Chapter XXXIII: Section 20: Annual detailed reports from carriers as to

finance, operation, rates or regulations in prescribed forms as
desired by the Commission.

Such is the substance of the statute which marks the real, beginning of subjection of the railroads to control by the Federal government. It was avowedly tentative in character. It was a compromise, entirely satisfactory to no one. Many of its provisions were not new. Administrative commissions had already been in existence some time in several of the states. Pooling had also commonly been condemned. The long and short haul clause in the statute constitutes no innovation. It was based specifically upon a number of state laws, more or less similar to it in tenor.[545] In Vermont, for example, since 1850; in Virginia, since 1867; and in Massachusetts, since 1874, long and short haul clauses had been in force. Some seventeen states, prior to the enactment of the Interstate Commerce Act in 1887, had conceded the wisdom of such an adjustment between local and long hauls. Nor were such statutes disregarded, as a rule. Thus, in Massachusetts they were enforced to the extreme degree of prohibiting any concession in rates at Provincetown, on the point of Cape Cod, one hundred and twenty miles from Boston by land, while only thirty-six miles in a direct line by water, below the rates at any of the intermediate points on the roundabout rail line along the Cape. The debates in Congress at the time this section of the Act was under discussion show that the bill as finally passed was a compromise between an absolutely inflexible prohibition, in the House, and a more elastic measure, providing for exceptions, in the Senate.

In one respect the law of 1887 marks a profound revolution in both commercial theory and practice. Its provisions concerning equality of rates to all classes of shippers denote a great moral uplift in the business standards of the country. Prior to this time the English common law, while requiring reasonableness of charges by common carriers, by no means insured that such charges should be stable and uniform. This flowed perhaps from the circumstance that rebating was an essentially American abuse. Neither in England, nor on the continent for that matter, had business rivals ever made such use of the services of carriers to suppress fair competition in trade. With us, on the other hand, in the early free-and-easy days, entire freedom of contract between shipper and carrier had been the rule. Published tariffs were only the starting point for "higgle" and "dicker." It was not bad form for a shipper to "go shopping" freely among the freight agents of competing lines. The location of new enterprises, new opportunities for the expansion of old ones, were all more or less conditioned by the special favors which were so readily obtainable on demand. Nor was the accompaniment of secrecy necessarily due to fear of moral condemnation by the community. Secrecy was an economic essential of the device, as has elsewhere been shown.[546] By this new statute all was suddenly changed. Rebating was made a crime, punishable as such. Is it any wonder that, almost from the outset and for nearly fifteen years, this part of the law was the storm centre of litigation; and that in respect of rebating, the need of supplementary legislation should first become apparent?

FOOTNOTES:

[521] The following references are best:--1866. Hudson, J. F. The Railways and the Republic.--1877. Seligman, E. R. A. _Political Science Quarterly_, II, pp. 223-264 and 369-413.--1887. Nimmo, J. Legislative history in _The Railway News_, currently reported.--1887. Painter, U. H. Compilation from the Congressional Record. Privately published.--1888-1889. Hadley, A. T. _Quarterly Journal of Economics_, II, pp. 162-187; III, pp. 170-187. In addition, the general works of Hadley, Charles Francis Adams and Haney; and the extensive list of magazine articles in the Bibliography on Railways of the Library of Congress, 1907.

[522] 43d Congress, 1st session, Senate Report No. 307, 2 pts.

[523] 49th Congress, 1st session, Senate Report No. 46, 2 pts: pt. 1, pp. 16 and 137-166.

[524] Pp. 140 and 192.

[525] In detail at pp. 22 and 411, _supra_.

[526] _Cf._ Haney, vol. II, p. 309.

[527] _Cf._ pp. 22, and 431, _supra_.

[528] Select Senate Committee on Transportation of Meat Products, 1889, p. 2, etc.

[529] _Cf._ the chapter from Miss Tarbell's History of the Standard Oil Company, reprinted in our Railway Problems. Hudson, pp. 55-106, well summarizes the Hepburn Committee testimony.

[530] _Op. cit._; vol. I, p. 199.

[531] Pooling is discussed in detail in volume II.

[532] University of Colorado Studies, V, 1908, pp. 137-148.

[533] Bulletin, University of Texas, No. 119, 1909, p. 73.

[534] Details in chapter I and in the discussion of speculation in volume II.

[535] Hudson, _op. cit._, pp. 251-286, uses much of this testimony.

[536] Pp. 72 _et seq._

[537] Pp. 51 _et seq._

[538] Pages 22, 422, _supra_, and 456, _infra_.

[539] _Cf._ Hudson, _op. cit._, pp. 41-46.

[540] _Cf._ chap. VIII.

[541] Chapters of Erie reprinted in part in our Railway Problems.

[542] _Cf._ Haney, Congressional History of Railways, vol. II, p. 256. The Credit Mobilier is also described by reprint in our Railway Problems.

[543] 118 U. S. 557.

[544] _Cf._ Cullom Committee, 1, pp. 28-40; and the summary of Congressional debates by Haney, _op. cit._, vol. II, p. 231 _et seq._

[545] 21 I.C.C. Rep., 340.

[546] Chapter XX.