Chapter XII: The Interstate Commerce Act

The Constitution of the United States was adopted nearly fifty years before the locomotive made its appearance. Had the steam railroad been in existence in 1787 and been as important an agency of commerce as it is to-day, there is every reason to believe that the railroad question would have received the special attention of the framers of that instrument. It is a well-known fact that the "new and more perfect government" had its origin in the necessities of commerce, and while the future exigencies of trade were beyond the reach of the most speculative mind, the provisions of the Constitution relating to the subject of interstate commerce were made broad and far-reaching. Section 8 of Article I. of the Constitution provides that "the Congress shall have power ... to regulate commerce with foreign nations, and among the several States, and with the Indian tribes ... and to make all laws which shall be necessary and proper for carrying into execution the foregoing powers and all other powers vested by this Constitution in the Government of the United States, or in any department or officer thereof."

If any doubt ever existed as to the import of the phrase "to regulate commerce," it has been entirely removed by the decisions of the Supreme Court. In the Passenger cases, 7 Howard, 416, the court said:

"Commerce consists in selling the superfluity; in purchasing
articles of necessity, as well productions as manufactures;
in buying from one nation and selling to another, or _in
transporting the merchandise_ from the seller to the buyer
to gain the freight."

And again, in the Philadelphia and Reading Railroad vs. Pennsylvania, the Supreme Court said:

"Beyond all question the transportation of freights or of
the subjects of commerce for the purpose of exchange or sale
is a constituent of commerce itself. This has never been
doubted, and probably the transportation of articles of
trade from one State to another was the prominent idea in
the minds of the framers of the Constitution when to
Congress was committed the power to regulate commerce among
the several States.... It would be absurd to suppose that
the transmission of the subjects of trade from the seller to
the buyer, or from the place of production to market, was
not contemplated, for without that there could be no
consummated trade with foreign nations or among the States."

Chief Justice Marshall, in Gibbons vs. Ogden, 9 Wheaten, 196, construed the words "power to regulate" as follows:

"This power, like all others vested in Congress, is complete
in itself, may be exercised to its utmost extent, and
acknowledges no limitations other than are prescribed in the
Constitution."

It is a strange fact that during the first eighty years of the Government's existence Congress did not exert its power to regulate the conduct of common carriers engaged in interstate transportation. The first act regulating such carriers was passed in July, 1866. It authorized railroad companies chartered by the States to carry passengers, freights, etc., "on their way from any State to another State, and to receive compensation therefor, and to connect with roads of other States so as to form continuous lines for transportation of the same to the place of destination." The passage of this act, it should be remembered, was urged by the railroad companies themselves. Seven years later an act was passed providing that "no railway within the United States, whose road forms any part of a line or road over which cattle, sheep, swine or other animals shall be conveyed from one State to another, or the owners or masters of steam, sailing or other vessels carrying or transporting cattle, sheep or swine or other animals from one State to another, shall confine the same in cars, boats or vessels of any description for a longer period than twenty-eight consecutive hours, without unloading the same for water, rest and feeding, for a period of at least five consecutive hours, unless prevented from so unloading by storm or accidental causes."

Every violation of this act was made punishable by a penalty of from $100 to $500.

Though Congress had asserted the right to regulate commerce among the States, it had made previous to 1873 very limited use of that power. In the midst of the Granger movement the Senate of the United States passed on the 26th day of March, 1873, the following resolution:

"_Resolved_, That the Select Committee on Transportation
Routes to the Seaboard be authorized to sit at such places
as they may designate during the recess, and to investigate
and report upon the subject of transportation between the
interior and the seaboard; that they have power to employ a
clerk and stenographer, and to send for persons and
papers...."

The committee, under the chairmanship of Mr. Windom, discharged their duty with great fidelity, and submitted their report to the Senate during its next regular session. They declared that the defects and abuses of the then existing systems of transportation were insufficient facilities, unfair discrimination and extortionate charges. As the principal causes of such excessive rates they assigned stock watering, capitalization of surplus earnings, construction rings, general extravagance and corruption in railway management, and combinations and consolidations of railway companies. The committee were of the opinion that the promotion of competition would not permanently remedy the existing evils, and laid it down as a general rule that competition among railways ends in combination and in enhanced rates. As expedient and practical remedies for the existing evils they recommended the following measures:

1. Direct Congressional regulation of railway transportation, under the power to regulate commerce among the several States.

2. Indirect regulation and promotion of competition, through the agency of one or more lines of railway, to be owned and controlled by the Government.

3. The improvement of natural water-ways and the construction of artificial channels of water communication.

The report was accepted and considered, but there the matter rested, so far as the practical results were concerned.

In 1878 Mr. John H. Reagan, of Texas, introduced in the House of Representatives a bill for an act to regulate railroad companies engaged in interstate commerce. This may be said to have been the first real interstate commerce bill before Congress. It was a progressive, thorough and well-planned measure, but failed to receive the approval of Congress because a majority of its members considered it too radical a measure. The bill contained many of the provisions of the present Interstate Commerce Act, including the anti-pooling and the long and short haul clauses; but instead of creating a commission it lodged in the courts, both State and Federal, the power to enforce the law.

Other bills were introduced from year to year, but during a period of nine years none of them drew sufficient votes to make it a law. Congress may be said to have been divided into three camps upon the railroad question, viz.: those who favored the system of regulation proposed by Mr. Reagan, those who favored the commissioner system and those who were opposed to every mode of Federal regulation of interstate commerce. In the meantime, the inactivity of Congress caused considerable restlessness among the people, and the demand for action became louder every year. The issue entered into politics, and a number of Western Congressmen owed their failure to be re-elected to their indifference or enmity to Federal railroad legislation.

On March 21st, 1885, under authority of a resolution adopted by the Senate of the United States, the President of the Senate appointed a select committee to investigate and report upon the subject of the regulation of the transportation of freight and passengers between the several States by railroad and water routes. Senator Cullom, of Illinois, became its chairman. The committee examined a large number of witnesses, including railroad managers and shippers, addressed letters to the railroad commissioners of the several States, to boards of trade, chambers of commerce, State boards of agriculture, Patrons of Husbandry, Farmers' Alliances, etc., and made every effort to obtain the opinions of those who had given special attention to the transportation problem.

The report of the committee was submitted to the Senate on January 18, 1886. Concerning the abuses of railroad transportation it differed but little from that of the Windom committee. The report declared publicity to be the best remedy for unjust discrimination and recommended that the posting of rates and public notice of all changes in tariffs be required. It also recommended that a greater charge for a shorter than a longer haul be made presumptive evidence of an unjust discrimination, and that a national commission be established for the enforcement of any laws that might be passed for the regulation of interstate commerce. Upon the question of pooling the report stated:

"The committee does not deem it prudent to recommend the
prohibition of pooling, which has been urged by many
shippers, or the legalization of pooling compacts, as has
been suggested by many railroad officials and by others who
have studied the question.... The majority of the committee
are not disposed to endanger the success of the methods of
regulation proposed for the prevention of unjust
discrimination by recommending the prohibition of pooling,
but prefer to leave that subject for investigation by a
commission when the effects of the legislation herein
suggested shall have been developed and made apparent."

The report was accompanied by a bill representing "the substantially unanimous judgment of the committee as to the regulations which are believed to be expedient and necessary for the government and control of the carriers engaged in interstate traffic."

The bill was before Congress for more than a year, receiving several important amendments before its final passage in both houses. It was approved by the President on the 4th day of February, 1887, and took effect sixty days after its passage, except as to the provisions relating to the appointment and organization of an Interstate Commerce Commission, which took effect at once.

The act contains twenty-four sections, but is by no means cumbersome. It is, in many respects, the most important piece of legislation that has been had in Congress for the past twenty years. It applies to common carriers engaged in the transportation of passengers or property wholly by railroad, or partly by railroad and partly by water, when both are used, under a common control, management or arrangement, for a continuous carriage or shipment from one State or Territory of the United States, or the District of Columbia, to any other State or Territory in the United States or the District of Columbia, or from any place in the United States to an adjacent foreign country, or from any place in the United States through a foreign country to any other place in the United States. It prohibits unjust and unreasonable charges, special rates, rebates, drawbacks, undue or unreasonable preferences, advantages, prejudices and disadvantages, as well as all discriminations between connecting lines. It makes unlawful a less charge for a longer than for a shorter haul over the same line, in the same direction, the shorter being included within the longer distance, except when specially authorized by the Interstate Commerce Commission. It prohibits pools, requires schedules of freight rates and passenger fares to be kept in all depots and stations, permits no advance in the rates, fares and charges once established, except after ten days' public notice, and makes it unlawful for common carriers to charge either more or less than schedule rates.

It also requires them to file copies of all schedules, traffic contracts and joint schedules with the Interstate Commerce Commission, as well as to make them public when directed by the commission, and prohibits combinations to prevent the carriage of freight from being continuous from the place of shipment to the place of destination. It makes common carriers liable for all damages to persons injured by violations of the act, and specially provides that any court before which such a damage suit may be pending may compel any director, officer, receiver, trustee or agent of the defendant company to appear and testify in the case, and that the claim that any such testimony or evidence may tend to criminate the person giving such evidence shall not excuse such witness from testifying, but that such evidence or testimony shall not be used against such person on the trial of any criminal proceeding. It likewise subjects such officers and employes of a railroad company as may be guilty of aiding or abetting in violations of the act to fines not exceeding $5,000 for each offense.

These provisions are covered by the first ten sections of the act.