The Reasonableness and Lawfulness of the
General Features of the President's Rate
Regulation Policy.
ADDRESS
BY
Senator Philander C. Knox,
AT
Banquet of Pittsburgh
Chamber of Commerce
November 3, 1905
The Reasonableness and Lawfulness of the
General Features of the President's Rate
Regulation Policy.
ADDRESS
BY
Senator Philander C. Knox,
AT
Banquet of Pittsburgh
Chamber of Commerce
November 3, 1905
The President believes that the power to pass upon
the reasonableness of a challenged railroad rate or prac¬
tice should be lodged in some tribunal upon which can
be also constitutionally cast the power to fix a reasona¬
ble rate or practice in lieu of a rate found by it to be
unreasonable, and that the rate so fixed should become
as nearly immediately operative as possible.
The proposition that the National Government should
exercise supervisory control over the tax upon trans¬
portation became almost self-evident from the time that
the railroads began, through various devices, to con¬
centrate this taxing power in the hands of a few men.
The Government's efforts to check this concentration
of power under the provisions of existing laws should
be supplemented by legislation which will prevent the
abuse of the power of taxing the movement of persons
and property under any form of concentration or under
any circumstances whatever.
It commends itself to me as wiser statesmanship
to provide a remedy for a mischief in whatever form it
appears rather than to waste time in matching the in¬
genuity of the lawmaker in devising laws to impose a
penalty for a wrong as it may appear in specific devices
against the ingenuity of the law-breaker in trying to
avoid its provisions by creating new ones. In other
words, it would seem to be wiser to cure the disease than
treat the symptoms.
The Wall Street Journal said, in 1902, in relation to
the issues involved in the Government's attitude toward
the Northern Securities Company:
"The railroads at this moment stand in serried
ranks, facing the law, and the settlement of the
present dispute involves a settlement on first prin¬
ciples. Abuse of the railroad interests on the one
hand, and of the Interstate Railroad Commission
on the other, at this time is puerile. The formel
4
may have been guilty of imprudent action and the
latter of dereliction of duty, but these are small
matters when questions of first principle have to be
settled, as they have at present."
This is true to-day.
The proposition is that Congress can and should at
once enact a law covering the main features of the public
demand for a prompt and efficient remedy against unjust
railroad practices, and leave to the future the determina¬
tion of the wisdom and necessity of legislating in respect
to collateral and related matters.
It is the duty of Congress to regulate commerce so as
to prevent injustice and imposition by the carriers.
The proposition to correct unreasonable railroad rates
and practices goes no further than this. It is tanta¬
mount to the proposition to correct injustice and impo¬
sition.
If you provide the remedy, the evil will largely dis¬
appear. The tendency for some time has been toward
fairer dealing by the railroads with the public.
The enlarged and more effective provisions against
rebates and unjust discriminations contained in the
legislation of the Fifty-Seventh Congress affected fewer
railroads and met with less railroad opposition than
would have been the case ten years earlier, as many of
the managers of the best roads had endeavored to abol¬
ish such practices before the law went into effect. One
makes a mistake who assumes that the best railroad con¬
science of the country approves the extravagant propa¬
ganda now being carried on to convince the public that
any regulative legislation would be unjust to the rail¬
roads.
There is no railroad in the United States that can be
in the slightest degree affected by legislation giving
relief from unreasonable rates and practices unless it is
guilty of unreasonable and unjust practices. There is
no practice which any railroad adopts or sanctions that
can be declared to be unreasonable or unjust until it
5
is challenged in a quasi judicial proceeding, and proved
to be unjust and unreasonable after the fullest hearing
and argument. There is no order that can be made by
any commission or board now existing, or which it is
proposed to create, that can change a rate or practice
that is unreasonable or unjust without its order being
subject to review in a judicial proceeding in the United
States Circuit Court upon the ground of the unreason¬
ableness of the order of the commission, and there is no
law that does, and probably no law could be enacted that
could, prevent the Court, if satisfied that injustice had
been done the railroads, from staying the operation of
the order upon terms, until the Court had passed upon
the merits of the controversy.
In other words, the railroads enjoy a complete remedy
against injustice which it is not proposed to take away,
while the public has no effective remedy against injus¬
tice. More than such a remedy the public does not ask.
Less than such a remedy it never should have been
without.
Exactly such a remedy Congress supposed it gave
under the original act to regulate commerce, and it was
applied in a number of cases before the decision of the
Supreme Court that it was not given by the act.
The administrative features of the power inhering in
Congress to fix reasonable rates for transportation may
be lawfully vested in the Interstate Commerce Commis¬
sion.
This includes the power to vest in the Commission
authority to substitute a reasonable rate for one found
by it to be unreasonable.
It has frequently been declared to be the law that
Congress cannot vest the power to fix tolls in any con¬
stitutional court, because the fixing of a toll is a legisla¬
tive and not a judicial act, and Congress cannot impose
the performance of non-judicial duties upon the courts,
which exercise the judicial power of the United States.
It is equally clear that Congress cannot give an appeal
6
from a non-judicial or administrative body to a judicial
body for the purpose of reviewing administrative acts
and correcting them by decreeing a new act, as in a judi¬
cial appeal; and this disposes of what I understand to
be the main contention between the advocates of the
proposition that a rate fixed by the commission should
go into effect at once, and the advocates of the proposi¬
tion that it should not go into effect until approved by a
court upon appeal. It is perfectly evident that if the
court in the first instance could not perform the legisla¬
tive act of fixing a reasonable future rate it could not
perform the same act upon appeal.
No device can cure the objection to suspending the
operation of the Commission's finding until passed upon
by the court. Of course, I do not mean that, in an in¬
dependent proceeding begun in the court, the court
could not, in the exercise of its discretionary powers,
when satisfied that the rate fixed by the Commission
was unlawful, enjoin its operation until a final hearing.
That is a power that inheres in the court that need not
be conferred by statute and probably cannot be taken
away by a statute.
The competency of the Commission to pass upon the
reasonableness of a challenged rate is denied because of
the technical character of the work ; because familiarity
with its requirements can only come through long train¬
ing and experience. This argument might be potent if
it were proposed to give the Commission the power to
initiate rates and practices. This, however, is not the
proposition.
It is not proposed to confer upon the Commission any
greater or different power than courts of equity possess
under a well-known branch of equity jurisprudence.
The Commission sits in the first instance to determine
the reasonableness of the challenged rate or practice,
and in so doing performs an ordinary judicial function.
There is no act or transaction, however technical, com¬
plex or important, whose legality may not be called in
7
question in a court. Courts listen to the evidence of
experts in mechanics, medicine, art, theology, and
finance, hear the elucidations of advocates on either
side, and, without previous special training in the par¬
ticular subject involved, determine the rights of the
parties to the issue.
Without such power in an independent tribunal there
could be no such thing as property rights.
There can be no such thing as a right without a
method of determining its existence.
So, in respect of a railroad rate or practice alleged to
be unreasonable and therefore unlawful, whether it
presents the simplest or the most involved question, the
able experts, who it is claimed are alone competent to
comprehend and deal with these questions, may en¬
lighten the Commission and the complaining shipper;
and it follows, of course, if the weight of reason is with
the railroad, the complaint will be dismissed. To con¬
jecture otherwise would be to assume that the Commis¬
sion could not understand, or would not heed, a sound
defense.
Upon the other hand, if the complainant makes good
his charge of unreasonableness in rate or practice, the
Commission, exercising the delegated non-judicial
power of Congress, decides what would be reasonable
under the evidence.
The different views brought forward relative to the
creation of new courts or the appointment of additional
judges have much that may be said in their favor and
against them, respectively.
Whether the existing Circuit Courts of the United
States would be able to handle the increased business
that the passage of the law proposed might impose upon
them is a mere matter of conjecture. As between the
suggestion of a permanent court of commerce in Wash¬
ington, composed of judges who perform no other duty;
a court of commerce in each circuit, and the suggestion
of the creation of nine new circuit judges and a court
8
of commerce, the personnel of which is to be determined
by the Chief Justice of the United States, one may find
himself at a loss to determine which, if either, is a wise
plan.
In my judgment, I think that matter can be left to be
determined in the future. Congress can well afford to
abide the result of experience in these matters.
A very short and simple law would reach the root of
the trouble. It should provide that the tolls collected
by common carriers and the practices pursued by them
should be just, fair and reasonable. The power to deter¬
mine these tolls and practices should rest with the rail¬
roads, and not be interfered with except upon complaint
and after full hearing before the Interstate Commerce
Commission.
The Commission should have the power, if it finds the
complaint well founded, to declare what shall be a just,
fairly remunerative, and reasonable rate or practice to
be charged or followed in place of the one declared to be
unreasonable.
This order of the Commission should take effect with¬
in such reasonable time as shall be prescribed by the
Commission in the order, and should be final, subject
only to attack for unlawfulness in the Federal courts,
where it would have to stand or fall upon its merits.
Such an act, with suitable provision for the regulation
of joint rates and rates upon traffic of international car¬
riers, would go to the full extent of, and no further than,
the recommendations made by the President in his last
annual message.
I am sincerely convinced that the time has come when
Congress must, in justice to the public, exercise more
fully its power in respect to railroad rates and regula¬
tion, and I believe that, in view of the misunderstanding
and differences of opinion relative to comparatively un¬
important features of the problem, no relief is likely to
be given in the immediate future unless some such
comparatively simple measure is adopted.
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