Chapter XX: Section 21: excepts from the operation of the act the carriage of

property for the United States, State or municipal governments, or for charitable purposes, or for fairs and expositions; also the issuance of mileage, excursion and commutation tickets, the giving of reduced rates to ministers of religion, the free carriage by a railroad company of its own officers and employes, and the exchanging of passes or tickets among the principal officers of railroad companies.

The sections not noticed are of minor importance, relating to annual reports, salaries, appropriations of funds, etc.

The act was amended on March 2, 1889, but the amendments made did not materially affect its principal provisions.

When the law was passed its friends well realized that its success would greatly depend on the character of the commissioners whom it was incumbent upon the President to appoint. It was feared that if the railroad influence should control these appointments, the power to suspend the long and short haul clause would be the chief and perhaps the only power exercised by the commission. There was great danger that the office of Interstate Commerce Commissioner might become a sinecure for servile railroad lawyers, as similar State officers had been before, and that a public trust might be turned into an additional corporation agency for evil. The selection of the commissioners, and especially that of Judge T. M. Cooley, of Michigan, was greatly to the credit of President Cleveland. A man of unquestionable integrity, an eminent jurist and close student of railroad affairs, Judge Cooley was particularly well qualified for the office of chairman of the Interstate Commerce Commission, which he occupied for nearly five years with signal fitness, and from which he only retired to the sincere regret of the American people. Under Judge Cooley's leadership the commission has been more than a purely executive board. It was under the Constitution not in the power of Congress to clothe the Interstate Commerce Commission with full judicial authority without giving its members, like other Federal judges, tenure for life, instead of a term of years. The inherent force of the commission's decisions in its interpretation of the law made them in many cases virtually the equivalent of judicial rulings.

A few of the most important decisions of the commission may be mentioned here. Construing the long and short haul clause, they held that, in case of complaint for violating this section of the act, "the burden of proof is on the carrier to justify any departure from the general rule described by the statute, by showing that the circumstances and conditions are substantially dissimilar." They also decided that "when a greater charge in the aggregate is made for the transportation of passengers or the like kind of property for a shorter than a longer distance over the same line in the same direction, the shorter being included in the longer distance, it is not sufficient justification therefor that the traffic which is subjected to such greater charge is way or local traffic and that which is given the more favorable rates is not; and that it is not "sufficient justification for such greater charge that the short-haul traffic is more expensive to the carrier, unless when the circumstances are such as to make it exceptionally excessive, or the long-haul traffic exceptionally inexpensive, the difference being extraordinary and susceptible of definite proof; nor that the lesser charge on the longer haul has for its motive the encouragement of manufactures or some other branch of industry, nor that it is designed to build up business or trade centers."

Upon the question of publicity of the railroad business the commission held that, as the books of the defendant carriers, as to rates charged, facilities furnished and general movements of freight, are in the nature of semi-public records, the officers and agents of defendant carriers ought to give promptly to a complainant any statement of facts called for, if such statement may probably have importance on the hearing.

Judge Brewer's opinion as to what constitutes a reasonable rate was evidently not shared by Judge Cooley and his colleagues, for in the case of the New Orleans Cotton Exchange vs. the Cincinnati, New Orleans and Pacific Railway Company the commission decided that the fact that a road earns but little more than operating expenses cannot be made to justify grossly excessive rates, and that "wherever there are more roads than the business at fair rates will remunerate, they must rely upon future earnings for the return of investments and profits." In another case the commission hold that "in fixing reasonable rates the requirements of operating expenses, bonded debt, fixed charges and dividend on capital stock from the total traffic are all to be considered, but the claim that any particular rate is to be measured by these as a fixed standard, below which the rate may not lawfully be reduced, is one rightly subject to some qualifications, one of which is that the obligations must be actual and in good faith."

The rules governing the proper construction of classification sheets which the commission has laid down are founded upon common sense and justice. They say:

"A classification sheet is put before the public for general
information; it is supposed to be expressed in plain terms
so that the ordinary business man can understand it and, in
connection with the rate sheets, determine for himself what
he can be lawfully charged for transportation. The persons
who prepare the classification have no more authority to
construe it than anybody else, and they must leave it to
speak for itself."

In defining what is legitimate traffic the commission made the following decision:

"The transportation of traffic under circumstances and
conditions that force a low rate for its carriage or an
abandonment of the business, but which affords some revenue
above the cost of its movement, and works no material
injustice to other patrons of a carrier, is to be deemed
legitimate competition. When, however, its carriage is at a
loss and imposes a burden on like traffic at other points
and on other traffic, it is to be deemed destructive and
illegitimate competition."

It has been shown in a former chapter that the weaker oil refiners have been discriminated against by the railroads, which permitted the Standard Oil Company to use their own tank cars in the shipment of oil and charge its competitors excessive rates for like shipments in barrels. Complaint being made of this discrimination, the commission held that it is properly the business of a carrier by railroad to supply rolling stock for the freight he offers or proposes to carry, and that "if the diversities and peculiarities of traffic are such that this is not always practical, and the consignor is allowed to supply it for himself, the carrier must not allow its own deficiencies in this particular to be made the means of putting at unreasonable disadvantage those who may use in the same traffic all the facilities which it supplies."

A most important ruling of the commission is that relating to the pass abuse. Complaint was made that the Boston and Maine Railroad Company issued in the States of Maine, New Hampshire, Vermont and Massachusetts free passes to certain classes of persons, among them "gentlemen long eminent in the public service, higher officials of the States, prominent officials of the United States, members of the legislative railroad committees of the above named States, and persons whose good will was claimed to be important to the defendant." The commission decided that such a discrimination is unwarranted, that a carrier is bound to charge equally to all persons, regardless of their relative individual standing in the community, and that the words "under substantially similar circumstances and conditions" relate to the nature and character of the service rendered by the carrier, and not to the official, social or business position of the passenger.

It is a notorious fact that the practice of issuing free passes to public officials and other influential persons has been more or less indulged in by nearly every railroad in the country up to the present time. It is to be hoped that this ruling of the commission will be enforced in such a manner as to put an end to this intolerable abuse.

The Interstate Commerce Commission has been equally efficient in its administrative capacity. From the very first it called attention to the great advantage of having one classification of freight throughout the country, and it has since labored diligently to unify the various classifications in use. As the commission in this undertaking is only armed with the armor of moral suasion, it is a difficult task; but there is little doubt that the accomplishment of this great reform is only a question of a few years. Iniquities in classifications and rates are constantly pointed out by the commission and corrected by the companies. Moreover, the annual reports of the commission, not to mention its very excellent statistical data, diffuse much useful information and dispel many delusions. Thus the fourth annual report of the commission says:

"A stranger to the law might infer, from some public
addresses and pamphlets which have assumed to discuss this
subject, that the railroad companies were prohibited from
carrying the necessities of life over long distances at very
low rates, unless their rates on other subjects of
transportation for shorter distances were made to
correspond. Indeed, instances have been pointed out in which
it was said that certain articles of commerce could not now
be transported for long distances, because, by reason of
this provision, they would not bear the charges that must
under compulsion of law be imposed upon them. Among such
instances has been mentioned the granite industry of New
England, as to which it has been said that valuable
manufactories have ceased to be profitable because it has
now become impossible for the proprietors to obtain from
the railroad companies the nominal rates for the
transportation of their products which they formerly
enjoyed, since it is now, by the long and short haul clause,
made criminal for the companies to give such rates.

"A complaint of this nature is not to be met by argument,
because it is baseless in point of fact. The instance
mentioned may safely be assumed to be chosen rather from
regard to the need of an attack upon the law than from any
belief in the justice of its application. The prohibition of
the fourth section, so far as concerns this article of
commerce, or any other that can be named, will have no
application whatever until it is made to appear that
elsewhere upon the lines of the road conveying it there is
property of the same kind, for transportation by the same
carriers in the same direction, upon which the carriers are
disposed to making greater charges in the aggregate for the
shorter hauls.

"The wheat of the extreme West, it is also said, can no
longer have the nominal rates which were formerly made for
transportation to the seaboard, but this assertion is also
without point or applicability, unless it is shown that the
carriers are not only disposed to give such rates, but
propose to make up for the consequent losses to themselves
by the imposition of greater charges in the aggregate for
the carriage of the like grain when offered for carriage by
growers in the States nearer the seaboard. Nominal rates
impartially made as between shippers of like articles in the
same direction and under like circumstances and conditions
are as admissible now as they ever were."

The same report contains a rather pointed reply to Judge Brewer's ruling in the Iowa rate cases, viz., that, "where the rates prescribed will not pay some compensation to the owners, then it is the duty of the courts to interfere and protect the companies from such rates," and that compensation implies three things: "Payment of cost of service, interest on bonds and then some dividends." The commission reviews this stupid rule as follows:

"The effort has sometimes been made to indicate a rule which
must constitute the minimum of reduction in all cases, and
it has been said that rates must not be made so low that the
carriers would be left unable to pay interest on their
obligations and something by way of dividend to
stockholders, after maintaining the road in proper condition
and paying all running expenses. This comes nearer to a
suggestion of a rule of law for these cases than any other
that has come to the knowledge of the commission. But it is
so far from being a rule of law, that it is not even a rule
of policy, or a practical rule to which any name can be
given, and to which the carriers themselves or the public
authorities can conform their action. In the first place,
when we take into consideration the question of the
condition of roads and of equipment, the proper improvements
to be made, the new conveniences and appliances to be
considered and made use of, if deemed desirable, and the
innumerable questions that are involved in the matter of
running expenses, it is very obvious that there can be no
standard of expenses which the court can act upon and apply,
but that the whole field is one of judgment in the exercise
of a reasonable discretion by the managing powers or by the
public authorities in reviewing their action. It is to be
borne in mind that there are many roads in the country that
never have been and in all probability never will be able to
pay their obligations and to pay dividends, even the
slightest, to their stockholders.... If the rule suggested
is a correct one, and must be adhered to by the public
authorities, then it is entirely impossible that those who
operate these roads can prescribe excessive charges, since
it is impossible to fix any rates that would bring their
revenues up to the point of enabling them to pay any
dividends.... But the rule suggested would also be one under
which those roads would be entitled to charge the most
which, instead of being built with the money of the
stockholders themselves, had been constructed with money
borrowed; the larger the debt the higher being the rates
that would be legal. If a road were out of debt so that it
had no bonds to provide for, it must content itself with
such rates as would pay some dividend to its stockholders.
If the road were in debt, though it perhaps served the same
communities, it might be entitled to charge rates 50, or
possibly 100 per cent higher.... But over and beyond all
this the attempt to apply the rule suggested would be
absolutely futile for the reason that the rates prescribed
for one road would necessarily affect all others that either
directly or indirectly came in competition with it."

It is no exaggeration to say that the annual reports of the commission stand unexcelled as dauntless, clear, concise and instructive public documents. It may also be asserted that whatever success has so far attended the Interstate Commerce Law, that success is in a great measure due to the tact, courage and ability of the men who, in the past, have been the guiding spirits of the commission.

Efforts will be made by railroad managers in the future, as they have been made in the past, to weaken the commission by securing the appointment of men servile to the railroad interest as members of that body.

Mr. Depew says that "all railroad men are politicians, and active ones." This is true as to manipulating managers and will continue to be so just as long as we allow such extraordinary powers to be exercised by them. The saloon men are politicians, and active ones. There is not a city or town in this broad land that is not in danger of falling under their sway unless their offensive efforts are resisted. The old United States Bank managers were politicians, and active ones. They perverted the trust reposed in their hands to such an extent that the indignation of the people was aroused, and under the lead of a stern old patriot the bank was swept out of existence. Shall we restrain corporation management within proper limits and make corporations serve the public welfare, or shall we let the abuses go on until the people, under the lead of another Jackson, demand emphatically the application of some remedy, for better or for worse? Perhaps Government ownership, perhaps something else. Nations, like individuals, should profit by the experience of the past.

The Interstate Commerce Commission, in their sixth annual report, say, concerning the Interstate Commerce Law:

"It was scarcely possible that it should be so complete and
comprehensive at the outset as to require no alteration or
amendment. Those who are familiar with the practices which
obtained prior to the passage of this law, and contrast them
with the methods and conditions now existing, will accord to
the present statute great influence in the direction of
necessary reforms and a high degree of usefulness in
promoting the public interest.

"Whoever will candidly examine the reports of the commission
from year to year, and thus become acquainted with the work
which has been done and is now going on, will have no doubt
of the potential value of this enactment in correcting
public sentiment, restraining public injustice and enforcing
the principle of reasonable charges and equal treatment.
Imperfections and weaknesses which could not be anticipated
at the time of its passage have since been disclosed by the
effort to give it effective administration. The test of
experience, so far from condemning the policy of public
regulation, has established, its importance and intensified
its necessity. The very respects in which the existing law
has failed to meet public expectation point out the
advantages and demonstrate the utility of Government
supervision....

"Of this much we are convinced: The public demand for
Government regulation and the necessity for legal
protection against the encroachments of railroad
corporations have not been diminished by the experience of
the last six years. The act to regulate commerce was not
framed to meet a temporary emergency, nor in obedience to a
transient and spasmodic sentiment. The people will not
tolerate a return to the injustice and wrong-doing which
inevitably occurs when no correction is undertaken and no
regulation attempted. The evils of unrestricted management
will not be permanently endured, and legal remedies will
continue to be sought until they are amply provided. The
present statute, however crude and inadequate in many
respects, was the constitutional exercise of most important
powers and the legislative expression of a great and
wholesome principle. Its fundamental and pervading purpose
is to secure equality of treatment. It assumes that the
railroads are engaged in a public service, and requires that
service to be impartially performed. It asserts the right of
every citizen to use the agencies which the carrier provides
on equal terms with all his fellows, and finds an invasion
of that right in every unauthorized exemption from charges
commonly imposed.

"The railroad is justly regarded as a public facility which
every person may enjoy at pleasure, a common right to which
all are admitted and from which none are excluded. The
essence of this right is equality, and its enjoyment can be
complete only when it is secured on like conditions by all
who desire its benefits. The railroad exists by virtue of
authority proceeding from the State, and thus differs in its
essential nature from every form of private enterprise. The
carrier is invested with extraordinary powers, which are
delegated by the sovereign, and thereby performs a
governmental function. The favoritism, partiality and
exactions which the law was designed to prevent resulted, in
large measure, from a general misapprehension of the nature
of transportation and its vital relation to commercial and
industrial progress. So far from being a private possession,
it differs from every species of property, and is in no
sense a commodity. Its office is peculiar, for it is
essentially public. The railroad, therefore, can rightfully
do nothing which the State itself might not do if it
performed this public service through its own agents instead
of delegating it to corporations which it has created. The
large shipper is entitled to no advantage over his smaller
rival in respect of rates or accommodations, for the
compensation exacted in every case should be measured by the
same standard. To allow any exceptions to this fundamental
rule is to subvert the principle upon which free
institutions depend and substitute arbitrary caprice for
equality of right.

"The spirit of the law is opposed to usages so long
continued and so familiar that their unjust and demoralizing
character has not been clearly perceived, but it is a long
step towards such regulation of the agencies of
transportation as will make them equally available to all
without discrimination between individuals or communities.
It can hardly be the fault of those who are charged with its
administration if the beneficial aims of this statute have
not been fully attained and compliance with its provisions
not completely secured. A better understanding of its
purpose and an educated public sentiment, aided by the
needful amendments which experience suggests, will fully
vindicate the policy of Congress in undertaking to bring the
great transportation interests of the country into general
harmony with its requirements.

"It affords us gratification to add that many railroad
managers of the highest standing now concede the necessity
for Government regulation, and avow themselves in favor of
such further enactments as will make that regulation
effective."