it. That is the principal case of challenging the reason- 
 ableness of rate that I know of in the whole broad territory of our 
 southAvestern country. Coal rates were taken up by a coal and gas 
 company at Denison, and the Commission held that those rates were 
 unreasonable, and the railroad reduced them. The butchers of New 
 Orleans said that it was wrong that the Texas and Pacific Railroad 
 should charge $3 5 more for 10 cars than it did for one car ($15 more 
 per car). The Commission heard that case and decided against the 
 road. And Mr. Bird, representing the Texas and Pacific Eailroad, 
 as I suppose — it is simply a guess on my part — said that that was 
 proper. 
 
 Any complaint submitted to the Commission should be first investi- 
 gated and determined Avhether or not it is a proper complaint, 
 whether it is reasonable, and if the Commission believes it is, then let 
 the Commission use its own judgment to investigate the subject, but 
 at Government expense and not at the expense of those poor shippers, 
 who can not afford to incur the costs incident to carrying the matter 
 on. I say that the Commission should determine the facts. It is 
 
PBOPOSED AMENDMENT OP INTERSTATE-COMMEECE LAW. 299 
 
 perfectly inconsistent with a legislative body — not itself determining 
 the facts upon which it acts, and therefore it is consistent that any 
 court shall i-eturn the" reasons upon which they base it, providing they 
 are constitutional and do not take private property without just 
 compensation. 
 
 The Chairman. You have now occupied forty-five minutes., 
 
 Mr. Cowan. I thank you, Mr. Chairman and gentlemen, for your 
 patience, and I ask that I may file this brief as a part of what I have 
 said. 
 
 The Chairman. I wish you would mark those parts that you par- 
 ticularly desire. 
 
 Mr. Cowan. I have only incorporated in this brief matters that 
 I believe are of considerable importance to every member of the 
 committee. 
 
 Mr. Btjrke. Have you the tables you referred to in your brief ? 
 
 Mr. Cowan. Yes, sir. 
 
 The Chairman. Very well, you may file that. 
 
 Mr. Cowan filed the additional argument. 
 
 STATEMENT OF MR. MUEDO MACKENZIE. 
 
 Mr. Chairman and gentlemen of the committee: I represent prob- 
 ably 80 per cent of the cattle growers of the West. I am not able to 
 lay the matter before you in such a lucid manner as Mr. Cowan has 
 done, but in a few sentences I am able to explain to you our griev- 
 ances. 
 
 For some time past we have felt that the railroads have been dis- 
 criminating against the section of the country from where I come. 
 Up to 1898 we paid per car from T'exas to the Northwest from $55 to 
 $65 per car. After that they advanced the rate from $65 to $70, and 
 to-day we are paying $100 a car. We feel this : That if the railroad 
 companies were in a position to pay their expenses at $65 a car and 
 make a little profit — or even if they did not make any profit at that 
 rate — that the difference between $65 a car and $100 a car is too 
 much. We feel, furthermore, upon investigation, that the cost to the 
 railroad is not as much as it was then. It is not as much for this 
 reason: They load us down with tonnage; they do not give us the 
 same service: They had in vogue what they call the tonnage system. 
 They tell us now that they have done away with that system, but that 
 is not a fact. 
 
 I know from experience that they have not done away with it. Up 
 to 1897 I could go to a railroad company and tell them that I would 
 give them from 10 to 12 cars on a train and they would give me a 
 special train. But now they will not move my freight unless they get 
 the full tonnage of a train, the full tonnage that the engine is rated 
 to carry. In many instances they overrate their engines, so that they 
 will not make more than from 7 to 10 miles an hour. I have had ship- 
 ments on the road — I have had from 3,000 to 5,000 cattle on the road 
 and I have got a service of from 7 to 10 miles per hour. 
 
 ^.'ow, gentlemen, it would be impossible for me to tell you or ex- 
 plain to you the losses we entail unless you are cattlemen. In fact, 
 I do not linow about it myself ; I am like Mr. Bird — I do not know how 
 these things are arrived at, but I know the loss to us is enormous. 
 The railroads have failed to give us service; they treat us as they 
 
300 PBOPOSED AMENDMENT OF INTERSTATE-COMMERCE L^W. 
 
 please, and we want to be protected. We do not want you gentlemen 
 to feel that we came here asking for a club to break the backs of the 
 railroads. We want protection. We want to "feel that we have a 
 board of arbitration between the shipper and the railroads. We want 
 to feel that if we are paying $100 a car the Commission will tell 
 us that that is an unreasonable rate. If the Commission would tell 
 us that that is a reasonable rate we bend to their decision; we are 
 willing to pay it. 
 
 But we feel, gentlenlen, that it is not a reasonable rate. We feel 
 that the railroads were giving us a rate of $65 from the Southwest to 
 the Xorthwest, and to-day they are charging us $100 per car. We 
 feel, furthermore, that the railroads at one time charged us $65 a 
 car from Texas to Kansas City. "VVliat do thejr charge to-day? They 
 charge us 34^ cents on a minimum of 22,000 pounds. They have 
 changed the rate from the carload rate to the cents per hundred. 
 They made the minimum 22,000 pounds, making us believe that they 
 were using the divisor to give us the saixie rate as we had before; but 
 if you take those figures you will find that in every instance instead of 
 giving the rate we were paying before we are paying from $10 to $20 
 more. They thought they could make the cattlemen believe that they 
 were getting the same rate, but it is not a fact that we are getting the 
 same rate. Every man who ships cattle from the Southwest to the 
 markets can tell you that he is paying to-day from $18 to $25 per car 
 more than he did in 1896 to 1898. That, together with the service 
 we are receiving, is more than we can stand, and if this condition 
 of affairs will continue it is going to knock us out of the business. 
 
 Xow, gentlemen, we do not feel that that should be the case. We 
 feel that you are here to give us justice; we feel that you are here to 
 do what is right by us; we feel that that is your intention, and all 
 that we ask of you is to give an Interstate Commerce Conurdssion the 
 power to do this one thing : That they shall have the right under the 
 Ijw to correct any inequalities which exist. 
 
 Now, I can point out a case to 3'ou where we have to pay for the 
 same service 6| cents per hundred more than our neighbors in Colo- 
 rado pay. In the point in Texas where I live I am 550 miles from 
 market. I^as Anima;->, Colo., is 550 miles. My cattle friend from 
 Colorado has to pay 28| cents per hundred and I have to pay 34| 
 cents a hundred. 'SYe can show the railroads, I think, by" figures, that 
 it does not cost them 1 cent more to carry our cattle than it does to 
 carrj' the cattle of the man who lives in Colorado. Some years ago 
 we had a meeting with traffic managers in St. Louis. Mr. Cowan has 
 already referred to that meeting in his statement before this commit- 
 tee. We pointed out this inequality in the rates at that meeting, and 
 we asked them to correct it. They admitted that we were right, but 
 they told us that in order to put us on a more equal footing with the 
 men in Colorado that they would raise the Colorado rate, which they 
 promptly did. 
 
 Now, that is the Avay the railroads have, gentlemen, of correcting 
 rates. They were perfectly satisfied with the rate they were getting 
 from Colorado until we complained. "When we made a complaint 
 then they came forward and said, " We will equalize the rate by rais- 
 ing the other man's rate."' Now, we do not think that is right ; we 
 do not think it is fair ; in fact, we feel that it is very unfair, and we 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMEECE LAW. 301 
 
 ask you gentlemen here to prepare such a bill, and report it, as wiU 
 give us protection under the law — that we may have a phxce to go 
 where we know we will get justice. 
 
 I do not blame the railroad men; I have friends among them. I 
 think that probablj^ I would do as they do if I were in their position, 
 and, on the other hand, they would probably feel very much as I do 
 if they were in my place. I am satisfied when you look this matter 
 over and consider it very fully that you will see that the cattlemen 
 and the industries in the Southwest require your protection. We 
 come to you hoping that we will get it, and we are satrsfied that before 
 you are through you will give us what we want. I thank you, Mr. 
 Chairman and gentlemen. 
 
 The Chairman. There is a gentleman here from the New Orleans 
 Board of Trade, Mr. Robinson, and we will now be glad to hear him. 
 
 STATEMENT OF MR. C. W. ROBINSON, REPRESENTING THE NEW 
 ORLEANS BOARD OF TRADE. 
 
 Mr. EoBiNSON. Mr. Chairman and gentlemen, I represent before 
 you the New Orleans Board of Trade. I am an untrained speaker; 
 in fact, I think in twenty-five years this is only about the third time 
 I have attempted to express my ideas while on my feet. By the cour- 
 tesy of your chairman I am entitled to ten or fifteen minutes to lay 
 before you some thought on this question. 
 
 I have sat here day after day and listened to the railroad men, and 
 I submit that they have fully demonstrated one or two propositions. 
 First, they have demonstrated that they are in favor of a fair regula- 
 tion provided they are allowed to say what is fair. 
 
 Our contention is' that an impartial commission shall be empowered 
 to say what is a fair and reasonable rate. 
 
 Second, they have stated very clearly and demonstrated, I think, 
 that they do not know and can not tell you how rates, how tariffs, are 
 made. For twenty-five years, directly and indirectly, as a manufac- 
 turer and as a banker, I have been brought into contact with traffic 
 managers, with rate makers, and I believe that I know how they make 
 rates. The first principle on which they base rate making is the 
 Robin Hood principle of what will the traffic bear? Illustrative of 
 this principle is the question of grain rates from Chicago to the At- 
 lantic seaboard. In the winter, when water competition has ceased 
 to exist because of the closing of the water routes, they take what the 
 traffic will bear. In summer time, when they must compete with the 
 water routes, they take what the traffic will allow them to take. The 
 manufacturers of yellow pine in the district covered by the Carolinas, 
 Georgia, Mississip|)i, Louisiana, and Arkansas protested against a 
 raise in lumber rates to the Central West, to all points north of Iowa, 
 to all points in the Middle and Eastern States, to all points, prac- 
 tically, in which yellow-pine lumber was sold, a raise of $8 per ton. 
 At a hearing held in Atlanta, Mr. Culp, traffic manager of the Southern 
 Railroad, was on the stand. He was asked to explain why this raise 
 of rates on lumber was made. As nearly as I can remember his exact 
 language, it was this : The railroad companies, desiring to share in the 
 general prosperity of the country, looked around to see who could 
 stand an advance in rates. In their judgment — ^mark you, in their 
 
302 PKOPOSED AMENDMENT OF INTEESTATE-COMMEBCE LAW. 
 
 j.udgment — the manufacturers of lumber in the Southern States were 
 prosperous and could stand a raise in rates. Therefore they raised 
 the rates. 
 
 I heard a great deal about injunctions. I wish first, in passing, 
 Mr. Chairman, to say that after listening to the clamor about in- 
 junctions we endeavored to get injunctions; we tried two judges of 
 the United States court — one in Georgia and one in Mississippi— and 
 they both refused us injunctions on the ground that they had no 
 jurisdiction. Congress in its wisdom, gentlemen, sought to protect 
 the producer of sugar in this country. They put a duty on imported 
 sugar. The railroad traiRc managers, in their wisdom, to an extent 
 nullified this action of Congress, in that they raised the classifica- 
 tion of domestic sugars, changing it from the fifth to sixth class, 
 thus raising the rate on domestic sugar about 30 per cent, and at the 
 same time they gave to imported sugar the lower rate of freight. 
 I take it for granted that you are all familiar with that case and what 
 the Supreme Court said about it. 
 
 Another proposition that the railroad people have demonstrated 
 is that thejr have a good thing and they do not Avant to be inter- 
 fered with. I can best illustrate this position by the story of the 
 cow. Two negroes in Mississippi bought a cow in partnership. 
 The elderly negro led the cow to his home and commenced at once 
 industriously to milk her. This .process went on for a week or more, 
 when the younger negro came around to inquire as to his rights in 
 the premises. The older negro grew very indignant. He said : " My 
 having possession of the cow for all this time, I have vested rights, 
 and for you to come here now and interfere with my milking would 
 be a great outrage and clearly unconstitutional." This is the posi- 
 tion the railroad people take. They have practically admitted to 
 this committee that rates have been raised in a good many instances; 
 that in some few instances they have been reduced. But the milk- 
 ing still goes on, and the manufacturers, the farmers, all over the 
 country are feeding the cow, while these people are doing the milk- 
 ing. Now, we do not ask that the process be reversed, that we be 
 allowed to do the milking, but we ask that a fair division be allowed 
 us, and by a tribunal that is impartial. 
 
 I think there is a mistaken idea, as Mr. Cowan has said, as to what 
 the people want, as to what they are clamoring for. All this talk 
 about the stopping of rebates is all true. We want them stopped. 
 The railroads want them stopped. Everybody wants them stopped. 
 But we do claim and we do believe, and we are sincere about it, that 
 the railroads are getting an unjust share for transporting our manu- 
 factured products and our agricultural products. Since I have been 
 here I have heard with a great deal of surprise from the traffic 
 managers that rates have been reduced. Well, people generally do 
 not understand it that way. If you go to the manufacturer of lum- 
 ber in the Southern States and tell him that his rate has been reduced, 
 when he knows that every day he is paying $8 more per ton than he 
 did six years ago, you would have a very hard time to convince him 
 that rates have been lowered. You would have a difficult time in 
 making him see that. 
 
 You have heard a great deal, too, gentlemen, about the vast number 
 of people who are dependent on the prosperity of the railroads. It 
 is true a vast number of people are dependent on the prosperity of 
 
PROPOSED AMENDMENT OP INTERSTATE-COMMERCE LAVfr. 303 
 
 the railroads; but we have about 90,000,000 population in our 
 country now, and I dare say that no more than one-fifth of them are 
 dependent either directly or indirectly on the prosperity of the rail- 
 roads for their livelihood and their own prosperity. Now, is it 
 your duty to legislate for that one-fifth or for the four-fifths? Is 
 it not your duty to so legislate that the greatest good will come to 
 the greatest number ? 
 
 It is true that incidentally every citizen of the United States is 
 interested in the prosperity of the railroads. It is equally true that 
 every citizen of the Uniteci States is interested in the prosperity of 
 the agriculturists, in the prosperity of 'the manufacturers, and only 
 in that limited sense are the four-fifths interested in the prosperity 
 of the railroads of the country. 
 
 Gentlemen, in conchision, justice to the transportation companies 
 demands such rates as will enable them to earn fair and propei' 
 returns on their actual investment, laid so as not to destroy natural 
 adva,ntages. No true American would deprive them of such rates. 
 Let it be remembered, however, that the managers of transportation 
 are human and are greedy, like other humans, and unless some power 
 be interposed to change and regulate their natural greed, oppressive 
 and discriminating and exorbitant rates are a necessity. 
 
 Gentlemen, I thank you for your attention. 
 
 Mr. Bacoht. Have you not misstated your figures in one respect? 
 You said $8 a ton, and I think you meant $0.80 a ton in one place 
 in your statement. 
 
 Mr. Robinson. Yes, sir; you are correct. 
 
 (Thereupon, at 12 o'clock, the committee went into executive 
 session.) 
 
 STATEMENT OF S. H. COWAN, REPRESENTING THE CATTLE 
 RAISERS' ASSOCIATION OF TEXAS AND OTHER WESTERN 
 CATTLE ASSOCIATIONS. 
 
 To the Chairman and, Members of the Interstate Commerce Commit- 
 tee of the House of Representatives, Fifty-eighth Congress. 
 Gentlemen: I was employed by the cattle interests to come here 
 to Washington to place before you such facts as will be important 
 and sustain the position of the cattle interests of the entire West — 
 namely, that a reasonably, speedy, adequate, and inexpensive remedy 
 be provided for the regulation of rates of freight on interstate trans- 
 portation of live stock as between points in the Western States and 
 the respective markets. 
 
 I have had several years' experience and practice in various ways 
 with respect to the matter of rates in interstate transportation of live 
 stock, and have represented the Texas Cattle Raisers' Association and 
 the Cattle Growers' Interstate Executive Committee in -the matter, 
 carrying on for them a prosecution before the Interstate Commerce 
 Commission, involving the reasonableness of advances which have 
 been made in the southwestern rates and the terminal charge of $2 
 per car on all carloads of live stock delivered at Chicago, in the 
 course of which investigation it has been my province to ascertain 
 .:.omething with respect to the matter of rates and the manner in 
 which they are made, and railroad service. 
 
304 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 Preliminary to what I shall say I pause to remark that hundreds 
 of them could be brought here to present tljeir claims before you did 
 they deem it advisable or desirable. Other shippers in many in- 
 stances are not as well organized, and I beg of this committee not to 
 consider the fact that because shippers are not here to appear before 
 it in any great number it indicates that they do not desire action on 
 the part of Congress. They have not the means nor the facilities 
 to come themselves or be represented by counsel. They place their 
 confidence in their Congressmen, and they feel themselves as much 
 unequal to the task of making an equal fight with the railroads be- 
 fore this committee as they do in the courts. 
 
 ADVANCES IN RATES. 
 
 It is a fact that the rates from most points in Texas have been 
 advanced since 1898 an average of $17.50 to $20 per car, and they 
 are to-day higher than they have been at any time since rates were 
 filed with the Interstate Commerce Commission. It is also a fact 
 that during the time these rates have been advanced the quality and 
 value of the service has been deteriorated. It takes a longer time to 
 reach the markets or any other destination, with a consequent mate- 
 rial 'loss to the shipper, and this has occasioned general complaint. 
 These advances have likewise applied to the Indian Territory, Okla- 
 homa, New Mexico, Arizona, and from most points in eastern Colo- 
 rado, western Nebraska, and western Kansas, parts of Wyoming and 
 South Dakota, though the advances in the rates have not been as 
 great from all points in such States as in the State of Texas. 
 
 I believe that it is safe to say that the rates of freight based on the 
 present tonnage cost the live-stock shippers of the States named 
 $3,000,000 per annum more to-day than would the rates of freight in 
 effect in the year 1898 and the average rates collected for the period 
 of ten years next preceding 1898. 
 
 Not only have the live-stock rates been advanced, but in March, 
 1903, an advance of from 7 to 20 per cent was made on practically 
 all class goods and commodities, with a few exceptions, from points 
 on the Mississippi River and east thereof to the State of Texas. 
 Space forbids a tabulation of the various rates, but you are referred 
 to the files of tariffs with the Interstate Commerce Commission to 
 prove the facts stated. They are not denied. 
 
 COMBINATION OF RAILWAYS. 
 
 I assert it to be a fact that it is proven by the testimony of the traf- 
 fic managers of the southwestern lines that these advances were made 
 by a corobination of the carriers through their respective traffic mana- 
 gers or freight agents having charge of the matter of advancing rates. 
 No such advances could have been made without an agreement or that 
 which is equivalent to an agreement, and while the traffic agents 
 denied that they had come to any agreement they admitted that they 
 conferred together and all pursued the same object by the same means, 
 each performing the very part of the transaction wliich all the others 
 expected they would, and published and put into effect an4 main- 
 tained these advanced rates by reason of that combination. This 
 
PE0P08ED AMENDMENT OP INTERSTATE-COMMERCE LAW. 305 
 
 applies to the rates on live stock as well as to the other rates named.. 
 Lumber and grain rates have been advanced by the same method.' 
 Such reductions as have been made have been brought about by tho 
 motive of making money, and not by a disposition on the part of the 
 carriers to make a lower rate, and on that ground they have put in 
 lower rates in order to move traffic when otherwise it would not have 
 moved. 
 
 In proof of the fact that the rates are higher in the Southwest than 
 for many years, and that the same has been effected by a combination 
 of the railroads themselves and the steamship companies carrying 
 freight from New York to Galveston, I attach hereto, as Exhibit No. 
 1, the testimony of Mr. Haile, traffic manager of the Missouri, Kansas 
 and Texas Eailway Company, taken before the Interstate Commerce 
 Commission. 
 
 INCREASE IN VOLUME OF TRAFFIC. 
 
 In the same period in which these advances in rates have been 
 made the total tonnage as well as the passenger traffic on the south- 
 western lines has increased an average of 40 per cent. As an exam- 
 ple, herewith find appended a table showing the advances of certain 
 representative lines selected at random. An examination of the 
 annual reports of other lines will show the same thing. 
 
 Table showing the number of tons of freight handled and the number of tons 
 carried 1 mile per mile of road for years ending June 30, 1898 and 1904.. 
 
 Road. 
 
 Total tonnage. 
 
 Increase. 
 
 Tons ca,rried 1 
 mile per mile of 
 line. 
 
 
 1898. 
 
 1904. 
 
 1898. 
 
 1904. 
 
 Texas and Pacific 
 
 2,470,765 
 4,596,071 
 3,568,825 
 6,889,657 
 14,230,742 
 4,518,923 
 
 3,631,316 
 7,719,627 
 5,204,103 
 9,513,801 
 21,267,370 
 6,645,698 
 
 Percent. 
 40 
 69 
 46 
 40 
 50 
 41 
 
 381,447 
 639,542 
 473,691 
 430,664 
 423,413 
 718,881 
 
 419,978 
 884,368 
 426,431 
 
 St. Louis, Iron Mountain and Southern 
 
 
 589,216 
 561,676 
 
 Chicago, ^Milwaukee and St. Paul 
 
 
 835,727 
 
 
 
 
 NoTB.— Union Pacific tonnage for 1898 was greater than any year up to 1904. For example, 
 1899 tonnage per mile of line was 575,325. 
 
 A large amount of this increased tonnage has been from heavy 
 articles like cement, lime, brick, castings and machinery, lumber, 
 coal, stone, ores, and the like, all of which classes of freight take a 
 lower rate per ton per mile than most of the agricultural products, 
 manufactured articles, and merchandise. The result is that the rate 
 per ton per mile may show a decrease, and yet every rate in the 
 schedule may, in fact, have been advanced. Let no one be misled 
 by paying any attention to the rate per ton per mile as applied to 
 all traffic as a whole. I state it as a fact that the rate per ton per 
 mile has advanced on live stock throughout the Southwest; that it 
 has advanced on merchandise coming into Texas, if you apply the 
 equation to each particular commodity, though, by reason of the 
 extraordinary amount of low-class freight, if you average all com- 
 modities it may show a reduction, but it is entirely unimportant. 
 The railroad which handles 1,000,000 tons of coal may handle 100,000 
 
 I c 1^05 20 
 
306 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 tons of merchandise, and an advance of 10 per cent advances the 
 tonnage 110,000 tons, but the low-class tonnage advance is really 
 ten times as great as the other, though the percentage of the advance 
 is the same. 
 
 PARTICIPATING IN GENERAL PROSPERITY. 
 
 The railroads have claimed the right to participate in the general 
 prosperity of the country. This they have done by the advance in 
 the volume of traffic, anti should not be permitted to do by simply 
 levying a tax upon the public at their will, which they may do so 
 long as they are in comljination together. The southwestern lines, 
 operating in the country where my clients do business, are in com- 
 bination with respect to the matter of rates, and competition in rates 
 has been eliminated. For example, in December, 1898, the same 
 rate of freight existed precisely on every line of road which com^ 
 peted for the same business from the same points of origin to the 
 same points of destination. The southwestern lines at that time 
 advanced the rates on live stock in exactly the same manner, pub- 
 lishing their rates and putting them in effect on exactly the same day. 
 The same thing was repeated in January, 1900, and again in March, 
 1903, and they all testify that the rates are still too low, and the 
 obstacle to advancing them still further lies in the fact that some 
 one of them will not consent to it. Space forbids a recital of the 
 testimony on the subject. 
 
 unreasonahijEness or rates. 
 
 It has been asserted by the railroads at hearings that the most ma- 
 teriul matter is the relative adjustment of rates and the prevention 
 of discrimination and preferences by rebates or otherwise. To the 
 railroads these are by far the most material. As applied between 
 coiimiunities of merchants situated in different citio^? it may be the 
 most Diaterial question. Merchants are not so much concerned in 
 what the rate is as in the relative adjustment of it. Rut when you 
 come to consider that great body of the people, the producers and the 
 consumers, the most material question to them is how much they shall 
 pay. The manufacturer adds the freight to the price of his goods. 
 The wholesaler or commission merchant adds the freight to the price 
 at which he sells to the shipper or the retailer. The retailer advances 
 his invoice by the amount of the freight, and at last the consumer 
 pays it. But the great body of farmers who are producers in this 
 country, who can not add the freight to the price of what they sell 
 because they can not dictate the price, must always stand the freight. 
 So, therefore, to them the most important question is that of the un- 
 reasonableness or reasonableness of the rate. 
 
 Since the railroads make a profit, as they have by the prevention 
 of rebates and the elimination of competition, that profit can only be 
 gained through the amount of the freight charged for transportation. 
 It has been proven in the case of the Texas Cattle Raisers' Associ&tion 
 against the southwestern lines, involving the reasonableness of the 
 advances in live stock rates above mentioned, that during the period 
 of time when the rates were adjusted upon a reasonable and satis- 
 factory basis, previous to these advances, for years the southwestern 
 
PBOPOSED AMENDMENT OE INTER8TATE-C0MMEECE LAW. SOT 
 
 lines customarily paid rebates to get the business. It was deemed 
 sufficiently profitable in that competition with each other to purchase 
 it. Who got the benefit of that? Undoubtedly the shippers. Who 
 received the benefit by the stopping of rebates? Undoubtedly the 
 railroads. Is it any wonder, then, that they, with one accord, desired 
 to prevent rebates ? 
 
 With rebates eliminated and with published rates maintained as 
 they are, and should be, competition is, as it must be, eliminated, 
 whatever the theory of the law was with respect thereto. The fac- 
 tors which the Supreme Court of the United States held to be those 
 on which the reasonableness of a rate must be determined and which 
 must be considered by the Commission or any other tribunal deciding 
 the fact of reasonableness are : 
 
 First. " That the circumstances and conditions which reasonable 
 men would regard as affecting the M^elfare of the carrying companies 
 and of producers and shippers and of consumers should be considered 
 by the tribunal appointed to carry into effect and enforce the provis- 
 ions of the act." (T. & P. Ry. Co. v. I. C. C, 162 U. S., 197;) And 
 in the Nebraska rate case the Supreme Court said : 
 
 We hold, however, that the basis of all calculations as to the reasonableness 
 of rates to be charged by a corporation must be the fair value of the property 
 being used by it for the convenience of the public, and in order to ascertain that 
 value the amount and market value of its stocks and bonds, the present as com- 
 pared wifh the original cost of construction, the probable earning capacity of 
 the property under particular rates prescribed by statute, and the sum required 
 to meet operating expenses are all matters for consideration and are to be given 
 such weight as may be just and right in each case. We do not say that there 
 may not be other matters to be regarded in estimating the value of the propery. 
 What the company is entitled to ask is a fair return upon the value of that which 
 it employs for the public convenience. On the other hand, what the public is 
 entitled to demand is that no more be exacted from it for the use of a public 
 highway than the services rendered by it are reasonably worth. 
 
 And again : 
 
 It can not, therefore, be admitted that a railroad corporation, maintaining a 
 highway under authority of the State, may fix its rates with a view solely to its 
 own interest and ignore the rights of the public; but the rights of the public 
 would be ignored if the rates for the transportatiou of persons or property 
 used for the public or the fair value of services rendered, but in order simply 
 that the corporation may meet operating expenses, pay interest on its obliga- 
 tions, and declare a dividend to stockholders. 
 
 If a railroad corporation had bonded its property to an amount which far 
 exceeds its fair value, or if its capitalization is largely fictitious, it may not im- 
 pose upon the public the burden of such increased rates as may be required for 
 the purpose of realizing profits upon such excessive valuation or fictitious capi- 
 talization ; and the apparent value of the property and franchises used by the 
 corporation, as represented by Its stocks, bonds, and obligations, is not alone to 
 be considered when determining the rates that may reasonably be charged. 
 
 And in the case first cited the Supreme Court has firmly estab- 
 lished it that the question of reasonableness is one of fact. In the 
 nature of things it could not be otherwise. Hence, the province of 
 the court should not extend to any question of reasonableness, as that 
 would destroy the act. 
 
 RAILROAD COMPANIES DO NOT UNDERTAKE TO MAKE REASONABLE RATES. 
 
 I state it as a fact, demonstrable by the evidence of every traffic 
 officer who has been examined by the Interstate Commerce Commis- 
 sion, that there is no basis for rate making. No better proof could 
 
308 PBOPOSED AMENDMENT OF INTEBSTATE-OOMMEKCB LAW. 
 
 be made than is found in the files of the tariffs showing the actual 
 rates which have been in existence on various lines of railroad, as 
 they, have fluctuated up and down, which fluctuations and comparir 
 sons of rates on various lines on various commodities conclusively 
 prove the want of any standard. 
 
 I therefore assert that railroads have no basis, theory, or practice 
 to fix reasonable rates : they accept what they must and take all they 
 can consistently with the effort of making the most money in the long 
 run. 
 
 As proof of this fact I attach hereto, as Exhibit No. 2, the testi- 
 mony of traffic officials of several of the southwestern lines, whose 
 names will be founa in connection with the exhibit. 
 
 COST or SERVICE UNKNOWN QUANTITY. 
 
 Undoubtedly one of the most material elements with respect to ths 
 reasonableness of rates charged for railway transportation is the 
 cost of performing the service. Anyone is entitled to ask the rail- 
 road company to perform the service, but no one is entitled to ask it 
 to perform the service without profit. But if the railroad company 
 perforining the service can not tell you what it costs to perform the 
 service, upon what ground can it be contended that it has a superior 
 Imowlcdge in determining what the charge should be? I assert it to 
 be a fact that when questioned upon that subject all of the traffic 
 men of the country admit, as Mr. Bird, vice-president of the Gould 
 lines admitted before this committee, that they can not tell the cost 
 of the service of transporting a giA'^en commodity or a given train- 
 load of commodities between any two points. In proof of this fact 
 I refer you to Exhibit No. 2, wherein you will observe that the traffic 
 representatives of the various southwestern lines have frankly so 
 testified. 
 
 Furthermore, it is fully shown in their testimony that none of them 
 consider any of the elements which the Supreme Court has stated 
 constitute the standard of reasonableness. 
 
 The inquiry naturally would be. How is the question of reasonable- 
 ness to be determined by anybody, whether a Conmiissioner or a traffic 
 man? The answer is that the present rate adjustment of the country, 
 or up to r the time when the companies entered into combinations 
 among themselves to fix rates by agreement or conference, that it is 
 a matter of evolution. Every imaginable circumstance surrounding 
 the building and the operation of railroads, the construction and put- 
 ting into operation of new lines, competition between each other, be- 
 tween markets, the economies in transporting freight, the volume of 
 , traffic, the return movement of empty cars, the direction of the 
 volume of traffic, the net result upon the whole is shown by experience, 
 have all had a marked influence. Imagination can not conceive of the 
 innumerable facts and things that have brought about what is. 
 Therefore, it is by comparison that we are enabled to know to-day 
 what is a reasonable rate, and this proposition will not be disputed. 
 If so, I would refer you to an abundance of testimony of railway men 
 on that subject. For example, Mr. James Hagerm'an, of St. Louis, 
 general counsel for the Missouri, Kansas and Texas Railway Com- 
 pany, in a brief filed before the Interstate Commerce Commission in 
 cause 677, im'olving the class and commodity rates from St. Louis to 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 309 
 
 Texas common points, after reviewing the authorities, makes the 
 following statement with respect to the standard of reasonableness 
 of rates : 
 
 Therefore, v(;hen rates are shown to be those resulting from the force of com- 
 petition and not in excess of the rates charged for the same service by other 
 carriers similarly situated, the rates are not only prima facie reasonable, but 
 are conclusively reasonable, as no other standard is or can be used for deter- 
 mining that question. 
 
 This is fully borne out by the expression of the Supreme Court in 
 the case of U. S. v. Trans-Missouri Freight Association (166 U. S., 
 332) , where the Supreme Court has said with respect to the question 
 of reasonableness : 
 
 What is the proper standard by which to judge the fact of reasonable rates? 
 Must the rate be so high as to enable the return of the whole business done to 
 amount to a sum sufficient to allow the shareholder a fair and reasonable 
 profit? If so, what is a fair and reasonable profit? That depends sometimes 
 upon the risk incurred, and the rate Itself ditCers in different localities. Which 
 is the one to which reference is to be made as a standard? Or is the reasonable- 
 ness of the profit to be limited to a fair return upon the capital that would have 
 been sufficient to build and equip the road. If honestly expended? Or Is still 
 another standard to be created, and the reasonableness of the charge tried by 
 the cost of the carriage of the article and a reasonable profit allowed on that? 
 And in. such case would contribution to the sinking fund to make repairs upon 
 the roadbed and renewal of cars, etc., be assumed as a proper item? Or is 
 the reasonableness of the charge to be tested by the reasonableness of the 
 charges for the transportation of the same kind of property by other roads 
 similarly situated? If the latter, a combination between the roads would, of 
 course, furnish no means for answering the question. It is quite apparent, 
 therefore, that It is exceedingly difficult to formulate even the terms of the rule 
 itself, which should govern In the matter of determining what would be reason- 
 able rates for transportation. While even after the standard should be deter- 
 mined there Is such an infinite variety of facts entering into the question of 
 what is a reasonable rate, no matter what standard Is adopted, that any indi- 
 vidual shipper would in most cases be apt to abandon'the effort to show the 
 unreasonable character of a' charge sooner than hazard the great expense In tlme> 
 and money necessary to prove the fact, and at the same time incur the ill will of 
 the road Itself in all his future dealings with it. To say, therefore that the 
 act excludes agreements which are not unreasonable restraint of trade and 
 which tend simply to keep up reasonable rates for transportation Is substan- 
 tially to leave the question of reasonableness to the companies themselves. 
 
 It is perfectly idle to talk about rates being reasonable or unreason- 
 able per se. There is no such thing, because it must always be rela- 
 tive — because it must be determined by comparison. 
 
 I ask you, therefore, what factor or element in the equation of 
 determining what is a reasonable rate may not as well be ascertained 
 by a competent commission on investigation as hj a traffic man him- 
 self. The Commission is an impartial tribunal; the traffic man is 
 making rates to make money. 
 
 ADVANCES IK THE COST OF SUPPLIES, MATERIAL, AND LABOR OFFSET BY 
 
 INCREASED TONNAGE. 
 
 It is stated that advances in rates are not unreasonable because 
 they are justified by the increased cost of operation due to increase in 
 the price of labor, supplies, and material, to which I reply that such 
 advance in these prices has more than been offset by the increased vol- 
 ume of traffic and by the economies introduced in handling it. 
 
 As the country settles, as towns, cities, and villages grow up, as 
 the population increases, as the volume of commerce increases to the 
 
310 PKOPOSED AMENDMENT OF INTEBSTATE-COMMEECE LAW. 
 
 consequent increase in tonnage of railroad freight and increase in 
 passenger travel, shall the result be that, notwithstanding these facts, 
 the tax which the public-service corporations levy against those oyer 
 whom they have the power of monopoly become greater? With 
 more railroads and better facilities for transportation shall the prices 
 of it increase to the public? If so, then every additional railroad 
 that is built in every community, which divides the tonnage and 
 reduces the earnings of the existing lines, furnishes a basis for 
 increased rates. 
 
 In order to furnish this committee with the data necessary to 
 prove the facts I state I file herewith, as Exhibit No. 3, a copy of a 
 brief which I prepared and filed before the Interstate Commerce 
 Commission in an investigation respecting the advances in the class 
 and commodity rates from St. Louis to Texas common points, in 
 which will be found, under proper headings, tables, figures, memo- 
 randa, and remarks with respect to testimony of witnesses, and 
 which are to be found in the record of that case, and which will show : 
 
 First. That the total cost of labor in proportion to the gross earn- 
 ings is not greater than it was in 1892 or 1894. 
 
 Second. That the increase in the price of labor was more than off- 
 set by what the labor earned in the service. 
 
 Third. That a dollar expended for labor in 1903 was more valuable 
 and produced greater results in transportation than in 1892. 
 
 Fourth. That beginning with January, 1900, there was a gradual 
 increase in prices of supplies until July, 1903, and since that time 
 there has been a substantial decrease, so that the prices of supplies 
 and materials are not substantially different to what they were in 
 1892. 
 
 Fifth. The tons of freight carried 1 mile per ton of fuel is mate- 
 rially increased. 
 
 • Sixth. That the financial condition, expenditures, operating ex- 
 penses, and net earnings on the southwestern lines is fully set forth 
 in tables from which it is shown that net earnings have been increas- 
 ing for twelve years and that based upon the real value of these rail- 
 ways they have earned a fair per cent on the cost of the property at 
 all times and in recent years a verj^ large per- cent, more than can be 
 earned in other large investments in real property. 
 
 Seventh. The economies in handling traffic are shown in which it 
 appears that there has been a great increase in the number of tons 
 carried 1 mile per mile of road, the number of tons per train mile and 
 per loaded-car mile, and general^ a decrease in the percentage of 
 empty-car mileage, with a large increase in passenger traffic and earn- 
 ings. 
 
 RAILWAY AND PUBLIC INTERESTS NOT IDENTICAL. 
 
 The oft-repeated and catchy expression that the railway interest and 
 that of the public is identical is in no sense true with respect to the 
 question of reasonable rates. Their respective interests are adverse 
 and the identity of interests must always disappear when the one 
 makes its charges against the other. That both are indirectly inter- 
 ested in the prosperity of the other goes without saying, iJut that 
 unity of interest ceases the riioment the one is to be made more or less 
 prosperous by taking or requiring from the other more than is just 
 
PROPOSED AMENDMENT OF INTEESTATE-COMMEECE LAW. 311 
 
 for a quasi public service. Thus it is that there must be always a 
 conflict of interest upon the question of the amount a railway may 
 charge, and this fact presents the supreme necessity of a tribunal 
 which may, at least in all cases of disagreement,- determine what is 
 fair and just under all the circumstances. The railroads, being op- 
 posed to giving up their prerogative to themselves fixed the amount, 
 are naturally in a position of antagonism to any adequate limitation 
 of that privilege ; and it will happen, as it must, that unless the voice 
 of the people's representatives rather than that of the railroads is 
 reflected in the provisions of any measure which provides the remedy, 
 such remedy will prove fatally defective. 
 
 THE REMEDY. 
 
 I am surprised to hear gentlemen of well-known ability argue be- 
 fore this committee that the fact that there has been no judgment of 
 the courts sustaining any decision of the Interstate Commerce Comis- 
 sion against the reasonableness of a rate is proof that rates are reason- 
 able, and that no finding x>f the Commission to the contrary has been 
 sustained. Until they shall point out some case in which the courts 
 hav6 overruled a decision of the Commission against a rate as being 
 unreasonable there is no merit to the argument. The fact is that the 
 Supreme Court has in no case held that the Conmiission's findings 
 on the facts were wrong. It would more comport with a sense of 
 justice for this committee to examine the decisions of the courts with 
 respect to the points on which the Comjnission's decisions have been 
 based than to accept the suggestion that it had missed the bull's-eye 
 and like remarks. For your convenience I attach a svnopsis, marked 
 " Exhibit No. 4." 
 
 As stated by the Supreme Court in T. and P. Ry. Co. v. I. C. C, that 
 it has been the law for more than a hundred years that all unjust and 
 unreasonable rates charged by a common carrier are unlawful, and it 
 has been settled that one suing at common law may recover for any 
 unreasonable or unjust or discriminatory charge (see Call v. Western 
 
 Union Telegraph Company, U. S., ) ; it is remarkable how 
 
 few cases there have been of recovery of this character. The diffi- 
 culty expressed by the Supreme Court in the 'Joint Traffic case of 
 proving the unreasonableness of a rate undoubtedly is amply suf- 
 ficient to insure railroads against many such suits, however exorbitant 
 their rates may be. Therefore we must look to the remedy which fixes 
 the rate in advance. 
 
 It needs no argument to show that it is quite within the exclusive 
 power as it is the duty of Congress to appropriately regulate interstate 
 commerce so as to produce justice and equality; and since the arteries 
 of that commerce are the railroads, to regulate both the rates which 
 they may charge and the service which they should render. I shall 
 waste no time to convince those who are of contrary mind of the 
 imperative necessity that this be done. 
 
 Probably not less than 65 per cent of all traffic on railroads is inter- 
 state, and a still larger proportion of the freight charges and passen- 
 ger fares collected which make up the $2,000,000,000 of railway earn- 
 ings of this country which annually come from interstate traffic. The 
 people being bound to pay it, shall the railroads charge what they may ? 
 
312 PROPOSED AMENDMENT OF INTEEBTATE-COMMEBCE LAW. 
 
 If it might be disastrous to the railroads for the shipper to fix the 
 rates, may it not be so to the public if the railroads may without 
 restrictions fix the charges? You must understand exactly the old 
 law before amending it. 
 
 SYNOPSIS or THE ACT TO REGULATE COMMERCE BY SECTIONS. 
 
 First. After making all railroads engaged in interstate trafiic under 
 a. common arrangement for continuous carriage, subject to the act, it 
 declares that all charges shall be just and reasonable and prohibits all 
 unjust and unreasonable charges, and this is its most important pro- 
 vision, though the power to enforce it is quite imperfect. 
 
 Second. It prohibits discrimination between persons in the matter 
 of charges for similar identical service. 
 
 Third. It prohibits undue and unreasonable preferences or ad- 
 vantages between persons, traffic, and localities. 
 
 Fourth. It prohibits charging more for longer than for shorter 
 hauls under similar circumstances, over the same line in the same 
 direction, except as may be allowed by the Commission. 
 
 Fifth. It prohibits pooling of earnings, and by its whole tenor 
 intends to leave competition free and unrestricted. 
 
 Sixth. It requires all interstate rates to be published, filed with the 
 Commission, and posted in their depots in manner provided by the 
 Commission, and prohibits deviation from such rates till changed — 
 in case of advance, on ten days' notice; or of reduction, three days' 
 notice.' 
 
 Seventh. It prohibits carriers from making local shipments out of 
 through shipments, and intends to bring all interstate movements on 
 through rates under the terms of the act. 
 
 Eighth. It declares the carriers liable for damages and attorney's 
 fees for every injury caused by any violation of the act, and purports 
 to furnish a remedy therefor. 
 
 Ninth. The injured party may proceed in a civil action for redress 
 for such injury either before the United States circuit court in the 
 first instance or before the Commission, and upon an order of repara- 
 tion by it which is not obeyed, then to proceed in court to enforce 
 such order. 
 
 Tenth. Every officer or agent of the carrier willfully violating the 
 act or any provision thereof is deemed guilty of a criminal offense 
 and subject to punishment by fine or imprisonment. So, likewise, is 
 the shipper aiding or abetting in the unlawful transaction. 
 
 Eleventh. For the purpose of enforcing the provisions of the act 
 the Interstate Commerce Commission is established, of five members,, 
 not over three of whom shall be appointed from the same political 
 party. 
 
 Twelfth. It prescribes the Commission's duties, as follows : 
 
 That the Commission hereby created shall have authority to inquire into the 
 management of the business of all common carriers subject to the provisions of 
 this act, and shall keep itself informed as to the manner and method In which 
 the same is conducted, and. shall have the right to obtain from such common 
 carriers full and complete information necessary to enable the Commission to 
 perform the duties and carry out the objects for which it was created ; and the 
 Commission is hereby authorized and required to execute and enforce the pro- 
 visions of this act. 
 
PROPOSED AMENDMENT OF INTEESTATE-COMMERCE LAW. 31 S 
 
 Also to prosecute through the Department of Justice all necessary 
 proceedings to enforce the provisions of the act and to compel the 
 production of witnesses and documentary evidence, but it is not given 
 the power to fix any rate tor the future. 
 
 Thirteenth. It gives the right to all persons, firms, corporations, 
 associations, and boards and municipalities to make complaint to the 
 Commission by petition of any violation of the act, which it is made 
 the duty of the Commission, if the grounds appear reasonable, to in- 
 vestigate in such manner and by such means is it shall deem proper;, 
 and in liJje manner to investigate any complaint forwarded to it by 
 anjr State railroad commission ; and upon its own motion to institute 
 any inquiry in the same manner and to the same effect as upon com- 
 plaint, and no complaint maj;^ be dismissed for want of direct interest 
 of the complainant. 
 
 Fourteenth. Whenever an investigation is made by the Commission,, 
 it is its duty to make a report in writing with respect thereto, and its 
 findings of fact upon which its conclusions may be based, together 
 with its recommendation as to what reparation should be made by 
 the carrier to the injured party ; such findings are in all judicial pro- 
 ceedings prima facie evidence of the facts found. 
 
 Fifteenth. If it appears to the Commission upon any investigation 
 that the act has been violated and anyone injured thereby, whether 
 complainant or other person, it shall serve a copy of its report upon 
 the carrier with notice to cease and desist such violation, or make 
 reparation for the injury done, or both. 
 
 Sixteenth. If the carrier does not obey such order to cease or 
 desist, the Commission or anyone interested may apply to the United 
 States circuit court for the proper district in a summary manner for 
 a mandatory injunction to enforce such order without the formalities 
 of equity proceedings; such court may take such evidence as it may 
 deem necessary, but must treat the Commission's findings as prima 
 facie correct, rendering a just judgment in the premises, being 
 fnlly empowered to speedily enforce the Commission's orders. 
 An appeal is allowed to the Supreme Court, but the circuit court's 
 decrees is not suspended during such appeal. The expenses of such 
 prosecution by the Commission is paid by the Government, and the 
 court shall allow complainant attorney's fees in case the Commission's 
 order be sustained. 
 
 Also, anj' injured party may file suit at law summarily in the United 
 States circuit court to recover the reparation found to be due by the 
 Commission and have a speedy hearing. In such case the Commis- 
 sion's findings are prima facie evidence of facts found. If successful,, 
 the complainant shall be allowed all costs -and reasonable attorney's 
 fees. 
 
 Seventeenth. The Commission shall conduct its business so as to 
 secure the ends of justice, and adopt such rules as may conduce tO' 
 that end. 
 
 Eighteenth. The Commission's salaries and expenses are provided 
 for, and it is authorized to employ and fix compensation of its office 
 force and other employees. 
 
 Nineteenth. The Commission's office is fixed at Washington, where 
 its general sessions are held, but when necessary or more convenient 
 sessions may be held elsewhere, and one or more of the Commissioners 
 
514 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 may prosecute inquiries and take evidence in any part of the United 
 States respecting any matter pertaining to the business of any carrier 
 subject to the act. 
 
 Twentieth. It is provided that the Commission shall require the 
 carriers to make annual reports to it, showing almost every con- 
 ceivable item of the carrier's affairs in every department of its 
 business. 
 
 Twenty-first. It is the Commission's duty to make its report annu- 
 ally before December 1 to Congress, containing all such data and 
 information as may be valuable in determining questions relating to 
 the regulation of interstate commerce, with such recommendations 
 as to additional legislation as may be deemed necessary to perfect 
 the act. The Commission has performed its duty in this particular, 
 but Congress up to this time has not. 
 
 Twenty-second. Certain exceptions from the operation of the act 
 are made respecting reduced rates or free service for the Govern- 
 ment, States, municipalities, and objects of charity and charitable 
 institutions, and officers and employees of railways. Also provisions 
 for interchangeable reduced-mileage tickets, etc. 
 
 The remedies of the act are also declared to be in addition to 
 common-law remedies, and such remedies, or those provided by the 
 common law or by statute, are not affected by the act. 
 
 Twenty-third. The circuit courts of the United States are author- 
 ized to issue writs of mandamus compelling such carriers to furnish 
 cars and facilities and to move freight upon same rates, terms, and 
 conditions for one person as another. 
 
 Twenty- fourth. Full power to compel witnesses to testify, notwith- 
 standing the testimony may incriminate him, is conferred by the 
 amendatory act of 1893. 
 
 Twenty-fifth. The scope of the act respecting rebates was enlarged 
 by the Elkins Act of 1903, so that every form of deviation from the 
 published tariffs is prohibited under penalties of fines, the imprison- 
 ment feature of the former law having been eliminated; also 
 additional powers given to the Commission to compel by judicial 
 procedure the enforcement of published rates and to prevent dis- 
 crimination in violation of the act. 
 
 It also makes applicable to suits by the Commission a certain 
 enactment to expedite hearings in such cases before the United 
 States circuit courts, providing for appeals direct to the Supreme 
 Court of the United States instead of through the circuit courts of 
 appeal. Since its passage the matter of direct rebates has largely 
 ceased, though by various indirect means the railroads, to some ex- 
 tent, still practice it. 
 
 Except as to the safety appliances act, the foregoing presents a 
 synopsis substantially of the principal provisions of the act to regu- 
 late commerce as it exists to-day, as applied to railroads. There 
 can be little doubt that it was intended by its framers to be suffi- 
 ciently comprehensive not only to prohibit all of the principal wrongs 
 then knoAvn, but to furnish an adequate and speedy remedy therefor. 
 But it was a new and untried comprehensive measure, and it was to 
 be expected that defects would be found in the law, and that new 
 conditions would arise to which it would not apply, and, therefore, 
 that it must be amended to meet such exigencies from time to time. 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 315 
 THE ACT t6 regulate COMMERCE HAS BEEN OF GREAT VALUE. 
 
 That it has been of inestimable vahie no one familiar with the 
 facts can doubt. The accumulated information contained in annual 
 reports of raihYays and the records and statistical data covering, 
 as they do, sixteen years of the marvelous railway development of 
 the country in construction, consolidation, and operation of railways, 
 as well as their financial operations, comprises a history which other- 
 wise it v\ouId be practically impossible to obtain. Its value, there- 
 fore, can not be overestimated, because we would be groping in the 
 •dark in any attempt at railway regulation without it. It has been, 
 therefore, equally valuable to the railways themselves and to the pub- 
 lic. The same may be said of the tariffs on file with the Conunission 
 for the same period, comprising a history of rates otherwise unob- 
 tainable. 
 
 In addition to this, volumes of testimony and findings of the Com- 
 mission in the many important hearings which it has held, in which 
 opinions have been rendered, often by very able men, furnish an 
 encyclopedia of learning upon the subject to which anyone may re- 
 sort who desires to become educated upon the subject, but for which 
 we, the public, would be like a schoolboy starting in the primer, so 
 far as this subject is concerned. 
 
 And, again, the questions which have arisen in the courts, fought 
 out by lawyers of great ability and decided by judges and courts 
 eminent for probity and learning, have blazed the way and placed by 
 the roadside landmarks of inestimable value to guide both the public 
 and the railroads when confronted, as we are, with the question of 
 appropriate railway regulation, which our worthy President em- 
 phatically declares to be the most important question before the 
 American people. 
 
 So, therefore, to him who says that the act to regulate commerce 
 has been a failure or a worthless enactment let it be said he has not 
 fairly measured it. 
 
 It is no uncommon thing to read in the papers and to hear from 
 the platform declarations that the law as it stands is worthless, but 
 what has been said shows that such statements are incorrect. That 
 the law has been discovered to be seriously defective is undoubtedly 
 true, yet it affords some remedy, though very imperfect, and is being 
 constantly resorted to as the only means of railway regulation. Many 
 of the Commission's decisions are complied with, and the fact that it 
 may be resorted to with a fair show of success, after protracted liti- 
 gation, has no doubt some beneficial restraining effect. On the whole 
 it may fairly be said to have been of very great benefit to the public. 
 
 PRESENT LAW SHOtTLD BE RETAINED, BUT PERFECTED. 
 
 You will observe from the foregoing analysis of the act that the 
 machinery of the law seems complete. In fact, its provisions have 
 been put into working order, and a system of operation thereunder 
 has become established. The country has become familiar with it 
 and the proceedings under it. The decisions under it may be used as 
 precedents and the machinery kept in working order without the 
 dangers which would surely follow a new system. Therefore, con- 
 sidering the comprehensive character of the act, its many wise and 
 
316 PEOPOSED AMENDMENT OF INTEBBTATE-COMMERCE LAW. 
 
 salutary provisions, it certainly seems to me that whesn we approach 
 the all important and complex problem of railway regulation we 
 should profit by experience, holding fast to that which is good, dis- 
 carding that which is bad, and render perfect that which is imperfect. 
 My ob]ect, therefore, is to point out these features and to show, if I 
 can, what ought to be done as well as the danger which may follow 
 the enactment of a new and untried complex system, thereby possibly 
 destroying what we have and leave us with a law more imperfect. 
 
 THE IMPERFECTION OF THE PRESENT LAW. 
 
 The fourth section, commonly known as the " long and short haul 
 clause," it was supposed, was intended to prevent discrimination 
 between localities and persons in transporting over the same line 
 in the same direction at a less rate for the longer than shorter haul. 
 The qualifying words, " imder substantially similar circumstances 
 and conditions," it was supposed, and the Commission so held, would 
 apply in case of water competition, but not competition by railroads 
 with each other. But the Supreme Court held otherwise, and now 
 the act as construed means that if there is competition at the farther 
 distanced point with other railroads, the section does not apply, 
 because in such case the carriage would not be under substantially 
 similar circumstances and conditions. 
 
 The undue-preference clause of the third section has fallen by the 
 same criticism wherever the preference arises from the same cause;. 
 and it has been expressly held that the qualifying words of the fourth 
 section, just quoted, gives the right to the carriers to make such 
 discrimination or preference in cases of dissimilarity existing alone 
 from railroad competition. So from practical effect, so far as I 
 can see, sections 3 and 4 might as well be repealed in so far as they 
 apply as bases of rate making to commercial centers or railroact 
 crossings. Under the interpretation of the act by the Supreme 
 Court, which all must admit to be correct whether we think so or 
 not, it is for the court to say what are similar and what are not 
 substantially similar circumstances and conditions, so that you can 
 never know in advance what it will consider dissimilar — the term 
 is so comprehensive. You can see from this how disastrous to this 
 feature of the law it was for its framers to have used such inapt 
 yet comprehensive and flexible terms as " under substantially simi- 
 lar circumstances and conditions." This illustrates how the whole 
 purpose of an enactment may be defeated by nullifying exceptions 
 and qualifications. 
 
 These defects can be cured by simply striking out the qualifying 
 words and leaving it to the Commission to determine the circum- 
 stances and conditions which will make it reasonable that a greater 
 charge for the short haul than the longer haul be allowed. If any- 
 one suffers from such amendment it will arise from the just applica- 
 tion of a beneficent rule. This section should either be thus amended 
 or repealed. 
 
 REASONABLENESS OF RATES AND HOW TO DETERMINE. 
 
 The Commission may not designate what the proper rate is to be 
 substituted for one found to be unlawful, because the act does not 
 
PEOPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 317 
 
 distinctly so provide.; neither is it within the power of any court or 
 tribunal to do so, because the rate-making power can not be dele- 
 gated to the judiciary. 
 
 It needs no argument to show that the law, being in this state, is 
 very imperfect; while it prohibits unjust, unreasonable, and dis- 
 criminatory rates, the machinery provided for its enforcement has 
 proven inadequate. Every provision for its enforcement seems on 
 its face to be complete, even to minute detail. The Commission is 
 apparently clothed with full power to enforce its provisions, but 
 this appearance became a mere shadow when it was found to be 
 defective in that it did not specifically empower the Commission to 
 name the rate to be substituted for the unla-w'ful one. This emas- 
 culated the law as it was previously supposed to exist. 
 
 It is this imperfection which leaves the public with no adequate 
 or speedy remedy to obtain redress in cases of unreasonable rates. 
 It is this imperfection which has caused the entire shipping interest 
 of the country, except the favored ones, to demand the amendments 
 of the act and largely induced the President to strongly recommend 
 it. Through repeated decisions of the courts and Commission, we 
 have become familiar with the very point wherein lies the trouble. 
 Why not remove the trouble — eliminate the imperfection exactly at 
 the point where we know it exists ? If that is done, the Commission, 
 instead of making a recommendation merely, can say to the carrier 
 " We have upon full hearing ascertained that a certain rate is too 
 high, and that a certain rate would be a proper one ; it is our opinion 
 that it will afford you fair compensation; you shall henceforth 
 charge that rate unless conditions so change as to entitle you to 
 charge more." Need anyone fear that the Commission will make 
 the rate too low? I do not believe anyone is justified in any such 
 assumption. I believe there has been no case in which the courts 
 have said so, but wherever the Commission's orders have been set 
 aside it has been upon the ground of some defect in the law or in the 
 procedure, and mainly because of want of power. 
 
 All commissions and courts must be imperfect and err in judgment, 
 and if we wait for absolute perfection and just judgments in all 
 cases before we have a remedy, then all law and all remedies must 
 fail. 
 
 NO DANGER OP COMMISSION MAKING RATES UNPROFITABLE TO RAILROADS. 
 
 The oversolicitous railroad representative conjures up in his mind 
 a scheme of confiscation by the Commission being granted the power 
 to name a proper rate to be substituted for an unlawful one, and 
 with elongated countenance deplores the prospect and thinlcs he faces 
 ruin. Such is a mere figment of the imagination. The railway 
 henchmen can always see ghosts of destruction in railway regulation, 
 but the destruction has not happened. It is only a ghost. Is it more 
 in accordance with justice that the railroads be permitted to continue 
 charging a rate held by an impartial tribunal to be unjust and unrea- 
 sonable or discriminatory and have the shipper stand the loss than 
 to require observance and let the railroad stand the loss of its unjust 
 exactions? The proposition is that when the Commission decides 
 that the rate is just the shipper must pay it, and when the Commission 
 decides that the rate is unjust the shipper must continue to pay it 
 
318 PROPOSED AMENDMENT OF INTEESTATE-COMMERCE LAW. 
 
 until some court decides that the Conmiission's decision is right. And 
 all of this because of an unholy fear that the Commission will rob the 
 railroad. In other words, the railroad must be permitted to rob the 
 public in order to prevent the Commission robbing the railroad. In 
 the former case there is the motive of gain ; in the latter, no motive 
 except justice. 
 
 PROPOSITION THAT BAILKOAD WILL KEIMliUKSE THE IXJtJEED PAETY ^ 
 
 UNSOUND. 
 
 The proposition that the railroad can and will reimburse the ship- 
 per upon the Commission's decision being found correct, while if the 
 Commission's decision is found to be incorrect the railroad can not be 
 reimbursed, and therefore that the Commission's order should not 
 become effective till final determination by the courts, presupposes^ 
 first, that reparation can be made to the really injured person, and, 
 second, that by the Commission's order reducing a rate will operate 
 as a loss to the carrier. Neither of these suppositions are maintain- 
 able; in fact, are impossible. The matter must be considered from 
 the standpoint of a given case, from which a rule for the many may 
 be deduced. Take, for example, the advance in freight rates on all 
 class goods and most commodities from St. Louis to Texas common 
 points, of an average of, say, 10 per cent, made in March, 1903. The 
 Commission made an investigation into that advance, but has not yet 
 decided it. Now, suppose it holds the advance unreasonable, who 
 will be entitled to reparation ? You will at once say, " The person 
 who paid the freight;" and the inquiry then is. Who paid it? Take 
 a carload of furniture, or agricultural implements, or sugar, for exam- 
 ple. The jobber, wholesaler, or commission merchant adds the 
 freight in the price to retailer, and the retailer to his customer ; so it 
 results that the consumer pays it. Can the wholesaler justly claim 
 reparation? He was not injured. Can the consumer do so? He 
 did not pay anything direct to the railroad, nor can he afford to fool 
 will the small amount which was added because of the advance. Can 
 the merchant whose business has been crippled thereby recover it? 
 
 Thus it seems impossible to make restitution to whom it belongs.. 
 Let it be admitted that as applied to some traffic it may be done, yet 
 in 75 per cent of the cases it can not be done. It thhj sound pretty 
 to give a bond to pay back the unlaAvful rate, but it amounts to little- 
 when the real injured party can't be found, or, if he should be found, 
 has an interest too small to consider. The law now provides for 
 reparation and is entirely as efficient as any proposed bond to make 
 rejjaration, so the bond would be mere surplusage. 
 
 As to the Commission's order resulting in loss to the carrier, it by 
 no means follows that a reduction in a rate will produce less earn- 
 ings; that depends on whether the movement of the traffic is 
 stimulated over the given line. Kailroads have frequently reduced 
 rates for the purpose of making more out of the business. It is 
 well known that a high rate may earn less than a low one on a given 
 line of railway on a particular traffic. Justice is always a matter of 
 approximation, and the rule of the greatest good to the. greatest num- 
 ber must prevail. 
 
 Any attempt, therefore, to so frame a law as to permit a railroad' 
 to continue an unlawful charge on the condition of making repara- 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 319^ 
 
 tion to the injured party is a mer^ delusion, and must result in the 
 railroads retaining the principal j)art of the unlawful booty. There 
 is never any danger of the Commission requiring that traffic be car- 
 ried at a loss, but if it does so it will be enjoined. 
 
 THE GOVERNMENT SHOULD PROSECUTE THE INQUIRY AND NOT REQUIRE; 
 OE THE SHIPPER THE UNEQUAL TASK OF LITIGATION. 
 
 If a given shipper is dissatisfied with a rate of freight or any ad- 
 vance in it, he will not generally enter into litigation with half a dozen 
 railroads, because the contest is entirely unequal. He can not aflford the 
 expense ; he can not get the witnesses ; he can not take the time which 
 would be necessary, and hence any remedy which does not provide- 
 for the Government to take up the contest will be of little practical 
 benefit. Let me illustrate : The Cattle Kaisers' Association of Texas 
 being dissatisfied with certain advances in rates on live stock in Texas 
 to market and elsewhere, in February, 1904, instituted a proceeding 
 before the Interstate Commerce Commission attacking the reason- 
 ableness of these advances. The first hearing was held at Fort 
 Worth in April, 1904, and occupied several days in taking testimony 
 of witnesses brought from various distant points at large expense- 
 to the association. The next hearing was held at St. LOuis in June, 
 1904, and there the railroads introduced testimony for almost a week. 
 In the meantime the cattle growers' interstate executive committee- 
 brought to the attention of the Interstate Commerce Commission the 
 claim of shippers in other parts of the West that the rates were 
 unreasonably high and the service bad. 
 
 The Commission, on its own motion, ordered an investigation.. 
 That inquirj'^, together with the Cattle Raisers' Association case,, 
 with which it had been consolidated, was set down for hearing at 
 Denver in September, and occupied several days in the examination' 
 of witnesses brought largely from a distance. The next hearing was 
 held at Chicago, occupying a week. The next hearing was held at 
 Fort Worth, where the evidence was practically concluded in De- 
 cember, 1904, at which the Cattle Eaisers' Association examined 
 witnesses brought from a great distance at large expense. The case- 
 now made by the testimony, if all of it were written out, including 
 the exhibits and documents as well as the testimony of the witnesses, 
 would embrace more than 20,000 pages of typewritten matter. The 
 case is yet to be briefed and argued before the Commission. Now, 
 suppose' the Commission should decide the case in favor of the cattle 
 raisers' contentions? If the railroads do not voluntarily obey the- 
 Commission's order, either the Commission must proceed or the Cat- 
 tle Eaisers' Association must proceed 'by a bill in equity to enforce 
 the Commission's decision; otherwise there is no penalty for dis- 
 obedience. If this great volume of testimony is placed Isefore the 
 court for consideration and the court should decide adversely to the- 
 Commission, on any appeal therefrom the record must be printed. 
 With the regular charge allowed to clerks for having the record 
 printed, that one item will cost $15,000. Of course, if the case should 
 be brought by the Commission the Government would pay the ex- 
 pense, but if the Commission did not see fit to bring it the shipper 
 would be practically deprived of his remedy on any appeal, because 
 of the expense of printing the record. True, the Commission has 
 
320 PROPOSED AMENpMENT OF IHTERSTATE-COMMEKOE LAW. 
 
 usually paid that character of expense, but under the present law 
 it is not bound to proceed, and therefore the option to the shipper 
 to do so is, from a practical standpoint, a worthless one. 
 
 Furthermore, in any proceedings involving rates on any given com- 
 modity or any schedule of rates the general public in the vicinity 
 where the rates apply is affected to the same degree as the shipper, 
 and it is therefore a matter of public concern and not merely a mat- 
 ter which concerns a particular shipper. 
 
 Hence I say that all the law should require is a specific complaint, 
 which the shipper makes, and if upon investigation it appears proper 
 to do so, the Commission should institute an investigation and the 
 Government bear the expense of it. and any remedy that falls short 
 of that will not be adequate. The machinery of the law already pro- 
 vides for this, except that the case proceeds before the Commission 
 upon complaint at the expense of the shipper, except in cases where, 
 on its own motion, the Commission institutes an inquiry. 
 
 THE COMillSSION SHOULD DETERMINE THE FACTS AND ITS ORDER SUBJECT 
 TO BE SET ASIDE EOE UNLAAVEULNESS ONLY. 
 
 It has been repeatedly decided by the courts that fixing a rate for 
 the future is a legislative act, whether done by the legislature or by 
 a Commission authorized to do so, and that the power to fix a rate 
 for the future can not be delegated to the judicial branch of the Gov- 
 ernment. The court can only determine whether the Commission has 
 violated the law in the manner of performing its functions or vio- 
 lated constitutional rights in fixing such rates. If it has, its orders 
 may be enjoined, and for this purpose the power is inherent in the 
 courts to act, without any special authority. It has been repeatedly 
 so held in injunction cases against rates fixed by State commissions. 
 Precisely the same principle is involved in actions for injunction 
 against the Interstate Commerce Commission if it is given the power 
 to fix a rate for the future. Hence, to the over-solicitous railway 
 representative let it be said the railroad is in no danger of having to 
 do business at a loss by any act of the Commission. 
 
 Furthermore, the establishing of a court to supervise the acts of the 
 Commission ought not to extend to matters of fact, but only to ques- 
 tions of the lawfulness of the Commsision's orders. This is so 
 because the determination of questions of the reasonableness or rates, 
 or whether they are unduly discriminatory, and the like are ques- 
 tions of fact, and the experience of a Commission enables it better 
 to determine the same correctly. It can not be compared to any 
 other sort of case. The evidence to show a rate to be unreason- 
 able is without limit, largely opinions, and in all cases the deter- 
 mination of the question is one of opinion — of judgment and not 
 of law. The factors which the Supreme Court of the United 
 States holds as most material are, the cost of the property, the 
 cost of improvements, amount and value of securities, cost of re- 
 placing, probable earning capacity, cost of operation, excluding all 
 fictitious indebtedness or watered bonds and stocks. But it holds 
 that none of these are controlling, and at last the most certain test 
 of what is a reasonable rate is such rates as is established by free com- 
 petition, and therefore the policy of the law is to preserve competition 
 and prevent combinations which destroy it. 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 321 
 
 Now, if you take any case which arises at this time, when competi- 
 tion has been largely eliminated, how is it possible to arrive at any 
 conclusion as to what is a fair rate, except the enlightened judgment 
 of an experienced and fair tribunal like the Interstate Commerce 
 Commission, having on file all previous rates and statistics pertain- 
 ing to the operation, earnings, expenditures, and finances of each 
 road? For what good reason should any court review its decisions 
 except to determine mere questions of their lawfulness and to preserve 
 constitutional rights? The Supreme Court of the United States has 
 repeatedly said that the Commission is more competent to pass upon 
 the facts than the courts. This is manifestly so, because each inves- 
 tigation enhances its knowledge, and familiarity with the subject 
 enables it to analyze and classify the facts, rejecting the errors, and 
 to base its findings upon the reliable evidence aided by its own ac- 
 cumulated knowledge. As an example of this, in a case respecting 
 dead freight, railway representatives testify that heavy train loading 
 and hcsivj equipment has not proven an economy in operation. That 
 was where the contention was made that because of these factors rates 
 should not have been advanced. In another case, where the same 
 roads are defendants, they proved that because of lighter train load- 
 ing of live stock than other freight the advances in rates were justi- 
 fied. This shiftiness would enable the roads to hoodwink two differ- 
 ent courts, but not so the Commission, which is entitled to use its 
 enlightened judgment. Such examples might be multiplied indefi- 
 nitely. In my opinion, there is no argument against leaving to the 
 Commission every power which it now^has and extending the same so 
 that it may adequately and speedily enforce the provisions of the act 
 without unnecessary interference from the courts. Mark it that 
 those who oppose these simple amendments are not looking for rail- 
 way regulation for the public good. 
 
 INTERSTATE COINIMEECE COURT SHOULD NOT BE EMPOWERED TO SUBSTI- 
 TUTE ITS JUDGMENT UPON THE FACTS FOE THAT OF THE COMMISSION. 
 
 The proposition, which has been made in various forms, to establish 
 an interstate-commerce court should be very carefully scrutinized and 
 its jurisdiction should not extend to the determination of the matters 
 of fact, except in so far as the same might be necessary in ascertaining 
 whether the Commission's decision was in violation of some law or 
 constitutional rights. In other words, its judgment upon the facts 
 should not be substituted for that of the Commission. It should be 
 made to work in harmony and not in opposition to the Interstate 
 Commerce Commission. It should be constituted in fact a court 
 to protect the rights rather than to act as a trier of facts. Its 
 object should be to speed, rather than to impede, the prompt 
 enforcement of the Commission's order. There should be only one 
 such court, so that on all questions it may act speedily as a unit, 
 and its judgment should be final except on constitutional ques- 
 tions. Its power to review any action of the Commission should be 
 confined to ascertainment of whether or not the Commission's order 
 is in violation of law or constitutional right, and it Should not be per- 
 mitted to suspend such order pending the court's decision except 
 where it is manifestly unlawful. 
 
 I c L— 05 21 
 
322 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 The procedure before it should require a prompt submission of 
 the findings of the Commission and the original testimony, without 
 the enormous expense of printing or copying, to such court on any 
 application to suspend the Commission's order, and that it decide 
 the matter of such application promptly upon that record. In all 
 such matters a speedy determination is the most important element, 
 and while the impossibility of a judicial procedure through the 
 regular channels of our courts affording sufficient promptness may, 
 and doubtless does, justify the establishing of such- a court, yet the 
 validity of any procedure before the Commission or the validity of 
 its findings and decisions should not be made to depend upon the 
 constitutionality of any law establishing such court or defining its 
 powers, that is to say, if Congress makes a mistake in the one law it 
 should not affect the other. We have all along supposed that it is 
 not within the constitutional right of Congress to vest in the judi- 
 ciary rate-making powers, directly or on appeal, though it may con- 
 fer such power i;pon a commission. In view of which it will be 
 readily observed that in the event of such power being conferred 
 upon the Commission no appeal could lie to any court for a review 
 of the Commission's determination of a rate for the future for want 
 of constitutional power of the court to exercise the legislative func- 
 tion of rate making. "We want the interstate-commerce act so 
 amended that the Commission, after hearing on complaint, may 
 name a proper rate to take the place of an unlawful one, and we dpn't 
 want that power destroj^ed because of the invalidity of some law 
 providing for review by some court. 
 
 Furthermore, it would seem foolish to have a court' review the 
 Commission's findings of fact and determination of what should be 
 a proper rate; the findings of some one must determine it, and 
 suppose the court has the power of review and should arrive at a 
 different conclusion to the Commission; upon what ground could it 
 be said that the court is any nearer right than the Commission? 
 Why substitute the court's judgment for that of the Commission on 
 the facts or questions of a proper rate, when a Commission is the 
 more competent to decide it, as the courts have repeatedly admitted? 
 
 The only excuse for an interstate-conunerce court is to provide an 
 appropriate and speedy opportunity to have passed upon the ques- 
 tions pertaining to the lawfulness of the Commission's decision and 
 protection of constitutional property rights; if it goes beyond that 
 it will be a snare and a pitfall. 
 
 The courts as they exist now can afford to parties complaining 
 of the Commission's decision respecting a future rate as proposed 
 adequate protection. Certainly until the new part of the proposi- 
 tion — that is, the establishing of a special court — can be deliberately 
 planned and carried out. There is no haste necessary, so let that 
 part of it rest till you ascertain how much it is needed. How fool- 
 ish it would be to establish a new court in a hasty and imperfect way. 
 
 THE PROPOSITION TO ALLOW POOLING UNNECESSARY; BESIDES, IT ^^'OULD 
 BE DESTRUCTIVE OF COMPETITION AND GOOD PUBLIC SERVICE. 
 
 The present law prohibits pooling; that is, it prohibits two or more 
 lines of railroad leading from one commercial center to another from 
 agreeing that they will divide their earnings or traffic. That provi- 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 323 
 
 sion of the law was no doubt inserted so as to preserve competition, 
 both, in respect to the matter of rates and quality and character of 
 service. It looks to me that it will be a step backward to now legalize 
 pooling and destroy competition. I can not see that it will have any 
 material effect upon the question of rates if the Commission is given 
 power to fix rates in case of a pooling agreement or arrangement, but 
 the question of service performed for the rate charged is quite as 
 material as the rate itself, both with respect to the carriage of freight 
 and passengers. There would bte no way in which the Government 
 can successfully regulate the quality of the service which shall be 
 rendered for a given rate. It could only do so in a general way. I 
 predict that in case Congress should legalize pooling that it will be 
 found by experience that it will be at the sacrifice of the service in 
 point of quality and time. There does not seem to be any necessity 
 for it. It is not necessary in order to prevent rate wars, since there 
 can be no competition if the railroads all maintain their published 
 rates. If one reduces a rate, the other does or may, so that very little 
 traffic will be diverted by the reduced rate from one line to another. 
 Besides, most of the rates are made practically by agreement between 
 the interstate lines. 
 
 I have no hesitancy in saying that it is an advantage to the rail- 
 roads to be able to agree upon the rates which shall be charged, and 
 such agreement through traffic associations or otherwise might be 
 legalized provided the rates thereby made are put into effect under 
 such agreement and are subject to the supervision of the Commission 
 in every case as a condition precedent to being effective, and thereafter 
 to investigation and change upon complaint. That sort of an ar- 
 rangement would leave out the danger of rate wars, which is the main 
 argument in favor of pooling, but would leave the public the benefit 
 of competition in the matter of service, as each road will undertake 
 then to render such service as to induce the largest movement over its 
 lines, and still be left with the incentiA'e to afford the best service pos- 
 sible to get the business. I believe in retaining the present law with 
 such additions only as are necessary, and after perfecting it let it be 
 fairly tried. It is like having a complicated machine, every part of 
 which works well, but there is a want of sufficient power to produce 
 results. Let the power be given the Commission to operate under 
 the present law and the public will have as simple a remedy as pos- 
 sible, and the railroads, kpowing that the remedy exists, will adjust 
 most of the disputes with shippers without compelling a resort to 
 the Commission. 
 
 I desire to impress upon the members of this committee that if you 
 make a provision in any bill which contains an interstate commerce 
 court that such court shall pass upon the- reasonablenes or the fair- 
 ness of the decisions of the Commission, or their justness, you might 
 as well abolish the Commission entirely, because the question of rea- 
 sonableness is a question of fact, and the court_ would simply be sub- 
 stituting its judgment for that of the Commission without tJfie power 
 to fix the rate for the future. In such a case the court would be de- 
 structive of the power of the Commission, as it might happen that its 
 judgment was different from that of the Conmiission. 
 
 The making of the rate by the Commission is a legislative power, 
 and it has never been considered that the courts have jurisdiction to 
 inouire into the reasonableness of the action of a legislature or n legis- 
 
324 PEOPOSED AMENDMENT OK INTERSTATE-COMMERCE LAW. 
 
 lative coinmission in determining the facts. It is unnecessary, be- 
 cause if the Commission acts lawfulty, within the limits of the Con- 
 stitution, there need be no fear that serious injustice will be done, and 
 if Congress has not confidence in the Commission acting justly in the 
 premises, upon what consideration might it be expected that the court 
 would be better qualified to' do so ? 
 
 Suppose, for example, that the Commission should decide that a 
 given rate, under all of the circumstances was unreasonable to the 
 extent of 1 cent per 100 pounds. That would be a matter of judg- 
 ment. Now, suppose that the court should hold according to its 
 judgment it should not be advanced and set aside the findings of the 
 Commission simply because the court might think that the Commis- 
 sion's decision was not reasonable. There is just as much sense in 
 having another court to pass upon the reasonableness of the j udgment 
 of that court, and so on, ad infinitum, as to have a court determine 
 whether the Commission's decision is reasonable. 
 
 I desire also to call this committee's attention to the fact that in the 
 bills so far presented, wherein it is proposed to have a court to review 
 the action of the Commission, it is only the railroad that is given the 
 right to review. Can it be possible that the railroads have greater 
 rights in this particular than the public? I say that if the court is 
 to be given the power to determine whether the Commission's decision 
 is reasonable the public and the shipper is as much entitled to it as 
 the railroad and they will demand it, and on behalf of my clients I 
 do demand it at the hands of this committee. My judgment is that 
 it will be found that it is destructive to the act to put any such pro- 
 vision in it. 
 
 THE BOND or THE EAILEOAD TO KEFUND TO THE SHIPPBE. 
 
 r undertalve to say that this provision is simply an illusion in the 
 form in which it appears in any of the bills which I have seen. I 
 am speaking plainly, but to the point. "V¥hat need is there for the 
 bond of a solvent railroad company to bind itself to pay back to the 
 shipper the unreasonable charge but to burden the shipper to sue the 
 railroad company on the bond in order to recover it? He has ex- 
 actly the same right under the common law to-day, and he has the 
 same right under the interstate commerce law to-day. He can not 
 resort to it ; he will not resort to it ; and it will be of no benefit what- 
 ever. The present act provides fully for reparation. It provides 
 that in case the rate is unreasonable or otherwise unlawful the Com- 
 mission may order what reparation it recommends that the carrier 
 shall pav to the; shipper, and the shipper can make his case in court 
 by filing a petition to recover that money, in the trial of which the 
 findings of the Commission arp prima facie evidence. If he suc- 
 ceeds, the court allows costs and attorneys' fees. Therefore, the bond 
 proposition is an entirely useless incubus in cases of solvent railroads 
 and no suit will ever be brought upon it. 
 
 VVARNINO. 
 
 From a careful and exhaustive study of the interstate commerce 
 act and the decisions of the courts Avith respect to the same, having 
 detailed knowledge of its provisions and the practice under it, I beg 
 
PROPOSED AMENDMENT OF INTEESTATE-COMMEKCE LAW. 325 
 
 to warn this committee, if it desires effective legislation, to act not so 
 hastily as to turn out and present a bill that does not bear the im- 
 press of deliberate and careful judgment. 
 
 Exhibit No. 1. 
 
 Cattle rates from Southwest higher than any time in fifteen years — 
 General complaint — Rates for Southwest fixed hy combination of 
 the railroads — Competition eliminated — Testimony of railroad offi- 
 cers in the matter of class and commodity rates from St. Louis to. 
 Texas common points in force over the Missouri Pacific and other 
 railways. 
 
 [C. Haile, freight traffic manager of Missouri, Kansas and.Texas Railway Company.] 
 
 Mr. Bbyson. Had you in the face of these new rates of March, 1903, taken 
 into consideration the water-competition feature from New Yorlj to Galveston? 
 Was that a controlling element? 
 
 Mr. Hailb. Possibly not a controlling element, but a very important factor in 
 the making of the rates ; it was really one of the strongest factors that appeared 
 to my mind. I had, previous to our announcement of this advanced scale, a 
 great deal of talk with the representative of the Mallory Liue. 
 
 Mr. Bbyson. That line is not subject in any way to the filing of tariffs with, 
 the Interstate Commerce Commission? 
 
 Mr. Haile. I understand not from New York to Galveston ; so far as parties 
 to a through rate is concerned, I do not know whether they file their rates or 
 not. But I was going to say that I had a talk with the view of determining 
 whether or not it was possible for them to make any advance, in view of the 
 competition they have from tramp vessels — schooners. I was satisfied in my 
 own mind that so far as the rail lines from St. Louis were concerned — and from 
 Chicago we were all of one opinion — that the rates ought to be advanced; that 
 there was no reason why they should not be, and every reason from our own 
 standpoint why they should. The question arose with me as to whether or not 
 it was possible to get these rates, these water rates, which might be used to 
 defeat any through tariffs, advanced, and I was satisfied from this conference 
 with Mr. Warfield that they could make some advances in their rates, and I 
 knew about what volume of advance that would probably be. 
 
 Mr. Bbyson. There was no understanding or agreement between you and 
 the water representative what the advance would be? 
 
 ^Mr. H.oLE. Absolutely none. 
 
 SJr. Bkyson. You felt it your duty to advise yourself \^hether your line, 
 independently, could undertake to advance the rates en your line? 
 
 Mr. Haile. Yes, sir. 
 
 Mr. Bbyson. I think that is all. 
 
 Commissioner Pbouty. Mr. Haile, most of the articles to which these ad- 
 vanced rates apply are produced both in the Middle West and on the Atlantic 
 seaboard, are they not? 
 
 Mr. Haile. A great many. 
 
 Commissioner Pbouty. And there must be a relation of rates between those 
 two points and Texas common points? 
 
 'Six. Haile. Yes, sir. 
 
 Conuuissioner Pbouty. Would it be possible for you to advance your rates 
 without the rates from the Atlantic seaboard were advanced? 
 
 ?ilr. Haile. I think the result would be to divert to eastern markets a great 
 deal of the tonnage now handled from the middle western markets. 
 
 Commissioner Pbouty. As a matter of policy, you would not be disposed 
 to make a general advance unless there was an advance there? ^ 
 
 Mr. Haile. Yes, sir. 
 
 Commissioner Pbouty. On the other hand, it would not be possible for them 
 to advance their rates unless you advanced yours? 
 
 Jlr. Haile. I think not. 
 
 Commissioner Pbouty. Before the rates of the Cromwell Line were advanced, 
 had you any talk or understanding with the managers of that line that if 
 their rates were advanced yours probably would be? 
 
326 PROPOSED AMENDMENT OF INTEBSTATE-COMMERCE LAW. 
 
 Mr. Hailb. I suppose you mean the Mallory Line? 
 Commissioner Peouty. Yes ; the Mallory Line. 
 
 Mr. H.iiLE. I had a talk, as I say, with Mr. Warfleld, and I told him it was 
 the very earnest desire on the part of our people to make an advance in our 
 rates from St. Louis, that naturally we could not do it unless there was an 
 advance from New York, and I asked him, in view of the competition that 
 he had to meet from New York to Galveston in the way of schooner com- 
 petition and tramp vessels, whether they would bring about an advance in their 
 rates to Galveston, and the net result of the interview was that they could 
 probably make some advance without affecting in any marked degree the 
 volume of tonnage they had. That was with reference primarily and, in 
 fact, I think, solely to the business between New York and Galveston. I felt 
 satisfied in my own mind that if they could make that advance, if they were 
 satisfied that they would make the advance to Galveston they would not hesitate 
 to make It to the Interior. 
 
 [Mr. Haile had just stated that he had a theory respecting increase in damage 
 claims, and that he could state it if desired.] 
 ' Mr. CowAN. You may do so. 
 
 Mr. Haile. That is, that the cattle men themselves, believing from their stand- 
 point that these advances In rates were not justified or proper, made up their 
 minds to avail of every pretext or technicality to get back as much of that 
 advance in the way of claims as possible. I do not mean that that resulted from 
 a dishonest purpose, but it followed the advance in rates and was the result of 
 the determination on their part to secure from the railroads every cent it was 
 possible to get on such a showing as they could make. 
 
 Mr. CowAN. Now, Mr. Haile, that might apply to some of those who have made 
 claims, but the evidence taken in this case as shown by many men engaged very 
 extensively in the cattle business is that they have had very few claims. The 
 principal cattlemen in Texas have very few claims, do they not? 
 Mr. Hajxe. I know some men who do not. 
 
 Mr. Cowan. There may be that disposition on the part of some men. 
 Mr. Haile. I think so. 
 
 Mr. Cowan. There has been a general complaint of an advance in rates, has 
 there not? 
 Mr. Haile. Yes, sir ; there has been complaint. 
 
 Mr. Cowan. Is it not a fact that resulted in the Cattle Raisers' Association 
 inviting a conference with the traffic oflilals at St. Louis some three years ago, 
 in which the representatives of the association immediately met you and a num- 
 ber of traffic men to talk over the matter and see if we could not get the 
 advances of 1899 reduced? Do you remember that? 
 Mr. Haile. Yes, sir. 
 
 Mr. Cowan. And after giving consideration, you all declined to reduce them? 
 Mr. Haile. Yes, sir. 
 
 Mr. Cowan. The advances which were made in those rates made them higher 
 than they had ever been before? 
 Mr. Haile. I think they are. 
 
 Mr. Cowan. Is it not a fact that for ten years previous to the advances made 
 ill 1899 the rate from Fort Worth, for example — which would be a fair one— .had 
 never been more than 31i cents per hundred pounds? 
 
 Mr. Haile. I will tell you. I think that is substantially true, Mr. Cowan. 
 Mr. CowAN. Is it not a fact that during that period — say, from 1890 up to 
 1899 — that the rates had gone from 25 to 28i cents for the major portion of the 
 time to Kansas City? 
 
 Mr. Haile. No ; I find that such rate was, in 1889, to Kansas City, 28i cents, 
 and it was advanced from that figure up to 83 cents, where it remained for a 
 series of years, and was reduced again to 28 cents, and then advanced to 33i 
 cents, and then again to 36J cents. 
 
 Mr. Cowan. When I said 31J I meant 33i cents; at all events, the 364-cent 
 rate to-day is a higher rate than has existed since the organissation of the Inter- 
 state Commerce Commission and since we have had a file of the tariffs with 
 them? 
 
 Mr. Haile. Yes, sir. 
 
 ■^tr. Cowan. What else could you expect, then, than that the cattlemen wonld 
 
 complain of the advances in these rates, when they did not know anything 
 
 about your operating expenses and you have increased your volume of traflic? 
 
 Mr. Haile. Oh, I expect them to complain. 
 
 Mr. CowAN. What better standard is there which a man should take than 
 
PROPOSED AMENDMENT OF INTERSTATE- COMMERCE LAW. 327 
 
 what has voluntarily been kept in force for a long period of years? What 
 better standard is there for him? 
 
 Mr. Haile. It would depend on the conditions entirely under which that rate 
 had existed. 
 
 Mr. Cowan. That rate existed under a condition, we will say, of competition? 
 
 Mr. Haile. I think it is clearly shown in the testimony which has been taken 
 in this case that it was an unreasonably low rate during all that period. 
 
 Wedistesday, January £5, 1905. 
 The committee met at 10.30 o'clock a. m., Hon. William P. Hep- 
 burn in the chair. 
 
 STATEMENT OF MR. H. T. NEWCOMB. 
 
 Mr. Xewcomb. Some time last summer I wrote a magazine article 
 contending that the question whether rates had been advanced or 
 decreased could not be decided without reference to the changes in 
 the value of the standard money in which the rate is paid. I have 
 since been requested by some of the railroad companies to apply the 
 principles that I used in that article to this SenatiP Document No. 257, 
 in which the Interstate Commerce Commission alleged that there has 
 been a great advance in rates, and made the statement, which has been 
 repeated here, that this amounted to about $155,000,000, as compared 
 with the year 1899, in the single year 1903. 
 
 Mr. Bacon. One hundred and fifty-five million dollars in the last 
 year, as compared with the next preceding year, not the four years 
 past. 
 
 Mr. Newcomb. I beg Mr. Bacon's pardon; I think Mr. Bacon is 
 in error in regard to that. I will read the statement, which is on 
 page 5 of this document: 
 
 The average rate per ton for this year was $1.0793, or nearly 12J cents per ton 
 greater than the average rate per ton for the year ending June 30, 1899, this 
 diiference amounting in revenue to $155,475,502 over what it would have been at 
 the average rate of the first-mentioned year. 
 
 Mr. Bacon. I stand corrected. 
 
 Mr. Newcomb. Now, it is rather startling, Mr. Chairman, that this 
 statement depends on an erroneous use of the Commission's own 
 figures. The figures used by whoever prepared this report differ 
 from those used by the statistician in the statistician's report, and the 
 differences, as between the year 1899 and the year 1903, amount to 
 one-third of the total advances. The author of this report gives the 
 rate per ton for 1899 as 95 cents. As a matter of fact, it was 97 cents. 
 He states the first year of his comparison too low. He gives the year 
 1903 as $1.07, when, as a matter of fact, it was $1.05. So that he puts 
 the first year 2 cents too low and the last year 2 cents too high, and if 
 we correct those figures by using the figures in the statistician's 
 report, which were open and available to the author of this report, at 
 once $53,000,000 of this increase disappears. I will furnish, to go 
 with my remarks, a table showing the figures furnished by the 
 auditor for this report, and the reports which are available to the 
 statistician. But, Mr. Chairman, a calculation of that sprt depends 
 entirely upon the selection by the author of the report of the year 
 
328 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 which he shall make the basis of his calculation. These rates per ton 
 have differed from year to year, and anyone can get any results 
 which he pleases by using a selected year. In order to show this I 
 have made a table on precisely the same basis, taking the year 1904, 
 and I show in colmnns the results as compared with the Commission's 
 table ; but it appears from my figures, using the year 1904 instead of 
 the year 1899 as a basis, that on that comparison there was a lowering 
 of rates amounting to $234,000,000. 
 
 I do not attach great importance to that table. It merely shows 
 how easy it is to use figures of this sort to get any result you want. 
 The Commission might, perhaps, have gotten an even higher figure if 
 they had taken another basis, and I can get a much higher figure 
 again by having some other basis. Anything in the world can be 
 gotten by taking figures of that kind. One result is as real as the 
 other. 
 
 It is proper to call the attention of the committee to the increased 
 expenses of railroad companies as between those two years which were 
 used for that comparison. Between 1899 and 1903 ' operating ex- 
 penses increased $400,000,000. Wages paid to the emploj'ees of the 
 railroads increased $222,000,000. The cost of maintaining structures 
 and equipment and roadbed increased $175,000,000, and the fuel bills 
 of the railwav companies increased from $77,000,000 to $140,000,000, 
 or $69,000,000 altogether. 
 
 I have also made some calculations showing the efficiency of money 
 payments for fuel, for operating expenses, for wages, and so forth. 
 It appears that for every dollar paid out in Avages in 1899 the rail- 
 ways were able to carry 294 tons of freight a mile.. In 1903 for each 
 dollar paid in wages they were only able to carry 240 tons a mile. So 
 that with that slightly higher rate it affected their earnings per ton 
 per mile, and they could only earn from .freight $1.88 where they 
 earned $2.13 in the earlier year. 
 
 The efficiency of the amount paid in wages was less in 1903 than it 
 was in 1890. I have made similar calculations relating to coal, which 
 show that for a dollar paid for coal the railways were able to earn $9 
 from freight in 1903 Avhere they earned $13.25 m 1899. 
 
 The same is true of their operating expenses, the figures being 
 $1.05 in 1903 as against $1.19 in 1899. On page 6 of the report we 
 find considerable discussion as to the advances of rates of particular 
 articles. I selected the article of hay, which was advanced from the 
 fifth to the sixth class, and that advance is now the subject of litiga- 
 tion. The Commission states that this is an average of about 80 cents 
 a ton on 12,000,000 tons. I do not kiiow whether that average is cor- 
 rect or not, but perhaps it is worth while showing that the price of 
 Hay has gone up so much during the year that if the railroads did 
 get the advance of $14,000,000 which the Commission thinks they got 
 on account of this higher rate, the additional farm value of the 
 amount moved during that time was $34,000,000, or two and a half 
 times as great ; and it is Avorth noting that during the four years used 
 for this comparison, although the crop was never as great as the crop 
 of 1899, the value of hay to the farmers of the United States was 
 $204,000,000 more than it would have been at the price of 1899. 
 
 It was stated here the other day, I think yesterday, that there had 
 not been any reduction in freight rates. I made a comparison on the 
 basis of the report published bj;^ the auditor of the Commission about 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 329 
 
 a year ago, called a " Forty-two year review of railway rates," a docu- 
 ment containing a good deal of very valuable data. There are three 
 freat classifications, you know, of the freight traffic in the United 
 tates. The official classification applies to all business east of the 
 Mississippi River and north of the Ohio and Potomac rivers. 
 
 In that classification during the period from 1887 to date — or to 
 the date of this report, some time in 1902 — the net result of changes 
 in the classification has been that 95 articles are classified higher 
 than they were at the beginning of the period and 121 articles are 
 classified lower than they were in the beginning of the period. 
 
 In the western classification, ^^•hich applies on all classified traffic 
 west of the Mississippi River and the Great Lakes to the Pacific 
 coast, 65 articles are classified lower and 23 are higher than they 
 were before. In the southern classification, which applies east of 
 the Mississippi Eiver and south of the Ohio and Potomac rivers, 
 there are 254 reductions as against 125 advances. Those are net 
 changes. 
 
 The CHAiE3rA>'. In what period is that? 
 
 ifr. Newcqimb. That is during the period covered by that report. 
 The auditor of the Conxmission receives something like 300 tariffs per 
 day. They all make changes, and it is the common impression, I am 
 told, that more ot those changes are downward than upward. I 
 took the pains to make some incpiiries yesterday afternoon concerning 
 the changes, and I foimd that within a recent period there have been 
 some important reductions. Thus the rate on lumber from St. Louis, 
 Kansas City, and river points to St. Paul and Minneapolis, Minne- 
 sota, and Wisconsin practically has been reduced from 16 to 14 cents 
 very recently. Sugar from the Atlantic seaboard to the Missouri 
 Ri^'er and to New Orleans territory has been reduced. There has 
 been a reduction on crackers and cakes and bakery products through- 
 out the entire West, and on soft coal there has been a reduction from 
 the Mississippi River to Iowa. Only one-half of the regular rates 
 on seed wheat to Iowa, Minnesota, and Dakota are now being 
 charged. 
 
 The lines from Chicago and Milwaukee to the Mississippi River 
 ha^'e made a reduction from 10 cents to 9 cents on wire articles, nails, 
 etc. The grain rate from MississijDpi River crossings to Ohio, Indi- 
 ana, Michigan, etc., have been reduced from 1 to 5 cents each. 
 There is a great reduction pending covering the entire through 
 south-bonnd business from the Ohio River, Chicago, Cincinnati, St. 
 Louis, and all points using the Ohio River as a base to the great 
 cities of the South, and that will affect all contiguous territory. 
 
 As a result of these reductions all the rates from Baltimore, New 
 York, Philadelphia, and Boston, and similar territory in the East 
 have been reduced so that practically all manufactured products 
 moving into the South have considerably lower rates than they have 
 been taking. And those are voluntary reductions. The rates to 
 Atlanta are reduced 9 cents on first-class freight, about 9 per cent of 
 the old rate. The reduction on second-class freight is 5 cents, on 
 third-class 3 cents, on fourth-class 5 cents, on fifth-class 4 cents, and 
 so all along the line. Other cities the rates to which are reduced are 
 Dalton, Cartersville, Athens, Elberton, Augusta, Macon, Milledge- 
 ville, Albany, and Americus, and, as I said, practically all of the ter- 
 ritory in that region. 
 
330 PROPOSED AMENDMENT OP INTERSTATE-COMMERCE LAW. 
 
 I have here from another Government document a table showing 
 the course of rates on wheat and flour from Chicago and St. Louis to 
 New York. These are the most important rates in the country. The 
 Chicago and New York rate is not only the basis of the rate on all 
 grain from any territory west of Buffalo and Pittsburg, and a line 
 drawn through there — what we call the Central Traffic Association 
 territory — but by the application of differentials is made the rate to 
 all eastern territory on all that freight, whether for domestic con- 
 sumption or exportation. It is far the most important rate in the 
 country. That rate from Chicago to New York has declined per 
 ijushel. It was $6.63 in 1899, the average for the year, and $6.17 was 
 the average for 1903. The table shows a decline from 15.7 cents to 
 the present basis. I have compared the rates per bushel on wheat 
 from Chicago to New York with the farm value of wheat, and it 
 appears that where it took 1 bushel in every 5^ in 1899 to pay the 
 freight from Chicago to New York, it only takes 1 bushel in every 
 7.82 bushels to pay the freight at the present time. That is, 7.82 
 bushels of wheat will now move from Chicago to New York for the 
 price of 1 bushel, while only 5 bushels would move at that price in 
 1899. 
 
 Mr. Bacox. I would like to ask Mr. Newcomb if he considers this 
 a fair comparison, as regards the price of wheat, which is now very 
 high. It is 25 or 30 cents higher now than has been the average price 
 during the last five years. > 
 
 Mr. Newcomb. For 1902 the comparison would have been : It took 
 1 bushel in 7.20 as against 1 bushel in 5.25 in 1899, so that about the 
 same result would follow in last year or any other year of that series. 
 
 STATEMENT OF HON. H. STEENERSON, A REPRESENTATIVE IN 
 CONGRESS FROM THE STATE OF MINNESOTA. 
 
 Mr. Steenebson. Inasmuch as I have prepared a couple of drafts 
 of a bill to accomplish the purpose recommended by the President in 
 his message in regard to extending the powers of the Interstate Com- 
 merce Commission, I thought that I would appear before this com- 
 mittee and give my views. 
 
 In the first place, I shall assume that the reason for this legislation 
 is apparent to the committee and that the evils to be remedied are 
 recognized, as they seem to be by the public sentiment throughout the 
 United States as well as by the Executive. So that it is not necessary 
 at all to dwell upon that feature. I will assume that the necessity 
 for the legislation exists and that it is desired to meet that necessity. 
 Neither do I care to discuss the objections which have been made to 
 this legislation, that it would injuriously affect capital invested and 
 labor. Those facts are not new to the committee nor to the American 
 ])eople. Those objections have been heard in the United States 
 almost in the same terms for the last thirty-five years, almost ever 
 since the first granger legislation in Illinois and other western States. 
 
 I recall very distinctly that I served in the senate of Minnesota in 
 1885, just twenty years ago, when we proposed to establish a railway 
 commission to regulate freight rates by law, and these same objec- 
 tions were made. We had ten years before that time prescribed by a 
 statute the maximum rate for transporting passengers — 3 cents a 
 mile. That was twenty years ago, and that is the maximum rate 
 
PKOPOSED AMENDMENT OF INTEESTATE-COMMERCE LAW. 331 
 
 to-day in Minnesota ; but at the time is was prescribed every railway 
 man in the country said that it would ruin and banlcrupt all the 
 railroads and stop all railroad construction. And when we sought 
 twenty years ago, as I say, to give this power to public officials, dire 
 disaster and ruin was predicted. But what followed? Of course 
 the act of 1885 in Minnesota did not contain the power, but two 
 years later it was conferred, and although that was not in the proper 
 language, so that it was set aside in the milk-rate case by the Supreme 
 Court, later the State did put it into their law — in 1891 — and that 
 has been in operation ever since, and we have reduced the charges for 
 transportation on grain, and I brought that case before the Commis- 
 sion myself and conducted the trial of it, whereby the transportation 
 rate on grain over the Great Northern was reduced, and the rail- 
 road, after it Avas put into effect, adopted the same rate as was pre- 
 scribed by the Commission. That has been our experience; and in 
 every instance the railway companies' representatives have predicted 
 that it would ruin them, whereas, in fact, it has benefited them ; and 
 if you ever refer to the book written by A. B. Stickney, president of 
 the Chicago and Great Western Railway, in 1893, fourteen years 
 after the passage of the interstate-commerce act, I think you will be 
 satisfied that he proves to your entire satisfaction that instead of 
 being an injury to railroad capital and railroad labor, public regu- 
 lation and control of transportation rates is a benefit. The power, 
 when it was exercised without limitation on the part of the State by 
 the transportation companies, was so abused that in many instances 
 railroad capital was entirely wiped out and destroyed. So that I 
 will not dwell upon that feature of the case. 
 
 My studies have been confined lately to the legal aspect of the 
 proposed bill. But in order to understand fully the legal form 
 which the proposed statute should take, I want to remind the mem- 
 •bers of the committee, although I am quite satisfied that they all 
 know it, that they should bear in mind that there are certain princi- 
 ples of law that are absolutely settled and are not subject to contro- 
 versy in the United States, although some of the speakers who have 
 been before the committee do not seem to recognize the fact. These 
 principles have been settled by the Supreme Court beyond any ques- 
 tion of doubt. It is settled that the exercise of the power to pre- 
 scribe a freight rate for the future is a legislative act, and that, 
 further, such a legislative function can not be exercised or performed 
 by any court. Now, inasmuch as the Constitution says that the judi- 
 cial power in the United States shall be vested in one Supreme Court 
 and such other inferior courts as the Congress may from time to time 
 establish, it is apparent that if you call a body a court, they are 
 thereby simply endowed with judicial power and not with legislative 
 power, and consequently, under the decisions of the Supreme Court, 
 can not review the action of a commission that prescribes rates for 
 the future, except with this limitation — and that is the only qualifi- 
 cation that exists — that they may review that action because it is 
 the same as a law, the order of the Commission in regard to. rates in 
 the future, or the same as an act of Congress prescribing what rate 
 shall be charged in the future. They stand absolutely on the same 
 footing, and the power to delegate that authority is conceded. There 
 is only one ground upon which a court can review that kind of legis- 
 lation, whether it is by act of Congress or by order of a commission, 
 
332 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 and that is upon the ground that it takes private property without 
 compensation or without due process of' law, in violation or the fifth 
 amendment to the Constitution, in case it is made by the United 
 States authority, or in violation of the fourteenth amendment to the , 
 Constitution of the United States in case this legislative authority is 
 exercised by a State. 
 
 Mr. TowNSEND. I would like to ask Mr. Steenerson to define a 
 word, if I may. 
 
 Mr. Steenerson. Certainly. 
 
 Mr. TowNSEND. In most of these bills it is provided that the court 
 may review the decision or order as to its reasonableness and lawful- 
 ness. 
 
 Mr. Steenerson. Yes. 
 
 Mr. TowNSEND. What can you say as to what '' reasonableness " 
 would include ; Avhether that is a question of fact ? 
 
 Mr. Steenerson. No; I conceive that probably the strongest bill 
 that was ever before a court in favor of the idea that the court could 
 review the question upon the facts was in the case in the State of 
 Minnesota, the case which I referred to which I argued before the 
 Commission myself; and it was argued by General Clapp, our 
 attorney-general, before the supreme court of Minnesota. There the 
 court stated that they must construe the statute to me^n that it only 
 confers upon the court judicial power — that is, power to review the 
 action, whether it is confiscatory or not confiscatory. 
 
 Judge Mitchell, whom I think everyone familiar with the judicial 
 history of the State will recognize as one of the ablest judges that 
 ever sat on the bench in that State, was particular to emphasize the 
 fact that the only ground upon which any court could review the 
 question was by virtue of the constitutional provisions that I have 
 referred to, in order to determine whether or not it was confiscatory, 
 or taking property without due process of law. 
 
 Mr. TowNSEND. Would not that be covered by " lawfulness ? " 
 
 Mr. Steenerson. I think the court would be bound to construe 
 " lawfulness " as simph^ " constitutionality." Now, these principles 
 having been settled beyond peradventure, that is that the function 
 is legislative, and that it may be exercised either by Congress directly 
 or by a Commission, and that no power exists anyAvhere.to review 
 that action except upon the ground that it violates the Constitution, 
 then where are we ? The right of a court to enforce the Constitution 
 is not dependent upon any statute of a State or of Congress. When 
 T drew my first bill, which was referred to this cornmittee, I modeled 
 my bill, for want of any more extended knowledge of the subject, 
 after the law of Minnesota — that is, I took the interstate commerce 
 act, and I took section 13 of that act and put in there the words of 
 the Supreme Court in the maximum rate case as they should have been 
 in there to confer the rate-maldng power. I put those words in there 
 and then I had special provisions for a review in the court somewhat 
 similar to the provisions of the Cooper-Quarles bill, modeled after 
 our statute; but upon reflection I made up my mind that this was 
 utterly superfluous and unnecessary, because if the courts have the 
 right to review it in order to enforce the constitutional provisions 
 against confiscation, then they do not need any statute, any more 
 than if you were to prescribe to-day that the maximum to be charged 
 for transporting passengers over the railroads should be 2^ cents a 
 
PROPOSKD AMKNDMENT OF INTEHSTATE-COMMEKCE LAW. 333 
 
 mile. That maximum rate can be attacked, and if they cOuld show 
 before a United States court anywliere that it was confiscatory of 
 their property, then that court would enjoin the enforcement of that 
 law as unconstitutional, without our putting into the act that they may 
 do it, and prescribing the manner of doing it. So that I hold that 
 it is better to leave the method of procedure to review these unconsti- 
 tutional orders to the courts themselves. Thev have the power, 
 and that is the only ground upon which they can" interfere. 
 
 I therefore revised my bill, and I drew a bill, which is now No. 
 18043, modeled after this theory. I took section 13 of the interstate- 
 commerce act and put in there that the Commission has the power 
 to order a rate that is excessive in their judgment to be discontinued, 
 and to substitute another schedule, and that the rate shall be the 
 rate for the future. That is in immistakable terms. After doing 
 that I provide that that rate, so prescribed by the Commission, shall 
 be the lawful rate, and then if the railroad company refused to obey 
 it in the future, such railroad shall be subject to a penalty of $1,000 
 a day. _ That makes it take effect at once when the Commission 
 orders it to take effect. And further, I provide that the penalty 
 may be recovered by the United States authorities, and shall be paid 
 into the Treasury of the United States. We therefore have a com- 
 plete law in itself, and the order of the Commission operates the 
 same as an act of Congress. Now, it is true that that may be 
 attacked because it is "confiscatory. Very well; let them attack it, 
 the same as they have attacked the statutes of Nebraska and other 
 States as being confiscatory. 
 
 The question that is raised, undoubtedly, in the minds of many 
 inembers is. How are we to avoid this interminable litigation that 
 takes a long time, and which the Interstate Commerce Commission 
 complains of ? 
 
 They say that it takes several years in the courts, and presumably 
 it was to avoid that delay that the proposed bill, known, I believe, 
 in the papers as the Hepburn bill, the bill introduced by the chair- 
 man of this committee, provides for the extensive machinery to 
 enforce it — ^nine circuit judges and a court of commerce, with all the 
 officers necessary to carry out its functions, entailing an expense upon 
 the United States Government of probably $200,000 or $300,000 a 
 year. The idea in that must be that it will expedite cases of this 
 kind and the settlement of those questions, and the only case of this 
 kind that can arise is as to whether or not the rate prescribed is con- 
 fiscatory or not. Let us bear that in mind, then. I claim that this 
 machinery and expense is unnecessary, and for this reason: The 
 records oi the Commission and of the courts show that in no instance 
 has the claim been made that the rate fixed by t^e Commission was 
 ■confiscatory. What they did claim in the case that went to the 
 Supreme Court was that the Commission did not have the power to 
 fix any kind of a 'rate, confiscatory' or otherwise. And it Avas the 
 question whether the words' in the law granted them that power. 
 That was the question argued, and not any other. 
 
 Now, this same question Avould arise in a new law, because it would 
 take years to find out what the law meant. A statute is never settled 
 until the highest judicial authority in the United States has construed 
 it. For that reason I think it would be a help to follOw as closely as 
 possible the old la^^', which has been construed, before we add any- 
 
334 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 thing to it. Further than this, if the committee desires to carry out 
 the lull meaning of the President's recommendation — that is, that the 
 rates shall go into effect, even if they are confiscatory, which I under- 
 stand to be the meaning of the recommenation in the President's mes- 
 sage — tlien, of course, leaving that as it was in the bill advocated by 
 my friend on my left here, it would be undoubtedly unconstitutional, 
 because you can no more confiscate a man's property for six months 
 or a year than you can for one hundred years. But if you desire to 
 carry out that, and if it is a delay in having rates take effect that you 
 are afraid of, I have a suggestion to make to the committee, although 
 it is not in my bill, whereby even that object can be accomplished, and 
 I desire to call attention to this fact with that in view. 
 
 There is a difference in the provisions of the fifth amendment to the 
 Constitution of the United States and the fourteenth amendment, 
 aside from the difference that the one restrains Congress and the other 
 restrains States. That is, the fifth amendment is a restraint upon the 
 law-making power of Congress and the fourteenth amendment simply 
 restrains the legislative action of the States so that they can not take 
 property without due process of law or deprive a man of the equal 
 protection of the law. The difference between these two provisions 
 of the United States Constitution is this : That the one in regard to 
 Congress, and limiting the power of Congress, says that no person 
 shall be deprived of his property without due process of law, nor shall 
 private property be taken without just compensation for public use. 
 Those are the words that are not in the amendment that relates to the 
 limitation upon States. Therefore, I say that if you desire to have a 
 rate take effect, regardless of the fact whether it is confiscatory or not, 
 then I believe the only way to do it Avould be to put in a provision 
 something like this, to the law that- 1 propose — that is, giving the 
 poM^er to the Commission to prescribe the rate for the future, and 
 making it the lawful rate, and prescribing the penalty for not enforc- 
 ing it — to add : 
 
 No court shall restrain the enforcemeBt of any rate prescribed by the Com- 
 mission under the authority of this act until after it shall have been finally 
 adjudicated that such rate is confiscatory and in violation of the fifth amend- 
 ment to the Constitution of the United States ; and in the event of such an ad- 
 judication the carrier affected thereby shall be paid out of the Treasury of the 
 United States just compensation for the time during which said confiscatory 
 rate was enforced, to be agreed upon by the carrier and the Commission, and 
 certiaed by the Commission to the proper authorities. Or, in case the amount 
 is in dispute, the amount of such claim for just compensation shall be referred 
 to the ( 'ourt of Claims for determination, and when so determined, paid out of 
 the United States Treasury. 
 
 l^ow, it might seem that that was a dangerous thing; but in view 
 of the fact that this Interstate Commerce Cominission has never, so 
 far as T have been able to learn, prescribed a confiscatory raie or one 
 that opefaied as a confiscatory rate, I do not believe' there is the 
 slightest danger. The danger that you apprehend is that the protest 
 that it is confiscatctty will be used to tie up the rate in the courts; 
 but if we guarantee the rate made by the Commission against this 
 confiscatory character then that objection is removed. And I am 
 free to say that I believe that this would be a restraint upon the 
 Interstate Commerce Commission against making rates that were 
 confiscatory. If they knew that Uncle Sam would have to pay the 
 loss then they v<ould be very careful, and of course the company 
 
PROPOSED AMENliMENT OF INTEE8TATE-COMMEK0E LAW. 335 
 
 could not be injured, because the amount of the loss could easily be 
 ascertained. It v.ould hurry up litigation, it would carry, probabJy, 
 the question of Avhether or not the rate was confiscatory to the Su- 
 preme (.'ourt m ii yery short time, and during that tiuio tlic matter 
 could \)e computed to what extent it was confiscatory, and deter- 
 mined, and it ^ecms to me that that would be taking property for a 
 public use to that extent which the Government could pay for. 
 That, I believe, -ivoald amount to less, if this suggestion should be 
 adopted, then the expense of the interstate commerce court and the 
 nine judges that aie provided for in the Hepburn bill. 
 
 The Chaiemax. You think it would be lawful and just to permit 
 the Government to tax a stockholder in a railroad and in that way 
 to compel him to contribute to a loss that is suffered by reason of an 
 unjust and unlawful benefit that a certain shipper may have had? 
 
 Mr. Steenerson. Well, the United States Government does not 
 levy any direct tax upon anybody ; they are all indirect taxes. 
 
 The Chairman. But it pays taxes. 
 
 Mr. Steeneeson. He pays on his consumption, the same as anybody 
 else. This is a new question to me ; it only suggested itself last night 
 to my mind, and I am not sure it would be satisfactory, but it strikes 
 me that it would be a public purpose within the meaning of the fifth 
 amendment to the Constitution of the United States. 
 
 The Chairman. A public purpose to aid a private shipper to ship 
 his private' property to market ? You would regard that as a public 
 use? 
 
 Mr. Steeneeson. I am not claiming that this is settled law ; I am 
 claiming that it is simply a suggestion that may be meritorious, and 
 may not be; it may be impracticable to do so. Therefore I do not 
 embody that suggestion in my bill. My bill simply provides that the 
 power shall rest in the Commission to prescribe a rate for the future, 
 makes it a lawful rate, and imposes a penalty for not observing that 
 rate, and authorizes the collection of a fine by the United States Gov- 
 ernment. That is all that my bill does. And I believe that we can 
 safely leave the question of a review of the law — a testing of the 
 constitutionality of that rate — to the courts, without prescribing the 
 method whereby it should be done, and I believe further that the 
 cases would be so few which would be brought before the court that 
 the present courts are ample, and that we would not be subject to 
 unnecessary delay. 
 
 STATEMENT OF MR. H. F. SMITH, REPRESENTING THE NASH- 
 VILLE, CHATTANOOGA AND ST. LOUIS RAILWAY. 
 
 Mr. Smith. Mr. Chairman and gentlemen of the committee. I 
 speak for the management of the Nashville, Chattanooga and St. 
 Louis Kailway and, unoiRcially, for all of the important railways 
 south of the Potomac and Ohio rivers east of the Mississippi Eiver. 
 
 I speak, sir, as a practical traffic man, having had a number of 
 years' experience in that territory. I want to say, in the outset, that 
 i marvel at the interest or the anxiety expressed over the railway 
 situation, particularly in the South. I am unfamiliar with the con- 
 ditions in other sections. But, as a practical traffic man, dealing 
 with these stilbjects every day, nieeting people, meeting their views, 
 revising their rates, I do not appreciate, can not appreciate, our 
 
336 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 management does not appreciate, why there should be so much 
 anxiety over the relations between the railwaj's of the South and the 
 people. They are harmonious. The real captains of industry, with 
 whom we deal, are not discontented. We have reformers in our sec- 
 tion of the country the same as ^ve have in all sections. They are 
 clamorous. But the real shippers, the real developers of traffic and 
 trade, the manufacturers, are not discontented in our district. 
 
 The honorable Interstate Commerce Commission in its eighteenth 
 annual report refers to " the rapid disappearance of railroad com- 
 petition and the maintenance of rates established by combination 
 attended as they are by substantial advances in the charges on many 
 articles of household necessity." It further says : 
 
 The Commission regards this matter as increasiugly grave, and desires to 
 emphasize its conviction that the saregnards required for the protection of tlie 
 public will not be provided until the regulating statute is thoroughly revised. 
 
 I want to say that those views of the Commission do not justly 
 apply to the southern territory — that there is no competition and that 
 the rates are being advancerl. In the southern country competition 
 among the railroads was never keener than it is at the present time. 
 
 The first annual report of the Commission embraces the follow- 
 ing statement: 
 
 A study of the conditions under which railroad traffic in certain sections of the 
 country has sprung up is necessary to an understanding of the difficulties which 
 surround the subject; The territory bounded by the Ohio and the' Potomac on 
 the north and by the Mississippi on tlie west presented to the Commission an 
 opportunity, and also an occasion, for such a study. 
 
 That is the territory, Mr. Chairman, that I am speaking for. 
 
 The railroad business of that section has grown to be what it is in sharp 
 competition with water carriers, who not only have had the ocean at their 
 service, but by means of navigable streams were able to penetrate the interior 
 in all directions. 
 
 I want to say, Mr. Chairman, that those factors of competition 
 are as potent to-day as they were in 1887. In fact, in respect to the 
 general transportation by water the conditions are very aggravated, 
 the competition is very much greater. The competition, Mr. Chair- 
 man, that we have to meet is not only between carrier and carrier, 
 but the competition that we do nieet is between markets, between 
 market and market, between product and product. The various car- 
 riers originating various characters of products-:-the products of 
 the mine, for instance — are all in competition, one carrier as against 
 the other. 
 
 As for the claim that the rates are being constantly increased, that 
 does not apply to our territory, sir. I think I can truthfully say 
 that 80 per cent of the changes in rates made in the South are reduc- 
 tions and have been for a number of years. Where advances are 
 made they are to bring about equalization and remove discrimination 
 and inequalities. The reductions in revenue, I should say, are not 
 less' than 90 per cent, and have not been less than that for three, 
 foiir, five, or six years. 
 
 Mr. TowNSEND. Ninety per cent of what ? 
 
 Mr. Smith. I mean that 75 or 80 per cent of the changes in rates 
 are reductions, but that involves 90 per cent of revenue — 10 per cent 
 in revenue advances and 90 per cent in reductions. 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 337 
 
 Mr. Chairman, the influence of the Commission in our territory 
 has been good. The occasional investigation by the Commission has 
 had a good, salutary, and moral effect in the South, and -ne of the 
 South respect the rulings of the Commission just so far as we are able 
 to do so. 
 
 The Commission reports in its eighteenth annual statement to Con- 
 gress that it has reviewed or has received 61 formal complaints in 
 twelvemonths. And examination of the cases shows that only about 
 15 involved the southern railways. Some of them are of minor impor- 
 tance, as the Commission tells you. For example, some shipper has 
 complained of the demurrage on a car of hay at Spartanburg. There 
 are two or three such cases as that involved in the 61 complaints. 
 That does not include what we call — or what the Commission is 
 pleased to call — informal complaints. It has been the practice of the 
 Commission to forward those informal complaints to the carriers 
 directly interested, and in our territory it has always been a great 
 pleasure to the carriers to give every attention to those informal com- 
 plaints and adjust them satisfactorily to the complainants and report 
 the results to the Commission. 
 
 The Commission in its eighteenth annual report disclaims the desire 
 or purpose of seeking " power to arbitrarily initiate or make rates 
 for the railways," but desires to be invested with the power " to pre- 
 scribe the reasonable rate upon complaint and after hearing." 
 
 Now, in my experience I have never arbitrarily initiated any rates, 
 and it is my business to revise rates. Those rates had been made for 
 me long before I got into the situation of having to re^ase them. The 
 traffic people of the South to-day are asking what the Commission 
 has asked the power to do — to review and decide on the reasonable- 
 ness of rates. We are constantly doing that. To avoid discrimina- 
 tion, the greatest publicity is given by one railroad to all of the 
 others of its intention to change rates. Otherwise we would have a 
 chaotic condition of rates, as you doubtless appreciate. 
 
 The whole time and attention of not less than 50 expert traffic 
 people is given to the question of revising existing rates in the South 
 to meet every changing condition resulting from the rapid develop- 
 ment of the resources of that territory. Now, the wisdom of that 
 practice as to the reasonableness of rates must necessarily be greater 
 than could be obtained or maintained by a small commission who 
 are occasionally having their attention directed to the territory. The 
 danger of investing a commission with authority to revise rates and 
 decide on their reasonableness, it seems to me, is demonstrated by the 
 action of the honorable Commission in 1884, when it ordered the 
 reduction in the rates from Cincinnati to eight prominent points in 
 the South, an average reduction of 28 per cent. If the railroads had 
 been willing and able to literally observe the order of the Commis- 
 sion we would have had a condition of rates in the South that would 
 liave been abnormal and very discriminatory. The order also re- 
 quired the lines south of Cincinnati to accept a like reduction in their 
 proportion on shipments from Chicago. 
 
 The gentleman on my right has referred to some reductions that 
 will become effective in the South on the 1st of February. I have 
 been very closely associated with the action resulting from these 
 changes, and I want to say, Mr. Chairman, that we commenced in 
 
 I c L— 05 22 
 
338 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 November and have worked industriously up to the present time to 
 determine and arrange tariffs that will represent all of those reduc- 
 tions. Gentlemen, the reductions mean $1.80 per ton on first class 
 and 40 cents per ton on grain and many other commodities. To show 
 you what that means to the Nashville, Chattanooga and St. Louis 
 Eailway, over 24 per cent of the tonnage of the Nashville, Chatta- 
 nooga and St. Louis Railway is embraced in these commodities — 
 grain and grain products and hay. Our railroad's proportion of that 
 means quite an amount of revenue. The Chattanooga railroad for 
 five years failed to pay its stockholders anj' dividends, notwithstand- 
 ing the country was prosperous and the business of the road was 
 materially increasing — that is, the gross earnings were materially 
 increasing. It resumed, in 1904, paying a dividend of 4 per cent to 
 its stockholders. It only takes $400,000 per annum to pay a divi- 
 dend of 4 per cent to the stockholders of the Nashville, Chattanooga 
 and St. Louis Railroad. All reductions made in our rates, the reduc- 
 tions that become effective February 1, come out of the net. It does 
 not result in increasing the volume of business, we can not force 
 that beyond a natural growth, and we can not afford to reduce our 
 expenses by modifying our service. The competition between car- 
 riers vying with each other to excel in service is too great in the 
 South to admit of any company modifjdng its service if it wants to 
 hold its business. 
 
 The Chairman. The time of the gentleman has expired. 
 
 STATEMENT OF HON. GILBEET N. HAUGEN, A REPRESENTATIVE 
 IN CONGRESS FROM THE STATE OF IOWA. 
 
 Mr. . Haugbn. Mr. Chairman and gentlemen of the committee, it 
 is not mj' purpose to impose upon the generosity of this committee by 
 taking up its valuable time in an extensive discussion of the subject 
 under consideration. Nor do I belive that I can add to or throw any 
 new light on the subject. This is a matter to which you have given 
 errnest, honest, thoughtful, and careful consideration for weeks, 
 months, and years. Men of ability and eminence from all parts of 
 this countrj' have appeared before you, and nobody has more thorough 
 knowledge of the subject and situation and as to what should be done 
 in justice to all concerned than have the respective members of this 
 conrniittee. However, I am grateful to this committee for its gen- 
 erosity and courtesy in extendmg to me a few moments for presenting 
 my views. 
 
 Time will not permit my going into details, nor will I undertake to 
 discuss the constitutionality of the proposed legislation. I quite 
 agree with the suggestion made the other day by a member of this 
 committee, I believe by the chairman, that the questions of law or 
 legality of the measure had better be studied in executive session 
 rather than in the public hearings. I will content myself by saying 
 that in view of court decisions it is generally conceded that Congress 
 has the power to regulate transportation rates. If so, I believe that 
 under present conditions it is the duty of Congress to legislate so as 
 to meet a universal, and I believe just, demand on the part of shippers 
 and 99 per cent of the people. 
 
 At present the common carriers have exercised, and do exercise, ex- 
 clusive power in regulating rates. The people have no voice what- 
 
PROPOSED AMENDMENT OF INTEESTATE-OOMMEBCE LAW. 339 
 
 G^^ui ^^™P^*itioii among carriers has been practically eliminated, 
 btable, equitable, and reasonable rates are essential, and discrimina- 
 tions, rebates, and unreasonable rates should and must be prohibited 
 m order that we may have the fullest development of worthy and 
 legitimate business enterprises. 
 
 All shippers, the small dealers, the large dealers, the small towns, 
 the large toM'ns, all cities; villages, farmers, and manufacturers, in- 
 cluding every person and every community, should be treated alike. 
 That IS, common carriers should charge a like amount for like services 
 under similar conditions. It is a question which vitally affects every 
 line of business. The interests of the common carriers and the people 
 are mutual and each is dependent on the other. The question should 
 be dealt with judiciouslv, in a broad and intelligent manner, and in 
 a spirit of justness and fairness to all concerned. 
 
 The railroad companies have rights and their rights should be re- 
 spected and protected. But the people also have rights and are en- 
 titled to have consideration, and should and must be protected against 
 the invasion of powerful and unscrupulous interests which compel 
 them to pay, involuntarily, tribute to the common carriers, which in 
 the aggregate amounts to hundreds of millions every year. 
 
 I am one of those who believe the common carriers have abused 
 their power, and carried it to a point so as to absorb about 
 $1,000,000,000 as net profit every year. The real value of all rail- 
 road property is less than $10,000,000,000, yet they absorb as net 
 profits one-third, and it has been estimated as high as one-half, of the 
 total increase of wealth of the United States. Only about 1 out of 
 22 employed in gainful occupation in the United States is employed 
 in transportation services. The net profit from one day's labor in 
 transportation is equal to one-half of the earnings of 22 in other 
 occupations. Not that the employees in transportation get larger pay 
 than those engaged in other occupations, but I am speaking of profits 
 to the owners and operators of the various enterprises. The profit 
 of $1 invested in railways is equal to one-half of every $9 invested 
 otherwise. 
 
 Just think of it ! Railroad property With a real value of less than 
 one-tenth of all the wealth of the United States, employing less than 
 1,500,000 of the 29,000,000 people engaged in gainful occupation, 
 earns as net profit an amount equal to one-third or the total increased 
 wealth of the United States. Compare it with agriculture. Rail- 
 road property is valued at less than $10,000,000,000. The value of 
 all farm property, according to the Federal census report, is more 
 than $20,500,000,000. Five million seven hundred thousand fami- 
 lies, or more than half of all the people, live on the farms. More 
 than 10,000,000 are engaged in agricultural pursuits. The railroads 
 employ 1 for every 8 employed on the farm, yet the railroads' gross 
 receipts are equal to two-thirds of those from the farms. 
 
 The Interstate Commerce Commission's report shows the gross 
 receipts of the railroads to be nearly $2,000,000,000. The Department 
 of Agriculture estimates the value of all farm products, except cot- 
 ton, at $2,700,000,000. To this add 12,000,000 bales of cotton at $40 
 per bale, or $480,000,000— all told, $3,200,000,000. 
 
 But, as I before stated, I have not time to go into the details. 
 
 In view of this, and the various complaints coming in from all 
 parts of this country, as to excessive, unjust, unreasonable, and dis- 
 
340 PROPOSED AMENDMENT OF INTEESTATE-COMMEROE LAW". 
 
 criminating rates, which I believe are well founded, it is high time, 
 and our duty, to give the desired relief. And as to that I think we 
 are generally agreed. The question then is, How shall we obtain the 
 best results ? How shall it be done ? 
 
 Congress as a body can not examine, investigate, and prescribe rates 
 in detail, as that would be a physical impossibilitj^ ; but it can dele- 
 gate that power to some commission. I believe this power should be 
 delegated to the Interstate Conunerce Commission, a Commission I 
 believe made up of men of integrity, intelligence, sound judgment, 
 and who have had extensive experience, and who are more compe- 
 tent to deal with the questions than any new commission or tribunal. 
 In fact, they are experts. If they were not such when appointed, 
 they have become such through long service. They are men learned 
 in the law. We have this Commission, maintaining it at a large ex- 
 pense ; and as some one has suggested, it is now more ornamental than 
 useful. In view of their experience, high standing, and ability, 
 I believe this Commission should be given exclusive power, after 
 full investigation and hearing, to determine and prescribe what to 
 them seem' just and reasonable rates. 
 
 At the suggestion of a member of the executive committee of the. 
 interstate commerce law convention I introduced a bill which has been 
 referred to your committee, which provides that this power shall be 
 conferred on this Commission. The bill was drawn by Mr. Call, of 
 California, who is reported to have had much experience in cases 
 before the Commission. My understanding is that the bill was drawn 
 by him at the request of members of the executive committee of the 
 interstate commerce law convention, and that the bill, if enacted into 
 law, will carry into effect that which was contended for by that con- 
 vention. 
 
 I take it from a statement made by this member of the executive 
 committee of the interstate commerce law convention that this bill 
 voices the sentiment of that organization, an organization which 
 represents hundreds of boards of trade, business organizations, and 
 State granges from all parts of this country; an organization ably 
 represented by the worthy gentleman, Mr. Bacon, who has so earn- 
 estly and honestly put forth his untiring energy for many years to 
 secure just legislation. 
 
 I understand that the features of this bill meet with his approval ; 
 that is, that if the Interstate Commerce Commission, upon investiga- 
 tion or hearings, fiuds rates to be unjust and unreasonable it shall 
 establish a just and reasonable rate; that its findings shall be final, 
 and shall not be subject to the review of courts, except for manifest 
 violation or error of law ; that when once determined by the Commis- 
 sion the rates are to take effect immediately, and that the Commis- 
 sion's rates shall not be suspended by reason of an appeal ; that the 
 rate or rates established by said Commission shall not be stayed, sus- 
 pended, modified, or annulled otherwise than by said Commission in 
 the establishment of a new rate or rates or by a final decree of a 
 United States court of competent jurisdiction for manifest violation 
 or error of law, giving to this Commission mandatory power; that 
 is, power to enforce its findings. 
 
 What is the function of a judge? I understand it to be to inter- 
 pret, to construe the law. The jury is called in merely to determine 
 the merits or demerits of the claim and the amount to be awarded. 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMEEOE LAW. 341 
 
 I have no special pride in any particular bill, just so that effective 
 legislation can be had. AYe should legislate so as to meet this just de- 
 mand of the people. I am not so particular about whose bill will be re- 
 ported as I am to have some bill passed that will give the desired 
 relief ; and if the bill introduced by me can be improved upon, very 
 well — and I believe it can — I will most cheerfully support it. If I 
 had my way about it I would make it reach out further and deal with 
 rebates, private cars, etc., but it seems to be the general opinion of 
 the friends of the proposed legislation that these matters should be 
 dealt with separately at a later date. 
 
 Personally I am willing to submit to their judgment in this respect. 
 
 I thank the committee for its indulgence and its kindness and cour- 
 tesy extended to me. 
 
 The Chairman. Mr. Bacon will be recognized for the fifteen min- 
 utes that he expressed a desire to have. 
 
 STATEMENT OF MR. E. P. BACON. 
 
 Mr. Bacon. Mr. Chairman, it would be impossible for me, it would 
 be impossible for anyone, in the limited space of time which has been 
 allotted, to properly review the statements which have been made dur- 
 ing the past two weeks of the hearings of this committee and the argu- 
 ments which have been presented, the statements undjoubtedly being 
 intended to be correct and the arguments to be solid ; but I see many 
 inaccuracies in the former and many sophistries in the latter, and 1 
 really feel, gentlemen, that it is due to the interests which I repre- 
 sen<>— 463 commercial organizations throughout the United States, 
 scattered in every State in the Union with the exception of two, and 
 two of the Territories of the country — ^to reply to many of these state- 
 ments and arguments, and I humbly ask you to accord me on another 
 day, to-morrow if possible, at least half an hour in addition to the 
 time that I shall have on this occasion. 
 
 But I will present what I may be able to during these fifteen min- 
 utes that are assigned to me now, which I must do necessarily very 
 hastily. 
 
 It has been questioned by some, and denied by others, that the 
 power which we have been seeking to have conferred upon the Inter- 
 state Commerce Commission has ever been exercised by the Commis- 
 sion, although it has been stated frequently and authoritatively that it 
 was exercised during the first ten years oi its existence. I have been 
 looking up the facts in the case for the purpose of presenting them to 
 the committee, and I find that in December, 1896, a report was made 
 by the Interstate Commerce Commission to the United States Senate, 
 at its request, in pursuance of the following resolution : 
 
 Resolved, That the Interstate Commerce Commission be directed to transmit 
 to the Senate a statement showing each case in which it has ordered any carrier 
 or carriers subject to its jurisdiction to malie any change in the classification of 
 freight or In the rates charged for moving passengers or property, or any modifi- 
 cation in the practices afCeeting such charges, and in connection with every such 
 order ; the classification or rates or practices in effect at the time when com- 
 plaint was filed ; those in effect at the date of the order ; those directed to be 
 placed in effect ; those, if any, put in effect in compliance with such order, and 
 those in effect at the present time In each case, as aforesaid, and the reason for 
 their action In each case. 
 
 That resolution was adopted March 18, 1896. And then followed 
 the report of the Commission, which I will file with the committee, 
 
342 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 dated December 21, 1896. In that report appear 69 cases which 
 were decided by the Commission while Judge Cooley was a member 
 of the Commission, and in which he participated during the period 
 of his service. The last year of his service he was largely incapaci- 
 tated and did not participate in decisions rendered after the 16th of 
 May, 1891, the organization of the Commission having been April 5, 
 1887. In a little over four years, with his participation, 69 cases 
 were decided in which rates or classification or practices affecting 
 rates were ordered to be changed by the Commission, and they appear 
 in detail in this statement ot the Commission to the Senate. Com- 
 missioner Schoonmaker, who was one of the original Commissioners, 
 participated in 59 of these 69 cases, from April 5, 1887, to November 
 30, 1890. From Judge Cooley's retirement until August 21, 1896, 
 five and a quarter years, there were 63 cases decided by the Commission 
 of the same class, each of which involved the particular rate com- 
 plained of or a classification or some practice or regulation affecting 
 the rate. And I will say that during the first four years the report 
 of the Commission states that most of the orders were complied with, 
 and during the subsequent period a considerable number of them were 
 complied with. But during the latter part of the ten-year period, 
 during which this power was exercised, the compliances grew less and 
 less; and since the decision of the Supreme Court in 1897 that that 
 power was not conferred upon the Commission specifically by the 
 original act the Commission has refrained from issuing orders of that 
 character. 
 
 Among those cases I wish to cite one which was of a very extensive 
 character. The Chamber of Commerce of Minneapolis v. The Great 
 Northern Railroad et al., decided January 3, 1893, is a case in which 
 the Commission ordered that from certain described territory in North 
 Dakota and South Dakota the rates on wheat should be 1 cent per 
 hundred pounds less to Minneapolis than to Duluth. This was a 
 decision affecting the relation of rates wholly, not the rates them- 
 selves. In certain other territory 1\ cents less; in a certain other 
 territory 2 cents less; in certain other territory 5 cents less. With 
 some modifications agreed upon by the parties to the case these differ- 
 entials were promptly put into effect, and it covered hundreds of 
 shipping points in the two States mentioned to Minneapolis and 
 Duluth. I am unable to state the exact number, but from personal 
 knowledge, my business relations lying in fact largely in that terri- 
 tory, it was a very large number ; I know that it covered several hun- 
 dred, probably not less than two or three hundred points. 
 
 I offer these statements to show the correctness of the statement 
 which has been made repeatedly that the Commission did exercise 
 this power. Now, the fact that it did exercise it I do not put forth 
 as a reason that it should be conferred upon the Commission now, 
 but as evidence that with the exercise of that power, with the con- 
 tinued and frequent exercise of it, no complaint arose as a result of 
 such action. 
 
 Mr. Stevens. I see that it did in that case. In that case the 
 Chamber of Commerce of Minneapolis asked that the rate should be 
 discontinued. 
 
 Mr. Bacon. With all respect, Mr. Stevens, I think you are mis- 
 informed. 
 
 Mr. Stevens. That is the information I have gotten from a very 
 
PROPOSED AMENDMENT OF INTEESTATB-OOMMEROE LAW. 343 
 
 good source. I did not want to interrupt, but I do not want any 
 misapprehension about it. 
 
 Mr. Baco>v^. Let me say that to my certain knowledge those differ- 
 entials are in force now" and have been from that time to, the pres- 
 ent; they are in effect to-day, and have been since the agreement 
 between the respective parties in relation to the modification. 
 
 Mr. Stevens. The information I get is from the Chamber of Com- 
 merce of Minneapolis, stating that they have asked that the dif- 
 ferentials be discontinued, for the reason that if the same policy were 
 pursued Minneapolis would get no advantage from the southwestern 
 trade and Duluth would get all the advantage from the northwestern 
 trade. 
 
 Mr. Bacon. I beg respectfully to state that you are misinformed. 
 I am entirely familiar with the facts in this case. There are certain 
 points in the Southwest where the Minneapolis people desire to have 
 a more favorable differential than now exists, bvit in North and 
 South Dakota the differentials established at that time are entirely 
 satisfactory and are being observed, and I will say that the Minne- 
 apolis people would not have them abrogated or interfered with 
 for any amount of money. I will say in this connection that I am 
 engaged in the commission businessj in the handling of grain, and I 
 have a branch office at Minneapolis and a branch office at Chicago, 
 my main office being in Milwaiikee. I also have a branch office at St. 
 Louis. So I am conversant from day to day with all the workings 
 of the rates on grain from the territory in question. 
 
 In this connection I wish to read a memorandum Avhich I made, 
 in order to be more condensed and concentrated in reference to this 
 report to the Senate. 
 
 (Referring to memorandum.) 
 
 The accompanying pamphlet is a printed report to the Senate of 
 the United States in response to a ];esolution of the Senate of March 
 18, 1896. This report contains a statement of the cases, arranged 
 according to the dates of the decisions, in which changes in rates, 
 freight classification, or practices affecting transportation charges 
 had been ordered by the Commission up to December 21, 1896. 
 
 The orders shown on the first 20 pages were all issued during the 
 period between April 5, 1887, the date when the Commission was 
 organized, and January 12, 1892, when Judge Cooley's resignation 
 took effect. Judge Cooley does not, however, appear to have par- 
 ticipated in any order after May 16, 1891. An order of that date 
 appears on page 18 of the report mentioned. 
 
 An examination of the recftrd of cases in that report shows that 
 regulating orders were made during the first year of the Commission's 
 existence, in ^vhich the following- powers were exercised: 
 
 First. Reducing rates found to be unreasonable under the first sec- 
 tion of the act, and prescribing a maximum charge for the future. 
 In the case of Evans v. The Oregon Railway and Navigation Com- 
 pany (1 I. C. C. Rep., 325), decided December 3, 1897, the defendant 
 carrier was ordered to cease and desist during the present grain sea- 
 son — ^that is, ending the 30th of June, 1888— from charging or receiv- 
 ing more than 23^ cents per hundred pounds, or $4.70 per ton, on 
 wheat transported over its railroad lines from Walla Walla, Wash., to 
 Portland, Oreg. The rate at the time the complaint was filed was 30 
 cents per hundred pounds, or $6 per ton, and when the order was 
 
344 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 issued the rate was 25 cents per hundred pounds, or $5 per ton. The 
 order reducing the rate to 23^ cents per hundred pounds was com- 
 plied with. 
 
 Second. Prescribing a definite and certain relation of rates as be- 
 tween different localities to be observed in the future. Ii;i the case of 
 the Board of Trade Union of Farmington v. Chicago, Milwaukee and 
 St. Paul Railway (1 I. C. C. Eep., 215), decided November 1, 1887, 
 the Commission ordered that while the -defendant charged a rate of 7^ 
 cents per hundred pounds from Minneapolis and other points on its 
 River and La Crosse divisions to Milwaukee, Chicago, and other 
 points in Iowa and Illinois on wheat, flour, and mill stuffs it must not 
 exceed a rate of 10 cents per hundred pounds, or a difference of one- 
 third of the amount on the lesser charge, for transporting the like 
 kind of property to the same points from Farmington, Northfield, 
 Faribault, and Owatona, Minn. Rates of 15 and IfS^ cents were in 
 effect wh-en the complaint was filed and when the order was issued. 
 The order was complied with. 
 
 Third. Prescribing a like definite relation in rates for the future 
 as between different commodities. In the case of Reynolds v. Western 
 New York and Pennsylvania Railroad Company (1 I. C. C. Rep., 
 393), decided January 13, 1888, the defendants were ordered to cease 
 and desist from charging more for the transportation of railroad ties 
 from points in Pennsylvania to Salamanca and Olean, N. Y., than 
 they charged for the transportation of lumber between the same 
 points. The order was complied with. 
 
 The forms of these first orders as they were entered at the time were 
 closelj' followed by the Commission in all subsequent decisions. Dur- 
 ing the first year after the Commission was organized petitions for 
 reductions in rates were dismissed, not for want of authority to grant 
 the relief prayed for, but because the proofs, or want of proofs, failed 
 to make a case against the carriers complained of. The powers thus 
 exercised by the Commission were as extensive in the direction of pre- 
 scribing rates for the future as any that were attempted by the Com- 
 mission in later years. 
 
 The cases above cited are only examples of orders issued by. the 
 Commission and shown in the report mentioned while Judge Cooley 
 was a member of the Commission, and, as above indicated, he joined 
 in authorizing the issuance of these prders. 
 
 A case decided by the Commission in an opinion by Commissioner 
 Schoonmaker has sometimes been referred to as holding in 1887 
 that the Commission had' not authority to prescribe reasonable rates. 
 This was the case of Thatcher v. Delaware and Pludson Canal Com- 
 pany (1 I. C. C. Rep., 152), decided July 25, 1887. That case, 
 however, did not involve the reasonableness of rates. The avowed 
 object of that proceeding was to compel the application of propor- 
 tions of through rates to reshipments from Schenectady, N. Y., to 
 Boston and Boston points. The decision made rests upon the 
 ground that the change desired AAould make the rate from Schenec- 
 tady less than from intermediate stations between Schenectady and 
 Boston and would thus bring about a conflict with the fourtk sec- 
 tion, unless the carrier should voluntarily reduce the rates from 
 the intermediate stations. There was no complaint in that case 
 that the rates from intermediate stations were unreasonable, nor, 
 was there any evidence upon that point. In this connection the 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 346 
 
 Commission used the language which has sometimes been referred 
 to as disclaiming the power to prescribe a reasonable rate on com- 
 plaint. The Commission said, as to rates from the shorter-distance 
 stations, concerning which no complaint had been made and no 
 evidence offered: 
 
 It is therefore impossible to fix future rates in this case, even if the Com- 
 mission had the power to make rates generally, which it has not. Its power 
 in respect to rates is to determine whether those which the roads impose are 
 for any reason in conflict with the statute. 
 
 It was impossible to fix rates from the shorter-distance stations 
 because the Commission had before it no complaint or any evidence ; 
 and if it had power to make rates generally, that is, without com- 
 plaint or evidence, it could not have done so in the absence of some 
 information on the subject. At that time, if the rates were found to 
 be in conflict with the statute, it was believed that the Commission 
 had authority to prescribe the maximum reasonable rate, and it 
 soon afterwards exercised that authority, namely, in the case of 
 Evans v. Oregon Railway and Navigation Company, above cited. 
 In the Thatcher case, above mentioned, the Commission said • 
 
 If the complainant thinks the rates from Schenectady and Intermediate 
 points to Boston and Boston points are excessive, he can raise that question 
 directly and distinctly, and the Commission can then enter upon a full investi- 
 gation of the facts bearing upon it. 
 
 It is proper to add that up to the time the United States Supreme 
 Court decided the Maximum Rate case (167 U. S., 478) in May, 1897, 
 the Commission exercised on every needful occasion the authority to 
 prescribe rates for future observance by the carriers. The last case in 
 which that authority Avas exercised was in the Milk Producers' Pro- 
 tective Association v. D. L. and "W. R. R. Co. et al. (7 I. C. C. Rep., 
 92) , decided March 13, 1897. In that case the Commission found the 
 existing rates upon the interstate transportation of milk to New York 
 delivery points unreasonable, unjust, and unduly prejudicial and dis- 
 advantageous to producers and shippers, and fixed certain group rates 
 for such transportation. This order was complied with by the differ- 
 ent carriers. 
 
 I have also had a statement drawn off showing the cases in which 
 the courts. haA'e refused to enforce" the orders of the Commission, 
 which is as follows. 
 
 In the following cases the courts refused to enforce the order of 
 the Commission from the date of its organization to January 14, 1905 : 
 
 * 1. Ky. andlnd. Br. Co. i;. L. andN ---- 87 Fed.Eep.,567. 
 
 *u3. I. C. C. V. B. andO ■- 145 U. S.,263. 
 
 * 3. I. C. C. V. A. T. andS. F 50 Fed. Rep., 395. 
 
 4. I. 0. C. ?>. L. V ---- .- 74 Fed. Rep., 784. 
 
 * 5. I. C. G.v. D. G. H. andM 167 U.S., 633. 
 
 * 6. Fla. Fruit Exoh. •«. S. F. and W 167 U.S., 512. 
 
 * 7. I. C. C. V. Tex. andPac _. 163 U. S., 197. 
 
 8. I. C. C. V. N. Y. P. and N _ _ Never reported. 
 
 * 9. I. C. 0. V. L. andN '_ 73 Fed. Rep., 409. 
 
 *10. I. O. C. -y. E. T. V. and G 181 U. S., 1. 
 
 *11. I. C. C. V. W.andA ..._ 181 U. S., 39. 
 
 *12. I. C. C. V. Clyde S. S -... 181 U. 8., 29. 
 
 *13. I. C. G.v. Clyde S. S 181 U. S., 39. 
 
 *14. I. C. C. V. Ala. Mid 168 U. S., 144. 
 
 15. I. C. C. V. D. L. andW 64 Fed. Rep., 733. 
 
 *16. I. C. C. V. C. N. O. andT. P __167U. S., 479. 
 
 *17. Behlmer 11. L. andN 175 U. S., 648. 
 
846 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 *18. I. C. C. u N. E. R. Co. of S. C 83 Fed. Rep., 611. 
 
 *19. Colo. F. and I. Co. v. So. Pac 101 Fed. Rep., 779. 
 
 *20. I. C. G.v. So. By 105 Fed. Rep., 703. 
 
 *21. I. C. C.v. So. By--- -- ..105.Ped.Rep.,703. 
 
 *23. I. C. C. D. L. and N - 190 U. S.. 373. 
 
 *33. Brewers. Cent, of Ga 84 Fed. Rep., 358. 
 
 134. Farm. L. and T. Co. u N. P 83 Fed. Rep. , 249. 
 
 *35. I. C. C. V. C. B. andQ.. 186 U. S.. 320. 
 
 *36. I. C. C. V. N. C. and St. L 130 Fed. Rep., 934. 
 
 *27. I. C. C. V. So. Pac. (Kearney) Not yet reported. 
 
 *38. I. C. C. V. So. Ry 133 Fed. Rep., 800. 
 
 *39. I. C. C. V. C. P. and V 134 Fed. Rep., 634. 
 
 It should be noted that of these 29 cases 25 went off not upon ques- 
 tions of fact, but upon proper construction of the law. These 25 
 cases are marked with a star. The Cattle Eaisers' case, naarked with 
 a dagger, was referred back to the Commission by the Supreme Court. 
 
 In the following cases the courts enforced the order of the Com- 
 mission : 
 
 1. I. C. C. ?•. C. N. O. andT. P. R. (partially) 163 U. S., 184. 
 
 3. City of St. ClouduN. P Not reported. 
 
 3. TilestonMill Co. v. N. P Not reported. 
 
 4. I. C. C. V. L. andN. (naval stores) 118 Fed. Rep., 613. 
 
 5. I. C. C. V. So. Pac. (oranges) .--. 132 Fed. Rep., 829. 
 
 6. I. C. C. V. L. andN. (Tifton, Ga.) No decision. 
 
 In the Tifton case defendants complied with the order of the Com- 
 mission after suit was brought in the court. 
 
 The Chairman. The time of the gentleman has expired. 
 
 Mr. Bacon. I respectfully beg that the committee will take into 
 consideration my request that I be allowed a half an hour more to- 
 morrow morning. 
 
 Mr. TowNSEND. Won't you put in what you have there ? 
 
 Mr. Bacon. I will put m the decision of the Supreme Court in the 
 case of Smythe v. Oliver Ames et al. 
 
 That the vested rights of railway corporations, and their immunity from the 
 operation of legislative action that would be unjust to their rightful Interests, 
 are amply protected by the provisions of the Constitution of the United States 
 has been definitely settled by recent decisions of the Federal courts, notably 
 by the decision rendered by the Supreme Court on March 7, 1808, in what is 
 known as the Nebraska Railroad Commission case, entitled " Smythe v. Oliver 
 Ames et al." The opinion of the court, delivered by Justice Harlan, declares : 
 
 " It is settled that a State enactment, or regulations made under the authority 
 of a State enactment, establishing rates for the transportation of persons or 
 property by railroad that will not admit of the carrier earning such compensa- 
 tion as under all circumstances is .iust to it and to the public, would deprive 
 such carrier of its property without due process of law, and deny to it the 
 equal protection of the laws, and would therefore be repugnant to the four- 
 teenth amendment of the Constitution of the United States. A railroad is»a 
 public highway, and none the less so because constructed and maintained through 
 the agency of a corporation deriving its existence and powers from the State. 
 Such a corporation was created for public purposes. It performs a function 
 of the State. Its authority to exercise the right of eminent domain and to 
 charge tolls was given primarily for the benefit of the public. It is therefore 
 under governmental control, subject, of course, to. the constitutional guarantees 
 for the protection of its property. A corporation maintaining a public highway 
 although it owns the property it employs for accomplishing public objects, must 
 be held to have accepted its rights, privllegeSj and franchises subject to the 
 condition that the government creating it, or the government within whose 
 limits It conducts its business, may by legislation protect the people against the 
 exaction of unreasonable charges for the services rendered by it; but it is 
 equally true thnt the corporation performing such public services, and the people 
 financially interested in Its business and affairs, have rights that may not be 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 347 
 
 invaded by legislative .enactment in disregard of the fundamental guaranties 
 for tbe protection of property." 
 
 The principle enunciated in this decision regarding the constitutional limita- 
 tions of legislation by a State is, of course, equally applicable to Congressional 
 enactment. 
 
 Thereupon, at 12 o'clock, the committee took a recess until 2 
 o'clock p. m. 
 
 AFTERNOON SESSION. 
 
 The committee reassembled at 2 o'clock p. m., pursuant to the tak- 
 ing of recess, Hon. William P. Hepburn in the chair. 
 
 STATEMENT OF HON. JUDSON C. CLEMENTS, INTERSTATE COM- 
 MERCE COMMISSIONER. 
 
 ]\lr. Clements : Gentlemen, I am very much obliged to you for the 
 opportunity of saying a few things this afternoon, and I will promise 
 not to detain you long. It is not my purpose to undertake a general 
 discussion of the questions that are pending in the different bills or the 
 general subject of railway regulation to any considerable extent. I 
 felt impelled to ask the privilege of coming here mainly because of 
 some things that have been said in regard to the manner in which the 
 Commission has endeavored to enforce the law or perform its duty, 
 and in respect to the decisions that have been made by the Commission 
 and reviewed by the courts ; and only from a sense of justice and self- 
 respect do I feel justified in trespassing upon your time in asking for 
 this opportunity. 
 
 I shall take ujj first the charge, as I may call it, which has appeared 
 in one form and another here and elsewhere, to the effect that the 
 Commission has not properly endeavored to enforce the provisions of 
 the present law against rebates and various forms of secret discrimi- 
 nations, and which has been used as an argument against investing 
 the Commission with other powers. 
 
 To begin with, I call attention to the fact that those who accuse 
 the Commission of dereliction in this respect are the representatives 
 of corporations that inaugurated and maintained these reprehensible 
 practices ; and you are asked in effect to discredit the Commission 
 at the instance of those who have broken the law. Now, let us look 
 at the facts. The Commission has instituted numerous general in- 
 vestigations when it has had reason to suspect deviations from the 
 published rates, discriminations, cut rates, etc.,' in various localities 
 all over the country. It is a matter of general public knowledge 
 that that has been so. In 1902 some important inquiries were made, 
 one with respect to grain rates from the West — from Chicago and 
 other points in the West — to the seaboard, and in the same year an- 
 other one in respect to packing-house products ; and notwithstanding 
 the Commission had on previous occasions inquired into these matters 
 and put traffic men on the stand and had been unable to develop what 
 it was informed in one way and another was the true situation — 
 that is, that the law was violated — it turned out during these investi- 
 gations that there Avas a general owning up by the carriers to viola- 
 tions of the law. 
 
348 PEOPOSEB AMENDMENT OP INTEKSTATE-COMMERCE LAW. 
 
 You have had printed here at various sessions full testimony 
 in which one traffic man after another appeared on oath and ac- 
 knowledged that there was a general practice of cutting rates 
 and giving rebates, sometimes one form and sometimes another, 
 both in respect to packing-house products and grain — not occa- 
 sionally, but by wholesale and generally. These inquiries were 
 instituted by the Commission, and this condition was developed. 
 The testimony in these cases was referred to the Department of 
 Justice with the request that proceedings be instituted for the pur- 
 pose of suppressing these violations of law. The result was that a 
 number of injunctions were obtained against the principal carriers, 
 not all. It was not then laiown that an injunction would lie on behalf 
 of the public against a practice of this sort. It was disputed by 
 able lawyers, it was a question of doubt; and the proceedings were 
 confined to some 12 or 13 leading roads as test cases, and also with 
 the idea that if the law was found to be so that they could be en- 
 joined and were enjoined that the moral effect of it would be to 
 admonish the others, and then they could be enjoined or not as it 
 might be found necessary. So those injunctions were obtained un- 
 der proceedings instituted by the Attorney-General, or under his 
 direction, at the request of the Commission in respect to these mat- 
 ters. The injunctions are still running against those roads, and they 
 are under injunction to-day. 
 
 It is the universal testimony, not only of railroad men, but ship- 
 pers, that since those investigations and disclosures and the publicity 
 that was given to them through the press and otherwise, and the 
 injunction proceedings were instituted and maintained, that that 
 practice of directly cutting the rate or paying rebates has very 
 largely disappeared. It has been corrected, and that is the universal 
 testimony, there is no doubt about it. I do not mean to say that 
 there are not violations of the law here and there, as there are viola- 
 lations of other laws, and as there always will be. You have never 
 been able to suppress counterfeiting or theft or any other crime 
 entirely; but with great effect and success these practices of paying 
 rebates and shipping at cut rates, deviations from the published rate, 
 have disappeared in the last two or three years as the direct result 
 of these investigations, the publicity, and the exposure and the injunc- 
 tion proceedings which have been had. These were not all. I men- 
 tion them because they occurred about the same time. I will say 
 more; that it was a shameful condition, and was acknowledged by 
 the carriers and by the public as intolerable, and it resulted in the 
 passage of the law khown as the " Elkins bill." 
 
 This is not all. The Commission has encountered great difficulties 
 at every step. It has had general investigations of practices of the 
 same sort at Minneapolis and at St. Paul in respect to flour. It was 
 difficult to obtain testimony. It always had been before these hear- 
 ings were had. As far back as 1892, when the Commission was under- 
 taking to develop these matters, it encountered this difficulty. Mr. 
 Counselman objected to testifying in regard to rebates, because to do 
 so would incriminate him. Notwithstanding there was a provision in 
 the act to regulate commerce that the testimony should not be used 
 against the witness he objected. The Supreme Court held, notwith- 
 standing that provision, that he was entitled to the exemption, and 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMBBCE LAW. 349- 
 
 that the only way a witness could be compelled to testify in such a 
 case was to give him absolute immunity from prosecution. Then, to 
 meet that, and to enable the Commission to proceed and obtain facts 
 at all in respect to such matters — because it was only the parties that 
 were guilty of the offense that knew about it — Congress promptly 
 passed, in 1893, an act complying with the suggestion of the Su- 
 preme Court,. giving immunity to a party when he testifies in respect 
 to these cases. 
 
 Very soon after that the question was again taken to the Supreme 
 Court, under the new law. It was said this act did not afford com- 
 plete protection, that the witness was entitled to immunity from the 
 exposure it would subject him to ; and, after a course of litigation and 
 appeal, the Supreme Court sustained that act, and since that time the 
 fact that it may incriminate a party is no reason why he shall not be 
 compelled to testify in regard to these matters. So you see it took 
 a long time to get that question settled. Again, in the Brimson case, 
 in- Chicago, where we were investigating the facts in connection with 
 the Illinois Steel Company, objection was made to producing books 
 and charters and papers in the possession of the company on the 
 ground that the Commission had no right under the law to institute 
 a general inquiry of this kind. 
 
 It was said that the Conmiission was not a grand jury, and therefore 
 could not ask the legitimate question of a witness except in a case 
 where there was an issue, where there were parties, complainant and 
 defendant, and an issue that it had the jurisdiction to try. So, there we 
 were confronted Avith that question, not that it would incriminate 
 them to answer, for that had been settled, but simply that the Com- 
 mission could not institute such an inquiry, could n-ot conduct it. 
 It is true the law said in terms that we could, but they said the 
 law was invalid, that it was unconstitutional. So, after a course of 
 appeal that went to the Supreme Court, by a majority of one 
 that case was decided in favor of the power of the Commission to- 
 conduct such an investigation. 
 
 Only last year, when we were investigating, upon complaint, the 
 anthracite-coal roads in New York, a general objection was made 
 again to the production of books and papers, and we had to stop pro- 
 ceedings and go into court, and then the case was appealed to the 
 Supreme Court. Though the circuit court decided against the Com- 
 mission, the Supreme Court fully upheld the position taken by the 
 Commission and ordered production of the documentary evidence. 
 
 Only last fall in Chicago, when we were investigating the private 
 car line practices imder a general inquiry, a witness who represented 
 a car company was asked whether his company paid rebates or not. 
 He refused, under advice of his lawyer, to answer. "We had to sus- 
 pend that branch of the case and institute a proceeding to compel him 
 to testify. That proceeding is pending now in the circuit court. 
 
 Thus it is seen that the Commission has been steadily confronted 
 at every step with difficulties and constitutional objections and re- 
 fusals to answer, necessitating resort to courts and appeals to the 
 highest court in the country to decide these questions. And yet the- 
 gentlemen under whose management these abuses have been commit- 
 ted are the gentlemen who come here and tell you that the Com- 
 mission is not to be trusted because it has not enforced the law 
 against them. 
 
350 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 There would be no need of enforcing the law if they were to hold 
 that their obligations under the law were first and highest and above 
 the pecuniary interests of the companies which they represent. They 
 say : " Well, I must pay rebates because my competitor does. I must 
 commit an offense because my competitor comiiiits one, or I will 
 lose business. I will get the business by violating the law, and there- 
 fore I must violate it. 
 
 I do not know of any code of ethics or code of morals that sus- 
 tains an argument of that sort with respect to any other business 
 in the land — that I must do as somebody else does for fear he. will 
 get ahead of me, irrespective of what the law says about it. Now. 
 I admit as a practical question the traific man is confronted with a 
 great difficulty when his business is being taken away by another 
 road that violates the law. I see the force of that ; it is a serious con- 
 dition. But it would be far better if all of them who are affected in 
 this way would combine to try to obey and enforce the law rather 
 than to follow the bad example of a competitor and violate it. But 
 what I protest against is that these gentlemen who have instituted 
 and maintained these practices shall stand here to impugn this Com- 
 mission for dereliction and failure in an effort to perform its duties 
 under this laAv and to compel them to obey it. 
 
 I do not criticise the carriers for exercising their right to raise the 
 questions that they have in these joroceedings. My point is that when 
 they stand upon their confessed violations of law they occupy a sorry 
 position from which to discredit the Commission for failure to 
 enforce upon them obedience to laws, especially in view of the fact 
 that they have in everj' way contested the authorit}^ of the Commis- 
 sion to require the disclosures necessary to that end. 
 
 Now, railroad men are no worse than other men; they are no 
 better; they are actuated by the same motives that other people are 
 actuated by. These gentlemen who represent these corporations that 
 are in this business for gain, confessedly so, represent the interests 
 of the owners. They do not pretend to represent the public. 
 
 The Northern Securities matter was first investigated by the Inter- 
 state Commerce Commission under a general inquiry. It was the 
 taking of testimony before the Commission that was a basis, a foun- 
 dation, for the proceedings that were carried to the Supreme Court 
 and resulted in the dissolution of that unlawful combination. The 
 joint traffic agreement between the 31 railroads in the trunk-line 
 territory a few years ago, when they had signed an agreement, was 
 taken up by the Commission and investigated, and it was upon 
 request of the Commission that proceedings were instituted by the 
 Attorney-General to enjoin and break it up, and which resulted in 
 the dissolution of that combination by injunction. 
 
 It was the investigation of the Commission onl}^ a couple of years 
 ago in southern territory, where it was alleged that the roads carrying 
 cotton in that section were reserving the rotiting to themselves and 
 dividing the traffic — it was the investigation of the Commission 
 and the request of the Commission that caused the institution of pro- 
 ceedings at Atlanta and Memphis and the breaking up of that prac- 
 tice. It was the general investigation of the Commission last fall which 
 developed the practices of so-called " industrial lines " in Chicago 
 and other places Avhere, by securing an undue amount of the through 
 
PE0P08ED AMENDMENT OF INTERSTATE-COMMERCE LAW. 351 
 
 rate, the manufacturer for a small trackage about his works obtains 
 an equivalent to a rebate. As a result of this investigation, some of 
 these practices have already been abolished. It was the general 
 investigation of the Commission that developed the abuses of Endred 
 character in respect to the private car lines receiving allowances 
 from the railroad and paying rebates to some shippers and not to 
 others. 
 
 The Commission has not been idle. It has been confronted Avith a 
 contest at every step it has made froni the beginning by these gentle- 
 men who impugn it and against whom it has been sought to enforce 
 the law. A sense of justice, a feeling of self-respect, forbids the Com- 
 mission to stand idly by and let it go as confessed that we have not 
 been attempting to do anything, and that there should be no regula- 
 tion as to the reasonableness of rates because the Commission has not 
 been able to induce the very men who make the arguments to cease and 
 desist from other violations of the law, such as hurtful and ruinous 
 discriminations as between individuals, commodities, and places. 
 
 I haA'e no animosity toward the railroads. The decisions of the 
 Commission — those in which I have participated — are matters of pub- 
 lic record. The facts upon which we have rendered decisions are 
 printed. They are in the reports, and these cases are open to inves- 
 tigation. There has been no crusade against the railroads by this 
 Commission. The crusade is the other way. The law enjoins upon 
 the Commission the duty of making a report once a year to the Con- 
 gress, including therein its recommendations for amendment of the 
 regulating statute. It has never failed to perform that duty as it 
 has understood it. The breaking down of this law in the etfort to 
 enforce it at different points has made it necessary for the Commis- 
 sion to do that, to emphasize it, and to repeat it time after time. Of 
 course, it would be easy to remain passive, have an easy job, and draw 
 the salary, and pay no attention to the sworn duties and obligations 
 which rest upon the Commissioners. 
 
 But we would be unworthy of your confidence if we did that. And 
 not having done that, every time the Commission has made a rCT)ort 
 recommending any important amendments to this law which affects 
 the carriers, and which they do not approve of, the Commission has 
 been attacked in various ways. 
 
 It has been asserted that we want autocratic power. Only last 
 year the Senate called upon the Commission for certain data and in- 
 formation in regard to increases of rates, which it answered as soon as 
 it could compile the testimony, and that special report became a public 
 document. A gentleman in Chicago, Mr. Slason Thompson, who is 
 the manager of the press bureau of a railroad organization, has put 
 forth a criticism of that report which is longer than the document 
 itself, and which begins with this statement: 
 
 January 13 last, presumably at the Suggestion of the Interstate Commerce 
 Commission, in furtherance of its campaign to obtain autocratic control of 
 American railroad transportation, Senator Quarles introduced in the United 
 States Senate and asked the present consideration of the following resolution. 
 
 There the Commission and the Senator who introduced it are most 
 unwarrantably characterized as joining in a campaign for what? 
 Autocratic authority for the control of all American railways. And 
 what is the offense ? The Senator introduced a resolution calling on 
 
352 PR0P08ED AMENDMENT OP INTERSTATE-COMMERCE LAW. 
 
 US for certain data and information in respect to the increase of rail- 
 way rates during the last three or four years, and the effect of those 
 increases. We made the best answer we could from the data we had, 
 and the Senate published the document. That is the way it is 
 handled and the way we are criticised by a representative of a large 
 number of these carriers. 
 
 Now, I want to pass away from that, for I am here, as I said 
 before, to repel these unjust insinuations or charges, in whatever 
 form they have been presented, and to give to you the evidence of the 
 activity of the Commission in its efforts to bring these concerns into 
 obedience of the law. 
 
 Mr. H. L. Bond Avas before the committee a few days ago, and T saw 
 in the newspapers, although I have not had a chance to read the cor- 
 rected or revised report of his statement, that he said, in respect to 
 what he considered the impropriety of conferring any power to fix 
 rates upon the Commission, after naming twenty -five or thirty cases 
 that had gone to the courts — to use his elegant language — " The Com- 
 mission had hit the bull's-eye once, had struck in the ring twice, and 
 had missed the target altogether the other 23 times." or whatever the 
 number was. Now, I only refer to that because stated in that way it 
 is misleading. 
 
 Out of the 35 cases that the Commission has had occasion to bring 
 in court for the enforcement of its orders, some five or six of them 
 were cases in which the courts enforced the orders of the Commission. 
 In the other cases they did not. But why not ? That is the material 
 matter to which I wish to call your attention. Nearly all of these 
 other cases in which the courts have not enforced ,the orders of the 
 Commission were either where the Commission found a rate unrea- 
 sonable and undertook to say what was the reasonable rate and pro- 
 hibited the charging of any more than the reasonable rate, and made 
 an order to that effect, or they were cases (of which there were a 
 large number) under the long and short haul clause, or fourth section 
 of the act, where the Commission announced and followed a construc- 
 tion of that clause to the effect that it was obligatory upon the car- 
 riers, except when they made a special case under an application to 
 the Commission for leave to depart from the rule of that clause or sec- 
 tion. So that as to all those cases Mr. Bond refers to them in such a 
 way as to imply that the Commission was reversed on the merits of 
 those cases, Avhile as a matter of fact the Commission was reversed 
 upon the construction or interpretation of the law in respect to the 
 fourth section and the power to fix a maximum rate. 
 
 I am not here to criticise the ruling of the Supreme Court on these 
 questions; but it is a fact that no railroads ever, before the interstate- 
 commerce law was passed or since, desired or did charge more for the 
 short .haul than for the long haul except to meet competition at the 
 longer-distance point. That was the only occasion for it. Now, it 
 has been held that where competition does exist at the farther point 
 and does not at the nearer point, or where greater competition does 
 exist at the farther point than at the nearer point, that the circum- 
 stances and conditions are substantially dissimilar, and therefore 
 that the long and short rule does not apply. However it has been 
 brought about, that section is as much a nullity as if it had never been 
 written. 
 
PROPOSED AMENDMENT O^ INTERSTATE-COMMERCE LAW. 353 
 
 ^ Now, I am not criticising the court about that. There may well 
 have been fault in framing the section, because that section is only 
 operative where the " circumstances and conditions are similar," and 
 right there in that phrase the difficulty has arisen. The Commission 
 was trymg to give some effect to the section; was assuming that Con- 
 gress meant to correct something by the fourth section ; but under the 
 construction given to that section by the court only one of its long 
 and short haul clause orders have been enforced. It is perfectly 
 evident that the law might just as well have never been written as 
 to have it mean what it now means, for it has no effect whatever. 
 
 In respect to the power to deal with the rate the Commission from 
 its very inception construed the law to mean that whejj a rate was 
 challenged and the qiiestion was tried„-and upon hearing the rate com- 
 plained of was found to be unreasonable, the Commission could find 
 what was reasonable, and could prohibit the carrier from charg- 
 ing any more upon the apparently good reasoning, it seems to me, 
 that any part of the excessive rate above that which is reasonable is 
 just as unlawful as any other part. If the reasonable rate is 90 cents 
 and the unreasonable rate is a dollar, and you have power to order 
 the carriers to cease and desist making an unreasonable charge, 
 why does not the same apply to any other part of the excess as well 
 as the one hundredth cent? " T\Tiy not apply it to the ninety-fifth or 
 the ninetieth, or any other part above the reasonable rate? That is 
 what the Commission was trying to do. That is what the Commis- 
 sion held from the beginning, when Judge Cooley was its chairman, 
 and it made rates at that time, and continuously (hereafter until the 
 Supreme Court said that the power was not conferred upon the Com- 
 mission by the statute. 
 
 A large number of these cases (25, I think) that Mr. Bond cites 
 as indicating the incapacity of the Commission, so to speak, are sim- 
 ply cases that were overturned in the way of undertaking to enforce 
 the law as it was construed from the beginning ; and whatever may be 
 the law now, whatever may be the rightfulness of the interpretation 
 which the courts have placed upon it, the very situation that con- 
 fronts you here to-day is a vindication of the desire of the Commis- 
 sion to enforce a reasonable or just rate. It is because of such inter- 
 pretation that this clamor for amendment exists, so that it is not fair 
 to array these cases here as cases in which the court upon the facts, 
 upon the merits and equities and justice of the case, has overturned 
 the Commission 29 or 30 times out of 35, when in reality these cases 
 went off solely upon construction of the law, which dembnstrated vital 
 defects in this regulating statute. In the various judicial proceedings 
 to which I have referred the Department of Justice has cooperated 
 with the Commission and acted with commendable promptness and 
 efficiency in the expedition and conduct of the cases. 
 
 Now, I have said about all I intended to say in respect to these mat- 
 ters. There are one or two general observations I want to make. It 
 was said the other day by Mr. Staples, a member of the railway 
 commission of Minnesota, before the Senate committee (and there 
 is no impropriety in my alluding to it, because it appeared in the 
 newspapers) that this Commission has had a case before it for a long 
 time from a place called Cannon Falls, in Minnesota, involving 
 a discrimination in rates. That is a long and short haul case. The 
 
 I c L— 05 23 
 
354 PROPOSED AMENDMENT OF INTERSTATE-COMMEEOE LAW 
 
 testimony ^YSLS taken about a year ago by the Commission, and it Has 
 been set some two or three times for argument before it was finally 
 submitted. It was either postponed on the request of the attorney 
 representing the complainant or by his consent and the request of the 
 other party 
 
 Mr. Stevens. When did the last brief come in ? 
 
 Mr. Clements. The brief on behalf of the complainant was filed 
 the 5th or 6th of this month. The Commission has had that case, 
 then, three weeks. The delay has largely resulted from the action of 
 counsel representing the complainant, either on his own motion for 
 his own convenience or in conjunction with counsel representing the 
 other side. ,Now, Mr. Staples never intended to indicate that this 
 Commission was at fault ; I have no idea that he did. What he was 
 undertaking to do was to show the defective state of the law as to the 
 long and short haul cases. That is what I believe was his intent and 
 meaning. I think he was entirely misunderstood, and I think it is 
 due to him and to us that this fact be stated on account of the publicity 
 that was given to his statement. 
 
 It is continually said that it is all right to stop rebates, stop the 
 cutting of rates, stop these disastrous and ruinous secret discrim- 
 inations; all these gentlemen say that those things ought to be 
 stopped. But then they will tell you in the next breath that such 
 a thing as an unreasonable rate is a thing of the past ; that there is no 
 need of any law about that because there are no unreasonable rates. 
 Well, there may not be — I am not here to try rates to-day — ^but what I 
 want to say about that is this: The present law proceeds upon the 
 idea that the shipper has a right to reasonable and just rates. If he 
 has, there ought to be some way of ascertaining whether he has a 
 reasonable or just rate, and to give it to him if he has not. If he has 
 no rights in the premises, if transportation is a commodity like a 
 horse or a hat to be sold under any terms and with any discrimination 
 the owner pleases, then we ought to wipe out the law we have now. 
 It has no place here, if that is the true theory. If, however, the law we 
 now have properly declares every rate is unlawful which is not rea- 
 sonable and just, and that the public is entitled to a reasonable and 
 just rate, there ought to be some process whereby it can be ascertained 
 and enforced. 
 
 These gentlemen say this is revolutionary, radical, reactionary. 
 I do not know how many adjectives have been used in respect to it. 
 It appears to me that it is just the other way, that it is a curious 
 anomaly that where two parties have rights involved and the law 
 provides that the question may be put m issue by complaint and 
 answer, with a trial and investigation, that the whole matter must end 
 finally by allowing one of the parties to decide the question. There 
 is no affective way now in which to revise and correct a rate and put 
 in a different one if the existing rate is unreasonable, no matter how , 
 unreasonable it may be. To say that the Commission may say that 
 a dollar rate is unreasonable, and therefore unlawful, and make its 
 order to that effect, subject to a trial de novo and the taking of new 
 testimony, when all of the traffic managers can come in and give testi- 
 mony as experts that the rate in question is a reasonable one, certainly 
 seems to me an anomaly. 
 
 There is no way within a reasonable time that the matter can be 
 
PROPOSED AMEKDMENT OB INTERSTATE-COMMERCE LAW. 355 
 
 settled and the reasonable rate made effective. There has never been 
 a time since the dawn of civilization, at least since the establishment 
 of common law, that one of the parties in a matter in controversy- 
 is left by the conditions of the law to determine for himself what shall 
 be the other party's right in the matteT. But then Ave are told, in 
 answer to_ that, that the interests of the carriers are so dependent 
 upon the just interests and prosperity of their patrons that they wiU 
 not kill the goose that lays the golden egg, and therefore their own 
 selfish interests will promote the application of just rates for their 
 patrons. This, of course, is mere evasion. In respect to no other 
 matter do we proceed upon the idea that we can safely leave the 
 just right of one person to be determined by the interests of the other 
 party in the controversy. 
 
 The Chairman. Would it interrupt you if I should ask you a ques- 
 tion there ? 
 
 Mr. Clements. No, sir. 
 
 The Chairman. What is the method pursued by the Commission in 
 ascertaining what is a reasonable rate? To what factors, what cir- 
 cumstances, do they look — ^how do they get at it? 
 
 Mr. Clements. Well, the Commission considers such testimony and 
 facts as it may get relating to many matters, among which are the 
 bulk of the article as compared with its weight and its value, how 
 much space it will take up in a car as compared with its weight and 
 its value, the length of the haul, the value of the article, the service of 
 the carrier, and also the question of competition. In addition to that 
 it considers what the traffic will bear. You can not put the same 
 rate on low-grade freight as you can put on high-grade freight. For 
 instance, you can not put the same rate on sawed logs that you can on 
 dressed meat, which is a higher grade article. Value is necessarily 
 an important factor. 
 
 The Chairman. Is there any mathematical method of determining 
 it? 
 
 Mr. Clements. There is absolutely none, I think. There is no 
 method by which you can work out to a mathematical demonstra- 
 tion that a particular figure is a just and reasonable rate. You can 
 not do it, because you can not count the cost of the traffic to the car- 
 rier for its movement. There are many elements that you can not 
 figure ; they are only estimates. That is the utmost that the railroads 
 undertake to do in considering these matters. It is one of those 
 questions that, in my judgment, are not susceptible of any such fine 
 measurement as the calculation of interest on a note. As with many 
 other questions, however, we get into cpurfc where there is a contro- 
 versy between persons, and the question submitted to the" jury by 
 the court is, "Wliat is reasonable under all the circumstances? No- 
 body can figure on it to a certainty, and nobody can prove it by any 
 rule, but human conscience, human judgment, with comparison of 
 all material things involved, are to be used. 
 
 Take, for instance, the matter of freight classification. Classifica- 
 tion, to be of any benefit, must group together all of one class. The 
 roads in some territories have six or seven classes, and in other sections 
 eleven, and so on. Take either one of them, and when you put the eight 
 or ten thousand articles of commerce that move into these different 
 classes you have to group together in one class several hundred articles. 
 
356 PROPOSED AMENDMENT OF INrERSTATE-COMMERCE LAW. 
 
 Thej^ all differ in greater or less degree — in value, in bulk, in weight, 
 and in their susceptibility to injury from water or breakage, and all 
 these things. It is a greater risk to haul glassware, cut glass, and 
 things lilre that, than it is to haul potterj^, because the loss is greater 
 when the breakage or damage comes. The best that can be done by 
 human ingenuity and human methods, in my judgment, or ever can 
 be done, is a fair and reasonable approximation in respect to these 
 things. 
 
 The Chairmak. Conjecture? 
 
 Mr. Clements. It amounts to more than a conjecture, perhaps. 
 Conjecture is not much more than a guess, I should think. There are 
 some of these things — you see them, you know them, they are sub- 
 stantial elements that you must consider — ^but you can not measure 
 them. 
 
 The Chairjian. Is it always proper in fixing a rate to ascertain, if 
 possible, whether it will be remunerative to some degree? 
 
 Mr. Clements. That is what we have always thought was neces- 
 sary, to find that the traffic paid something more than the cost of mov- 
 ing. Otherwise it would be carried at a loss, which loss would have 
 to fall upon some other traffic and would be an unjust discrimination. 
 So we have always regarded it as a wholly unjustifiable thing for a 
 carrier to carry at a loss. It can not be done without injustice to some 
 other traffic. 
 
 The Chairman. Well, there would be a difference, I suppose, be- 
 tween carrying at a loss and carrying at a remunerative rate ? 
 
 Mr. Clements. Yes. The carriers as a rule say that they had 
 better ca,rry a thing that will pay the cost of movement and some- 
 thing more rather than not to carry it at all, although it does not pay 
 enough to support the cost of the movement and pay its proportion 
 toward the fixed charges and expenses of the plant. And undoubt- 
 edly there are many things that do move at less than a remunerative 
 rate, if you take into account the fair proportion which that traffic 
 should bear of all the expenses of maintaining the road and operat- 
 ing it, and paying fixed charges. There is no doubt about that. 
 If that were not so there are a great many cheap and heavy articles 
 that would not move at all. The carriers think that it is to their 
 interest to move those at something above the cost of movement, 
 and that it has tended to build up industries, has created industries ; 
 that it has pleased the public, and it is entirely defensible so far as 
 I can see. It helps to develop the country and develop industries, 
 and inures to the benefit of the public and to the railroads, although 
 they do it at less than they might reasonably charge if they were 
 undertaking to make this traffic bear its proportion of all expenses. 
 
 Mr. Burke. May I ask you one question there? 
 
 Mr. Clements. Certainly. 
 
 Mr. BuEKE. If I understand you correctly, in determining a rate 
 you do not consider to any great extent the cost of the service ? 
 
 Mr. Clements. Well, it can not be considered for the reason that 
 it is not ascertainable; but, of course, that is looked to as far as it 
 can be considered. 
 
 Mr. Burke. If I understand you correctly, the Commission, in 
 determining a reasonable rate, does it in exactly the same way and 
 on the same basis that the railroads say they do it? 
 
PROPOSED AMENDMENT OF INTEESTATE-COMME.RCE LAW. 357 
 
 Mr. Clements. That is my understanding. "We consider all the 
 things which they consider. I do not think there is any difference 
 between us about that. They sometimes insist upon giving more 
 effect to competition than we do at some points, and also use competi- 
 tion for a justification for some other things they do. We differ about 
 that. But so far as the basis of considering these things is concerned, 
 it is the same, whether it is by the Commission or by the railroads. 
 
 Some other statements have been made here by some very reputable 
 and worthy gentlemen in respect to the settlement of cases, to the effect 
 that upon a certain small per cent of the complaints, formal and 
 informal, that have come to the Commission the Commission has 
 made orders, and of that per cent a certain proportion of the orders 
 made by the Commission have been obeyed by the carriers, while, as 
 to the remainder, some few suits have been brought to enforce them. 
 I do not know where they obtained their figures. Certainly we have 
 made no official statement of that kind. They may be correct, how- 
 ever, for the time they cover. These informal complaints consist of 
 letters complaining of a rate, or an overcharge, or this or that ; some- 
 times it is an alleged discrimination, or a burdensome rule, or a rate, 
 or an overcharge. The Commission handles them in this way : 
 
 It is not a comjplaint that you can serve and the carrier can answer 
 formally as the basis for a trial; but in order to avoid unnecessary 
 suits, delay, and expense we make a memorandum upon it in the office 
 from the rate sheets on file, so as to show what they indicate about the 
 matter, and we send that to the railroads complained against (just as 
 a letter) , asking them to deal with it and let us know about it, and if 
 there is anything wrong to correct it. They answer, and a great 
 many of those informal complaints are disposed of in that way. If 
 they have charged, by mistake, $5 more than the published rate 
 would warrant and you can show it to them, they invariably pay it, 
 and pay it promptly, and that is the end of it. There are complaints 
 of that sort all the time, varying from 25 cents to $200, on these 
 things, and much more than that in some cases. These are called 
 the informal complaints. 
 
 The complaint is often about a rate or about a discrimination in 
 rates. These are submitted in the same way for the correction of 
 any injustice and with a request for information. If it is an over- 
 charge and it is settled, that is the end of it. If it is a rate that is 
 involved and the carrier does not see proper to change it, its reasons 
 why it declines to do so are stated, and then the matter is submitted to 
 the complainant. If he wants to file a complaint he does it. Other- 
 wise it is dropped. Very freqviently it is dropped. 
 
 Now, I suspect in these figures that have been used here all those 
 cases where the matter has been dropped are classified as adjusted or 
 settled. There has been no settlement. The shipper has abandoned 
 the case because he found he had to make a formal complaint, at the 
 end of which he could do no more than get an order that the carrier 
 cease from charging that rate. There is no adjustment there. In 
 those cases where overcharges have been claimed and obtained, 
 they have been settled; they are adjusted, as I say, informally and 
 satisfactorily. That is an adjustment, to be sure, but it is simply pay- 
 ing back what the carrier admits he took o^er and above his own pub- 
 lished rate. It is not the adjustment of a rate ; it is the payment of 
 
358 PROPOSED AMENDMENT OF INTEESTATE-COMMEBCE LAW. 
 
 that which the carrier took in excess by mistake over the freight he 
 was entitled to take. 
 
 As I say, these figures are misleading, and because of these various 
 elements they do not mean just what it has been sought to make them 
 inean. 
 
 The Senate has sent to the Commission a request for inforniation 
 in regard to these matters and we are undertaking to compile it. 
 There will be a statement of all these matters which will show their 
 exact status and the disposition of them as soon as it can be prepared. 
 
 The Chairman. If you please, I think the committee would like to 
 have you explain the method pursued by the Commission with refer- 
 ence to a complaint ; what is the process ? 
 
 Mr. Clements. You mean a formal complaint ? 
 
 The Chairman. YeS ; what is done ? 
 
 Mr. Clements. Well, the complainant makes out and alleges as he 
 would in a petition or a bill in court, setting forth what he complains 
 of and against what carrier. They frequently do not say that the car- 
 rier is engaged in interstate commerce ; they may say the rate is from 
 ''Atlanta to New York," or something like that, and omit to state the 
 roads that make up the actual physical line. It then becomes neces- 
 sary for the Commission, in order to avoid delay, amendments, and 
 things of that kind, to send the petition back, indicating what should 
 be inserted. 
 
 For instance, to give the Commission jurisdiction it must be said 
 that they are engaged in interstate commerce, and the roads must 
 be stated, the technical names of the roads, the names under which 
 they are chartered, and so on. Well, when that is done, it is signed by 
 the complainant and sent to the Commission. It is then filed, copied, 
 and a copy is mailed by registered letter to each carrier complained 
 of, together with a notice from the Commission that the carrier shall 
 file answer within twent3'- days or some other period of time. Twenty 
 days is usually the time. When it is on the Pacific coast we give a 
 longer time. When it is near by, if it is urgent, if it is a matter of 
 perishable fruit in the spring, or something of that kind, and it 
 seems necessary that whatever is done must be done in a short time, 
 we fix a less time. The law only says reasonable notice. So we are 
 governed by circumstances, distance, etc. The carrier answers 
 within the time or asks for further time, and then answers. Then 
 as soon as the Commission can find a time when it can set th^ 
 case 'for a hearing it does it, and notifies the parties that the case will 
 be heard at Chicago or Atlanta, or wherever the place is, at such a 
 time. The Commission goes there and sits down with a stenographer 
 and takes the testimony. That is written out by the stenographers, 
 typewritten, furnished free to each side, and then after argument, 
 oral or written, or both, it is submitted to the Commission. 
 
 Mr. BuHKE. Does the whole Commission attend that meeting ? 
 
 Mr. Clebibnts. As near as possible ; it is not always possible to do 
 so. We have a good many Cases sometimes, so that we have to divide 
 up. In an important case we try to have as many as three of the 
 Commissioners present, or all of them if possible. But in a number 
 of cases one Commissioner goes and takes the testimony, and after it 
 is written out it is submitted to the whole Commission. There is no 
 way to deal with all the cases except in some such way. Sometimes 
 
PROPOSED AMENDMENT OF INTERSTATE-OOMMEBCE LAW. 359 
 
 the testimony is taken by deposition, for which the law provides. 
 The parties, on notice to each other, may do that. 
 
 The Chairman. Is it necessary for the complainant to appear by 
 counsel ? 
 
 Mr. Clements. No, sir ; that is not required. 
 
 The Chaikman. Are the expenses of witnesses paid ? 
 
 Mr. Clements. We print on the subpoena that each party will pay 
 his own witnesses, so as to avoid as far as possible the payment out 
 of the public money of any witness fees. And in all civil cases that 
 is adhered to. Sometimes, when we have an investigation that re- 
 lates to these secret rebates and things of tliat kind, and a witness is 
 not willing to come, we issue a subpcBna and pay him. 
 
 The Chairman. Would you pay the expenses of an indigent com- 
 plainant ? 
 
 Mr. Clements. The witness fees ; you mean the witness fees ? 
 
 The Chairman. A man who is unable to pay. 
 
 Mr. Clements. I do not know if we ever have done that. I do not 
 know if a case of that sort was presented whether we would feel 
 authorized to do that or not. I am sure it has never been done. We 
 try to avoid that by setting these cases as near to the complainant as 
 possible. They may be heard, all of them may be heard, in Wash- 
 ington under the law ; but we long since found that that amounts to 
 a denial of any hearing at all, because where there is a large number 
 of witnesses to come these distances and pay their hotel bills and so 
 forth they could not afford to do it. Consequently, we set these cases 
 as near as possible to the residence of the complainant. 
 
 We have found no difficultj'- in getting witnesses in that way. The 
 railroads do not complain of that, because it is about as easy for them 
 to go one place as to another. They are men who are generally trav- 
 eling anyhow, and they do not find any hardship in that. Sometimes 
 they prefer to go to a place where there is a good hotel rather than to 
 a place where there is not a good hotel, but they do not make any pro- 
 test. They go wherever the case is set. 
 
 Now, I have about concluded what I wanted to say. In respect 
 to the importance of this question I have some figures here, made 
 a few days ago, which do not show that there are unreasonable 
 rates, but they do, to my mind, show that this is a very important 
 question and one which ought to be controlled in some tangible way 
 by law. Upon a total mileage of 187,000 miles of railway for the 
 year ending June 30, 1899, the carriers reporting to the Commission 
 earned in gross $1,313,000,000, in round figures. Upon a mileage of 
 about 209,000 miles in the year ending June 30, 1904, they earned, 
 gross, $1,966,000,000, showing an increase for the last year named 
 over the first one of $653,000,000. This increase exceeds the entire 
 receipts of the Government of the United States for the last fiscal 
 year from all sources. The increase of net earnings for the last year 
 mentioned as compared with the first year mentioned, five years 
 previous, is $177,000,000. 
 
 The gross earnings per mile of line for the first year named were 
 $7,005 per mile; for the last year named it was $9,410. The net 
 earnings of line per mile for the first year were $2,433, and for the 
 last year $3,055. 
 
360 PROPOSED AMENDMENT OF INTEKSTATE-COMMEECE . LAW. 
 
 Mr. TowNSEND. In determining the net earnings of the road, is the 
 Commission in a position to know whether a proper proportion has 
 been assigned to operating expenses? 
 
 Mr. Clements. Well, the Commission has been endeavoring with 
 its utmost ability, under the help of Professor Adams, our chief 
 statistician, to get on a uniform basis, so that all reports would be 
 alike and would make a fair showing as between operating expenses 
 and permanent improvements, and so on. I can not say that it- is 
 perfect yet, but these figures I have read are made and reported by 
 the carriers. 
 
 • Mr. Stevens. This is a question that I have been requested to ask 
 you. In considering the wrongs under the long-and-short-haul 
 clause — section 4, as I remember — between localities, has there been 
 any attempt by the Cofnmission to remedy any such wrongs as might 
 be caused by long-and-short-haul conditions under the third section 
 of the act — discriminations ? 
 
 Mr. Clements. Yes. 
 
 Mr. Stevens. In Avhat way and what have you done? 
 
 Mr. Clejients. Well, in the Chattanooga case, which was a long- 
 and-short-haul case originally, after it got into court, before it 
 reached a decision in the circuit court the Supreme Court had made 
 its decision construing the fourth section. The Chattanooga case 
 had been decided under our construction of the fourth section as 
 originally announced, but the Supreme Court overturiaed that before 
 the ' Chattanooga case reached trial in the circuit court. Judge 
 Severance held in that case that the third section would apply 
 if the fourth did not. There was new testimony in the court 
 bringing the case down to the time it was tried over again in that 
 court. The judge said further that while there might be a greater 
 charge for a short haul than for a long haul, it ought not to be out 
 of proportion to the difference in circumstances and conditions ; that 
 it ought to be measured by them and not more. That case came to 
 the Supreme Coui't and it was reversed. 
 
 The Chairman. In your judgment. Judge, would it be practical 
 or just to strike out from the fourth section the language " under 
 similar conditions and circumstances? " 
 
 Mr. Clements. Well, of course it is a difficult matter to answer in 
 a satisfactory way what would be the effect of that in all cases. But 
 there is much hardship and friction growing out of the present con- 
 dition, and I believe that the evils and hardships, if those words were 
 stricken out, would be much fewer than now. The public on the 
 whole would be greatly benefited. 
 
 Mr. Ryan. Is it not a fact that in nearly all of the important cases 
 before your Commission the shippers have been represented by coun- 
 sel, all of the important ones ? 
 
 Mr. Clements. Yes ; that is true. 
 
 Mr. Stevens. On what point was that case decided on the third 
 section — that Chattanooga case? 
 
 Mr. Clements. That case involved the rates to Chattanooga, as 
 compared with the rates to Nashville by the eastern gateway — that 
 is, by the Southern Railway from Baltimore and New York, and so 
 on around to Nashville through Chattanooga, so that Chattanooga 
 was the near point. Now, the Louisville and Nashville Railroad 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 361 
 
 from across the Ohio also reaches Nashville. It had put in certain 
 rates there for reasons of its own — rates to Nashville — which had to 
 be met by the roads carrying by the eastern lines, or nearly met, in 
 order to get part of the business by that route from the east, but in 
 doing that they did not want to reduce their Chattanooga rates to the 
 level of the Xashyille rates. The Supreme Court appears to have 
 held in that case, if I understand it, and I am simply speaking from 
 memory, that that rate having been fixed at Nashville by the Louis- 
 ville and Nashville road, the roads reaching Nashville from other ter- 
 ritory and by another route were at liberty to meet that competition 
 as they found it and without respect to what they charged to Chatta- 
 nooga, provided, of course, the Chattanooga rate itself was not in and 
 of itself unreasonable, which would be an independent question. 
 
 Mr. Adamson. As to whether circumstances and conditions are 
 similar or not is a question of fact, is it not ? 
 
 Mr. Clements. IJndoubtedly. 
 
 Mr. Adamson. Do you not think the law ought to leave questions 
 of fact with the Commission, and have reviewing courts to confine 
 themselves to the law entirely? 
 
 Mr. Clements. Well, as I said a while ago, I did not come here to 
 discuss these bills particularly, and I did not want to indulge in any 
 discussion of that on my own motion, because my chief purpose here 
 was simph', out of self-respect, to show these insinuations or accusa- 
 tions against the Commission to be unjust and unfair and at variance 
 with the record and history of the Commission. 
 
 Mr. Adajisox. Has not new evidence been heard by the circuit 
 court in almost every case in which you have been reversed ? 
 
 Mr. Clements. I gTiess every one of them ; I do not think there has 
 been an exception. They always try the case over again after it 
 leaves the Commission. 
 
 Mr. Adamson. Suppose in case parties have discovered new evi- 
 dence, and are entitled to a hearing on it, the law should require a 
 further hearing before the Commission, and then let the appeal go on 
 to the court upon the law, do you not think the working would be 
 more satisfactory and fairer to the Commission and to the parties ? 
 
 Mr. Clements. I have never been able to see how the Congress 
 can confer upon the court the power to make a rate for the future, 
 since the Supreme Court has decided that that act is a legislative act, 
 and I do not understand that under the Constitution a judicial tri- 
 bunal can legislate. As the Supreme Court has decided that this 
 is a legislative act directly, I suppose it can only be exercised by Con- 
 gress or some body other than a court authorized by Congress. 
 
 Mr. Adamson. When courts of equity want the help of a master 
 and send a case back time after time to the master to take additional 
 testimony, they allow the master to pass on it every time, do they not ? 
 
 Mr. Clements. I understand that to be the practice. 
 
 Mr. Lamar. I would like to ask you one question, if I may. 
 
 Mr. Clements. Certainly. 
 
 Mr. Lamar. Is there any recommendation of the President in his 
 message substantially or exactly the same as the request made by your 
 Commission for years as to giving power to enforce a rate when it is 
 declared reasonable? Take the message of the President. He rec- 
 ommends, as I understand it, that the Commission be given the power 
 
362 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 to decide on a reasonable rate, and that when a rate is so declared to 
 be reasonable that it shall go into effect at once. 
 
 Mr. Clements. Yes, sir. 
 
 Mr. Lamae. What does that " at once " mean? 
 
 Mr. Clements. I suppose that means, as I understand it, as soon 
 as the carrier could be notified and woiild have opportunity to print 
 his tariff in such a way as to conform to it. 
 
 Mr. Lamar. Has this bill given that power ? [Reading. J 
 
 And it is hereby authorized to perform that duty, to declare at the same time 
 what would be a fair, just, and reasonable rate or'regulation or practice in lieu 
 of the rate, regulation, or practice declared unreasonable, and the new rate, 
 regulation, or practice so declared shall become operative twenty days after 
 notice. 
 
 Does that give the power to fix that rate at once — ^to go into effect 
 at once ? 
 
 Mr. Clements. It seems to me it would from your reading of it. 
 
 The Chairman. If the Commission was given the power referred to 
 in that last query should its exercise of that power be subject to any 
 judicial review, in your judgment? 
 
 Mr. Clements, t do not see any reason why it should not be to any 
 judicial review that is possible to be had under constitutional and 
 legal methods. The Commission has never asked for the power to 
 make a final rate independent of anything of that sort; but, at the 
 same time, I have in late years, and particularly since the decision 
 of the Supreme Court in the minimum-rate case, as it is called, had 
 very great doubt as to whether the courts will ever apply their 
 judicial authority to the question of making a rate — that is, saying 
 whether it shall be 90 cents or 95 cents — or that they will do any more 
 than decide whether or not it is or is not lawful. 
 
 The Chairman. Reasonable? 
 
 Mr. Clements. Yes, sir. . 
 
 The Chairman. You think they have that power? 
 
 Mr. Clements. Yes; I should thinls: that would be included — -the 
 judicial question. 
 
 The Chairman. And it is your opinion that the Commission should 
 take that away from the courts? 
 
 Mr. Clements. I do not believe it can, if the Constitution gives 
 protection to the property of everybody, theoretically at least, and the 
 doors of the courts are open all the time to restrain an order by this 
 Commission, or any State commission, which intrenches upon the con- 
 stitutional rights of property involved in these cases. 
 
 Mr. Adamson. If the section read by Mr. Lamar were enacted into 
 law, leaving both the courts open as now for the railroads to interfere 
 with your proceedings, and also the statutory proceedings for you to 
 go into court on your judgment, you think there is no necessity for 
 further legislation as to procedure — you think we could get along ? 
 
 Mr. Clements. That would probably cure that particular thing. 
 Of course there are a good many other things that could improve the 
 law, but I do not care to go into them. 
 
 Mr. Adamson. Are not there sufficient avenues open — — 
 
 Mr. Clements. It seems to me so. 
 
 Mr. Adamson (continuing). If we can get this section Mr. Lamia- 
 read to you? 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 363 
 
 Mr. Clements. It seems to me so, if there was some way to have 
 that obeyed. To say that such a rate is a lawful rate is one thing, 
 and to have it conformed to is another thing. 
 
 Mr. Adamson. I want to ask you about another bill. I believe you 
 have read the bill I introduced early in the Fifty-eighth Congress. 
 
 Mr. Clements. Yes; some time ago. 
 
 Mr. Adamson. I would like to ask you whether it is your recollec- 
 tion that that embodied all the recommendations, substantially, that 
 the Commission made for amendment to the law ? 
 
 Mr. Clements. It embodied as many as were concurred in by the 
 Commissioners, I think. Of course there are five of us, and we do not 
 all agree. 
 
 Mr. Lamae. One other question, Judge, and I am through. Upon 
 the question of capitalization I asked Mr. Bird a question, and I 
 would like to ask you substantially the same thing. Leaving out all 
 question of contest among carriers for freight, and leaving out all 
 question of a particular rate as being unreasonable, and taking the 
 whole tariff sheets of the railroads of the United States, must they 
 not bear a direct relation to the capital invested in those properties? 
 
 Mr. Clements. I think so. The Supreme Court has indicated that. 
 
 Mr. Lamar. The Supreme Court has said that in the Nebraska case. 
 If that be true, and the Supreme Court has gone to the extent of say- 
 ing that they can not earn compensation upon fictitious capital 
 
 Mr. Clements. S^es. 
 
 Mr. Lamar. Now, has jonr Commission ever inquired into the 
 question of how much fictitious capital exists in all the railroads of 
 the United States? 
 
 Mr. Cleiments. It has never made any exhaustive examination of 
 that matter that would be at all satisfactorJ^ 
 
 Mr. Lamar. As I understand it, the public generally has a, belief, 
 whether it be true or not — and it is a pity that that matter has not 
 been invest igated^that a large proportion of the capital of American 
 railways is fictitious. If that be true it disposes of the argument of 
 the railway men that railroad rates are reasonable, because if they 
 are confiscatory they are unreasonable and extortionate. So that is 
 an important question. The Supreme Court has said that as the 
 basis of overthrowing a schedule of rates. 
 
 Mr. CLEJiENTb. It is a very important question and a very large 
 one. 
 
 Mr. Lamar. It is such a vital question I am surprised that no 
 statistics exist in the United States to challenge the fictitious capital — 
 wind and water, as it is called popularly — in railways, for the simple 
 fact that if that fact were proven it would be conclusive proof to the 
 American mind that the present rates are unreasonable. Taking 
 their own assertion that the present railroad rates are reasonable, it 
 overthrows their statement at once, because it would be patent that 
 they were earning dividends on capital not invested, and the Supreme 
 Court says they can not do that. 
 
 Mr. ]\£vNN. What is the average rate of dividends now on all the 
 capital stock of the railways of the United States, par value? 
 Mr. Clements. I have not those figures with me, Mr. Mann. 
 Mr. Mann. I suppose it would depend on what the present rates 
 are whether it would show what Mr. Lamar suggests? 
 
364 PBOPOSED AMENDMENT OF INTER8TATE-C0MMEECE LAW. 
 
 Mr. Lajiar. Does not the Industrial Commission in its general 
 conclusions — I ask for information, I am not quite sure about it — 
 say that everything is conjecture — and I believe there is a great deal 
 of conjecture about all these questions — but being permitted to have 
 their guess, have they not guessed that a large percentage of capital 
 in the railways of America is fictitious? 
 
 Mr. CiiBBiENTS. I believe so. 
 
 Mr. Mann. The market value of the capital stock will demonstrate 
 that fact, that it is either fictitious or worthless. 
 
 Mr. Cleseents. Yes ; some of it is not worth much. ' 
 
 Mr. Burke. I understand you to say that discriminations by rea- 
 son of a secret rate or cut rate or rebate have practically ceased? 
 
 Mr. Clesients. As compared with Avhat was going on three or 
 four or five years ago, yes. I do not mean to say in this vast country, 
 with all its great variety of commercial interests and industries, that 
 there is not some of that going on, and probably there always will be, 
 but it has been very greatly diminished. 
 
 Mr. Btjeke. I believe you stated that certain proceedings were 
 instituted in the way of injunction proceedings under the Elkins law. 
 
 Mv. Clements. Yes. 
 
 Mr. Burke. Is your legislation adeqiiate and sufficient on that 
 point? 
 
 Mr. Clements. Well, we have several cases pending now under 
 the Elkins law, and it is a little too early to say it will be sufficient 
 in all respects, because it has not been tested, as we have had to test 
 these former laws, by judicial procedure. 
 
 Mr. Burke. Have you any reason to think at this time that it is 
 not adequate? 
 
 Mr. Clements. I have no suggestions to make in the way of fur- 
 ther legislation to cover what are known as secret rebates, cut 
 rates, and so on, which are covered mainly by the Elkins bill; but 
 among other things one important thing is to practically prohibit 
 and effectually stop certain abuses in respect to these terminal rail- 
 ways and car lines. For instance, an industrial plant that was a 
 manufacturer and was running for no other purpose some few years 
 ago has had switches put in and has incorporated as a railroad, and 
 then it asked of the real railroad a division of the rates. Compe- 
 tition between carriers leads to that. 
 
 The CHAiETNtANT. Is it your opinion that the present legislation 
 gives power to the Commission and the courts to remedy those evils ? 
 
 Mr. Clements. There is some difference of opinion among us 
 about that. 
 
 The Chairman. I am asking your opinion. 
 
 Mr. Clements. It is stoutly denied by the car-line owners, and by 
 the railroads, too, that use those car lines, that the Commission can 
 pass upon the reasonableness of a refrigerator charge, an icing charge 
 made in connection with the transportation of fruits and vege- 
 tables coming from California and other points to the eastern mar- 
 ket. A great many of those railroads now have exclusive contracts 
 with these car companies that the refrigerator cars of the companies 
 shall be handled exclusively by railroad companies. The railroads 
 do not publish the schedules for the icing service 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMEECE LAW. 365 
 
 The Chaiemax. I was asking you particularly with regard to the 
 two instances that you gave where a fictitious railroad is created 
 for the purpose of a joint rate and where an extravagant mileage is 
 paid. 
 
 Mr. Clements. I do not see Avhy that can not be found upon the 
 facts to be a rebate, where it is excessive. 
 
 The Chaie3ian. Then, in your judgment, the present legislation 
 is sufficient to remedy those evils ? 
 
 Mr. Clements. That is what I think, although that is an untried 
 question. We have some matters of that kind now pending. 
 
 The Chairman. I am asking your opinion. 
 
 Mr. TowNSEND. The question was asked you a little while ago in 
 regard to the courts reviewing the unreasonableness of a rate. T 
 notice in all the bills it is provided that the court may pass upon the 
 reasonableness and lawfulness of the rate. What is the distinction 
 between those two terms; or, to put it in other words, what is there 
 in " reasonableness " that is not covered by " lawfulness " that would 
 be reviewable by the courts? 
 
 Mr. Clements. I do not know yet what the law is about it. I do 
 not suppose there is anybody here who can say for a certainty. Sup- 
 pose the law was that the Commission could, upon inquiry, fix a 
 reasonable rate, which would be the lawful rate without appeal, with 
 no review, and that would be the end of the law according to its terms. 
 
 Now, the railroad could nevertheless go into the courts, without 
 any further provision of law, under the Constitution of the United 
 States, and attack that rate as confiscatory just as if Congress had 
 said that should be the rate, or a State commission or State legis- 
 lature should say it, as they have done in various cases. Suppose 
 it is claimed by the carrier that it is unreasonable because it does 
 not allow a fair compensation, and, therefore, to that extent is 
 confiscatory, because it intrenches upon the right of the carrier to 
 make a reasonable return upon the actual capital invested. Now, 
 will the court hold that that is an unlawful rate because it is unrea- 
 sonably low and yet that there is some profit, but not enough ? I con- 
 fess I do not know 
 
 Mr. Townsend. Does not unlawfulness cover all the ground that 
 you hope to cover there, without the word " unreasonable ? " 
 
 Mr. Clements. I think it does; that is my judgment about it. I 
 hardly think a court would hold a rate to be lawful that was unrea- 
 sonable. It is because it is unreasonable that the law allows the court 
 and the Commission to condemn a rate made by the carriers, and if 
 it is unreasonable to the carrier I suppose the courts would apply the 
 same rule 
 
 The Chairman. Might not a rate be unreasonably low, fixed by 
 the company itself, and yet be lawful so far as those parties were 
 concerned ? 
 
 Mr. Clements. I presume so ; I have never thought otherwise. 
 
 The Chairman. And yet be unreasonable and unlawful so far as 
 other parties were concerned — its discriminating between localities ? 
 
 Mr. Clements. That is what this law proceeds upon now, that 
 there may be discriminations of that sort; and by having one rate 
 unreasonably low and another one unreasonably high, or even reason- 
 
366 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW 
 
 ably high, the difference is so great that it allows one shipper to over- 
 reach his competitor. That is what I understand to be undue and 
 unreasonable discrimination. 
 
 The Chaikman. If the high rate was reasonable in the case of local- 
 ities, then the remedy would be to raise the loAver rate, would it ? 
 
 Mr. Clements. If the higher rate was reasonable ? 
 
 The Chairman. If the higher rate was reasonable and the other 
 rate unreasonably low, creating a discrimination between localities, 
 would that furnish a case for the intervention of the Commission and 
 the raising of the lower rate ? 
 
 Mr. Clements. Well, we do not understand that under the law we 
 can do that. We have said repeatedly in these cases where we 
 thought that was the case that we condemned the discrimination, found 
 that unreasonable and wrong, and ordered them to cease and desist 
 from that, and admitted that they could cure that by raising the 
 lower rate. 
 
 The Chairman. I am speaking now of localities that were not 
 served by the same carrier. 
 
 Mr. Clements. Oh! 
 
 The Chairman. Where the discrimination is between localities. 
 
 Mr. Clements. As between places served by the same carrier ? 
 
 The Chairman. No; by other carriers; and the higher rate is 
 conceded to be a reasonable rate and the lower rate unreasonably low. 
 Now, in order to remedy that discrimination would you raise the 
 lower rate? 
 
 Mr. Clements. That is a new question. Of course no such ques- 
 tion as that can be raised in the law we now have, as I understand it. 
 The present law deals with the carriers. You can not make one car- 
 rier change its rates because of what some other independent carrier 
 is doing, whether it is a high or low rate. 
 
 The Chairman. Then questions of discrimination of that kind be- 
 tween localities are not within the jurisdiction of the Commission? 
 
 Mr. Clements. Not unless the discrimination is by the same car- 
 rier. 
 
 The Chairman, In your judgment, do you think discriminations 
 of the kind I have spoken of ought to be within the jurisdiction of 
 the Commission? 
 
 Mr. Clements. That is a pretty broad question, and I would hesi- 
 tate to say that they ought to be. 
 
 The Chairman. You think that they ought not to be ? 
 
 Mr. Clements. I am not prepared to say that they ought to be. 
 
 The Chairman. Is it not true that the Commission has frequently 
 assumed jurisdiction of discriminations of that kind? 
 
 Mr. Clements. By different carriers? 
 
 The Chairman. Yes, sir. 
 
 Mr. Clements. No, sir ; I do not understand so. We have investi- 
 
 fated the condition of rates by all carriers between certain points 
 requently, but not with the view of milking the roads parties and 
 issuing an order against a particular carrier or several carriers on 
 account of rates that other and independent carriers have made ; we 
 have not done that. 
 
 The Chairman. The Eau Claire case, you do not think, involved 
 that question ? 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 367 
 
 Mr. Clements. I think in that case the Commission finally found 
 that its order could not be enforced because one road served one of the 
 favored points and didn^t serve the complaining town. We under- 
 stand this act to run and apply against carriers if they combine or 
 if they make a through line, and so forth, and we have investigated 
 tariff conditions and practices in respect to the railroads in a large 
 territory, but not on a complaint in which we expected to make an 
 order correcting any differences of the sort you mention. 
 
 It is said by the carriers in opposition to public rate regulation that 
 " an unreasonable rate per se is a thing of the past." If the shipper 
 has any right involved in the amount of the rate, there should be some 
 place where he can be heard as well as the other party to the contro- 
 versy who is making the rate; and such hearing should be with the 
 usual effect of ordinary hearings in other matters, to the ascertain- 
 ment of what is right and lawful and the enforcement af the same. 
 Any other course must assume that the carriers can do no wrong in 
 respect to these matters and exempt the complaints and issues in 
 respect thereto from the ordinary and time-honored methods of pro- 
 cedure, which are based upon the principles of fair play and equal 
 justice and have been recognized at least as long as the common law 
 has existed. 
 
 Gentlemen, I am very much obliged to you. I have taken very 
 much more time than I intended. 
 
 The Chaiemj^n. I would like to say to the committee that Mr. 
 Crocker and Mr. Rulofson, from San Francisco, who were expected 
 here on Monday, and who were detained in Chicago, are here now, 
 and if it is the pleasure of th^e committee we will hear them briefly. 
 I will say to those gentlemen that the committee had closed its 
 hearings. 
 
 Mr. Crocker submitted the following papers: 
 
 San Francisco, January 19, 1905. 
 To all whom it may concern : 
 
 This is to certify that Mr. A. C. Rulofson was duly appointed at a meeting of 
 the board of directors of the Manufacturers and Producers' Association, held 
 January 19, 1905, as a delegate to proceed to Washington, D. C, for the pur- 
 pose of urging upon Congress the disadvantages to the business interests of the 
 Pacific coast of any legislation which shall give the Interstate Commerce Com- 
 mission the arbitrary right to make rates. 
 
 [seal.] Mantjpactubees and Peodcjcees' Association of Califoenia. 
 
 E. Goodwin, Secretary. 
 
 Preamile and resolutions adopted iy the hoard of directors of the Manufac- 
 turers and Producers' Association of California, January 19, 1905. 
 
 Whereas the present welfare of the manufacturers, producers, wholesalers, 
 and jobbers of the Pacific coast and the future growth and development of 
 their various and varied business interests depend largely upon a system of 
 rate making by the transcontinental railroads, by which the terminal rate to 
 which the jobbing and manufacturing cities of the coast are justly entitled by 
 reason of water competition is recognized ; and 
 
 Whereas determined effort has been made in the past by the manufacturers, 
 producers, wholesalers, and jobbers of other sections to do away with said 
 
368 PEOPOSED AMEKDMENT OP INTERSTATE-COMMERCE LAW. 
 
 terminal rates to Pacific coast cities, and substitute tberefor a system of rates 
 based on distance or mileage, ignoring water competition ; and 
 
 Whereas the assistance rendered the manufacturers, wholesalers, and job- 
 bers of the Pacific coast by the transcontinental railroads In combatting said 
 effort to establish rates based on distance or mileage satisfies us that the inter- 
 ests of the coast will be best served by leaving the authority to make rates 
 where it now is, in the hands of the carriers, who are familiar with the excep- 
 tional conditions on the Pacific coast and the Northwest, subject to review by 
 the Interstate Commerce Commission upon complaint of the shipper who feels 
 that a given rate is wrong: Now therefore be it 
 
 Resolved, That the Manufacturers and Producers' Association of California, 
 while expressing the highest respect for and confidence in, personally and col- 
 lectively, the members of the Interstate Commerce Commission, respectfully 
 protest against any legislation whereby said Commission would be given the 
 arbitrary right to make rates as inexpedient and not to the advantage of busi- 
 ness interests of this community, and that we recommend in lieu thereof that 
 the Commission be increased to seven members and that in view of the vast 
 commercial interests involved and the differences governing transportation on 
 the Pacific coast and in the Northwest that the two new members thus added 
 to the Commission should be appointed one from the Pacific coast and one from 
 the Northwest, so that all geographical sections of the country would be repre- 
 sented ; and be it further 
 
 Resolved, That the law under which the Commission is at present operating 
 is, in our judgment, a proper one if proper measures are. taken to expedite the 
 hearing of cases upon appeal, which would comtemplate the establislunent of a 
 court of transportation, whose decision would be final except in cases where the 
 constitutionality of the decree was questioned. 
 
 Manufactubees and Pkoducees' Association of Califoknia. 
 A. Sbarbobo, President. 
 K. Goodwin, tiecretary. 
 
 ADDITIONAL STATEMENT OF MR. E. P. BACON. 
 
 Mr. Bacon. Mr. Chairman and gentlemen of the committee, I wish 
 to thanii you for having accorded me a little further time to conclude 
 the remarks which I commenced this morning and to say that it is 
 highly appreciated. 
 
 In line with what I was stating this morning I have an additional 
 paper to submit in relation to a question that I was asked when I was 
 on the stand some weeks ago as to whether a carrier, in case of the 
 Commission ordering a, change in rates, would make a slight change 
 instead of complying fully with the order of the Commission. I have 
 a statement of a few cases of that kind which I will not read, but will 
 file; but I will hastily refer to one or two instances. One is a case 
 against the C. J. M. and R. Railway Company and others, decided 
 June 15, 1893, involving rates from Tecumseh, Mich., to Kansas City, 
 Mo., on celery and other vegetables which had been placed, respec- 
 tively, in class 3 and class C. Class 3 is one of the numbered classes, 
 of which there are six, and class C is one of the lettered classes, of 
 which there are five, showing a difference of six classes in the classi- 
 fica.tion of the respective articles. The order of the Cohamission was 
 that both should be charged at the same rate, or, in other words, 
 classified in the same class. The action of the carrier was to keep 
 celery in class 3 and put other vegetables in class 5. 
 
 Another case is Newland and others against the Northern Pacific 
 Railroad Company, decided March 21, 1894, involving the rate on 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 369 
 
 wheat from Eitzville, Wash., to Portland, Oreg., which was 32^ cents. 
 Ihe Commission ordered it reduced to 20 cents. The railroad com- 
 pany reduced it to 21^ cents, making a very large xeduction to be sure, 
 but not such reduction as was required by the Commission. 
 
 In another case, the Cordele Machine Shop against the Louisville 
 and Nashville Railroad Company and others, decided October 19, 
 1895, m the transportation of pig iron from Birmingham, Ala., to 
 Cordele, Ga., the rate being $3.84 per ton, the Commission ordered a 
 maximum rat« of $1.80 per ton. The carrier reduced it to $3.69 per 
 ■ ton — that is, reduced it 15 cents when it was required by the Commis- 
 sion to reduce it $2.04. In the case of the Georgia Peach Growers' 
 Association against the Atlantic Coast Line Railroad et al., in a case 
 decided June 4, 1904, the rate on peaches jvas $80 per car, and the rate 
 ordered by the Commission was $50 a car. The rate made bv the 
 • railroad after the order was $65 per car. I will file a copy of 'these 
 orders and changes in the rates after the order, showing how carriers 
 have only partially complied with orders of the Commission. 
 
 The Chaieman. Do you understand that there are many other 
 cases ? 
 
 ]\Ir. Bacon. The list which I have comprises, six cases, which are 
 presented as examples of the action of carriers in complying only to 
 a partial extent with orders of the Commission. 
 
 Table showing a few ejcamples of how carriers have only partly complied with 
 
 orders of the Commission. 
 
 Title of case. 
 
 Date of de- 
 cision. 
 
 Places involved. 
 
 Commodities. 
 
 Bate at 
 date of 
 order. 
 
 Maximum 
 rate ord- 
 ered. 
 
 Change 
 made 
 after or- 
 der. 
 
 
 
 
 Wheat, per 
 
 $0.17i 
 
 $0.14 
 
 $0.15 
 
 EeFoodProduots- 
 
 June 7,1890 
 
 Missouri Biver 
 points to East 
 St. Louis. 
 
 lOOpounds. 
 1 Corn, per 100 
 1 pounds. 
 Flour, per 
 
 100 pounds. 
 
 .15 
 
 .in 
 
 .12 
 .14 
 
 .12 
 .15 
 
 ' 
 
 
 
 ■ Celery, per 
 
 Class 3 
 
 Bothtobe 
 
 [■ Class 3. 
 
 Tecumseli Celei-y 
 Co. V. C. J. and 
 
 June 15, 1893 
 
 Tecumseh, Mich., 
 
 lOOpounds. 
 
 
 I charged 
 
 
 
 to Kansas City, 
 
 •pother vege- 
 
 Class C 
 
 (same 
 
 1 Class 5. 
 
 M. B. Co. et al. 
 
 
 Mo. 
 
 tables, per 
 lOOpounds. 
 
 
 J rate. 
 
 I 
 
 Newland et al v. 
 
 Mar. 21,1894 
 
 Eitzville, Wash., 
 
 Wheat, per 
 
 .32i 
 
 .20 
 
 .21i 
 
 N.P.E.Co.etal. 
 
 
 toPortland, 
 Oreg. 
 Birmingham, 
 
 lOOpounds. 
 
 
 
 
 Cordele Machine 
 
 Oct. 19,1895 
 
 Pig iron, per 
 
 3.84 
 
 1.80 
 
 3.69 
 
 Shop V. L. and 
 N. B. Co. et al. 
 
 
 Ala., to Cor- 
 
 ton. 
 
 
 
 
 
 dele, Ga. 
 
 
 
 
 
 Ga. Peach Grow- 
 
 June 4,1904 
 
 Boston to New 
 
 Peaches, per 
 
 80.00 
 
 50.00 
 
 65.00 
 
 ers' Assn. V. A. 
 
 
 York as part of 
 
 ear. 
 
 
 
 
 C.L.E.Co.etal. 
 
 
 through ship- 
 
 ment from 
 
 Georgia points. 
 
 South MoAles- 
 
 
 
 
 
 Denison L. and P 
 
 June 25, 1904 
 
 Coal, per ton. 
 
 1.90 
 
 1.25 
 
 1.50 
 
 Co. V. M. K. and 
 
 
 ter, Ind. T., to 
 
 
 
 
 
 T. B. Co. 
 
 Denison, Tex. 
 
 
 
 
 The foregoing cases are taken from the reports of the Interstate Commerce Commission. 
 
 I wish" to allude to the statements which have been made in regard 
 to advances and reductions in rates resulting from changes in classi- 
 fications, which have been represented to the committee as having 
 been nearly as great in the number of reductions as in the number 
 of advances. A gentleman on the stand this morning, if I under- 
 
 I c ii— 05- 
 
 -24 
 
370 PROPOSED AMENDMENT OF INTEESTATE-COMMEBCE LAW. 
 
 stood him correctly, stated that the reductions had exceeded the 
 advances. 
 
 The Chairman. He said in his territory. 
 
 Mr. Bacon. Yes ; in his territory. The southern territory. In 
 this document, Senate Document No. 257, second session of the 
 Fifty-eighth Congress, being a report from the Interstate Commerce 
 Commission to the Senate in response to a Senate inquiry in regard 
 to changes in rates and classiiications in March last, it is stated 
 that the principal advances in classification in what is called official- 
 classification territory, which covers the territory east of the Mis- 
 sissippi and north of the Ohio and Potomac rivers, with the excep- 
 tion of the State of Wisconsin and the northwest corner of the State 
 of Illinois — a line drawn from Chicago to St. Louis limits it on the 
 west — the number of advances in that territory on January 1, 1900, 
 was 572. That was the number of advances in classification from 
 a lower to a higher class. The number of reductions was 6. That 
 was the number reduced from a higher to a lower class. In March, 
 ]900, however, most of the articles (289 out of 572) which had been 
 changed from the fourth to the third class were modified by the 
 carriers to a reduction of 20 per cent below third-class rates, which 
 brought them about midway between those two classes as to rates; 
 and most articles that were advanced from the third to the second 
 class, of which there were 155, Avere changed to 15 per cent below 
 second class, bringing them to about halfway between second and 
 third. That was a modification made in the advances which I have 
 mentioned, which was conceded on the urgent demand of a large 
 number of commercial organizations. 
 
 The number of advances in classification in southern territory 
 between February 1, 1900, and NoA^ember 10, 1900, was 531. They 
 made several revisions of their classification during that period, and 
 the total number of articles advanced in classification during that 
 time was 531. The number of reductions during the same time 
 was 105. The number of advances in classification in western ter- 
 ritory, which comprises the entire territory between the Mississippi 
 River and the Pacific coast, made January 5, 1900, was 240, and the 
 number of reductions was 17. This is compiled from the statement 
 made by the Interstate Commerce Conamission to the Senate in reply 
 to its resolution of inquiry. I will file this Senate Document No. 257: 
 
 Interstate Cohmeece Commission, 
 
 Washington, April 7, 190Jf. 
 
 Sib: The Interstate Commerce Commission lierewith respectfully submits the 
 following report in complifiuce with the resolution of the Senate of the United 
 States, adopted March 11, 1904, which reads : 
 
 "Resolved, That the Interstate Commei-ce Commission is hereby directed to 
 furnish the Senate, as speedily as may be practicable, a report showing the prin- 
 cipal changes in railway tariff rates, whether resulting from the adopton of new 
 rates or the amendment of freight classifications, and an estimate of the effect 
 of such changes upon the gross and net revenues of railway corporations in the 
 United States during each of the fiscal years ending June thirtieth, nineteen 
 hundred, nineteen hundred and one, nineteen hundred and two, and nineteen 
 hundred and three, as compared with the gross and net revenue that would have 
 been derived by them under the rates and freight classifications in force during 
 the fiscal year ending June thirtieth, eighteen hundred and ninety-nine ; and 
 also report the changes in cost of operation and maintenance of said railways 
 for said years." 
 
 A statement prepared by the auditor of the Commission shows the principal 
 changes in rates caused by changes in freight classification and the advances in 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 371 
 
 rates ou a number of specified commodities. Most of these changes took place 
 during the year 1900, but some commodity rate changes occurred between that 
 year and the end of 1903. For the r^asens indicated in the statement no more 
 specific or comprehensive account of rate charges can be given. 
 
 The resolution directs the Commission to furnish an estimate of the effect of 
 such changes in rates upon the gross and net revenues of railway corporations 
 in the United States during each of the fiscal years ending June 30, 1900, 1901, 
 1902, and 1903, basing the comparisons upon the gross and net revenues they 
 would have derived in those years under rates in force during the fiscal year 
 ending June 30, 1899. As far as practicable the statement of the auditor is in 
 conformity with such requirement, and following this statement is a table 
 showing, for each of the years mentioned, what the gross revenue of the rail- 
 ways would have been if the average rate per ton received by all the railways 
 in the fiscal year 1899 had been applied to the tonnage carried over such rail- 
 ways in the succeeding fiscal years to and including 1903. As to a few staple 
 commodities the increase in revenue due to advanced rates in effect during 
 specified periods is estimated in the statement mentioned substantially in 
 accordance with the method of calculation directed in the resolution. 
 
 No similar calculation can be made respecting net revenue for the reason that 
 the net revenue of a railway depends not merely upon gross earnings, but also 
 upon cost of operation, which may be varied by numerous conditions, including 
 the density of trafiic as well as the aggregate tonnage. 
 
 From what has been stated it must appear that no accurate or even approx- 
 imate estimate of the actual effect of specific changes in rates upon the revenues 
 of the carrier can be made. The best that can be done is to indicate the rate 
 changes, and then, without using them as factors, show by yearly tonnage and 
 earnings and the average rate per ton for the year 1899 results similar in char- 
 acter to those called for by the resolution. This method of computation is not 
 without value as indicating enormous additions in recent years to the cost of 
 railway transportation to the people of the United States. 
 
 The statement and table above mentioned constitute Part I of the appendix 
 hereto. 
 
 The resolution also directs the Commission to report the changes in cost of 
 operation and maintenance of United States railways for the years therein- 
 mentioned. Except for the fiscal year ending June 30, 1903, this information is 
 contained in a table prepared by the statistician of the Commission, which will 
 be found herewith as Part II of the appendix. The returns for the fiscal year 
 1903 have not yet been compiled, and the figures relating to the cost of opera- 
 tion and maintenance for that year must therefore be omitted from this report. 
 
 All of which is respectfully submitted. 
 
 Maktin a. Knapp, Chairman. 
 
 The Presii'ent oi the Senate of the United States. 
 
 APPENDIX. 
 Paet I. 
 
 inteestatb commebce commission, 
 
 Office op the Auditok, 
 WasMnffton, March 24, 1904. 
 
 Memorandum. — f^enatc resolution, dated March 11, 1904, relative to advance in 
 freight rates and the resulting increase in revenue of the railway corporations 
 of the United States. 
 
 The freight trafiic of the railways of the United States is carried under two 
 general classes of schedules known as " class tariffs " and " commodity tariffs." 
 The latter name specific rates on certain commodities, such as grain, lumber, 
 coal, live stock, dressed meats, fertilizers, etc. In the absence of commodity 
 rates the regular class tariffs apply. In these tariffs the rates are arranged 
 in classes and are used in connection with a freight classification, which indi- 
 cates the class to which any given article belongs. Where an article is changed 
 from one class to another, the effect, therefore, is to change the rate of trans- 
 portation upon that article. 
 
372 PROroSED AMENDMENT OF INTE.RSTATE-COMMEECE LAW. 
 
 For many years there have been three general freight classifications in use 
 throughout the United States, namely, the official classification, which governs 
 the class rates generally in the terf itory north of the Ohio and Potomac 
 rivers and east of the Mississippi River and Lake Michigan : the southern 
 elassificatiou \Yhich governs generally in the territory south ofthe Ohio and 
 Potomac rivers and east of the Mississippi River, and the western classifi- 
 cation, which govei'ns generally in the territory west of the Mississippi River 
 and also applies on traffic between Chicago, Peoria, and certain other points 
 east of the river and points west thereof. 
 
 On January 1, 1900, official classification No. 20 became effective. This 
 classification made many advances in ratings over the previous classification 
 (No. 19), which was in force prior to the date mentioned. The total number 
 of ratings advanced was 818, but it was found that there were many duplica- 
 tions, the same article being classified more than once in different parts of 
 the classification, and that such duplications amounted to about 30 per cent 
 of the total number. The actual number of advances was 572, as follows : 
 
 Ratings. 
 
 Advanced— 
 
 Fi-om 
 
 To 
 
 
 class— 
 
 class — 
 
 289 
 
 4 
 
 3 
 
 155 
 
 3 2 
 
 71 
 
 6 5 
 
 25 
 
 2 1 
 
 16 
 
 5 : i 
 
 8 
 
 1 u 
 
 5 
 
 1 D-l 
 
 2 
 
 U D-l 
 
 1 
 
 D-l ! 2i 
 
 1 
 
 4 j 2- 
 
 572 
 
 
 
 In the same classification (No. 20) there were six reductions in rating. 
 
 On March 10, 1900, most of the articles «hich had been advanced on January 
 1 from fourth to third class were reduced to 20 per cent less than third class, 
 and most articles which on same date had been advanced from third to second 
 class were reduced to 15 per cent less than second class, and these ratings still 
 remain in force. 
 
 Prior to February 1, 1900, southern classification No. 25 had been for some 
 time in force. There were three issues of this classification during the year 
 1900, namely. No. 26, effective February 1 ; No. 27, effective June 1 ; and No. 
 28, effective November 10. By comi)aring the last with No. 25 it was found that 
 636 changes were made during the year, of which 5.S1 were advances and 105 
 reductions iu rating. 
 
 Western classification No. 30, which became effective January 2.5, 1900, super- 
 seding No. 29, which tooli effect July 1, 1899, made 257 changes in rating, of 
 wliich 240 were advances and IT were reductions. 
 
 These classification changes ^^•ere quite fully set forth in the annual report of 
 the Commission for the year 1900. A number of issues of eacli of the classifi- 
 cations referred to have been made since the year 1900, but the changes made iu 
 such issues were comparatively few and were not of such importance as to de- 
 serve special notice. 
 
 As before indicated, all traffic which is carried at class rates throughout the 
 United States is carried under one or more of the three general classifications 
 above described. All of the thousands of railroad points throughout the country 
 are therefore more or less affected by these classification changes, but in order 
 to form an estimate which would be of any value as to the amount of increase 
 in the revenues of the railways as a result of such advances in classification it 
 would be necessary to be in possession of some knowledge, not only as to the 
 separate tonnage carried of each of the articles aft'ected, but as to the points 
 between which they were carried as well. This information is not available, 
 and even if it could be obtained the undertaking would be so enormous as to 
 render it virtually impracticable. 
 
 The annual reports filed with the Com.mission by the common carriers under 
 section 20 of the act to regulate commerce show the total tonnage of all freight 
 carried and the total freight revenue derived therefrom ; but with the exception 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 373 
 
 of a few iinpoitilut comuiodities, sucli as coal, ores, foj'est products, etc., tlae 
 separate tonnage of tLe articles transported is not sliowu. and in the cases of 
 tbe exceptions referred to tlie points between which such articles are carried 
 are not stated. The following table sho\AS the total tonnage and freight revenue 
 of all the railways in the United States for the years ending June 30, 1899, 1900, 
 1901, 1902, and 190?., with the average rate per tou for each vear, except that 
 the figures given for the year last named represent aboat 98 per cent of the 
 total operated mileage: 
 
 Year ending June 30— 
 
 Total number 
 of tons of 
 freight car- 
 ried. 
 
 Total freight 
 revenue. 
 
 Average rate 
 per ton. 
 
 1899.. 
 
 959,763,583 
 1,101,680,238 
 1,089,226,440 
 1,200,315,787 
 1,221,475,948 
 
 $913,737,155 
 1,049,256,323 
 1,118,543,014 
 1,207,228,845 
 1,318,320,604 
 
 SO. 9520 
 9524 
 
 1900 
 
 1901 
 
 1 0269 
 
 1902 " 
 
 1 0058 
 
 1903.. 
 
 1 0793 
 
 
 
 Attached hereto is a statement showing the actual tonnage and freight rev- 
 enue for the years named, and also what the total freight revenue would have 
 been for 'each of the fiscal years subsequent to that ending June 30, 1899, at the 
 average rate per ton which prevailed that year, also the increase in revenue 
 for such subsequent years resulting from the higher average rate per ton. It 
 is believed that such a statement gives a more accurate idea of the increased 
 revenue resulting from an advance in freight rates and classifications than can 
 be obtained in any other way. The pgures given include the tonnage and also 
 the revenue derived from both class and commodity rates, there being no way 
 of showing these Items separately. 
 
 It should be borne in mind, in connection with this statement, that the 
 average rate per ton and the average rate per ton per, mile, being determined 
 from the tonnage carried and the revenue derived therefrom, and not from the 
 tariflfs, would vary somewhat for different years without any change being made 
 in the tariff rates, such variation being due to the difference in the relative 
 quantity of the various classes of freight carried. For instance, should there 
 be a marked increase in the percentage of tonnage of low-grade freight for any 
 given year over the preceding year, the average rate per ton and the average 
 rate per ton per mile would show a decrease for the latter, as compared with the 
 previous year, based on the same tariff rates. It may be said that there is a 
 constant tendency toward an increase in the -percentage of the tonnage of low- 
 grade freight, so that if there had been no advances in rates or classification 
 since the year ending June 30, 1899, it is safe to sas' that the average rate per 
 ton for each of the subsequent years would have been somewhat less than for 
 that year. 
 
 The Increase in the average rate per ton for the year ending June 30, 1900, 
 over the previous year was quite small, being only four one-hundredths .of a 
 cent per ton, and by reference to the statement it will be seen that the increase 
 in revenue for that year over the preceding year was only $456,736. For the 
 year ending June 30, 1901, the increase in the average rate per ton over the 
 year ending June 80, 1899, was 7.49 cents, the difference in revenue being 
 $81,599,443. The average rate per ton for the year ending June 30, 1902. was 
 $1.0058, being 5.38 cents greater than the average rate for the first-mentioned 
 year, but a little over 2 cents per ton less than for the preceding year. The 
 difference in revenue for this year over what would have been produced by 
 the average rate of the first year in question was $64,528,216. The falling off 
 in the average rate per ton appears to have been due to a large increase in low- 
 grade tonnage in 1902 over the preceding year. For instance, in the items of 
 coal, coke, and ores alone there was an increase in tonnage for this year over 
 the preceding year of nearly 30,000,000 tons. 
 
 For the year ending June 30, 190.3, it will be seen there was a large Increase 
 in both tonnage and revenue over any of the previous years mentioned, the in- 
 crease in revenue, however, being relatively much greater than the increase in 
 tonnage. The average rate per ton for this year was $1.0793, or nearly 12| cents 
 per ton greater than the average rate per ton for the year ending June 30, 1899, 
 been at the average rate of the first-mentioned year. 
 
374 PBOPOSED AMENDMENT OF INTEESTATE-COMMEKCE LAW. 
 
 In the reports of the Commission on the Statistics of Railways in the United 
 States, compiled from the annual reports of the carriers filed under section 20 
 of the act to regulate commerce, the railways of the country are divided into ten 
 territorial groups, the tonnage, revenue, etc., for each group being separately 
 shown. As heretofore Indicated, the annual reports of the carriers show the 
 tonnage of a few important commodities separately, and while the separate reve- 
 nue derived therefrom and the points between which the articles are carried 
 are not given, where advances in rates have been made on any of these com- 
 modities it is possible to form an estimate of the increase in revenue resulting 
 from such advances, which no doubt, while considerably at variance with the 
 actual figures, were they obtainable, will give a fair idea as to the increase in 
 revenue resulting from an advance in rates on such articles. 
 
 In the territory governed by the official classification, heretofore described, 
 both hay and sugar in carloads were advanced January 1, 1900, from sixth to 
 fifth class. Between New York and Chicago this advance amounts to 5 cents 
 per 100 pounds, or $1 per ton. Between -.New York and the territory lying 
 between that point and Chicago the advance would be less, in some cases as 
 low as 40 cent& per ton, while in the territory west of Chicago and east of the 
 Mississippi River the advance would be in some instances as high as §1.50 per 
 toq. An average advance of 80 cents per ton on these two commodities in 
 official classification territory, it is believed, is a fair estimate. 
 
 The total tonnage of hay reported by originating roads for the years ending 
 June 30, 1900, 1901, and 1902, was as follows : 
 
 Tons. 
 
 1900 4, 112, 092 
 
 1901 4, 086, 700 
 
 1902 .: 4, 681, 509 
 
 The figures giving the separate tonnage of this commodity for the year end- 
 ing June 30, 1903, are not yet available. 
 
 It is calculated from the statistical reports of the Commission that of the 
 total tonuage carried by the railroads of the United States about 05 per cent is 
 carried in the territory governed by the official classification. Taking the total 
 tonnage of hay for the last year mentioned (1902), namely, 4,681,509 tons, 65 
 per cent thereof would be 3,042,980 tons. Based on an average advance of 80 
 cents per ton in rate, the increase in revenue for that year would be $2,434,384. 
 and from January 1. 1900, to the present time, during which the advanced 
 rates have been in force, nearly $10,000,000. There was no advance in the 
 classification of hay in the southern and western classifications. 
 
 The total tonnage of sugar originating on reporting roads for the same years 
 was as follows : 
 
 Tons. 
 
 1900 2, 050, 558 
 
 3901 ■- ,_ 2, 301, 932 
 
 1902 2, 254, 571 
 
 The classification rji' sugar, as before stated, was advanced in the official 
 classification territory at the same time as hay (January 1, 1900), and to the 
 same extent, iiitmely, from sixth to fifth class, the increase between New York 
 and Chicago being 5 cents per 100 pounds, or $1 per ton. Taking 65 per cent as 
 the proportion of the total tonnage carried in the official classification territory, 
 we have for the year ending June 30, 1902, 1,405,471 tons. On the basis of an 
 average advance of 80 cents per ton the increase in revenue for that year would 
 be $1,172,376, and from January 1, 1900, to the present time, during which the 
 advanced rates have been in force, something over !(!4,500,000. 
 
 In the western classification no advance was made in the classification of 
 sugar, while in the southern it was advanced from sixth to fifth class. In the 
 latter territory, however, sugar shipped from the regular shipping points, such 
 as New Orleans, La., and Mobile, Ala., is almost invariably carried at com- 
 modity rates. It does not appear that any general advance has been made in 
 these rates, and recently material reductions have been made. 
 
 On January 1, 1900, when the carload rating of hay and sugar was advanced, 
 the carload rating on about 70 other articles was also advanced from the sixth 
 to the fifth class in the official classification, but thei'e is no way of arriving 
 at even an estimate of the tonnage of these articles, and no estimate can, there- 
 fore, be made as to the increased revenue resulting from the advance in 
 classification of such articles. 
 
PEOPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW^ 375 
 
 At the beginning of the year 1903 the rates on all Iron and steel articles 
 were advanced 10 per cent in the territory governed by the official classi- 
 fication. The annual reports of the carriers do not appear to include all 
 iron and steel articles in the table which gives the separate tonnage for 
 particular commodities. According to the reports for the year ending June 
 30, 1902, the total tonnage of iron and steel articles originating on reporting 
 roads was as follows : 
 
 Tons. 
 
 Iron, pig and bloom 14,714,989 
 
 Iron and steel rails 4,849,255 
 
 Other castings arid machinery 9, 696, 433 
 
 Bar and sheet metal 10, 624, 712 
 
 Machinery is not included in the list of iron and steel articles and does not 
 take the same rates. The third item, as given above, must therefore be elimi- 
 nated. The total of the other three items is 30,188,956 tons. Taking 65 per cent 
 of this as the tonnage carried in official classification territory we have 
 19,622,821 tons. The advance ranged from about one-half to li cents per hun- 
 dred pounds. The average was probalbly short 1 per cent per hundred pounds, or 
 20 cents per ton. Assuming the tonnage of these articles for the year 1903 to 
 be not less than for 1902, the increased revenue thereon for that year, owing to 
 the advance in rates, would be about $4,000,000. 
 
 The total tonnage of bituminous coal for the year ending June 30, 1902, was 
 154,402,501 tons. There appear to have been few important changes in the rates 
 on this commodity in southern and western territory since January 1, 1900. 
 In the territory north of the Ohio and Potomac rivers and east of the Missis- 
 nage of this commodity for 1902, the increase in revenue for 1903^ at an average 
 aged 10 cents per ton. A,gsim, taking 65 per cent of the entire tonnage as the 
 amount carried in this territory, we have 100,361,625 tons. Based on the ton- 
 nage of this commidity for 1902, the increase in revenue for 1903, at an average 
 advance of 10 cents per ton, would be a little over $10,000,000. There appear 
 to have been no material advances in the rates on anthracite coal during the 
 period in question. 
 
 In June, 1903, the rates on lumber and other forest products from all lumber- 
 producing points in the southern territory east of the Mississippi River to Ohio 
 River points and points north thereof, also from points in Arkansas, Louisiana, 
 and Texas to the same territory, were advanced 2 cents per 100 pounds. For 
 the year ending June 30, 1902 (figures for 1903 not yet available) the total 
 tonnage of lumber and other forest products was 67,703,050 tons, of which it is 
 estimated that about 20,000,000 tons originated in the territory above described. 
 Assuming that there has been no falling off in tonnage, the increase in revenue 
 for the nine months the advanced rates have been in force, at an advance of 2 
 cents per 100 pounds, or 40 cents per ton, would be about $6,000,000. 
 
 Grain and grain products constitute an important part of the freight traffic 
 of the country, the tonnage for the year ending June 30, 1902, being 36,813.857 
 tons. The fluctuation in the rates on these commodities during the last four 
 years, however, has been such as to render an estimate of the effect of such 
 changes on railway revenue impracticable. The rates on this traffic for a large 
 portion of the country are based on the rates from Chicago to New York. The 
 following table shows the changes in the rates on wheat and flour, carloads, 
 from and to the points named, since January 1, 1900, to the present time : 
 
 Cents per 100 pounds. 
 
 January 1, 1900 22 
 
 March 5, 1900 15 
 
 November 1, 1900 17i 
 
 June 1, 1901 15 
 
 October 21, 1901 17J 
 
 December 8, 1902 20 
 
 May 11, 1903 18 
 
 December 1, 1903, to present date 20 
 
 As will be seen, the rate in force January 1, 1900 (which became effective 
 November 1, 1899), was higher than at any subsequent date, while for a consid- 
 erable portion of the time the rates on this traffic were on the basis of 15 cents 
 per 100 pounds Chicago to New York. 
 
 Respectfully submitted. 
 
 J. M. Smith, Auditor. 
 
376 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 Statement slwwing the total nwnher of tons of freight carried ly the railroads 
 of the United States for the fiscal years ending June SO, 1899, 1900, 1901, 1902, 
 and 190S, with the total revenue accruing therefrom; also the revenue which 
 would have accrued at the average rate of 95.2 cents per ton for the years 
 ending June SO, 1900, 1901, 1902, and 190S, this Tyeing the average rate for the 
 year ending June SO, 1899; and the increase in the revenue for the years 1900, 
 1901, 1902, and 1903 resulting from the increase in the average rate per ton 
 for those years. 
 
 Year ending June 30— 
 
 Number of tons of 
 freight carried. 
 
 Total freight reve- 
 nue as charged. 
 
 Amount of 
 freight revenue 
 at average rate 
 per ton of 95.2 
 cents, being the 
 average rate 
 for the year 
 ending June 30, 
 1899. 
 
 Increase. 
 
 1899 
 
 959,763,583 
 1,101,680,238 
 1,089,226,440 
 1,200,315,787 
 1,221,475,948 
 
 $913,737,155 
 1,049,256,323 
 1,118,543,014 
 1,207,228,845 
 1,318,320,604 
 
 $913, 737, 155 
 1,048,799,587 
 1,036,943,571 
 1,142,700,629 
 1,162,845,102 
 
 
 1900 - 
 
 $456,736 
 
 1901 
 
 81,599,443 
 
 1902 
 
 64,528,216 
 
 1903O 
 
 155,475,502 
 
 
 
 a The figures given for the year 1903 represent about 98 per cent of the total mileage. 
 
 Part II. 
 
 Summary sliowing gross earnings, operating expenses, ratio of operating expenses 
 to earnings, mileage operated, etc., of the railways in the United States, for the 
 years ending June 30, 1S99, 1900, 1901, and 190?. 
 
 
 1899. 
 
 1900. 
 
 
 Increase,1900over 
 1899. 
 
 Item. 
 
 _1. 
 
 $1,313,610,118 
 
 11 
 
 II 
 II 
 
 1 
 
 § . 
 1 
 
 1 
 
 
 Per mile of line oper- 
 ated. 
 
 Amount. 
 
 a 
 8 
 
 u 
 PM 
 
 Gross earnings from opera- 
 
 P.ct. 
 
 $7,005 
 
 $1,487,044,814 
 
 p.ct. 
 
 S7,722'$173,434,696 
 
 13.20 
 
 
 
 Operating expenses: 
 
 Maintenance of way 
 
 and structures 
 
 Maintenance of equip- 
 
 180,410,806 
 150,919,249 
 
 21.05 
 17.62 
 
 962 
 805 
 
 211,220,521 
 181,173,880 
 
 21. W 
 18.84 
 
 1,097 
 941 
 
 30,809,715 
 30,254,631 
 
 17.08 
 20.05 
 
 Conducting transporta- 
 
 486,159,607 
 
 38,676,883 
 
 802,454 
 
 .56.73 
 
 4.51 
 
 .09 
 
 2,593 
 206 
 
 4 
 
 529,116,326 
 
 39,328,765 
 
 589,019 
 
 55.04 
 
 4.09 
 
 .06 
 
 2,748 
 
 42.958.719 
 
 8.84 
 
 General expenses 
 
 UnclassiOed 
 
 204i 651,882 
 3' 0213,435 
 
 1.69 
 a26.60 
 
 
 
 Total operating ex- 
 
 856,968,999 
 
 100.00 
 
 4,570 
 
 961,428,511 
 
 100.00 
 
 4,993 104,459,512 
 
 12.19 
 
 
 
 Percentage of operating 
 
 expenses to earnmgs 
 
 Mileage operated (single 
 
 65.24 
 
 187,534,68 
 
 
 
 64.65 
 192,556.03 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 oDeorease. 
 
PKOPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 377 
 
 Paet ll.^Summary showing gross earnings, operating expenses, etc. — Continued. 
 
 
 1901. 
 
 Increase, 1901 
 over 1900. 
 
 Item. 
 
 Amount. 
 
 ^1 
 
 Is 
 
 L 
 
 "SI 
 
 1 
 
 Amount. 
 
 Per 
 
 cent. 
 
 Gross earnings from operation 
 
 $1,588,526,037 
 
 P.ct. 
 
 $8,123 
 
 $101,481,223 
 
 6.82 
 
 
 
 Operating expenses: 
 
 Maintenance of way and structures 
 
 231,056,602 
 
 190,299,560 
 
 565,265,789 
 
 42,566,553 
 
 1,208,766 
 
 22.42 
 18.46 
 54.87 
 4.13 
 .12 
 
 1,182 
 973 
 
 2,890 
 
 218 
 
 6 
 
 19,836,081 
 
 9,125,680 
 
 36,149,463 
 
 ■3,237,788 
 
 619,747 
 
 9.39 
 
 
 5.04 
 
 floTirlnrttiTigf trfl.nspmi-ji.t.inTi 
 
 6.83 
 
 
 '8.23 
 
 tlnclassifled 
 
 105.22 
 
 
 
 Total operating expenses - 
 
 1,030,397,270 
 
 100.00 
 
 5,269 
 
 68,968,759 
 
 7.17 
 
 
 
 Percentage of operating expenses to earnings 
 
 Milefl.ge opfiTfl+Afi (Ringlft tranV) T"il'=*S 
 
 64.86 
 195,561.92 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Item. 
 
 Gross earnings from operation 
 
 Operating expenses: 
 
 Maintenance of way and structures . _ 
 
 Maintenance of equipment 
 
 Conducting transportation--. 
 
 General expenses- 
 
 XTnclassifiea 
 
 Total operating expenses - 
 
 Percentage of operating expenses to earnings 
 
 Mileage operated (single track) miles 
 
 1902. 
 
 Amount. 
 
 $1,726,380,267 
 
 248, 381,. 594 
 
 213,380,644 
 
 609,961,695 
 
 44,197,880 
 
 1,116,248,747 
 
 64.66 
 200,154.56 
 
 o to 
 SB 
 
 O (D 
 
 p.ct. 
 
 22.25 
 
 19.12 
 
 51.64 
 
 3.96 
 
 .03 
 
 100.00 
 
 $8,625 
 
 1,241 
 
 l,f 
 
 3,047 
 
 221 
 
 2 
 
 5,577 
 
 Increase, 1902 
 over 1901. 
 
 Amount. 
 
 $137,854,230 
 
 17,324,992 
 
 23,061,084 
 
 44,695,906 
 
 1,631,327 
 
 1881,832 
 
 85,851,477 
 
 Per 
 
 cent. 
 
 8.68 
 
 7.50 
 12.13 
 7.91 
 3.83 
 172.95 
 
 8.33 
 
 a Decrease. 
 
 Further, in respect to advances and reductions in Southern terri- 
 tory, I have a communication recently addressed to me (January 13). 
 by the president of the King Hardware Company, of Atlanta, Ga., in 
 which he states differences in rates on a comparatively unimportant 
 commodity — coffee mills (although this commodity, as a matter of 
 fact is quite an important one in the hardware trade) — which I will 
 not read, but it shows excessive rates to x^tlanta as compared with 
 Nashville from Columbus, Ohio ; Freeport, 111., and Meriden, Conn., 
 to which he attaches a statement of changes in classification of vari- 
 ous articles of hardware, showing the percentage of increase in rates, 
 as per Southern classification No. 25, which is the classification that 
 was in force in February, 1900, when these advances in classification 
 
378 PROPOSED AMENDMENT OF INTEKSTATE-COMMEROE LAW. 
 
 were first commenced to be made, extending up to November in that 
 same year, as compared with the current classification, No. 32, now in 
 force,, based on current rates from Cincinnati, Ohio, to Atlanta, Ga., 
 in which the former classification and rates and changes in classifica- 
 tion and rates are given on thirty-nine different articles of hardware, 
 and the percentage of advance in consequence of that change in classi- 
 fication is shown for each, the result of which is that on the thirty-nine 
 articles the advance in rate arising from changes in classification 
 ranges from 13.1 to 84 per cent, and the average increase, counting the 
 number of articles, without taking the tonnage into consideration 
 (which it is impossible to arrive at), is 34.5 per cent. I will file this 
 also with the committee. 
 
 Office cf King Habdwaee Company^ 
 
 Atlanta, Ga., January 13, 1905. 
 B. P. Bacon, Washington, D. 0. 
 
 Deab Sir : If the papers reported Mr. Spencer correctly on yesterday, It would 
 seem that he had overlooked the true situation with regard to the effect of some 
 changes In the classification. 
 
 During a recent period of time, instead of everything being re'duced, we here- 
 with inclose a tabulated statement showing the increase in the percentage due 
 to some of these reclassifications. 
 
 As an evidence of what some distributing points suffer in the way of discrimi- 
 nations, beg to hand you below a table showing current rates on coffee mills to 
 Atlanta, Ga., and to Nashville, Tenn. : 
 
 Coffee mills. 
 
 From Columbus, Ohio, to — • 
 
 Atlanta, Ga $1. 24 
 
 Nashville, Tenn . 66 
 
 Nashville, Tenn. (carload) .49i 
 
 From Freeport, 111., to— - 
 
 Atlanta, Ga 1. 26 
 
 Nashville, Tenn . 67 
 
 From Meriden, Conn., to — * 
 
 Atlanta, Ga , 1. 09 
 
 Nashville, Tenn." . 78 
 
 Nashville, Tenn.« (carload) .'42 
 
 We have taken the most prominent shipping points in the West, Middle West, 
 and Bast. 
 
 Very truly, yours, W. B. Newill, Vice-President. 
 
 <■ These frequently move via Atlanta. 
 
PROPOSED AMENDMENT OP INTEESTATE-OOMMERCE LAW. 379 
 
 Statement of changes in classifications of hardware, showing percentage of increase 
 in rates, per Southern classification No. S3, compared with current classifica- 
 tion No. S2, based on current rates from Cincinnati, Ohio, to Atlanta, Ga. 
 
 [Less than car load, L. C. L.; car load, C. L.] 
 
 Special iron. 
 
 C.L. 
 
 L.C.L. 
 
 Classes . 
 Bates . . . 
 
 I 
 
 107 
 
 81 
 
 31 
 
 37 
 
 Old classifica- 
 tion No. 85, 
 released. 
 
 New classifica- 
 tion No. 32, 
 released. 
 
 Percentage of 
 increase. 
 
 L.C.L. C.L. 
 
 Agate ware, granite or enameled ware, iron or 
 
 steel stamped, in boxes 
 
 Axes 
 
 Belting, viz: 
 
 Cotton. , 
 
 Eubber 
 
 Earthenware, in crates or hogsheads - 
 
 Forges, portable. 
 
 Fruit jars i 
 
 Grease, axle. 
 
 Grindstones, without fixtures 
 
 Handlbs, n. o. s 
 
 Hatchets, boxed 
 
 Iron or steel articles, viz: 
 
 Axles, carriage or wagon, loose or wired 
 together 
 
 Bolte, nuts, rivets, and washers, in kegs, casks, 
 or barrels _ . 
 
 Brackets, sheU, n. o. s 
 
 Boxes and skeins, in kegs, barrels, or loose . . . 
 
 Castings, not part of machinery, each piece 
 weighing less than 15 pounds . 
 
 Chain beltmg, rel. val. 2^ # in barrels 
 
 Same, in boxes or barrels, n. o. s 
 
 Chains, iron, in barrels or caskj, rel. val. a 
 cents per pound. 
 
 Crowbars -• 
 
 Harrow teeth, in kegs or barrels 
 
 Nails, in kegs 
 
 Hooks, backhand, in kegs, barrels, or casks . . 
 
 Lap rings — ; 
 
 Picks and mattocks, in ban-els or kegs i 
 
 Plow irons, clevises, frogs, heel bolts, molds, | 
 
 • plant fenders, plates, paints, and wings, in j 
 
 barrels, kegs, or casks ..j 
 
 Sadirons, in barrels or casks, with contract 
 that no other articles should be put in same. | 
 
 Shoes, horse and mule, in kegs 
 
 Staples, fence, in kegs | 
 
 Tires, wagon i 
 
 Wire, iron or steel, in barrels, coils, or reams. ; 
 
 Wedges, without handles 1 
 
 Lamp and lamp goods, packed .! 
 
 Leather 
 
 Nails, horse and mule, in boxes 
 
 Bope, cotton 
 
 Shot, in kegs or in double sacks 
 
 Tinware --. 
 
 Spring vehicle 
 
 L.C.L. C.L 
 
 51 
 51 
 
 L.C.L. C.L 
 
 13.6 
 19.1 
 
 35.3 
 13.6 
 
 21.4 
 
 13,6 
 
 19.1 
 
 48 
 
 21.7 
 
 19.1 
 
 IH.l 
 
 51 
 
 51 
 
 19.1 
 
 51 
 
 64.3 
 
 76 
 
 44.6 
 
 51 
 
 24.3 
 
 24.3 
 
 24.3 
 
 21.4 
 
 84 
 
 84 
 
 24.3 
 
 84 
 
 24.3 
 
 24.3 
 
 ■34.3 
 
 24.3 
 
 84. 
 
 16.4 
 
 13.1 
 
 21.4 
 
 21.4 
 
 2L7 
 
 13.6 
 
 48 
 
 30 
 
 120 
 
 50 
 
 Thirty-nine articles. Increase in rates arising from change In classification, 13.1 to 84 
 per cent. Average Increase, 34i per cent. 
 
 I also received copy of a statement from a very large lumber cor- 
 poration in Mississippi, signed by Silas W. Gardiner, one of the 
 owners of the corporation, m which he shows the advances made in 
 rates of freight on lumber for ten years, which I will not stop to 
 read, but will file with the committee. It shows an advance of 4 
 cents per hundred pounds from the lumber district of Georgia, Ala- 
 
380 PROPOSED AMENDMENT OF INTERSTATE-COMMEBCE LAW. 
 
 bama, and Mississippi to points north of the Ohio River since the 
 year 1898. I will not take the time of the committee to read anything 
 further from that. 
 The paper referred to is as follows : 
 
 December 22, 1904. 
 Senator W. B. Allison, Washington, D. C. 
 
 Deae Sie: I write to urge upon your attention and favorable consideration 
 the enactment of legislation at this session of Congress giving to the Interstate 
 Commerce Commission the power suggested by the President iu his late message 
 to Congress. 
 
 The railroads of this counti-y have, by consolidation of interests and mergers, 
 so entrenched and strengthened themselves, and have in so many instances made 
 tyrannous use of their power, that conditions in many lines of business and 
 manufacture are well-nigh intolerable. They claim the sole power to make 
 rates and classifications, and in recent contests, where opposition has been 
 made in this vicinity to arbitrary advances in rates on lumber, they have made 
 the statement that the only criterion as to the .iustice of a rate made by them 
 was, or is, its publication. 
 
 1 would state for your information that since the beginning of 1898 rates 
 have been advanced on southern pine lumber to points north of the Ohio Kiver 
 4 cents per 100 pounds, which means an advance of $1 to $1.50 per I^IOO feet, 
 according to the kind of lumber shipped, whether dry and dressed or rough and 
 heavy. This is a tremendous tax to lay upon southern lumber manufacturers, 
 because they have to absorb it in their prices. To make this clear to you I will 
 make the following statement of average prices received by our company for 
 each year from 1893 to 1904, inclusive: 
 
 Statement of average prices per thousand feet received for their lumber produc- 
 tion (not including lath) l>y Eastman, Gardiner <& Co., of Laurel, Miss., after 
 deducting freight, for each year from 1893 to 190Ji, inclusive. 
 
 1893 
 1S94 
 1895 
 1896 
 1897 
 1898 
 
 $9.37 
 8.14 
 8.83 
 8.24 
 7.99 
 8.79 
 
 1899 $9.71 
 
 1900 10.27 
 
 1901 10.83 
 
 1902 11.89 
 
 1903 - 11.32 
 
 1904 10.64 
 
 When you consider that wages have advanced 25 per cent and pine timber 
 lands 100 per cent during the above period, you will see that lumbermen are 
 not and have not been in any condition to bear these heavy advances in freight 
 rates. 
 
 To assure you of the correctness of the above statement, we shall be willing 
 to submit the same to you or anyone else by affidavit, and you can further con- 
 firm the statement in a general way by interviewing any of the northern lum- 
 ber dealers who are and have been handling southern ' pine lumber for a 
 number of years. 
 
 This additional burden of freight rates over that of 1898 and previous, 
 amounts to $40,000 or more on our shipments alone annually, and to millions 
 of dollars on southern pine going into northern States. 
 
 In view of the facts above presented, I most earnestly hope you will give 
 your support to the endeavors that are being made to enable the Interstite 
 Commerce Commission to name a just and fair rate when complaint is made 
 that in their judgment is unfair and unjust. 
 
 We- are Iowa people, having been in business there many years, and my 
 home is in Clinton yet. I therefore feel justified in appealing to you as a 
 constituent to give full consideration to this great question. 
 Very respectfully, yours, 
 
 Silas W. Gabdinee. 
 
 I want to bring out one point in connection Avith the result of these 
 advances as compared with the increase in operating expenses, the 
 result of which it seems to me is shown more conclusively and defi- 
 
PKOPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 381 
 
 nitely by the actual net earnings of the railways of the country during 
 the period in question than by any comparison of figures, either in 
 rates of freight or wages or other expenses of operation. The in- 
 crease in net earnings, as shown by the annual statistical reports of 
 the Interstate Commerce Commission, between the years 1899 and 
 1903 amounts to $184,989,077; That is the increase in net earnings 
 for the four years in question. That is an increase of 40.5 per cent 
 on the earnings of the preceding year. The increase in mileage dur- 
 ing that time was 7.42 per cent. 
 
 Mr. Mann. That is single-track mileage, is it? 
 
 Mr. Bacon. Single-track mileage, certainly; the length of the 
 railroads, which is always what is counted. The 200,000 miles of 
 railroad — a little over tKat — now in existence is what Ave take into 
 account. 
 
 Mr. Mann. That takes no account of double tracking? 
 
 Mr. Bacon. Xo; it simply takes the length of the railroads, the 
 increase in length of lines, which is 7.42 per cent during that period. 
 
 The Chairman. Does your paper give the tonnage of the two 
 periods ? 
 
 Mr. Bacon. Yes, sir. I will come to that directly. The increase 
 in tonnage of freight during the same period was 10.9 per cent. The 
 increase in freight revenue during the same period was 25.6 per cent. 
 Those are final and conclusive figures, as I say, which show the real 
 result of the advances in rates on one hand and increase in expenses 
 on the other, showing an increase in tonnage of 10.9 per cent and an 
 increase in freight revenue of 25.6 per cent. 
 
 Mr. Mann. Have you made any comparison anywhere, Mr. Bacon, 
 as to the percentage of dividends, compared with the receipts for the 
 two respective periods ? 
 
 Mr. Bacon. I have not any figures of that kind at hand, Mr. Mann. 
 I can obtain them if desired, but there is no time at present to do so. 
 I will say, generally speaking, however, that dividends have ranged 
 all the way from nothing up to 8 per cent — dividends on the stock of 
 the various railway companies — and that the net earnings of many 
 of the railways, according to the figures published, show as high a net 
 result as from 10 to 20 per cent on the capital stock applicable to divi- 
 dends; but the dividends themselves have not been increased above 
 the customary rate for some years past (the customary rate being 6 
 or 8 per cent) except in some individual cases where 1 per cent addi- 
 tional may have been declared, or in the case of some railroad com- 
 panies that have not been paying dividends previously, they have paid 
 a small dividend during the past few years. 
 
 Mr. Mann. Do your tables show what percentage of net to gross 
 receipts there has been for the two periods you have named? 
 
 Mr. Bacon. Of gross receipts? 
 
 Mr. Mann. "What the percentage of net is to the gross receipts ? 
 
 Mr. Bacon. I have not that with me; no, sir; I have figures of 
 that kind, but they do not come to my mind with sufficient clearness 
 to undertake to state them. j, ■■, . ■■, 
 
 The Chairman. Is there any considerable number of miles or rail- 
 ways that pay no dividends ? 
 
 Mr. Bacon. I could not say what percentage it constitutes, but 
 there is a large number of railways that never have paid dividends 
 and never will. 
 
382 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 The Chairman. Can you approximate the percentage of the whole 
 mileage ? 
 
 Mr. Bacon. I could not. 
 
 The Chairman. That have not paid dividends? 
 
 Mr. Bacon. I have never attempted to do that. But in such cases 
 it arises generally from the fact that the railroads have been enor- 
 mously overcapitalized, and in other cases from the fact that the roads 
 were unnecessary, that they were built to parallel other lines, or 
 were built expensively, and, as I said before, under an excessive 
 capitalization — a gi'eat overcapitalization. I could give the commit- 
 tee those figures if desired, but I am unable to do so at the present. 
 
 One point I wish to bring to the cognizance of the committee, is 
 what appears to me to be a misapprehension as to the probability of 
 the number of cases of litigation that would be likely to arise under 
 the change in the law which it is projDosed to make. It appears to me 
 that the very fact of the existence of the power which it is proposed 
 to confer upon this Commission will operate to a very large extent in 
 deterring the carriers from imposing rates upon the traffic which 
 they can not defend before the Interstate Commerce Commission. 
 In the next place it will operate largely to put the shipper upon a 
 parity with the carrier in attempted negotiations between them as to 
 the adjustment of rates which are deemed by the shipper to require 
 adjustment. As it is now it is entirely in the hands of the carrier 
 as to whether to make concessions when desired by the shipper or not, 
 and as a matter of fact if they do make any concessions they make 
 only a small proportion of what the shipper considers himself entitled 
 to, the fact of the matter being that the final and ultimate decision 
 of the case is wholly in the hands of the one party, and he will grant 
 such concessions as he deems his interests require, or as he deems nec- 
 essary to pacifj' the complainant; but if this power exists in the 
 hands of the Commission to take this case up and say just what shall 
 be done to adjust this difficulty between them, the complainant or 
 the shipper occupies a position, in a certain respect at least, of treat- 
 ing with the carrier upon common gi'ound, the carrier realizing that if 
 he does not yield what is reasonable and proper the complainant can 
 take the case to an independent or an impartial tribunal that will 
 compel them to do it. 
 
 Hence, I think the number of cases that will come before the Com- 
 mission under this law is very greatly overestimated and that the 
 Commission will have no difficulty in handling the cases that will be 
 brought before it. Furthermore, I wish to say that I think that the 
 courts that are already provided will find no difficulty in dealing with 
 these cases, and it will be very much preferable to the interests that I 
 represent — the commercial organizations of the country — if the estab- 
 lishment of a separate court to treat these cases were left for after con- 
 sideration. Wait until the operation of the law demonstrates the 
 necessity, if there be one, for the establishment of additional courts. 
 It will be a year, at least, before any case can be gotten through the 
 Interstate Commerce Commission after the enactment of this law, 
 should it be enacted, and during that time, if it appears that there 
 is any necessity for additional courts. Congress will meet and there 
 will be opportunity to provide them. Furthermore, I would like 
 very much — I say " I ; " I speak for the interests I represent — ^we 
 would like very much to see this question of whether or not this 
 
PB0P08ED AMENDMENT OF INTEKSTATE-COMMBROE LAW. 383 
 
 power is to be vested in the Commission presented to Congress en- 
 tirely independent of any other proposition. 
 
 Let Congress say whether it deems best to confer this power upon 
 the Commission, and let that be said independent of any other ques- 
 tion. And then, if it desires to do so, and decides to" do so, after 
 that has gone into effect the necessary court machinery can be pro- 
 vided for it in ample time and it will divest the question of very 
 serious complications. 
 
 I have heard many members of Congress and some members of the 
 Senate object very seriously to the enlargement of the courts of the 
 country, the enlargement either of the circuit courts by an addi- 
 tional judge for each, or the establishment of any new court. That 
 question is going to involve this main question" in great diiSculty, 
 and it seems to me it will be to the interests of the country, it will 
 be to the advantage of Congress, to determine the one question first 
 by itself, without reference to any other; and I sincerely commend 
 the consideration of this point to this committee. 
 
 Mr. Adamsox. I understand you mean if we can secure the enact- 
 ment of the first section of most of these bills you will consider that 
 we have made great progress ? 
 
 Mr. Bacok. That is it ; great progress ; and it will be settled with- 
 out complicating it with any other issue. That is very desirable, I 
 think. Congress ought to have the opportunity to' pass upon that 
 one question entirely independent of any other. It is the great ques- 
 tion before this country to-day, and if Congress is placed in a posi- 
 tion where it can treat upon that question without complication or 
 reference to any other we will get a fair and more satisfactory 
 expresion, certainly, of the attitude of Congress in relation to this 
 question. 
 
 Mr. Mann. Is your opposition to the court proposition an opposi- 
 tion based on the prospect of legislation or an opposition to the propo- 
 sition itself? 
 
 Mr. Bacon. It is in the belief that it is unnecessary and a belief that 
 it is better to wait until the necessity for it demonstrated, but pri- 
 marily because it will involve the main question and because Congress 
 will not be able to act upon that question by itself. That has been 
 so long before the country that it seems to me that Congress is en- 
 titled to the opportunity to treat the question by itself, independent of 
 any other. 
 
 Mr. Adamson. Do you not believe that if certainty and expedition 
 are secured in the law that it will result in a diminution of litigation 
 anyhow ? 
 
 Mr. Bacon. That is what I previously stated. 
 
 Mr. Adamson. I had forgotten that. 
 
 Mr. Bacon. That is what I first stated. 
 
 Mr. Mann. I have always understood from you, Mr. Bacon, that 
 the principal trouble wa^ discrimination between localities and 
 between commodities. That is a discrimination which the railroad 
 companies can not remedy without the consent of the localities or the 
 shippers of the commodities.- 
 
 Mr. Bacon. For that very reason it should be referred to an inde- 
 pendent tribunal to decide for them. There are a great many claims 
 of that kind, where one community is jealous of another, that are not 
 well founded. 
 
384 PROPOSED AMENDMENT OF INTERBTATE-COMMEBOE LAW. 
 
 Mr. Adamson. And would not that require the Commission to act? 
 
 Mr. Bacon. Certainly. 
 
 Mr. Adamson. You think that would require the Commission to 
 act? 
 
 Mr. Bacon. Yes; but, as I say, it will take a year or more to reach 
 a decision by the Commission. That has been the history of the cases 
 that have been before the Commission — it will take a year at least to 
 decide a case, to take the testimony and hear the arguments and bring 
 the case to a conclusion. I do not think there has been a case de- 
 cided before thfe Commission in less than a year. A. majority of the 
 cases — the great bulk of the cases, in fact — ^take from one to three 
 years. It is very rare that a case is settled in as short a time as a year, 
 and it is very improbable that you would get any cases for this new 
 court to take* hold of within a year from the date of the enactment of 
 the law. 
 
 Mr^ Adajison. I was speaking of two communities. One of them 
 thinks the other has the better of it. If the railroad company changes 
 its rate, then the first community will think the other has the better of 
 it. Is not that a question to be tried by the Commission ? 
 
 Mr. Bacon. Yes ; to be sure. 
 
 Mr. Adaaison. Will not that make a good deal of litigation? 
 
 Mr. Bacon. I do not call that litigation, but the consideration of 
 the question by the Commission whether discrimination exists or not. 
 
 Mr. Adamson. I mean litigation before the Commission. 
 
 Mr. Bacon. It will not tend to increase those cases ; no. The fact 
 is, as I have said, that the Commission having power to deal with 
 them they will be satisfactorily adjusted between shippers and the 
 carriers in nine cases out of ten. 
 
 Mr. Adamson. Excuse me, but I do not see how it is possible for 
 the railroad companies and the shippers to settle it, when it is a 
 rivalry between communities, without going to the Commission. 
 
 Mr. Bacon. They often do settle it now. 
 
 Mr. Adamson. They have not had any tribunal to go to. 
 
 Mr .\ Bacon. They are not complaining about it now. The Cora- 
 mission has treated those cases during all the time since its organiza- 
 tion, but the difficulty is that its decisions are not operative ; they are 
 merely opinions which are expressed. 
 
 I want to say a word in relation to a defect which it strikes me 
 exists in the Hepburn bill, which has been just introduced, which I 
 want to call the attention of the committee to, and that is the pro- 
 vision or the absence of any provision in reference to additional testi- 
 mony which either party, may desire to present when the order of the 
 Commission is under review by the court. There has been great 
 difficulty arising heretofore, as you well know, in consequence or the 
 fact that new testimony has been introduced before the court which 
 has not been before the Commission, and has practically made a new 
 case of it, and consequently the Commission has been overruled in its 
 previous decision; whereas if it had had that additional testimony 
 it might have made an entirely different decision. I want to cite to 
 the committee the declaration of the Supreme Court on that point 
 in the case of the Cincinnati and New Orleans and Texas Pacific 
 Railway Company against the Interstate Commerce Commission, 162 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 385 
 
 United States reports, page 194, etc. This is from Mr. Kernan 
 [reading] : 
 
 The Supreme Court of the United States has condemned the present practice 
 proposed to be continued under the Cooper-Quarles bill and has in substance 
 approved of the change that I propose in the following language : 
 
 " We think this a proper occasion to express disapproval of such a methed of 
 procedure on the part of the railroad companies as shall lead them to withhold 
 the larger part of their evidence from the Commission and first adduce it in the 
 circuit court. The Commission is an administrative board and the courts are 
 only to be resorted to when the Commission prefers to enforce the provisions of 
 the statute by a direct proceeding in court or when the orders of the Commission 
 have been disregarded. The theory of the act evidently is, as shown by the pro- 
 vision that the findings of the Commission shall be regarded as prima facie evi- 
 dence, that the facts of the case are to be disclosed before the Commission." 
 
 That ends the quotation from the opinion of tlie court, but follow- 
 ing this is a paragraph which is from a paper written by. Hon. John 
 D. Kernan, former chairman of the railway commission of the State 
 of New York, who appeared before this committee in 1902 and gave 
 testimony in regard to the desirability of this legislation. I will say 
 also that he is giA'en the credit of be.ng the author of the present in- 
 terstate-commerce act to a very large exteni, the author of it in the 
 main, in fact. He sajs : 
 
 It would greatly facilitate and cheapen the cost of proceedings and promote 
 justice to have all the evidence taken before the Commission. If parties under- 
 stood that the holding back of their evidence would only result in their being 
 sent back to offer it before the original tribunal there would cease to be any 
 such withholding in the first instance, and yet there would not be denied to par- 
 ties the opportunities to supply omissions caused by accident or by changed 
 conditions. 
 
 I want also to refer to one other point in the Hepburn bill. That 
 is the fact that it is provided that an appeal to the Supreme Court 
 shall not operate to stay the order of the commerce court, provided 
 a bond is filed to protect the parties interested. It says : 
 
 But in none of the suits or proceedings described in this section shall an 
 appeal operate as a supersedeas or shall any order be passed suspending or setting 
 aside the decree of the court of commerce upon an appeal except upon the giving 
 of a bond of good and sufficient security, conditioned that the appellant shall 
 prosecute his appeal to effect, and if he fail to make his plea good shall answer. 
 In addition to all costs, all damages, which shall include compensation for what- 
 ever sums for transportation service any person or corporation shall be com- 
 pelled by the appellant to pay during the pendency of the appeal in excess of 
 the sum's such person or corporation could have been compelled to pay if the 
 order, judgment, or decree of the court of commerce had not been suspended or 
 stayed, which compensation may be recovered in an action of debt upon such 
 bond brought in the name of the United States in any court of proper jurisdic- 
 tion for the use of the person or corpration from whom or from which the 
 excessive tolls shall have been collected. 
 
 I want to say, in the first place, that a bond provided in that case, 
 or the fact of the providing of a bond in that case, is very delusive, 
 for the reason that it will be next to impossible, probably in ninety- 
 nine out of a hundred cases actually impossible, to reach the party 
 that has suffered in consequence of the continuance of this rate that 
 has been found by two bodies — the Interstate Commerce Commission 
 in the first place and the transportation or the commerce court, as 
 the case may be, in the second ]olace — to be unjust and unreasonable. 
 
 Mr. Ad.\msox. If that condition applies to every shipper whether 
 he be a party to the record or not, will not that be sufficient? 
 
 1 c L— 05 25 
 
386 PROPOSED AMENDMENT OF INTERSTATE-COMMEKCE LAW. 
 
 ]Mr. Bacox. The difficulty lies in the fact that the shipper is not 
 the interested party 
 
 Mr. Adamson. J understand; I say if that applies to everybody 
 that ships, whether he is a party to the recx)rd or not. 
 
 ^Ir. Bacon. The bond would require the railway company to re- 
 fund to the man who has paid the freight the excess over the rate 
 that had been fixed by the Commission; but in the meantime the 
 man who has paid the freight, either the shipper or the consignee, as 
 the case may be, has no remaining interest in it whatever. In the 
 case of the consignee who has received goods for sale, he has sold them 
 to the retailer and has added the freight which he has had to pay 
 into the price of the goods he has disposed of, and the retailer passes 
 them over to the consumer and the consumer pays that freight in the 
 price of the goods which he purchases. He can not be reached. It 
 would be impossible to trace even in the case of a single shipment 
 the party that is really entitled to the money, and nobody has any 
 standing at law in the case except the one who has paid it, who holds 
 the expense bills, as thej- are called, of the railroad company, which 
 he obtained when he paid the freight. 
 
 ilr. Ada3isox. Suppose 
 
 Mr. Bacox. AUoav me a few words further. I want to trace this 
 a little further. In the ekse of the shipper — we will say a shipper of 
 agricultural products, agricultural products being principally the 
 things that the shipper deals in, although manufacturers also are 
 bhippers: but in case of manufacturers the freight paid goes right 
 into the product itself and is paid by the consumer finally, the same 
 as in the case of merchandise, which I referred to previously — the 
 price paid by the shipper, that is the price paid by the buyer of agri- 
 cultural products in the country. You all imderstand, of course, that 
 there are verj' few men Avho raise agricultural products and ship 
 them themselves; they sell them at the nearest railway station to 
 the local buyer, and the buyer ships them to market, and he pays the 
 freight; that is, the freight is paid at the point of destination and is 
 deducted from the account of sales that is rendered to the shipper. 
 So the shipper really pays the freight and gets his expense bill back 
 from his commission merchant or consignee. So that he is the only one 
 entitled to recover under the bond in the case of agricultural products. 
 That is the case with grain, cotton, hay, and other things ; it is the 
 case largely with fruit; it is the case with every agricultural product 
 that is the subject of transportation, and the shipper takes the freight 
 which he has to pay to market directly out of the farmer or producer 
 when he buys the articles and takes them into his possession for ship- 
 ment. So that the man who really bears the freight — ^bears it in the 
 price he accepts for his products — has no standing in court, and, as 
 in the other case, is not known and ca,n not be known — can not be 
 traced up; hence, the payment under the bond would go to parties 
 who have no earthly claim whatever to it, having recouped themselves 
 already fully, both in the case of the wholesale dealer who handles 
 merchandise and the shipper of manufactures, and also in the case of 
 the grain buyer or cattle buyer who has bought the product of the 
 country from the producer, all of them having fully indemnified 
 themselves and are not entitled to another cent from any source what- 
 ever. 
 
PROPOSED AMENDMENT OF INTER8TATE-C0MMEKCE LAW. 38T 
 
 There is this advantage in the existence of such a bond. It would 
 remove the present incentive from the carrier to i^rblong the litiga- 
 tion in the courts, because during the prolongation of that litigation 
 Jis the laAv is now he is receiving the benefit of these excessive rates, 
 which have been so found bj^ these two bodies to which I have 
 referred, and it is desirable to" have the bond on that account. But 
 I say let the excess in freight which is found, in case the order of the 
 Commission is finally sustained, be paid to the Government. Nobody 
 has any claim to it; consequently give it to the Government and it 
 could go toward meeting the expense of this Commission. 
 
 Mr. Ma>'n. Woijld that be the case in the case of discriminatory 
 rates between localities? 
 
 Mr. Bacon. Yes; precisely. 
 
 Mr. Adamson. I thought you were going to state the converse of 
 this situation. In case the official judgment is in favor of the rail- 
 roads and the railroads siie the shipper and get back the difference 
 that he ought to have paid, how is the company to recoup itself? 
 Who is going to be liable for that? 
 
 jMr. Bacon. If he is going to be liable in the future for the pay- 
 ment of the difference between the rate fixed by the Commission and 
 the one finally decided upon, he is going to indemnify himself in 
 advance. 
 
 Mr. Adamson. How would you know that he is solvent? 
 
 Mr. Bacon. To be sure, and for that reason he is going to protect 
 himself by putting it into the price of the goods he handles. 
 
 The Chaikman. Do you think, Mr. Bacon, from your knowledge 
 of railways, that where an indebtedness to a shipper is fixed in 
 amount by his bill of lading on the one hand and the order of the 
 Commission on the other, in a sum that he can not avoid by any 
 possibility in a court of justice, that he would wait to be sued before 
 he would make prompt payment of a debt of that kind ? 
 
 Mr. Bacon. He would indemnify himself in the outset by putting 
 the freight which he would be liable to pay in the future to the 
 carrier into the price of the goods when he sells them. 
 
 The Chairman. That is, you think when the rate is lowered by 
 the Commission and is in litigation the carrier would increase that 
 rate that he was at that time charging, do you, to recoup ? 
 
 Mr. Bacon. It may be that way, or it might be that he would keep 
 the lower rate in efect and hold the party who paid the freight 
 liable to him for the subsequent payment of the difference. 
 
 The Chaieman. Is that practicable? 
 
 Mr. Bacon. I do not consider either of them practical; no, sir; 
 but if such were the case the shipper would necessarily protect him- 
 self b>' putting the rate that he would ultimately be liable to pay on 
 the property which he handled. He would be ruined in a year's 
 time if he did not do it in any business that I know anything about. 
 
 The Chairman. Suppose, on the other hand,- that the action of a 
 commission is not sustained, and that the rate is held to be unreason- 
 able. What is the remedy of the carrer ? 
 
 Mr. Bacon. The carrier would probably protect itself by con- 
 tinuino- the rate in question in force. That -would be his natural 
 and almost necessary course. 
 
 The Chairman. In that event, what remedy would the shipper 
 
 iiave? 
 
388 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 Mr. Bacox. The shipper in any case protects himself by adding 
 the freight that he has either paid or is liable to pay into the cost of 
 the goods, the price of the goods -which he handles when he sells 
 Ihem, the same as the cotton buj'er or the grain buyer or the cattle 
 buyer takes it out in advance from the producer of whom he pur- 
 chases those products in the countr}'. 
 
 Mr. Wanger. Would not the dealer in many instances, if this bond 
 provision became effective, agree with his customers that if the 
 fm&ight rate were reduced so many cents a bushel and that was paid 
 back to him that he would hand it over to his customer ? 
 
 Mr. Bacon. In the case of the grain buj^er buying from men he 
 knows in the country, he might do that in some instances or do so in 
 part. 
 
 Mr. Adamson. If he thought they knew about it ? 
 
 Mr. Bacon. Oh, it would be only a division of it with the other 
 men if he did anything at all. but in all probability he would not 
 attempt anything of the kind. 
 
 Mr. Mann. Have you ever considered this phase of it? Suppose 
 the rate fixed by the carrier is held by the court to be unreasonable 
 and it has been in effect since it was fixed by the Commission. I 
 mean the rate fixed by the Commission is held by the court to be 
 unreasonable and it has been in effect. Will the railroad companies 
 have the right to sue the shippers to recover the difference between 
 the actual charge and the rate fixed bj' the court? 
 
 Mr. Bacon. It is proposed to put up a bond to protect the carrier 
 in that case. 
 
 Mr. Mann. What bill provides that ? 
 
 Mr. Bacon. This provision I have just read, I understand, covers 
 that. , 
 
 Mr. Mann. No : there is no bond to protect anyone in the position 
 T am putting to you. Suppose there is no bond. Assume a case 
 where there is no bond and the rate is 30 cents a hundred, and the 
 Commission fixes a rate of 25 cents a hundred, and it. goes into effect, 
 and the court holds that it is unreasonably low and throws it out 
 
 Mr. Bacon. The carrier is not going to put that rate into effect 
 when he is testing it in court. 
 
 Mr. Mann. I am assuming that the carrier is required to put it ijito 
 effect, as he would under some of the bills, and it is in effect by re- 
 quirement of the law, which the Supreme Court holds to be unreason- 
 able. Now, will the carrier, ha^'ing been compelled to put a rate into 
 effect which is xmreasonably low, have the right to sue the shipper 
 and recover from the shipper the difference between the rate actually 
 paid and the reasonable rate? 
 
 ^Ir. Bacon. I should not think he would ; no, sir. 
 
 Mr. Adajison. A^'ould he not, Mr. ilann, unless we prevented it? 
 
 Mr. Mann. I am inclined to think, under the decisions of the court, 
 that he might have. 
 
 Mr. Bacon. That is a legal question; but if that is the case, the 
 shipper would protect himself in the same way I have previously 
 indicated. 
 
 Mr. Mann. In that event there is no possible objection. If the 
 shipper did not protect himself in such cases, there is no object in 
 puttmg the rate into effect so far as the consumer is concerned. 
 
PROPOSE!) AMENDMENT OP INTERSTATE-COMMERCE LAW. 389 
 
 Mr. Bacon. I look at it in this way : The act of the Commission 
 under this authority is a legislative act which has been delegated to 
 it by Congress, and it has the same effect as if Congress itself had 
 passed an act to that effect. Hence it is obligatory upon every citi- 
 zen of the United States, and nobody could recover any damages in 
 consequence of it any more than under any other act of Congress 
 which may subsequently be determined to be unconstitutional bv the 
 Supreme Court. 
 
 The Chairman. Have you taken this view of the subject, Mr. 
 Bacon ? Suppose that the view that you have expressed here should 
 become law and a railway company without ,anv legislation has its 
 right to enjoin the going into effect of that rate' and proceed by the 
 ordinary process of injunction in the methods that we now have of 
 administering justice. According to statements which you have 
 made -here it takes from four to six years to conclude a case of that 
 kind. 
 
 Mr. Bacon. I think it does ; yes, sir. 
 
 The Chairman. Heretofore, and it will be the same hereafter in 
 all hriman probability if present methods are determined upon, and 
 that at the end, we will say of four years, an act of the Commission 
 is sustained. Now what remedy under those circumstances will the 
 shipper have except it be by an individual suit against the railroad 
 company to make his recoveries? Will he have any? 
 
 Mr. Bacon. I do not think the shipper will have any need 
 
 The Chairman. Will he not have under the provisions of the bill 
 you referred to? 
 
 Mr. Bacon. The shipper, in the first place, is going to put himself 
 in the position where he can not suffer loss on either side, and conse- 
 quently he M'ill not be in a position that he wants any recovery from 
 anybody. 
 
 The Chairman. Perhaps that may.be so, I do not know whether 
 it is or not; but there is a class of shippers that does not have that, 
 they ship their own grain, they ship -their own cattle, there are 
 scores of them, hundreds of them. 
 
 Mr. Bacon. In the case of cattle that is the case to a considerable 
 extent, but take the whole traffic of the country and it is not the case 
 in 5 per cent of the tonnage of the country. 
 
 The Chairman. Probably not. 
 
 Mr. Mann. 1 guess they would always find some one who would 
 be willing to ship and buy' and not lay up money in the savings bank. 
 
 Mr. Bac(1n. Yes ; if their capital would admit of it, but, as I say, 
 the capital invested in this business of buying and selling the prod- 
 ucts of the country is usually very small, and the difference of a 
 few cents a hundred pounds on grain or cattle or anything of that 
 kind would ruin 99 per cent of the men in the business in the course 
 of a year; they are absolutely debarred from taking ^ny risk of that 
 kind "to anv appreciable extent. 
 
 Mr. Mann. You are speaking particularly of the grain trade? 
 
 Mr. Bacon. No; all classes of farm products. 
 
 Mr. Mann. That is largely grain trade. 
 
 Sir. Bacon. No; that is only one. Cotton is larger than grain. 
 Fruit is growing to be an immense article of production ; live stock 
 is another. I could name you probably a dozen articles of equal 
 importance with grain in the traffic of the country. • 
 
390 PROPOSED AMENDMENT OF INTEJRSTATE-OOMMERCE LAW. 
 
 Mr. Mann. Are the men who actually buy these articles in the 
 country usually men of wealth ? 
 
 Mr. Bacon. No, sir. 
 
 Mr. Mann. Don't they generally borrow money in order to carry 
 on their business? 
 
 Mr. Bacon. To a large extent. Their capital is small and they 
 can not afford to take any risks. A man doing a country business in 
 grain is quite an exceptional man if he has a capital of over $10,000. 
 
 Mr. Mann. They would always find some one to take the risks ? 
 
 Mr. Bacon. No; I don't think so. So far as the grain business 
 is concerned, with which I am most familiar, I can not call to mind 
 a single man who could run a risk for a year of one-eighth of a cent 
 per bushel on the grain which he handles. The amount handled is 
 enormous. A man with $10,000 capital will handle a million bushels 
 of grain a year, and you will see that a tenth of a cent a bushel on 
 that will soon absorb a large capital. 
 
 Mr. Mann. A man who has a country elevator will not handle that 
 much. 
 
 Mr. Bacon. A man with a capital of $10,000 will handle pretty 
 near that much. 
 
 The Chairman. We have two more gentlemen here who want to be 
 heard. 
 
 Mr. Bacon. I am sorry I have not time to take up one or two other 
 points, but I appreciate very much the time that has been given me, 
 and thank the chairman and the committee for their attention. 
 
 STATEMENT OF ME. S. H. COWAN. 
 
 Mr. Cowan. Mr. Chairman and gentlemen, I do not wish to waste 
 your time, but I want to say two or three more words in respect to 
 some matters pertaining to the" bills before you. 
 
 My judgment, after some years' experience in this matter, and, I 
 believe, a comprehensive knowledge of the statute on this subject and 
 the practice and decisions of the courts, that it would not be necessary 
 to provide for a special court at this time. I have no objection to the 
 principle of a special court. In fact, I am disposed to think that it 
 IS probably necessary, as I have expressed myself in public addresses, 
 for the purpose of speeding the determination of the inquiry par- 
 ticularly, and for the purpose of furnishing a court which will acquire 
 special knowledge on the subject by reason of familiarizing itself 
 from day to day and from term to term with the great importance of 
 the subject-matter both in law and fact. I believe the court is prob- 
 ably necessary. T doubt the expediency of undertaking to hamper 
 tlie passage of a bill giving proper powers to the Commission by 
 including in it provisions respecting the establishment of a court. If 
 it is the desire of the conunittee to pass a bill which will authorize 
 the Commission to pass upon the lawfulness or reasonableness of a 
 rate of freight — I say, if it is the desire of the committee to do that, it 
 can be written in 75 words, as an amendment, in addition, to section 
 15 of the act. 
 
 Two or three words in two or three different sections ought to be 
 stricken out, probably. For example, that section which establishes 
 a commission of five. If this committee thinks it should be seven it 
 
PROPOSED AMENDMENT OF INTEBSTATE-COMMEKCE LAW. 391 
 
 ]s easy enough to change that to seven. And in the first section of the 
 act i call your attention to the fact that certain classes of interstate 
 carriage are not governed by the interstate-conunerce law. Only 
 those roads which are under a common control for their shipments 
 are under the control of the interstate-commerce act as it exists 
 to-day. The result is when the Texas Pacific, as it did, canceled its 
 live-stock rates in shipments intended for beyond the State, neither 
 the commission of Texas had control nor the Interstate Commerce 
 Commission. Why? Because as to that class of shipment they are 
 not withm the arrangement provided for in the first section of this 
 act, which makes it subject to the act to regulate commerce, and, being 
 interstate freight, a State law can not control it. I will not take time 
 to call your attention to decisions where that has been decided, but 
 that IS the law. When a short line carrying lumber, for instance, 
 from the South to points north of the Ohio River refuse to make, as 
 r understand has been the case, a joint freight rate, if the first section 
 were changed as I have suggested so as to leave the act to apply to 
 all interstate carriers, then the Commission could determine the rate 
 or any part of the rate for interstate carriage. It would simplify 
 the act very much. 
 
 Then, by adding to section 14 or 15 the provision that the Com- 
 mission shall be empowered to fix a rate of freight in lieu of one 
 found to be in violation of any of the provisions of the act, or any 
 part of a rate or charge for that purpose, you will have given that 
 Commission the power which is necessary now to put an already 
 operating machine in force sufficient to do the work. 
 
 Now, then, as to the remedy of the Commission and the railroads. 
 The act provides that the Commission may go before the Supreme 
 Court, and it provides a means by which it can enforce its orders. 
 The law now gives a speedy remedy to enforce the Commission's 
 orders by suit in court. Now, as to the remedy of the railroads in 
 case the Commission's orders shall be unlawful. If the orders of the 
 Commission in a given case are objectionable to the railroads, the rail- 
 roads in the first place take the risk of the penalty that should be fixed 
 by this addition to section 15 for disobedience — say $5,000 a day or a 
 less amount if you please. If the railroad feels that the given rate 
 violates its right of property in requiring public service for less than 
 a reasonable compensation, it has its right under the present system 
 of jurisprudence in this country to go before any circuit court of the 
 United States and apply for an injunction to restrain that act of the 
 Commission ; nor can this body, in my opinion, prevent the exercise 
 of that constitutional jurisdiction, whether it provides for a special 
 court or not. I may be wrong about that, but that is my judgment. 
 
 Mr. Adamson. Do you think that it would be right to leave the 
 effect of a penalty open after a court has taken jurisdiction? 
 
 Mr. Cowan. Manifestly when a court enjoins the enforcement of 
 that order during the time of that injunction that order can not be 
 enforced. 
 
 Mr. Adamson. Could it be enforced afterwards? 
 
 Mr. Cowan. Not while the injunction is pending, because the 
 injunction protects the road against it. You will find, if you desire 
 to pass this legislation, that a small addition to section 15 of the act 
 will furnish every remedy that is desired and that it will leave open 
 
392 PROPOSED AMENDMENT OF INTEE3TATE-C0MMEECE LAW. 
 
 every right to protect all rights of property and leave it in such a 
 situation that the Commission can go ahead perforifliing its duties as 
 it has heretofore with a great deal more speed before the courts, 
 because we have got an act now that will speed the cases. Take the 
 cattle raisers' case, which I consider the most important that has ever 
 been brought before the Commission, certainly it is the most impor- 
 tant case in the West. We have used all sorts of diligence, and so has 
 the Commission, to try that case. It has been impossible. The rail- 
 roads have been "Johnny on the spot," and so have I. We have pro- 
 duced our witnesses and" tried the case in a most speedy mamier. A 
 brief has been prepared consisting of 20,000 pages. That takes a good 
 long time to prepare. I said I would undertake to prepare it in a 
 month. Judge Baxter, representing the railroads, said he would 
 undertake to prepare his brief in a month. Now, as soon as that is 
 done, it takes some time to hear such a casp. It must be heard fully 
 and argued. But Ave undertake to say that it can be submitted and 
 argued by the Ist of May. That is just as quick as you can expect 
 to reach such an important case as that. 
 
 If the Commission decides that case in our favor I expect to have a 
 decision of the Supreme Court by next November. I expect to have 
 it submitted to the Supreme Court at the October term, if the rail- 
 roads refuse to obey the order, and get a decision before the October 
 term adjourns. Gentlemen, it is the lawyers in these cases that have 
 delayed them more than ,any others, and the record will show it. A 
 great many of the cages heretofore have been delayed in the courts. 
 Now, I say the remedy, the proceedings, the machinery, everything, 
 is in working order to protect everybody by giving the power to the 
 Commission, which can be given in 75 words; and if this committee 
 will appoint its best lawyers, or two of its best lawyers and its chair- 
 man, and ask any of these railroad attorneys who are desirous, as 
 they say they are, of securing this power and yet having a reasonable 
 protection, to appoint one of their best attorneys who is familiar 
 with this matter, the shippers, I am sure, will be willing to risk their 
 side in my hands, and we can go to the Attorney-General and saj" 
 '■ You can prepare a bill in a hundred words that will give the pro- 
 tection and right desired." 
 
 Mr. Adamson. Do you not think these associations would make 
 better speed if they would do like your cattle association has done, 
 employ a good lawyer? 
 
 Mr. CowAN. We haven't got the money. It is costing us $10,000 
 or $12,000 to try that case. 
 
 Mr. Adamson. A great many of them have the money. 
 
 Mr. Cowan. No; a business organization is generally the poorest 
 kind of an organization in the world, and if anybody suggests that 
 they send a man to Congress they think somebody is looking for a 
 soft job. 
 
 Mr. Adamson. Judging from what some of these associations rep- 
 resent in the way of business concerns it seems to me that they ought 
 to be able to raise money enough to employ a good lawyer. 
 
 Mr. Bacon. I would like to file with the clerk of the committee, to 
 be made a part of the record, a list of the associations now associated 
 in the- movement to secure this legislation. I have not the list 
 with me. 
 
 (Thereupon, at 4.45 o'clock, the committee adjourned.) 
 
PEOPOSED AMENDMENT OF INTERSTATE-COMMEECE LAW. 393 
 
 List of commercial, mercantile, manufacturing, and ayriculturul organizations 
 associated in the movement to secure legislation i/iving qreater effectiveness 
 to the interstate commerce act. 
 
 [By conferring authority upon the Interstate Commerce Commission, upon full hearing of 
 any formal complaint, to prescribe reasonable and equitable rates to be substituted by 
 the carrier in place of those found to be unreasonable or discriminative ; the order of 
 the Commission in such case to become operative upon due notice to the carrier and so 
 continue until set aside by the court of last resort, unless upon review in the circuit 
 court of the United States it is found that such order clearly proceeds upon some error 
 
 -NATIONAL AND SECTIONAL ORQASIZAIIOXS. 
 
 American Shippers' Association 
 
 American Sliort-Horn Breeders' Association. 
 
 Carriage Builders' National Association. 
 
 Cattle growers' Interstate Executive Committee. 
 
 Central Yellow Pine Association (comprising the southern States of the 
 Mississippi Valley). 
 
 Coal Shippers' Association. 
 
 Colorado and Wjoming Lumber Dealers' Association. 
 
 Eastern Washington and Northern Idaho Lumber Manufacturers' Association. 
 
 Grain Dealers' Union of Southwestern Iowa and Northwestern Missouri. 
 
 Grain Dealers' National Association. 
 
 Hardwood Manufacturers' Association of the United States. 
 
 Iowa-Nebraska Wholesale Grocers' Association. 
 
 Millers' National Association. 
 
 Millers' National Federation. 
 
 Millinery Jobbers' Association. 
 
 Mississippi and Louisiana Lumber Dealers' Association. 
 
 Mississippi Valley Lumbermen's Association. 
 
 National Association of Manufacturers. 
 
 National Board of Trade. 
 
 National Dining Table Association. 
 
 National Wholesale Druggists' Association. 
 
 National Farmers' Exchange. 
 
 National Grange, Patrons of Husbandry. 
 
 National Hardware Association. 
 
 National Retail Hardware Dealers' Association- 
 National Hay Association. 
 
 National League of Commission Merchants. 
 
 National Live Stock Association. 
 
 National Live Stock Exchange. 
 
 National Lumber Manufacturers' Association. 
 
 National Wholesale Lumber Dealers' Association. 
 
 National Paint, Oil and Varnish Association. 
 
 National Wool Growers' Association. 
 
 National Retail Grocers' Association. 
 
 New England Grain Dealers' Association. 
 
 New England Granite Manufacturers' Association. 
 
 New England Shoe and Leather Association. 
 
 North Carolina Pine Association (comprising North and South Carolina and 
 Virginia). 
 
 Northwestern Manufacturers' Association. 
 
 Northwestern Lumbermen's Association (comprising Minnesota, Iowa, North 
 Dakota, and South Dakota). 
 
 Pacific Coast Hardware and Metal Association. 
 
 Pacific Coast Jobbers and Manufacturers' Association. 
 
 Pacific Coast Lumber Manufacturers' Association. 
 
 Paint Grinders' Association of the United States. 
 
 Southeastern Cotton Buyers' Association (comprising Alabama, Georgia, North 
 and South Carolina). 
 
 Southeastern Millers' Association. 
 
 Southern Hardware Jobbers' Association. 
 
 Southern Lumber Manufacturers' Association. 
 
 Southern Supply and Machinery Dealers' Association. 
 
 Southwestern Kansas and Oklahoma Implement and Hardware Dealers' As- 
 sociation. 
 
394 PROPOSED AMENDMENT OF INTEESTATE-COMMERCB LAW. 
 
 Southwestern Lumbermen's Association (comprising Kansas, Missouri, and 
 Olilnlioma). 
 
 Southwestern Mercantile Association. 
 
 Trans-Mississippi Commercial Congress. 
 
 Travelers' Protective Association of iimerica. 
 
 Western Association of Pine Shippers (comprising Washington, Oregon, Idaho, 
 and Montana). 
 
 Western Fruit Jobbers' Association. 
 
 Western Retail Implement and Vehicle Dealers' Association (comprising 
 Kansas, Missouri. Colorado, Oklahoma, and Indian Territory). 
 
 Western Retail Lumbermen's Association. 
 
 Western Merchants and Manufacturers' Association. 
 
 Western Association of Shoe Wholesalers. 
 
 Winter Wheat Millers' League. 
 
 Wholesale Saddlery Association of the United States. 
 
 STATE AND LOCAL OEGANIZATIONS. 
 
 Birmingham Board of Trade. 
 Birmingham Commercial Club. 
 Huntsville Chamber of Commerce. 
 Huntsville Wholesale Grocer.s" Association. 
 Mobile Commercial Club. 
 
 ARKANSAS. 
 
 Arkansas State Board of Trade. 
 
 Fort Smith Traffic Bureau. 
 
 Gentry Fruit Growers' Association. 
 
 Judsonia Fruit and Vegetable Growers' Association. 
 
 Little Rock Board of Trade. 
 
 Little Rock Merchants' Freight Bureau. 
 
 Texarkana Commercial Club. 
 
 Texarkana Freight Bureau. 
 
 Texarkana Wholesale Grocers' Association. 
 
 CALIFORNIA. 
 
 Associated Wholesale Grocers of California. 
 
 California State Board of Trade. 
 
 California State Grange, Patrons of Husbandry. 
 
 Manufacturers and Producers' Association of California. 
 
 Southern California Fruit Exchange. 
 
 Southern California Retail Hardware and Implement Association. 
 
 Olaremnot Citrus Union. 
 
 Highland Orange Growers' Association. 
 
 Humboldt Countj' Chamber of Commerce, Eureka. 
 
 Indian Hill Citrus Union, North Pomona. 
 
 Associated Jobbers of Los Angeles. 
 
 Los Angeles Board of Trade. 
 
 Los Angeles Chamber of Commerce. 
 
 Los Angeles Merchants and Manufacturers' Association. 
 
 Oakland Board of Trade. 
 
 Oakland Merchants' Exchange. 
 
 Pomona Board of Trade. 
 
 Pomona Fruit Growers' Exchange. 
 
 Porterville Board of Trade. 
 
 Sacramento Board of Trade. 
 
 Sacramento Chamber of Commerce. 
 
 San Antonio Fruit Exchange, Pomona. 
 
 San Bernardino Board of Trade. 
 
 San Bernardino County Fruit Exchange. Colton. 
 
 San Diego Chamber of Commerce. 
 
 San Francisco Chamber of Commerce. 
 
 San Francisco Merchants' Association. 
 
 San Francisco iSIerchants' Credit Association. 
 
PROPOSED AMENDMENT OP INTEESTATE-COMMEBCE LAW. 395 
 
 lo!!^? Barbara County Chamber of Commerce, Santa Barbara, 
 banta Barbara Lemon Growers' Exchange 
 Tulare County Citrus Fruit Exchange, Porterville 
 Whlttier Citrus Union. 
 
 COLORADO 
 
 Colorado and Wyoming Lumber Dealers' Association. 
 
 Colorado State Realty Association. 
 
 Colorado City Chamber of Commerce. 
 
 Colorado Springs Chamber of Commerce. 
 
 Denver Chamber of Commerce and Commercial Club 
 
 Denver Manufacturers' and Jobbers' Transportation Association. 
 
 Denver Real Estate Exchange. 
 
 Fort Collins Sheep Feeders' Association. 
 
 Grand Junction Chamber of Commerce. 
 
 Grand Junction Liberty League. 
 
 Gunnison County Stock Growers' Association, Gunnison. 
 
 Lincoln County Cattle Growers' Association, Hugo. 
 
 Lincoln and Elbert County Wool Growers' Association, Hugo. 
 
 Roaring Fork and Eagle River Stock Growers' Association, Carbondale. 
 
 ■ CONNECTICUT. 
 
 Connecticut State Grange, Patrons of Husbandry. 
 Bridgeport Business Men's Association. 
 New Haven Chamber of Commerce. 
 Waterbury Business Men's Association. 
 
 DISTRICT OF COLUMBIA. 
 
 Washington Board of Trade. 
 
 FLORIDA. 
 
 Georgia Interstate Saw Mill Association (comprising Georgia and Florida). 
 
 UMOBGIA. 
 
 Georgia Interstate Saw Mill Association (comprising Georgia and Florida). 
 North Georgia Fruit Growers' Association. 
 Atlanta Chamber of Commerce. 
 Atlanta Freight Bureaui 
 Savannah Cotton Exchange. 
 
 Eastern Washington and Northern Idaho Lumber Manufacturers' Association. 
 
 Idaho Lumber Dealers' Association. 
 
 Idaho Sheep and Wool Growers' Association. 
 
 Illinois Grain Dealers' Association. 
 
 Illinois Live Stock Breeders' Association. 
 
 Illinois Lumber Dealers' Association. 
 
 Illinois Manufacturers' Association. 
 
 Illinois Millers' State Association. 
 
 Illinois State Grange, Patrons of Husbandry. 
 
 Southern Illinois Millers' Association. 
 
 Travelers' Protective Association of Illinois. 
 
 Anna Fruit Growers' Association. 
 
 Belleville Commercial Club. 
 
 Bloomington Business Men's Association. 
 
 Cairo Board of Trade. ' 
 
 Chicago Branch, National League of Commission Merchants. 
 
 Chicago Board of Trade. 
 
 Chicago Builders and Traders Exchange. 
 
396 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 Chicago Commercial Exchange. 
 
 Chicago Live Stock Exchange. 
 
 Chicago Merchants' Association. 
 
 Joliet Business Men's Association. 
 
 Quincy Chamber of Commerce. 
 
 Quincy Freight Bureau. 
 
 Quincy Jobbers' Association. 
 
 Quincy Retail Merchants' Association. 
 
 Rockford Business Men's Club. 
 
 Rockford Grocers' Association. 
 
 Rockford Shippers' and Manufacturers' Association 
 
 Springfield Business Men's Association. 
 
 Indiana Grain Dealers' Association. 
 
 Indiana Hardwood Lumbermen's Association. 
 
 Indiana Millers' Association. 
 
 Indiana Retail Merchants' Association. 
 
 Indiana Shippers' Association. 
 
 Indiana State Board of Commerce. 
 
 Indiana State Grange, Patrons of Husbandry. 
 
 Indiana Wool Growers' Association. 
 
 Shippers' Protective League of Indiana. 
 
 Travelers' Protective Association of Indiana. 
 
 Evansville Business Association. 
 
 Fort Wayne Commercial Club. 
 
 Fort Wayne Retail Merchants' Association. 
 
 Indianapolis Branch, National League of Commission Slerchants. 
 
 Indianapolis Board of Trade. 
 
 Indianapolis Commercial Club. 
 
 Indianapolis Fruit and Produce Commission Merchants' Exchange. 
 
 Indianapolis Furniture Manufacturers. 
 
 Lafayette Commercial Club. 
 
 Lafayette Merchants' Association. 
 
 Commercial Association of Iowa. 
 Corn Belt Meat Producers' Association of Iowa. 
 
 Grain Dealers' Union of Southwestern Iowa and Northwestern Missouri. 
 Iowa Grain Dealers' Association. 
 Iowa-Nebraska Wholesale Grocers' Association. 
 Iowa State Grange, Patrons of Husbandry. 
 Iowa State Manufacturers' Association. 
 
 South Dalcota, Southwestern .Minnesota, and Northwestern Iowa Retail Imple- 
 ment Dealers' Association. ^ 
 Burlington Business Jlen's Club. 
 Burlington Commercial Exchange. 
 Cedar Rapids Commercial Club. 
 
 Chariton, Xoxall Club (The Business Men's Association). 
 Davenport Business Men's Association. 
 Des Moines Commercial Exchange. 
 Dubuque Shippers' Association. 
 Oskaloosa Commercial Club. 
 
 Federation of Commercial Interests of Kansas. 
 Kansas Grain Dealers' •Association. 
 Kansas Millers' Association. 
 Kansas State Grange, Patrons of Husbandry. 
 Kansas Improved Stock Breeders' Association. 
 Kansas AVholesale Grocers' Associatiou. 
 Southern Kansas Millers' Commercial Club. 
 
 Southwestern Kansas and (Oklahoma Implement and Hardware Dealers' 
 Aissociation. 
 
 Arkansas Citj- Commercial Club. 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 397 
 
 Emporia Business ileii"s Association. 
 Howard Commercial Club. 
 Hutchinson Commercial Club. 
 Lindsborg Commercial Club. 
 Russell Commercial Club. 
 Salina Commercial Club. 
 Topeka Commercial Club. 
 Wellington Business Men's Club. 
 Wichita Board of Trade. 
 Wichita Chamber ol Commerce. 
 Wichita Commercial Club. 
 Wichita Traflic Bureau. 
 
 KENTUCKY. 
 
 Travelers" £'rotecti\e Association of Kentuclvy. 
 
 Covington Business Men's Club. 
 
 Hartford Commercial Club. 
 
 Louisville Branch, National League of Commission Merchants. 
 
 Louisville Lumbermen's Club. 
 
 LOUISIANA. 
 
 Mississiijpi and Louisiana Lumber Dealers' Association. 
 
 New Orleans Branch, National League of Couunission Merchants. ^ 
 
 New Orleans Board of Trade. 
 
 New Orleans Live Steele Exchange. 
 
 Ponchatoula Farmers' Association. 
 
 MARYLAND. 
 
 Baltimore Branch, National League of Commission ilerchants. 
 
 Baltimore Chamber of Commerce. 
 
 Baltimore Lumber Exchange. 
 
 Baltimore Travelers and Merchants' Association. 
 
 Baltimore Tobacco Board of Trade. 
 
 MASSACHUSETTS. 
 
 Massachusetts State Board of Trade. 
 
 Massachusetts State Grange, Patrons of Husbandry. 
 
 Boston Associated Board of Trade ( repi'esenting 2.3 affiliated organizations). 
 
 Boston Frait and Produce Exchange. 
 
 Boston Branch, National League of Commission Merchants. 
 
 Brockton Board of Trade. 
 
 Cambridge Citizens' Trade Association. 
 
 Fitchburg Merchants' Association. 
 
 Haverhill Board of Trade. 
 
 Lowell Builders' Exchange. 
 
 Lowell Board of Trade. 
 
 Mansfield Board of Trade. 
 
 Norwood Business Association and Board of Trade. 
 
 Somerville Board of Trade. 
 
 Worcester Board of Trade. 
 
 MICHIGAN. ■ 
 
 Michigan Dairymen's Association. 
 Michigan Grain Dealers' Association. 
 Michigan Hay Association. 
 Michigan .Aleriuo Sheep Breeders' Association. 
 Jlichigan Retail Lumber Dealers' Association. 
 Michigan State Grange, Patrons of Husbandry. 
 Michigan State Millers' Association. 
 Southern Michigan Fruit Association. 
 Albion Farmers' Club. 
 
 Detroit Branch, National League of Commission Merchants. 
 Detroit Merchants and Manufacturers' Exchange. (Merged into Detroit Board 
 of Commerce.) 
 Grand Rapids Board of Trade. 
 Saginaw Lumber Dealers' Association. 
 
39b PROPOSED AMENDMENT OF INTEK8TATE-C0MMEKCE LAW. 
 
 MINNESOTA. . 
 
 Jlinnesota Millers' Club. 
 
 Minnesota Municipal and Commercial League (representing over fifty com- 
 munities). 
 
 Minnesota Retail Grocers and General Merchants' Association. 
 
 Minnesota Retail Hardware Association. 
 
 Minnesota Shippers and Receivers' Association. 
 
 South Dakota and Southwest Minnesota Millers' Club. 
 
 South Daliota, Southwest Minnesota, and Northwest Iowa Retail Implement 
 Dealers' Association. 
 
 Duluth Board of Trade. 
 
 Duluth Commercial Club. 
 
 Duluth Produce and Fruit Exchange. 
 
 Duluth Retail Grocers' Association. 
 
 Duluth Branch, L. S. Retail Meat Dealers' Association. 
 
 Mankato Board of Trade. 
 
 Minneapolis Branch, National League of Commission Merchants. 
 
 Minneapolis Chamber of Commerce. 
 
 Minneapolis Millers' Club. 
 
 Red River Millers' Club, Moorhead. (See North Dakota.) 
 
 Rochester Union, American Society of Equity. 
 
 St. Paul Board of Trade. 
 
 St. Paul Chamber of Commerce. 
 
 St. Paul Commercial Club. 
 
 St. Paul Produce Exchange. 
 
 South St. Paul Live Stock Exchange. 
 
 Winona Board of Trade. 
 
 MISSISSIPPI. 
 
 Mississippi and Louisiana Lumber Dealers' Association. 
 Aberdeen Group Commercial Association, West Point 
 Laurel Board of Trade. 
 Natchez Cotton and Merchants' Exchange. 
 Vicksburg Cotton Exchange. 
 
 MISSOURI. 
 
 Grain Dealers' Union of Southwest Iowa and Northwest Missouri. 
 
 Missouri Retail Merchants' Association. 
 
 Missouri Retail Hardware Association. 
 
 Travelers' Protective Association of Missouri. 
 
 Gashland Fruit Growers' Association. 
 
 JefCerson City Commercial Club. 
 
 Kansas City Board of Trade. 
 
 Kansas City Hay Dealer.s' Association. 
 
 Kansas City ^Manufacturers and Merchants' Association. 
 
 Kansas City Millers' Club. 
 
 Pierce City Fruit Grov^ers' Association. 
 
 St. Joseph Commercial Club. 
 
 St. Louis Builders' Exchange. 
 
 St. Louis Business Men's League. 
 
 St. Louis Cotton Exchange. 
 
 St. Louis Fruit and Produce Exchange. 
 
 St. Louis Lumber Dealers' Association. 
 
 St. Louis Manufacturers' Association. 
 
 St. Louis Merchants' Exchange. 
 
 St. Louis Millers' Club. 
 
 St. Louis Stove Manufacturers' Association. 
 
 MONTANA. 
 
 Eastern Montana Wool Growers' Association 
 Montana Stock Growers' Association. 
 North Montana Wool Growers' Association. 
 Great Falls Retail Merchants' Exchange. 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 399 
 
 NEBRASKA. 
 
 Iowa-Nebraska Wholesale Grocers' Association 
 
 Millers' Clnb of Nebraska. 
 
 Nebraska Lumber Dealers' Association. 
 
 Nebraska Retail Merchants' Association. 
 
 Nebraska Stock Growers' Association. 
 
 South Nebraska Millers' Club. 
 
 Fremont Commercial Club. 
 
 Lincoln Commercial Club. 
 
 Lincoln Retail Grocers' Association. 
 
 Omaha Branch, National League of Commission Merchants. 
 
 Omaha Grain Exchange. 
 
 Omaha Produce Exchange. 
 
 South Omaha Live Stock Exchange. 
 
 NEW HAMPSHIRE. 
 
 New Hampshire State Grange, Patrons of Husbandry. 
 
 NEW JERSEY. 
 
 New Jersey Lumbermen's Protective Association. 
 New Jersey State Grange, Patrons of Husbandry. 
 Jersey City Board of Trade. 
 Newark Board of Trade. 
 
 NEW MEXICO. 
 
 Las Vegas Commercial Club. 
 
 NEW YORK. 
 
 New York State Fruit Growers' Association. 
 
 New York State Grange, Patrons of Husbandry; 
 
 New York State Millers' Association. 
 
 New York State Retail Lumber Dealers' Association. 
 
 Albany Chamber of Commerce. 
 
 Auburn Business Men's Association. 
 
 Brooklyn, United Retail Grocers' Association. 
 
 Buffalo, Black Rock Manufacturers' Association. 
 
 Buffalo Branch, National League of Commission Merchants. 
 
 Buffalo Chamber of Commerce. 
 
 Buffalo Lumber Exchange. 
 
 Jamestown Manufacturers' Association. 
 
 Lockport Board of Trade. 
 
 Middletown Business Men's Association. 
 
 New York Cotton Exchange. 
 
 New York Fruit and Produce Trade Association. 
 
 New York Lumber Trade Association. 
 
 New York Manufacturers' Association. 
 
 New York North Side Board of Trade. 
 
 New York Stationers' Board of Trade. 
 
 Rochester Chamber of Commerce. 
 
 Utica Chamber of Commerce. 
 
 NOETH CABOLINA. 
 
 North Carolina Pine Association (comprising North and South Carolina and 
 Virginia). 
 Charlotte Shippers' Association. 
 
 East Carolina Truck and Fruit Growers' Association, Wilmington. 
 Wilmington Chamber of Commerce. 
 Wilmington Merchants' Association. 
 
 NOBTH DAKOTA. 
 
 Red River Millers' Club (comprising North Dakota and northwest Minne- 
 sota). 
 
400 PROPOSED AMENDMENT OE INTERSTATE-COMMERCE LAW. 
 
 Miami ^'alley and Western Ohio Grain Dealers' Association. 
 
 Middle Ohio Grain Dealers' Association. 
 
 Northwest Ohio Grain Dealers' Association. 
 
 Northwest Ohio Millers and Grain Dealers' Association. 
 
 Ohio Shippers" Association. 
 
 Ohio Grain Dealers' Association. 
 
 Ohio Millers' State Association. 
 
 Ohio State Association, Patrons of Industry. 
 
 Ohio State Grange, Patrons of Husbandry. 
 
 Ohio State Hardware Association. 
 
 Western Ohio Grain Dealers' Association. 
 
 Cincinnati Chamber of Commerce. 
 
 Cincinnati Business Men's Club. 
 
 Cincinnati Lvuubermen's Club. 
 
 Cincinnati Manufacturers' Club. 
 
 Cincinnati Receivers and Shippers' Association. 
 
 Cleveland Chamber of Commerce. 
 
 Cleveland Retail Coal Dealers' Association. 
 
 Columbus Board of Trade. 
 
 Dayton Commercial Club. 
 
 Massillon Board of Trade. 
 
 Newark Board of Trade. 
 
 Portsmouth Board of Trade. 
 
 Sandusky Chamber of Commerce. 
 
 Toledo Builders' Exchange. 
 
 Toledo Produce Exchange. 
 
 Youngstown Builders' Exchange. 
 
 . OKLAHOMA. 
 
 Oklahoma Chamber of Commerce, Oklahoma City. 
 Oklahoma Live-Stock Association. 
 Oklahoma Millers' Association. 
 Oklahoma Traffic Association. 
 
 Southwest Kansas and Oklahoma Implement and Hardware Dealers' Asso- 
 ciation. 
 
 Oregon Live-Stock Breeders' Association. 
 
 Portland Board of Trade. 
 
 Portland Chamber of Commerce. 
 
 Portland Manufacturers' Association of the Northwest 
 
 PENNSYLVANIA. 
 
 Pennsylvania Lumberman's Association. 
 
 Pennsylvania Millers' State Association. 
 
 Pennsylvania State Grange, Patrons of Husbandry. 
 
 Philadelphia Board of Trade. 
 
 Philadelphia Bourse. 
 
 Philadelphia Commercial Exchange. 
 
 Philadelphia, Commercial Museums. 
 
 Philadelphia Hardware Merchants and Manufacturers' Association. 
 
 Philadelphia Lumbermen's Exchange. 
 
 Philadelphia Manufacturers' Club. 
 
 Philadelphia Produce Exchange. 
 
 Philadelphia Trades League. 
 
 Pittsburg Chamber of Commerce. 
 
 Pittsburg Grain and Flour Exchange. 
 
 Pittsburg Branch, National League of Commission Merchants. 
 
 Pittsburg Wholesale Lumber Dealers' Association. 
 
 Reading Board of Trade. 
 
 Scranton Board of Trade. 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 401 
 
 RHODE ISLAND. 
 
 Lumber Dealers' Association of Rliode Island. 
 Rhode Island State Grange, Patrons of Husbandry. 
 Pawtucket Mercbants' Association. 
 Pawtucket, Southern Woodlawn Improvement Society. 
 
 SOUTH CAHOLINA. 
 
 North Carolina Pine Association (comprising North and South Carolina and 
 Virginia). 
 Anderson Chamber of Commerce. 
 Charleston Bureau of Freight and Transportation. 
 Charleston Chamber of Commerce. 
 Charleston Commercial Club. 
 Charleston Cotton Exchange. 
 Columbia Chamber of Commerce. 
 Gafdney Business Men's Club. 
 Georgetown Board of Trade. 
 
 Piedmont Wholesale Grocers' Association, Anderson. 
 Spartanburg Chamber of Commerce. 
 
 SOUTH DAKOTA. 
 
 South Dakota and Southwestern Minnesota Millers' Club. 
 South Dakota, Southwestern Minnesota, and Northwestern Iowa Retail Imple- 
 ment Dealers' Association. 
 Western South Dakota Stock Growers' Association. 
 Deadwood Business Club. 
 
 TENNESSEE. 
 
 Chattanooga Retail Grocers' Association. 
 
 Memphis Builders' Exchange. 
 
 White County Live Stock Association, Sparta. 
 
 Texas Cattle Raisers' Association. 
 Texas Cotton Growers' Association. 
 Texas Grain Dealers' Association. 
 Texas Live Stock Association. 
 Texas Lumbermen's Association. 
 Texas Millers' Association. 
 Travelers' Protective Association of Texas. 
 Dallas Commercial Club. 
 Dallas Freight Bureau. 
 
 Utah Live Stock Association. 
 
 Utah Wool Growers' Association. 
 
 Ogden, Weber Club (The Business Men's Association). 
 
 VERMONT. 
 
 Vermont Jersey Cattle Club. 
 
 Vermont State Grange, Patrons of Husbandry. 
 
 Vermont Sugar Makers' Association. 
 
 VIRGINIA. 
 
 North Carolina Pine Association (comprising North and South Carolina and 
 
 Virginia). 
 Danville Commercial Association. 
 Danville Tobacco Association. 
 
 Richmond Branch, National League of Commission Merchants. 
 Richmond Tobacco Exchange. 
 
 I c L— 05 26 
 
402 PROPOSED AMENDMENT OF INTERSTATE-COMMEEOE LAW. 
 
 WASHINGTOS. 
 
 Eastern Washington and Northern Idaho Lumber Manufacturers' Association. 
 
 Washington State Grange, Patroiis of Husbandry. 
 
 Chewelah Commercial Club. 
 
 Colville Commercial Club. 
 
 Dayton Commercial Association. 
 
 Franklin County Chamber of Coiniiierce, Pasco. 
 
 Grays Harbor Commercial Club, Cosniopolls. 
 
 Kepublie Chamber of Commerce and Mines. 
 
 Ritzville Chamber of Commerce. 
 
 Seattle Manufacturers' Association. 
 
 Spokane Chamber of Commerce. 
 
 Spokane Jobbers and Shippers' Association. 
 
 Spokane Lumbermen's Association. 
 
 Tacoma Chamber of Commerce and Board of Trade. 
 
 Tacoma Retail Grocers' Protective Association. 
 
 Walla Walla Commercial Club. 
 
 WEST VIHOIKIA. 
 
 Charlesto^vn Board of Trade. 
 
 WISCOJXSIS. 
 
 Wisconsin Cheese Makers' Association. 
 
 Wisconsin Grain Dealers' Association. 
 
 Wisconsin Retail Hardware Association. 
 
 Wisconsin Retail Lumber Dealers' Association. 
 
 Wisconsin State Grange, Patrons of Husbandry. 
 
 Wisconsin State Millers' Association. 
 
 La Crosse Board of Trade. , 
 
 La Crosse Manufacturers and .Jobbers' IFnlon. 
 
 Marinette General Improvement Association. 
 
 Marinette County Good Roads Association. 
 
 Milwaukee Association of Steam and Hot Water Heating Engineers. 
 
 Milwaukee Branch, National League of Commission Merchants. 
 
 Milwaukee Builders and Traders' Exchange. 
 
 Milwaukee Chamber of Commerce. 
 
 Milwaukee Merchants and Manufacturers' Association. 
 
 Milwaukee Millers' Association. 
 
 Milwaukee Retail Grocers' Association. 
 
 Muscoda Dairy Board, Spring Green. 
 
 Peshtigo Good Roads Association. 
 
 Superior Retail Grocers' I'rotective Association. 
 
 WYOMING. 
 
 Colorado and Wyoming Lumber Dealers' Association. 
 Eastern Wyoming Wool Growers' Association. 
 Saratoga Board of Trade. 
 
 The legislatures of the following States have memorialized Congress within 
 the past two years to enact legislation of similar character, viz : Iowa, Kansas, 
 Louisiana, Michigan, Minnesota, Missouri, South Dakota, Wisconsin. 
 
 National and sectional organizations 62 
 
 State and local organizations, representing 44 States and Territories 401 
 
 Total 463 
 
 State granges. Patrons of Husbandry 17 
 
 Aggregate 480 
 
 The State and local organizations enumerated in the foregoing, including IT 
 State granges of the Patrons of Husbandry, are situated as follows : 
 
PROPOSED AMENDMENT OP INTERSTATE-COMMERCE LAW. 403 
 
 Alabama 5 
 
 Arkansas 9 
 
 California 32 
 
 Colorado 13 
 
 Connecticut 4 
 
 District of Columbia 1 
 
 Georgia 5 
 
 Idaho 2 
 
 Illinois 27 
 
 Indiana 20 
 
 Iowa 13 
 
 Kansas 20 
 
 Kentucky 5 
 
 Louisiana 4 
 
 Maryland 5 
 
 Massachusetts 15 
 
 Michigan 13 
 
 Minnesota 21 
 
 Mississippi 4 
 
 Missouri 20 
 
 Montana 4 
 
 Nebraska 12 
 
 New Hampshire 1 
 
 New Jersey 4 
 
 New Mexico 1 
 
 New York 22 
 
 North Carolina 4 
 
 North Dakota 1 
 
 Ohio 27 
 
 Oklahoma 4 
 
 Oregon 4 
 
 Pennsylvania 18 
 
 Rhode Island 4 
 
 South Carolina 10 
 
 South Dakota 4 
 
 Tennessee 3 
 
 Texas 9 
 
 Utah 3 
 
 Vermont 3 
 
 Virginia 4 
 
 Washington 15 
 
 West Virginia 1 
 
 Wisconsin 20 
 
 Wyoming 2 
 
 Total 418 
 
 National and sectional organiza- 
 tions 02 
 
 Aggregate- 
 
 480 
 
 Washington, D. C, January 25, 1905. 
 Hon. W. P. Hepburn, 
 
 Chairman Committee on Interstate and Foreign Commerce, 
 
 House of Representatives, Washington, D. G. 
 Sib : In support of the oral statement which I made before your committee 
 this afternoon, to the effect that the net earnings of many of the railways 
 of the countrv have produced a return on the capital stock of the several 
 companies ranging from 10 to 20 per cent, I beg leave to present the following 
 detailed statement showing the percentage on the capital stock of the railway, 
 companies mentioned produced by the net earnings of the companies mentioned 
 after paying fixed charges, including taxes and interest on outstanding 
 bonds, during the years ending June 30, 1902 and 1903, as reported in the 
 Wall Street Journal, a daily newspaper published in the city of New York, 
 devoted especially to financial interests. I also include several companies 
 whose net earnings have produced a return of between 7 and 10 per cent 
 on their capital stock during the years mentioned. In cases where blanks 
 occur, the return is not given In the journal mentioned. 
 
 Atchison, Topeka and Santa Pe 
 
 Atlantic Coast Line - 
 
 Baltimore and Ohio - 
 
 Buffalo, Eochester and Pittsburg - 
 
 Central of New Jersey - 
 
 Chicago and Eastern Illinois 
 
 Chicago and Northwestern -----.-- 
 
 Chicago, Indianapolis and Louisyille 
 
 Chicago, Milwaukee and St. Paul 
 
 Chicago, Book Island and Paoiflc - . -------- 
 
 •Chicago, St. Paul, Minneapolis and Omaha . 
 
 ' Hocking Valley 
 
 — • " al- - - 
 
 Illinois Central- 
 Lehigh Valley . 
 
 LouisviUe and Nashville -- --- 
 
 Minneapolis and St. Louis . - - - - - - - . - - -y--.-- - 
 
 Minneapolis, St. Paul and Sault Ste. Mane . 
 
 Missouri Pacific - -- - 
 
 Mobile and Ohio -- j-if--;i---.J " 
 
 New York, New Haven and Hartford - 
 
 Norfolk and Western. .- --- 
 
 Pacific Coast - 
 
 Pennsylvania Railroad 
 
 Philadelphia and Erie 
 
 Union Pacific - - 
 
 1902. 
 
 Pre- 
 ferred. 
 
 Percent. 
 5 
 
 10.52 
 
 6 
 
 14.6 
 i 
 9.-19 
 
 6.56 
 
 Com- 
 mon. 
 
 Per cent. 
 9.66 
 9.4 
 
 10.52 
 
 14.4 
 14.6 
 6.53 
 9.19 
 12 
 
 6.56 
 12.36 
 
 8.27 
 7.83 
 8.45 
 
 8.71 
 6.36 
 
 12.3 
 4.20 
 
 1903. 
 
 Pre- 
 ferred. 
 
 Per cent. 
 5 
 5 
 4 
 12.4 
 
 14.6 
 4 
 
 16.49 
 
 7 
 
 10 
 
 "h' 
 
 Com- 
 mon, 
 
 7.93 
 10.23 
 12.4 
 
 7.78 
 28.5 
 14.6 
 
 7.75 
 
 9.9 
 
 8.2 
 
 9.49 
 
 7 
 11.29 
 
 4.9 
 10.35 
 
 5.3 
 
 7 
 
 10 
 14 
 
 8.34 
 
 8 
 10.6 
 
 9.2 
 
 7.87 
 10.40 
 
404 PROPOSED AMENDMENT OF INTEKSTATE-COMMEECE LAW. 
 
 The dividends declared by tlie several eompauies mentioned have in most cases 
 been less than, and in some cases very much less than, the percentage earned as 
 shown in the above figures, the surplus having been applied in some cases to 
 betterments and permanent improvements, and in other cases to an accumulated 
 surplus fund. The aggregate amount of such surplus fund accumulated by all 
 the railways of the United States during the four years ending June 30, 1903, 
 as shown in the annual reports on railway statistics of the Interstate Commence 
 Commission, amounts to $358,440,000. The amount reported as having been ex- 
 pended for permanent improvements during that period (when not included in 
 operating expenses) was $92,500,000. Tliis amount added to the accumulated 
 surplus makes an aggregate of $450,940,000 derived from the net earnings of the 
 railways of the country, in addition to the dividends declared and paid to stock- 
 holders. 
 
 Respectfully submitted. 
 
 E. P. Bacon. 
 
 STATEMENT OF H. B. MARTIN, OF NEW YORK, NATIONAL SECRE- 
 TARY OF THE AMERICAN ANTI-TRTJST LEAGXTE. 
 
 Mr. Chairman an'd Gentlemen of the Committee : In view of the short 
 time at the disposal of the committee I respectfully ask permission to file a 
 brief statement on behalf of the American Anti-Trust League and numerous 
 commercial and agricultural organizations, including shippers, consumers, and 
 producers from many States, who have presented petitions to Congress urging 
 the enactment of H. li. 13778, the bill amending the interstate-commerce law, 
 introduced by Representative Hearst, of New York. 
 
 The organizations and citizens who indorse the Hearst bill and urge its pas- 
 sage do so for the following reasons among others : 
 
 First. Because the bill empowers the Commission to fix freight rates when 
 existing rates have been found by it to be unreasonable or discriminating. 
 
 Second. It prohibits change of rates without thirty days' notice to the 
 Commission. 
 
 Third. Makes all its orders effective within thirty days after service and re- 
 ■ quires the Conmii.ision to decide every case within sixty days after it is closed. • 
 
 Fpurth. Unlike all other bills, it makes the execution of the law effective and 
 expeditious by creating an interstate-gommerce court, with exclusive jurisdiction 
 to review all orders of the Commission and power to enforce them by contempt 
 proceeding.-*. 
 
 Fifth. This does away with double trials, and limits stays to cases found on 
 hearings to be clearl.y unjust. 
 
 Sixth. No appeal lies to the Supreme Court unless either the commerce court 
 or the Supreme Court certifies that a constitutional question is involved which 
 ought to be reviewed, in which cases, however, no stay can be granted. 
 
 Seventh. It empowers the Commission to fix elassifigation of freights that will 
 be just and fair to all persons. 
 
 The opposition to this legislation regulating rates, as formulated by the rail- 
 road owners and their representatives, has substantially resolved itself to this : 
 
 They claim — 
 
 First. That Congress. has no right to delegate to the Interstate Commerce 
 Commission the power to fix rates. 
 
 Second. That Congress has no right to delegate to the courts the power to fix 
 rates. 
 
 Third. That Congress itself can not fix railroad rates. 
 
 Fourth. Their logical conclusion and consistent contention is that the rail- 
 road managers alone have the right to fix rates, and thereby to fix the value of 
 all the billions of dollars worth of movable property owned by the 80,000,000 
 people of the United States, who would thus be helpless in the hands of the few 
 who own the highways. 
 
 Are the Interstate Commerce Committees of the House and Senate willing 
 to accept this conclusion? 
 
 Is Congress itself willing to accept it? 
 
 Are the sovereign people of the United States willing to accept it? 
 
 The self-evident answer to these questions and to the untenable claims of the 
 railroad managers is most emphatically " No." 
 
 The present system of private management of those great public highways, 
 the interstate railroads, has been tried In the balance and found wanting. The 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMEECE LAW. 405 
 
 abuses which have attended the system from the beginning to the present have 
 become so aggravated that they are now intolerable, and the people are deter- 
 mined that a change must be made. 
 
 The power to fix the rates of transportation for the property and persons of 
 80,000,000 of people is too great a power to be safely trusted in the hands of 
 any small clique of private individuals. This much is certain and settled in 
 the mind of most intelligent Ainerican citzens outside the ranks of those who 
 serve or share the railroad monopoly. 
 
 Every man's property, every man's labor, every man's livelihood, every man's 
 hope of the future is at the mercy of the men who, with an eye solely to the 
 increase of their own wealth and power, now control the public highways in 
 derogation of public rights and in defiance of public law. This is a condition 
 that can not and will not long be endured by the people. 
 
 There is a remedy for these evils arising from the private monopoly of the 
 public highways. It is the high privilege, prerogative, and duty of this Congress 
 of the United States to find and apply that remedy before the disease becomes 
 too deep rooted to be removed. 
 
 It is also the privilege and duty of the citizens to suggest and to petition to 
 Congress for the adoption of the reforms needed to cure the evils complained of. 
 
 To this end we have here presented to this committee and to Congress 
 numerous petitions signed by many citizens, both shippers and consumers, from 
 all parts of the United States in favor of the enactment into law of bill H. R. 
 1377S, knowA as the " Hearst bill." 
 
 ******* 
 
 The objections against this line of legislation provided for in H. R. 13778, 
 which are presented by the railroad men and their friends, are as I have before 
 stated : 
 
 First. Because they claim it is unconstitutional for Congress to delegate its 
 legislative power to fix rates to the Interstate Commerce Commission, a body 
 appointed by the President, and thereby conferring the legislative power on the 
 executive branch of the Federal Government and is unconstitutional. This is 
 sufficiently answered by the decisions of the United States Supreme Court to 
 the effect that the Commission is a legislative body and that Congress can dele- 
 gate the rate-making power to it. 
 
 Second. Because they claim that the courts, by virtue of the provision allow- 
 ing appeals from the orders of the Commission, would be in fact allowed to fix 
 the rate, and that would be delegating a legislative power to the judicial 
 branch of the Government and thereby disturbing the balance of powers be- 
 tween the legislative and judicial branches. 
 
 The sufficient answer to this is that all legislative acts are subject to judicial 
 review as to their constitutionality ; but that does not necessarily mean that 
 Congress thereby delegates to the courts any part of its proper legislative 
 power. 
 
 Third. They claim that Congress itself, although empowered to make rates, 
 can not do so, because it is too complex a subject to be dealt with properly by 
 so large a body of men, inexperienced in railroad affairs. 
 
 A sufficient answer to this is the fact that a Congress competent to enact so 
 complicated a thing as a customs-tariff schedule is certainly qualified to enact a 
 railroad freight and passenger schedule. 
 
 This argument and the fourth argument of the railroad managers, viz, that 
 they alone are competent to fix just and reasonable freight and passenger rates, 
 is akin to the old argument of the friends of monarchy and nobility, viz, that 
 only the wealthy and well born are competent to govern. That all question of 
 Government were, as the railroad managers now claim the rate question is, too 
 deep and too complicated to be dealt with by the common people and their 
 representatives In Congress. The claims of the monarchist proved to be utterly 
 absurd; and the common sense of the people to-day emphatically repudiates 
 the equally absurd claim to superior wisdom and virtue on the part of the rail- 
 road managers. 
 
 The fixing of just and reasonable rates is not so complex a matter as they 
 would have us believe. It is the making of unjust discriminatiton and extor- 
 tionate rates that is the complex and complicated things. 
 
 " It is the tangled web they weave 
 " When first they practice to deceive " 
 
 that makes the rate-making business look so complicated. 
 
406 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 Ample evidence has been furnished to this oounnittee and to Congress and to 
 the United States Industrial Commission and the Interstate Commerce Com- 
 mission of the enormous aiiil dangerous abuses of the power to fix rates and 
 control the rail highways when that power is exercised by the private indi- 
 viduals now owning and managing the roads. 
 
 That Government regulation of railroads must come is now admitted even 
 by some of the reriresentatives of the railway companies themselves who have 
 appeared before this committee. 
 
 But they claim that by enforcing the existing interstate-commerce law all the 
 evils of importance would be wiped out. From this opinion we emphatically 
 dissent. 
 
 The abuses carried on through the manipulation of freight classifications 
 would not be abolished by enforcing the existing interstate-commerce law. 
 
 The unfair advantage which the railroads have over the shipper and eon- 
 stmier through the almost intermediate delays by long-drawn out trials and 
 appeals under the present s.<.stem would not be nliolished !>y the enforcement of 
 the present law. 
 
 The private-car abuse is not reached through the present law. 
 
 A hundred different forms of outrageous secret discrimination and rebates 
 are not reached l)y the existing law. 
 
 And above all, the giant evil of unjust, unfair, unreasonable, and extortionate 
 rates can not be abolished by the enforcement of existing interstate-commerce 
 law. The remedy for all these evils is more comprehensively and effectively 
 provided in the Hearst bill than in any other bill now before Congress. 
 
 There has been much testimony and argument presented before this commit- 
 tee in behalf of the shippers and in behalf of the railroad companies ; but there 
 is another party besides these two, who is most vitally interested in Govern- 
 ment regulation and control of railroads to the end that the admitted abuses and 
 extortion I have enumerated should be put a stop to, and that party is the great 
 body of 80,000,000 producers and consumers, on whom the whole burden of rail- 
 road freight and passenger charges finally falls. 
 
 It is in behalf of the 80,000,000 of unjustly overburdened consumers that I 
 speak to-day. 
 
 That the burden so unjustly imposed on them by the railroads is very griev- 
 ous is clear to everyone when we consider that the tax in the form of railroad 
 rates levied each year now amounts to about nineteen hundred millions of dol- 
 lars. Approximately one-half of this, or nearly ten hundred millions, is clear 
 profit to the railroad owners, and over five hundred millions of that profit is an 
 excessive and extortionate charge. 
 
 This is an injustice so great as to be intolerable. Congress can and should 
 put a stop to it. 
 
 When the private owners and managers of the railroads proceed to such 
 lengths as this, ill usurping the power to tax the citizens, it becomes the impera- 
 tive duty of Congress to enact a law that will relieve the people of this enor- 
 mous and unjust burden. 
 
 Not only do the railroads themselves levy this monopoly extortion of five 
 hundred millions a year, but by the favoritism which they show to certain 
 individuals and corporations they have built up numerous monopolistic ti'usts, 
 who, ap soon as they have secured control of the markets, proceed to levy 
 another monopoly tax on the consumers almost as burdensome and more 
 oppressive and ruinous than even the exactions of the railroads. 
 
 Fortunately for the nation. President Roosevelt, by the statements in his 
 last message, sliows that the people have reason to hope that the executive 
 branch of the Government is ready to actively cooperate with Congress in 
 remedying these evils by the enactment of the new laws so greatly needed to 
 control the railways and correct their abuses. 
 
 There have been many examples furnished your committee by many wit- 
 nesses of cases of unjust and unreasonable rates. / 
 
 A typical case affecting directly the people of the National Capital and 
 making the United States Government itself a victim is the rate on soft coal 
 from points in West Virginia. I am informed that the rate from McDowell 
 County points to Shenandoah Junction, about 200 miles, is $1.60 per ton ; from 
 Shenandoah Junction to Washington, 60 miles, is also $1.60 per ton, over 300 
 per cent higher. This is effective in keeping out competing coal that would, 
 if the rate were fair, greatly reduce the cost of coal to all the consumers in 
 Washington, including the Government itself. 
 
PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 407 
 
 To allow, as we have done, a few private individnals to secure absolute con- 
 trol of the main highways of the nation is to create an autocracy within the 
 Republic which has already become more powerful than the Republic itself. 
 Indeed, it is the common understanding in Washington to-day that the railroads 
 will allow no bill to pass which does not suit them. A prominent Government 
 official, testifying before the Senate committee a short time ago, said, " You can 
 not pass any bill regulating the railroads without the railroads' consent, and 
 they will not consent." 
 
 The result of private control of railroads is commercial despotism. They defy 
 the Government, disobey the laws, and enforce their own decrees with ruthless 
 disregard of the rights of both shippers and consumers. 
 
 Ra.llroad tariffs are both legally and essentially a tax levied on the whole 
 people. In 1903 that tax levied on the nation by this handful of private indi- 
 viduals amounted to eighteen hundred and ninety million dollars — three times 
 the amount of all the taxes levied by the Government of the United States. 
 
 In the language of ex-Governor Larrabee, of Iowa : 
 
 " Other tax laws of the United States are not changed, even in the slightest 
 degree, without months of discussion by Congress, and after thorough investi- 
 gation of all interests likely to be affected by the change ; but this great trans- 
 portation tax can be increased by this handful of men between two days, and is 
 often so done without any consultation with those who are compelled to pay it, 
 or any consideration for their interests. 
 
 " Nowhere else in the civilized world are a few irresponsible persons permitted 
 to carry on a large public business like this, or vested with such tremendous 
 powers of taxation without severe restrictions being placed upon them." 
 
 H. B. Martin, 
 1229 Pennsylvania Avenue NW., Washington, D. C. 
 
 STATEMENT BY JOSEPH NIMMO, JR., STATISTICIAN AND 
 
 ECONOMIST. 
 
 JANUAKT 19, 1905. 
 
 Mr. Chaieman : Mr. G. Waldo Smith, of the New York Board of Trade and 
 Transportation, who appeared before this committee on Tuesday the 17th instant, 
 presented a petition from that board, in which was recommended " a .ioint spe- 
 cial commission of Congress on interstate commerce to thoroughly investigate 
 all problems involved, and to report their conclusions and recommendations by 
 bill at the opening of the next Congress." 
 
 This is a subject in which I am deeply interested. I have for years urged the 
 importance of such a Congressional investigation upon the trade bodies of the 
 country and in the public press. Perhaps the most explicit of these recom- 
 mendations is the one made in the Railway Age of January 31, 1902, from which 
 I quote the following : 
 
 " It is somewhat astonishing that there has been but one such investigation as 
 that here recommended since the advent of railroad transportation in this coun- 
 try, namely, the investigation of 1886. Since that time important changes have 
 taken place in economic and commercial conditions of controlling force. 
 
 "We may profit very much in regard to' this important subject from the ex- 
 ample of Great Britain. The British Parliament began the investigation of the 
 peculiar commercial, economic, and political aspects of tramways in the year 
 3801 — more than one hundred years ago. Since the advent of steam railroads, 
 about the year 1830, there have been many parliamentary investigations in 
 Great Britain concerning the relations of the railroads to the public interests. 
 The most notable of these were the investigations of 1840, 1844, 1846, 1852, 1865, 
 1872, 1881, 1888, and 1893-94. The printed report of the Commission of 1872 is 
 a quarto volume of 1.189 pages, nearly as large as a Webster's Dictionary. The 
 report of 1893-94 is also a quarto volume of nearly 700 pages. In these various 
 reports all the more important commercial, economic, and political conditions 
 governing the railroad transportation que.stion in Great Britain have been inves- 
 tigated and reported upon. Theories and notions about railroad management 
 and regulations have also been considered and reported upon — some of them 
 quite as visionary and as absurd as certain of those which now command public 
 attention in this country. As the result of these elaborate parliamentary inqui- 
 ries, abuses of various sorts have been abated, mistaken ideas in regard to the 
 management and regulation of the railroads of Great Britain have been cor- 
 
408 PROPOSED AMENDMENT OF INTERSTATE-COMMERCE LAW. 
 
 lected, sensible remedial expedients have been adopted, many questions at issue 
 have been amicably settled, and public discontent has been allayed. Thus, 
 British statesmen, following the historic example of their illustrious predeces- 
 sors, have from time to time, in the language of Mr. Gladstone, ' submitted them- 
 selves to tlae lessons of experience and to the lessons of the hour.' 
 
 " How different has been the course pursued toward the railroads of this 
 country by our National Government. With an area (exclusive of Alaslia and 
 our insular possessions) twenty-five times that of the United Kingdom of Great 
 Britain and Ireland, and with a railroad mileage of over 200,000 miles as against 
 22,000 miles in Great Britain, as before stated, we have had only one Congres- 
 sional investigation of the railroad question, namely, the Senate inquiry of 1886, 
 which resulted in the interstate-commerce act of February 4, 1887. o That 
 investigation related to the cure of certain causes of complaint. What is now 
 needed is an inquiry relating to the organization of our vast American railroad 
 system, its relationships to the social, commercial, and industrial lntere.sts of the 
 country, the benefits which it has conferred, the evils which have incidentally 
 arisen in the course of its development, and the proper course to be pursued in 
 the attempt to cure those evils. This appears to be the supreme duty of the 
 hour. It is a duty which can not be evaded if legislation in regard to the most 
 important material interests of this country is to be based upon the certain 
 lessons of experience, and not upon the uncertain leadings of public clamor. 
 
 " If the eminently wise and wholesome example of Great Britain is to be 
 followed the proposed inquiry will involve many hundred and even thousands 
 of inquiries. Without any attempt to formulate a definite scheme of investiga- 
 tion, I submit, offhand, some of the topical features of such a Congressional 
 investigation." 
 
 [Here follow thirty-six specific inquiries relating to the economy of transporta- 
 tion by rail and the relations of the railroads to the general public interests, but 
 which need revision in order to meet changed conditions. — N.] 
 
 In view of the fact that the commercial, economic, and constitutional aspects 
 of such Congressional inquiry as that here recommended have been pretty thor- 
 oughly discussed at the present hearings, I shall invite your attention only to 
 certain inquiries bearing upon fundamental principles of our form of Govern- 
 ment, which inquiries, in my judgment, relate to the most important aspect of 
 the whole question at issue. The nature and scope of these inquiries are indi- 
 cated as follows : 
 
 In order to avoid the slightest misrepresentation as to the attitude assumed 
 by the Interstate Commerce Commission, I quote the following from page 10 of 
 its seventh annual report, dated December 1, 180.S : 
 
 " To give each community the rightful benefit of location, to keep different 
 commodities on an equal footing, so that each shall circulate freely and in nat- 
 ural volume, and to prescribe schedule rates which shall be reasonably just to 
 both shipper and carrier is a taslj of vast magnitude and importance. In the 
 performance of that task lies the great and permanent work of public regula- 
 tion." 
 
 The Utopian idea of placing the conduct of the commercial and transportation 
 interests of this country under the supervision and control of an administrative 
 bureau of the National Government constitutes a striking Illustration of what 
 is commonly meant by " bureaucratic government." 
 
 During the last two thousand years there has been going on among the fore- 
 most nations of the globe a struggle between the advocates of dispensing justice 
 in the conduct of the interaction of commercial and industrial forces through the 
 exercise of the judicial power and througli the exercise of autocratic adminis- 
 trative authority, the latter function being usually performed by a bureau 
 clothed with executive authority or with delegated legislative authority. This 
 latter method — bureaucracy — was the potential cause of the downfall of the 
 Roman Empire. The only civilized country in which it now prevails as an unre- 
 strained expression of sovernmental authority is Russia, where the people are 
 to-day clamoring for its suppression, for the reason that it constitutes an Intol- 
 erable form of despotism. In England the autocratic exercise of the power of 
 controlling the course of the development of the commercial and industrial 
 interests of the country by autocratic governmental authority was known 
 as a " dispensing power." This form of despotism was abolished as the result 
 
 «The Windom Senate committee report of 1873 was essentially the result of 
 an inquiry in regard to the construction or improvement of certain water routes. 
 
PROPOSED AMENDMENT OF INT ERST ATE- COMMEBCE LAW. 409 
 
 of the British revolution of 1688. The men who framed our present form of 
 government utterly repudiated any form of autocratic power. But, ever and 
 anon, men oblivious to the lessons of the political experiences of the civilized 
 nations of the globe during the last two thousand years announce in this and in 
 other countries some new scheme for placing the commercial and industrial 
 interests of the people under bureaucratic} rule. This Is the controlling idea of 
 the Quarles-Cooper bill. 
 
 In view of the foregoing, I desire to express the earnest hope that this com- 
 mittee will perceive the present importance of a thorough Congressional investi- 
 gation of the railroad transportation question and that it may be led to institute 
 such inquiry in all its political, commercial, and economic bearings. 
 
 For thirty years as officer of the Government, and in my private capacity as 
 statistician and economist, I have been a laborious Investigator of the railroad 
 problem in this country, and that experience has impressed me with a sense of 
 the importance of an investigation of the subject by a Congressional committee 
 clothed with all the powers which the governmental authority confers for the 
 discovery of facts not accessible to the private citizen. 
 

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