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Analysis of H. R. 1Ô5Ô8
BY
HON. WALKER D. MINES
COMPLAINT CAN BE INSTITUTED BY ANYONE
WHETHER INTERESTED
OR NOT.
H. R. Bill 18588 which has been favorably reported by
a majority of the Committee on Interstate and Foreign
Commerce, provides that the Interstate Commerce Com¬
mission may make rates, practices and regulations upon
complaint duly made under Section 13 of the Interstate
Commerce Act. That section permits complaints to be
made by any person, firm, corporation or association, or
any mercantile, agricultural or manufacturing society, or
any body politic or municipal organization, or by any rail¬
road commissioner or commission of any State or Territory,
and also permits the Interstate Commerce Commission
itself to institute proceedings on its own motion with the
same effect as though complaint had been made; and the
section further provides in effect that no complaint shall
be dismissed because the complainant has no interest in
the controversy. Thus the provision in the pending bill
for action upon complaint is meaningless, for any person
or organization, with or without interest, can complain,
and the Commission itself can initiate complaints. Under
this bill, whenever the commission wants to change any
rates, regulations or practices, it can and will undoubtedly
do so.
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confp:rs general rate-making power.
The pending bill speaks of "rate, regulation or practice
in the singular, but no sensible person will contend that
under that provision the commission will be restricted to
action upon a single rate, regulation or practice in a given
proceeding. Section 13 of the original act does not
restrict complaints to a single rate, and under the pending
bill the commission can an will deal with and change at its
pleasure all the rates, regulations and practices that may¬
be complained of or that may be necessarily involved in
the complaint. Indeed, the well-known dependence of
rates will make it absolutely necessary for the commission
to deal simultaneously with vast numbers of rates under the
proposed rate-making power. But even if the commission
should attempt to confine itself to a single rate in a single
proceeding, the practical result would be a general re-mak¬
ing of rates. If the commission should change the rate
from Chicago to New York a corresponding change would
have to be made, whether the commission ordered it or
not, on all the eastbound traffic between the Mississippi
River and the Atlantic Seaboard. If the commission
should change the rate from Cincinnati to Atlanta corres¬
ponding changes would have to be made, whether the
commission ordered them or not, on all the rates from
points on and north and west of the Ohio and Mississippi
Rivers, and from the Eastern Seaboard cities and the
Virginia cities, to all the Southeastern States. The use,
therefore, in the pending bill of the term "complaint" and
the employment of the singular instead of the plural in
referring to "rate, regulation or practice" are without any
practical effect, and that bill will give the commission the
general rate-making power to whatever extent the com¬
mission seeks to exercise it. So the provision as to «'full
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hearing" is of no practical effect. No commission under
any grant of rate-making power would undertake to change
rates without investigation and hearing of the railroads
interested, but the extent of the hearing is absolutely
within the discretion of the commission.
ORDER SELF-EXECUTING.
The proposed bill provides that all rates, regulations and
practices made by the commission shall be self-executing,
becoming effective thirty days after notice from the com¬
mission, giving any party directly affected the right to have
the court of transportation review the lawfulness, justness
and reasonableness of the rates, practices and regulations so
made. For practical purposes this is simply the jüdícíaí
review which, by force of the Federal Constitotion, may
always be had as to the reasonableness of rates fixed by
any rate-making commission. The fact that the court is
called a court of transportation does not increase the extent
or the effectiveness of the judicial review provided.
COULD BE NO MORE DRASTIC LEGISLATION.
The consequence is that the bill now under consideration
gives the commission the general rate-making power just
as fully, and for practical purposes, just as free from judicial
review, as it is possible to imagine. It is difficult, there¬
fore, to understand what is meant by those who assert that
this is "moderate" regulation of the railroads, and that it
must be adopted to prevent more "drastic" regulation.
The fact is that it would be impossible for Congress to
enact legislation which would be more drastic in theory;
and in practice the extent to which this legislation will be
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drastic will depend absolutely on the disposition of the
particular individuals who for the time being constitute the
commission, subject only to such judicial review as exists
by virtue of the Constitution, and which could not be legis¬
lated out of existence. In point of fact, the only thing
more radical than this bill which could be enacted would
be to provide for Government ownership of the railroads.
That will be the only radical step remaining to be taken
after the passage of this bill, and doubtless the owners of
the railroads would, so far as their pecuniary interest in the
railroads is concerned, welcome Government ownership
with the resulting substitution of Government securities in
return for their present railroad holdings at a fair valuation
in place of continuing to hold their property subject to the
self-cxectítíng regulations of the Interstate Commerce
Commission taking effect prior to any judicial review.
NO SUCH POWER ORIGINALLY INTENDED
TO BE CONFERRED BY CONG ESS.
The claim that any such power was originally intended
to be vested in the commission, or was universally supposed
to exist, or was acquiesced in for ten years or any other
time, is absolutely incorrect, and yet the disposition to
take the step now proposed seems to grow largely out of
the idea that it is simply giving effect to what Congress
had already deliberately agreed to do when it passed the
original Interstate Commerce Act. That such an error
could be responsible for such a step is convincing proof of
the difficulty of getting people to resort to the actual fact
for the correction of vague and erroneous impressions. The
report of the Senate Select Committee in 1886, and the
repeated declarations of Senators and Representatives in
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the course of the debates, show beyond the possibility of
dispute that Congress not only did not intend to give the
the commission any rate making power, but deliberately
and postively refrained from doing so on the distinct ground
that it would be impracticable and detrimental to the
interests of the public. There is not a word in the Inter¬
state Commerce Act suggesting the idea that the rate-
making power was intended to be conferred, but every¬
thing in the act shows that such was not the intention, and
this has been the uniform declaration of the courts on the
subject. No fair-minded man can read the decision of
the Supreme Court of the United States in the Maximum
Rate Case in 1897 without appreciating that the claim that
Congress intended to give the commission the rate-making
power is absolutely unfounded ; nor was there any general
acquiescence in this assumption of power by the com¬
mission. Year by year, from the time the commission
was established, we find its assumption of this power was
questioned by the courts and by the railroads, and at first by
the commission itself. And the commission itself admitted
in 1892 that some of the railroads continued to dispute its
authority to exercise the power. The denial of the power
was asserted in litigation as early as 1891, was strongly
pressed in litigation in 1893, and was decided adversely by
the Supreme Court in 1896, in the first case involving the
question which reached that court. It is difficult to con¬
ceive how such a departure in legislation can be given
such an impetus on the basis of such an absolutely un¬
founded and erroneous assumption as that Congress
originally intended to give the commission the rate-making
power, or that its exercise of that power was universally
acquiesced in for ten years or any length of time.
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WHY THE ORIGINAL ACT REFUSED TO MAKE
THE ORDER SELF-EXECUTING.
Not only is this argument of the supposed original inten¬
tion of Congress and the supposed general acquiescence
therein made the basis for giving the commission the rate-
making power, but it is also being made the basis for a
number of additional incidents and provisions which were
never even dreamed of when the Interstate Commerce Act
was passed, and which the Commission never pretended
were contemplated and never attempted to effectuate. The
present plan is to make the commission's orders self execut¬
ing without first being examined or enforced by any judicial
tribunal. This theory was fully considered and distinctly
rejected when the Interstate Commerce Act was passed, on
the ground that the commission was not of a judicial
character. The present bill does not propose to relieve
the commission of its various functions which will always
deprive any such tribunal of anything approaching a judicial
attitude. The commission is still left with the duty of
detecting and prosecuting all violations by the railroads of
the laws against rebates and the laws requiring the proper
use of safety appliances ; it is still charged with the duty
of being the practical representative and champion of the
shippers in their controversies with the railroads ; it is still
left the duty of scrutinizing railroad accidents and seeking
to ascertain and fix the responsibility therefor, and in
general, of supervising railroads for the purpose of making
them comply with all the existing laws, and it still con¬
tinues to be charged with the duty of studying railroad
affairs to see what additional legislation against them in
the interest of the public should be provided. That such
a tribunal with such duties is likely to have the judicial
temperament is impossible. The Attorney-General could
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better be made the chief justice of the proposed court of
transportation while continuing to exercise his present
functions than to give the commission with its present func¬
tions the power to make self-execating orders which are to
become effective without any really jodiciary tribunal first
considering them. Certainly no such theory as this was
ever supposed to have been adopted by Congress or was
ever universally, or at all, acquiesced in, and yet the same
argument of alleged intention and acquiescence is being
used to sweep this innovation into operation along with the
other extensive features of the present bill. Whether such
a combination of utterly incompatible functions clearly
belonging to distinct departments of the Government can
be vested in a single tribunal, is an entirely novel question
under the Federal Constitution which must undoubtedly be
raised for decision if this bill is passed, although on account
of the comparatively small importance of the State railroad
commissions a similar question seems never to have been
raised as to any of them.
JOINT RATES.
There was never any pretense that the original Inter¬
state Commerce Act gave the commission the power to
establish joint rates against the will and judgment of the
carriers interested, or in other words to force carriers into
involuntary partnerships, and the constitutionality of any
such provision is open to the gravest doubt, yet this inno¬
vation seems almost to be incorporated in the present bill
with the idea of being swept into existence along with the
others, on the unfounded plea that the whole measure is
simply giving effect to what was supposed to have been
enacted many years ago.
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RELATIVE ADVANTAGE OF COMPETING
LOCALITIES.
The most that was ever pretended, even by the Inter¬
state Commerce Commission, under the original act, was
the power to prescribe a maximum rate, and the com¬
mission expressly decided it had no power to prescribe a
minimum rate, yet the power conferred by the present bill
is the power to prescribe a specific rate which can neither
be increased nor reduced without the consent of the
commission. This will clearly enable the commission to
put into effect its theories about what shotild be the
relative advantages of competing localities and which will
introduce a sectional, and possibly political, phase into the
administration of the Interstate Commerce Act which was
absolutely removed from all the theories of regulation
which Congress seriously considered when the Interstate
Commerce Act was passed. Much of the support for the
present measure comes from parties interested in particular
localities who hope to profit by the commission being able
to give effect to its theories as to the comparative com¬
mercial advantages of competing communities, although
every one must, on reflection, appreciate that every time
the commission helps one community by such an exercise
of its power it correspondingly hurts another, and also
puts a check upon the most wholesome competition which
has ever existed in this country, that is, the competition
between rival localities or rival sources of production for
the markets of the country.
TRAFFIC MANAGER RATES ONCE ORDERED
CAN BE CHANGED ONLY BY COMMISSION.
Moreover, this feature of the bill constitutes the commis¬
sion the perpetual traffic manager of every rate it assumes
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to fix, because when once fixed it becomes the specific
rate which must thereafter be charged until the commission
authorizes a change. Consequently, every rate the com¬
mission fixes will add to its duties and difficulties, because
for all time thereafter it will have to supervise that rate,
and no change can be made to meet new conditions or to
correct inequitable results which experience may demon¬
strate without being investigated and authorized by the
commission.
DOES PROPOSED ACT FACITITATE DECISIONS ?
The majority of the committee reports that the present
commission has failed to perform its present work in a
reasonable time, and yet it proposes to confer upon the
commission the most stupendous additional powers and
duties, and expects these new Herculean tasks to be
performed in a reasonable time, simply because it adds
two members to the commission, making it necessary for
a body of seven to act on all the changes which the
commerce of the country may demand in the specific
rates which the commission may fix, instead of having
those matters disposed of by a body of five. The idea
that any tribunal, whether five or seven, or any other
number, should have to sit in judgment upon the changes
necessary to be made in rates in this country for the
development of commerce, was never at any time in the
mind of Congress or in the mind of the people, but this
will be the precise situation if the present bill is enacted
with respect to each rate and rate adjustment that the
commission fixes. The power and work of any State
Railroad Commission in existence are simply infinitesimal
compared with the power and work of the Interstate Com¬
merce Commission under the proposed bill. No state in
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the Union has as much as six per cent of the total railroad
mileage of about 212,000 miles. On an average, not
twenty-five per cent of the traffic of any one state is subject
to the control of the State Commission. As a matter of
fact, all the really important controversies between compet¬
ing localities (which will furnish by all odds the most
important and difficult rate-making propositions) grow
almost without exception out of interstate rate
adjustments with which State Commissions have nothing
to do. The commission, through Judge Cooley as Chair¬
man, declared many years ago that the adjustment of the
claims of rival commonities in any single state would be
an enormous task, but that in the Union as a whole it
would be superhuman. Therefore, the country is utterly
without any precedent to support the idea that a com¬
mission of seven or any other number of men can make,
with the necessary wisdom and promptness, the changes
which commercial conditions will from time to time
demand in the specific rates and rate adjustments which the
commission may fix under the pending bill, even if we
assume that the commission's original orders fixing the
respective rates and rate adjustments are in themselves
wise and proper.
POWERS CONFERRED CONTROL ALL REGULA¬
TIONS AND PRACTICES AFFECTING
TRANSPORTATION.
The original Interstate Commerce Act deals primarily
with charges for transportation and regulations affecting
those charges. But the present bill increases its assort¬
ment of radical innovations by extending the power of the
commission to all regulations and practices whatsoever
^'affecting the transportation of persons or property".
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Under this bill the regulations and practices which the
commission may fix, need not at all relate to or affect the
charges for transportation, but the commission's power
will extend to all regulations and practices which affect the
transportation itself. It is impossible to determine in
advance of judicial construction how far this innovation
goes and how much of the practical side of railroad trans¬
portation is thus put in the power of the commission.
Practically everything a railroad does affects the transpor¬
tation of persons or property and apparently the commission
is to be given the power to fix all rules and practices of the
company which do affect such transportation, whether
they relate to rates and charges or not. It is certainly
carrying the argument of supposed original intention of
Congress and supposed acquiescence far beyond the limit
of reason to put this innovation under its protection and to
rush throctgh Congress the provision that the commission
may prescribe all practices and regulations affecting trans¬
portation in this country—a matter which has never been
seriously presented to Congress and which appears to
have received no independent consideration.
REBATES.
The fact is that this bill is simply an aggregation of
extensive innovations, and it is the outgrowth of a
remarkable series of misconceptions. One of the most
important is, that in some way this bill is going to aid in
the prevention of secret rebates, whereas not a single
provision of the measure will give the slightest assistance
in that direction or in the remotest degree help to insure
that the highways of commerce shall be kept open to all
on equal terms. The present laws, if fully enforced, will
stop all rebates, and there is absolutely nothing in this bill
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to strengthen the present laws in that respect or to facili¬
tate their enforcements. On the contrary, this bill is going
to confer such tremendoos and really.impracticable powers
upon the commission as to make it more difficult than
ever for the commission to give the necessary time and
attention to the paramount duty of discovering and pre¬
venting secret rebates. Moreover, this bill, by authorizing
the commission to prescribe specific rates which cannot be
departed from without application to the commission, is
going to encourage secret rebates, because when com¬
mercial conditions imperatively necessitate a speedy
reduction in specific rates established by the commission,
it will be impossible to get the neceesary consideration
and action by the commission in time to meet the
exigencies of the occasion, and this condition will consti¬
tute an almost overwhelming temptation to the railroads
to violate the mandate of the law that the rate fixed by
the commission must be observed until changed by the
commission, and to make secret reductions from such rates
for the purpose of meeting the immediate necessities of
commerce.
TERMINAL TRACKS. PRIVATE
REFRIGERATOR CARS.
Aside from the evil of rebates, the discontent about
allowances to terminal tracks and about the practices of
private refrigerator car lines, has constituted the most
prominent basis of agitation for amendment of the Inter¬
state Commerce Act, and yet there is not a word in the
present bill which seeks to define any more clearly the
relation of the commission or of the Interstate Commerce
Act to these terminal tracks or to the private refrigerator
car lines, so that one of the principal sources of agitation
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remains absolutely unsatisfied and is still left for the con¬
sideration of the courts without any assistance from Con¬
gress.
PRESENT LAW HAS BEEN CONSTRUED.
PROPOSED ACT MUST BE SUBJECT
OF EXTENDED LITIGATION.
The status of the present Act to Regulate Commerce
has now been pretty thoroughly established by the courts,
and what can be done under it is fairly well understood.
The claim that as so construed it is unavailing is utterly
without support, and though the supporters of the new
legislation have been repeatedly urged to point to instances
of failure of the preseut law where the commission has
acted along the lines prescribed by the courts, they have
without exception failed to do so. The present bill simply
amounts to throwing aside the reasonably well defined
system which now exists and which has not been shown to
be insufficient, and to substitute for it a series of the most
remarkable innovations, many and perhaps all of which
will call for judicial construction, and to put the whole
question of regulating interstate commerce into ancertainty
for another series of years pending final judicial determina¬
tion of the status of the new legislation; and all this is pro¬
posed without any demonstration of evils which the present
act cannot remedy, and certainly without any effort to
increase the effectiveness of the law with respect to the
particular evils which have excited the greatest attention«
PRESENT EVILS NOT ANALYZED OR REMEDIES
PROVIDED.
The facts seem to demonstrate conclusively that the
present evils have not been sufficiently analyzed, and the
/
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effectiveness of the present law has not been adequately-
considered. Certainly the relation of the proposed bill to
the existing evils is most remote, and there is absolutely
no excuse for many or the innovations which are sought to
be incorporated in the law. The railroads and the com¬
merce of the country have no more practical protection
under this bill than they would have under any other form
of drastic railroad legislation which could be enacted. The
entire subject is too large, the interests involved from the
public as well as the railroad standpoint are too great, and
the details to be considered are too numerous and com¬
plex to make it just or proper that a bill so crude and
uncertain as the one now proposed should receive the
sanction and the impetus which would come from its passage
by either House of Congress.
To borrow a phrase from one of our most accomplish
statesmen, the agitation for the amendment of the Interstate
Commerce Act is simply a "fortuitous concourse of unre¬
lated prejudices"; and the bill now proposed does not
remove the various causes of those prejudices, but launches
the country on an absolutely untried and uncertain system
of commercial regulation without time to consider what is
really needed and what the bill really means, and yet upon
a system which is fraught with the gravest menace to the
railroads and the commerce of the country.
WALKER D. HINES.
Louisville, Ky.,
February 5, 1905