PRINCIPLES OF RAILWAY LEGISLATION. By HON, MARTIN A. KNAPP. Interstate Commerce Commissioner. Address before the Railway Congress Auxiliary of the World’s Columbian Exposition, June 23 , 1893 . REPRINTED FROM THE RAILWAY REVIEW. CHICAGO: The Railway Review, 818 The Rookeky. 1893. J p3 the people just and equal treatment by every common carrier. This duty is recognized with great clearness of per- ception in the act to regulate commerce. It was the intention of congress in that enactment to insure fairness and impartiality in all that relates to rail- way transportation. The provisions of the act are restrictive in character and they call for a construc- tion in harmony with their beneficent aims. It is* much to be regretted that the federal courts, in some instances at least, have seemed unable to realize their scope or to appreciate their purpose. The grave conditions which existed when this statute was passed appear to have been left out of view, and full weight has not been accorded to the express declaration that its regulative features were an addition to remedies* furnished by the common law. It was the design of congress to provide something more than a procedure for the correction of demonstrated wrongs; its higher — 9 - and broader endeavor was to prevent wrong doing. To that end general rules for the government of car- riers were prescribed, rules well calculated, it would seem, to secure the actual and relative equality which results from effective regulation. The filing and pub- lication of rate sheets, for example, is not merely a, standard for determining whether particular charges are unjust or discriminatory, and by which reparation to injured parties may be measured, but the more sig- nificant purpose is found in the provision that the rates so filed and published are the only compensation which the carrier may charge, collect or receive. It is not left for any tribunal to decide whether a var- iation in rates for like and contemporaneous service inflicts injury upon an individual or a community; the law itself declares that a departure from schedule charges is per se unjust discrimination and unlawful. The long and short haul clause contains a similar de- claration. It is unnecessary to show that undue preference or prejudice results from charges which are greater for longer than for shorter distances over the same line, for such an adjustment of rates in ordinary cases is condemned by the terms of the statute. Yet some judges have construed these pro- hibitions as applying only where actual damage re- sults to an assignable person. Such a construction virtually treats the carrier as a private corporation, takes little account of its public obligations, and over- looks the real purpose of the law making power in en- joining compliance with its requirements. The pecul- iar office which transportation performs is often ob- scured by issues founded upon individual rights, and concrete questions arising from the contract relations between shipper and carrier notunfrequently exclude considerations of public policy far more important than the particular controversy. For these reasons the early action of congress should be invoked for a legislative construction of important features of the act, an interpretation so definite and unmistakable that neither can its provisions be questioned nor its wholesome purpose defeated. Crude and imperfect as this statute is, difficult of enforcement and weak- ened by adverse decisions, nevertheless it is the legis- — 10 — lative expression of a great and vital principle. It contains the substance of correct doctrine respecting the office and obligations of public carriers, and em- phasizes the conviction that their' proper regulation is a recognized national duty. In a general sense it is quite true that all measures of legislation are means to the one end of securing, at all times and under all circumstances, just and equal charges for public transportation. But in de- vising the legal machinery by which that consumma- tion shall be most speedily reached, and the full ben- efits of equality most completely enjoyed, other con- siderations than those relating to the nature and office of public carriage demand earnest and thought- ful attention. I am very much impressed with the notion that the facilities of domestic transportation, the agencies by which intercommunication is main- tained and the distribution of industrial products effected, should be regarded in their entirety and treated as a single and indivisible unit for all the pur- poses of legal regulation. Every railway and every water line constitutes an inseparable element of a vast and intricate organism. There are many mem- bers, yet but one body. Practically, there is no such thing as an independent and isolated carrier by rail or by water. Bitween the different parts of this com- plex system there is such mutual dependence, such intimate relationship, that whatever affects one must in greater or less degree affect the others also. If one member suffers all the members suffer with it. Transportation is a constant and a universal neces- sity. There is no time when its facilities can be dis- pensed with, no place where its services are not urgently demanded. It is the ever-present and un- yielding condition upon which personal welfare and social progress continually depend. For this reason state legislation is unsuitable in scope and must be inadequate in action. It is influenced by the circum- stances and prejudices of locality, and is therefore unequal in its operation and changeable in its at- tempted restraints. So far as it undertakes the task of regulation, it is liable to be feeble and inefficient in results, or it may be so vexatious and burdensome — li- as to be plainly oppressive. Both habits find illus- tration in local statutes quite recently enacted. But the function of public carriage cannot be separated into parts, as the country is divided into states. By the union of sovereignties it becomes interstate and national. It cannot be segregated without fatal im- pairment. It is the nerve-power of the nation, sensi- tive to its furthest extremities; to divide it is to de- stroy it. The laws which regulate property in different localities may be variable and conflicting without serious injury, but the laws which regulate commerce must be uniform and harmonious in all the territory which submits to one jurisdiction. Bights which are acquired may be varying and dis- similar as between one state and another, but rights which are inalienable, which are a privilege and not a possession, must have common and equal protection in every part of the union. This point of view permits two or three more specific observations. If the propositions already stated are correct, it follows that any scheme of legis- lative control designed to give greater efficiency and value to this public service, and to promote thereby the general welfare, should embrace in its provisions all the agencies of transportation which are within the jur- isdiction of the general government. The act to reg- ulate commerce, therefore, is insufficient in scope, be- cause it extends only to interstate carriers by rail and leaves untouched and unregulated the great volume of traffic which seeks transportation by water. But rail carriage and water carriage are inseparably connected. They act and react upon each other. They cannot be disassociated in fact and ought not to be in law. Their united facilities are demanded by pub- lic requirement, they join in a common service. The internal water routes by lake, river and canal, and the coastwise lines of gulf and ocean, transport an enormous tonnage between points near and remote, nnd thereby give indispensable aid to commercial prosperity. They are confined to the highways which nature has provided, while the railroad can choose its location and change it at pleasure. Each mode of conveyance has its peculiar advantages, each is a 12 — competitor for public favor. Both of them partici- pate in interstate carriage, and the constitutional power of congress “to regulate commerce between the several states” applies with full efficacy to all the agencies of water transportation. The same reasons which induced the law making power to place rail- way lines under specific restraints call for like limi- tations upon the delegated powers with which water carriers are also invested. The circumstance that one carrier uses the natural facilities of intercom- munication, while an artificial roadway must be con- structed by the other, affords no excuse for exempt- ing the former from any obligation rightfully im- posed upon the latter. Each forms a part of an insep- arable system, each is the custodian of a public privi- lege, and each should be amenable to public authority. Not only on the grounds of abstract jus- tice, but for the benefit of the people and in further- ance of the objects for which the duty of railway reg- ulation was assumed, the government should include in its plan of supervision all the agencies of water transportation within its jurisdiction. Again, no just theory of legislative action will pro- ceed upon the assumption that the people alone are in need of protection and that the railroads can take care of themselves. I have little sympathy with such an unfair and illogical contention. Between shippers and carriers there is reciprocal dependence rather than mutuality of interest. Neither can exist alone, neither is independent. The bonds which hold them together are indissoluble, yet are they so conjoined that one of them cannot gain undue advan- tage without positive injury to the other. The ship- per is entitled to have his property transported at a reasonable price, the carrier is equally entitled ta reasonable compensation for performing the service. The collision of pecuniary motives by which both parties are influenced gives rise to the controversy over rates and charges. This conflict is incessant and sometimes extremely severe. But the shipper is not always the under dog in the fight. It happens upon occasion that he gets much the best of the bar- gain. The necessity of the carrier is not unfrequent- — 13 — ly the opportunity which the shipper does not scruple to turn to his own profit. Odious extortions have often been practiced by carriers, but shippers also are sometimes arbitrary and unjust. The public ser- vice in which the carrier engages is undertaken for private gain; the shipper avails himself of this public service, likewise for private gain/ The selfish- ness of human nature is on both sides of the trans- action. Now the object of legal regulation is to hold these opposing forces in stable equilibrum, to reduce contests and complaints to a minimum, and to bring the dealings between shipper and oarrier under the control of mutual justice. The sufficient scheme of legislation, therefore, will recognize the possibility of wrong-doing on one side as well as the other, it will be judicial rather than partisan in its aims and requirements, and while equipping the shipper with ample protection will also furnish the carrier with all needful defenses. This seems especially true of rela- tive rates between competing centers of trade and be- tween competitive articles of traffic. Questions of this character are constantly arising and their intricacy is beyond all comparison. They must be brought to solution by judicial procedure and judicial determi- nation. So far as the law can provide remedies for grievances of this description they should be avail- able to the carrier as well as to the shipper. It may sometimes occur that just results can be reached only by directions which tend to the pecuniary advantage of the carrier; but justice is the end to be attained by remedial legislation, and its defeat should never be occasioned by defective or one sided enactments. I, therefore, concur with Judge Veazey that the power to determine what charges are reasonable, a power without which all attempts at regulation are delusive, should include and carry with it the power to pre- scribe minimum as well as maximum rates. Reason- able payment by the shipper arid reasonable remuner- ation to the carrier are alike involved in the idea of public regulation; and legislation which expresses the full meaning of such regulation, and makes its full purpose effective, will not be wanting in provis- — 14 - ions which conserve the interests both of the public and the public servant. It goes without saying that the regulative powers conferred upon congress by the federal constitution are not wisely or justly exerted, if the effect of their operation diminishes the ability of domestic carriers to meet the competition of rivals not subject to our jurisdiction. The proposition requires no argument. While due regard should be had for the interests of American shippers and passengers, it is manifest that no advantage in respect to domestic traffic should be given to foreign lines of transportation by means of inflexible restrictions upon our own carriers. The true policy will be found, I apprehend, in compelling these foreign roads, under the coercion of statutory restraints imposed by congress, to practically subject themselves to the provisions of the act to regulate commerce by making compliance with its require- ments the condition of engaging in internal local business. This view of the nature and office of public trans- portation, and the necessity for its just and uniform regulation by federal authority, forces upon us an- other question of immediate and pressing import- ance, concerning which I feel bound to state in a few words my personal convictions. Legislation i pon this subject, I am thoroughly persuaded, to be adequate in design and capable of accomplishing the most useful results, must recognize an 1 adjust itself to the co-operative tendencies which mark the closing decade of the nine- teenth century. The advent of steam and elec- tricity has not only wrought a revolution in all the methods of distribution and exchange, but is fast un- dermining the economic theories so long and so im- plicitly accepted. It is folly to shut our eyes to un- mistakable facts, or to stand in the way of inevitable events. The competitive philosophy of Adam Smith may have satisfied the era of stage coaches and spin- ning wheels, but it will not answer the purpose or meet the requirements of this marvelous generation, so restless in thought and resistless in action. As. astronomy has been corrected, theology revised and. — 15 .— civil administration emancipated from the tyranny of irresponsible power, so our political economy, and many inherited notions respecting - the diffusion of wealth and the acquisition of property, must be largely modified, if not wholly reconstructed. When com- munities were isolated by distance and the sphere of activity confined within local limits, when it took two weeks to haul a wagon load of goods from London to Edinburgh, the attrition of rivalry was com- placently endured; but now when the ocean is bridged by the steamship and every sea threaded with whispering wires, when the swift locomotive rush- ing across continents like the shuttle through the loom, weaves this many-hued and majestic fabric of commerce which covers the globe, when men are no longer localized in effort or achievement, and the thought of one is the instantaneous possession of all, the friction of unbridled competition has become irk- some and intolerable. * Some relief from its hard- ships and some check upon its wastefulness must surely be provided. - Fools may deride and dema- gogues denounce, but neither protestation, nor agita- tion, nor legislation can impeach the utility or prev vent the advance of industrial federation. Competition is essentially selfish in its nature, un- brotherly in its instincts and uncharitable in its methods. It is the effort of the individual to gain personal advantage at the expense of his fellows, and its cruel creed is “every man for himself. ” Such a doctrine is quite unsuited to the interlacing and in- terdependent activities of a complex civilization, and wholly unequal to tne increasing demands of associ- ated life. The whole trend of modern industry is to- wards wider fraternity, larger organization, cheaper production and distribution, to the end that all labor may receive more stable and adequate reward, and thereby the welfare of wage earner and wage payer as well, most surely promoted. As the implements of modern warfare are becoming so devastating in their effects that nations will be compelled to live in amity,, so the destructiveness and exhaustion of competitive industry make monopoly a necessity. In the vast business of public carriage — the busi- — 16 — mess which unites every craft and vocation, and fur- nishes at once opportunity and incentive for every ipursuit — some way of escape must be afforded from the rigors and reprisals of unrestricted competition. The situation of many railways at the present time is not unlike that of the great powers of Europe. Each in a state of armed neutrality watches the other with jealous suspicion, while, in their most amicable rela- tions between themselves, they maintain an approxi- mate peace by lavish preparation for war. The pro- cess is expensive, the result unsatisfactory. Their revenues are depleted, their management embarassed, their usefulness greatly impaired. They take from the substance of the people more than three million of dollars a day, an enormous tax in the aggregate, yet their surplus earnings often fall below the re- quirements of solvency, and are seldom sufficient to relieve the anxiety of investors. The facts of com- mon experience and familiar knowledge demonstrate the inconsistency and unwisdom of a legislative pol- icy which enforces competition by legal decree, and at the same time condemns as misdemeanors the methods and inducements by which competition is usually effected. The time has come for harmonizing the operations and combining the facilities of com- mon carriers, that they may better meet the demand tor equal treatment, stable rates and cheaper trans- portation. Surely this government is strong enough and great enough, surely it has the power and the sagacity, to permit this incomparableser vice to be per- formed by friendly association, and at the same time provide the public with ample protection against all the dangers of corporate monopoly.