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class or description--gets any benefit from the policy of railway competition which we have endeavored to enforce. Practically speaking, that policy bas powerfully aided the great combinations of this country, because it has resulted in giving influential shippers of large tonnage an advantage which the smaller dealers have not been able to

I think it not too much to say, Mr. Chairman, that the evils of present railway management and operation are mainly described by w the single word “discrimination.” That discrimination takes a twofold

form. It may manifest itself in the secret rate by which a large shipper or combination of shippers gets a secret advantage, or it may manifest itself in such an adjustment of rates as between different localities and different articles of traffic as to prejudice the one and unduly favor the other. Those evils and both those forms of discrimination are mainly caused by what we call railroad competition. I am not optimistic enough to expect that those evils will be removed so long as the cause is perpetuated, but I think the time has come when we should recognize the origin of these evils and endeavor to get at the root of the difficulty and correct it from the bottom.

Therefore it seems to me that the amendments of this law which are most needful are those amendments which are most likely to secure the absolute preservation of tariff rates. I say that not only because of its abstract justice, and not only for the reasons I have already suggested, but for another reason, which to my mind is even more convincing, whatever may be said to the contrary-and I certainly express no opinion as to the merits of any particular case--and that is, that there are a great many complaints at the present time that rates are too high. Those complaints, I may say, are mainly, if not altogether, confined to the advances in rates affecting several hundred articles which were affected two years ago by a simple change in classification. Aside from those advances so brought about, nearly every complaint which has reached the Commission has, in its final analysis, resolved itself into a complaint of discrimination.

The most offensive and demoralizing of all evils connected with railroad operation is the giving of a rebate, and I think the first duty of Congress is to provide a legislative remedy against that evil. As I have already said, I think no remedy is adequate which does not include in its provisions the right of association and contract between railroads, which present laws forbid. I say

that for another reason. If it be true that tariff rates are in any case excessive, if it be true that in any community a commodity is burdened with an unjust transportation tax, I believe there is no influence so powerful to bring about a reduction of that burden as to compel everybody to share it equally. Just so long as the carrier, by yielding to the pressure of some great shipper or combination of shippers, by giving to some interest a private and preferential rate, can hold up its tariffs as to everybody else, it is perfectly natural that that should occur.

The carrier is aided to that result by its own interest and by the implied demand of the powerful shipper who gets the preferential rates. So if the question of the reasonableness of railway charges is a question between the public on one side and the carrier on the other, you have, under conditions of actual railway competition-conditions which are enforced by our present legislative policy-you have a diyision of the public, its most powerful members in a particular locality being ranged on the side of the carrier; and just so long as the interest on one side is divided and the powerful shipper is allied with the carrier, just so long it is natural, if not inevitable, that the tariff rates will be disregarded and the great majority of men be required to pay a high rate and their more important and influential rival allowed a lower rate. I believe there is no influence which will be so powerful, no authority which you can confer upon the Commission which will be so effective, to bring down rates which are too high as to compel the absolute observance of tariff rates under all circumstances and to all shippers.

For when it comes to pass that an Armour or a Havemeyer or a Counselman can not get a carload of freight carried for one mill less than the weakest and least consequential competitor, then you will have the entire influence of large shippers and small concentrated in an effort to bring about a reduction of rates, and that effort will ordinarily succeed, because, as a general proposition, I do not believe that any railroad or combination of railroads can long maintain a rate which is demonstrably excessive or unreasonable against the united demands and the united insistence of the community or the dealers in the commodity to which those rates apply. Therefore I believe that the most wholesome and powerful agency which can be introduced to bring about the purposes

for which this law was enacted is that which shall secure to every shipper, large and small, precisely the same charge; and that, as I have already said, I do not believe, as a practical matter, can be accomplished without allowing the railroads the right of association with each other.

The CHAIRMAN. We shall be pleased, Judge Knapp, if you will continue these remarks at our next meeting.

Mr. KNAPP. That, Mr. Chairman, covers all I want to say.


United States Senate, June 6, 1902. At the regular weekly meeting of the committee (present, Senators Elkins (chairman), Kean, Dolliver, Millard, Foster, Carmack, and McLaurin), Mr. Joseph Nimmo, jr., made a statement on the bills before the committee to amend the interstate-commerce act as follows:




Mr. NIMMO. Mr. Chairman, since bills were introduced in both branches of Congress at its present session for the amendment of the act to regulate commerce, the whole situation has been changed by judicial procedure instituted by the Interstate Commerce Commission at Chicago. After fifteen years of efforts by the Commission to enforce the criminal provisions of sections 10 and 12 of the act to regulate commerce, recourse was had during the month of March last to the civil remedy provided in section 16 of that act. It is yet too soon to predict what may come of the attempt to enforce this provision of the statute. The only information of value upon the subject is contained in the remarks of Judge Grosscup just before issuing his order for a temporary injunction on March 24 last. The language of the learned judge upon that occasion is as follows:

The question presented by this application is a new one and a very great one, and I will not pass upon it finally until there have been elaborate arguments on each side. If the United States courts sitting in equity have the power called for, it will make them master of the whole rate situation, for an inquiry instituted by them to inquire whether the injunction has been violated or not will, much more readily than criminal proceedings, probe to the bottom of the railroad's doings. For my own part, I believe that railroad rates ought to be as stable as postage rates, so that every shipper would know, as certainly as the sender of a letter, how much it would cost him, and the fact that no one else could send it for less. An injunction something like this has been granted in other cases, notably in the Debs case, but an important distinction between that case and this is that in the Debs case the things complained of were in their nature temporary, while in this case the injunction will be against conduct running continuously into the future. The interstate-commerce act has hitherto been ineffectively executed, but the taking of such power by the courts, as this injunction implies, might turn out to be the vitalizing of the act.

This is a mere forecast by Judge Grosscup, but it contains a word of hopefulness. It tells the important fact that the appeal of the Commission to section 16 is a new one- -so new indeed that the court will require elaborate argument of the question on both sides before deciding it. It declares further that if the courts have the power called for *• it will make them master of the whole rate situation.” It next states the opinion of the learned judge that the new or civil process “ will much more readily than criminal proceedings probe to the bottom of the railroad's doings,” that “the injunction will be against conduct running continuously into the future” and thus exercise a deterent influence, the finest expression of governmental power, and that while criminal procedure has proved ineffectual, the taking of power under section 16 "might prove to be the vitalizing of the act."

This, Mr. Chairman, is the opinion of a learned and astute judge concerning a possible remedy for the specific difficulties which have been made the occasion for the introduction of the various bills now before Congress for the amendment of the act to regulate commerce. So the fact appears at this late day that the interstate-commerce act has two arms—the right arm of civil remedy and the left arm of criminal remedy. Hitherto the interstate commerce has confined its attempts at regulation to the left arm of criminal remedy, but it has at last had recourse to the right arm of civil remedy provided in section 16 of the act. After waiting fifteen years to inaugurate such action, why not, I ask, postpone legislation upon the subject until it can be ascertained what will become of this injunction proceeding, which, as Judge Gresham observes, is not only promising of good results with respect to rate cutting, but also to the whole broad subject of railroad regulation. The motion was set down for hearing on June 9, but I think it has been postponed to a later date in order that similar procedure before a United States judge at Kansas City may be taken under consideration at the same time.

There is another matter which I would refer to, and that is that section 3 of the Corliss bill proposes to take the vital principle out of this vitalizing section 16 of the act. I need not attempt to explain the phraseology which makes this change, for it is evident upon the reading of the act and of the bill, but will simply say that the bill proposes to repeal all of section 16 on pages 15 and 16 of the act to regulate commerce, as printed, and to substitute in lieu thereof obedience to definitive orders of the Commission with respect to prescribing rates for the future, a matter which has no place in the law as it stands. In the opinion of an able lawyer “it would seem to have the effect of establishing the Commission as the sole tribunal to deal with the subject and ousting the courts of their important jurisdiction.” For this reason above all others, I would say postpone action on this Corliss bill or any other bill involving an attempt to paralyze section 16 of the act to regulate commerce, at least until after the courts have had a chance to decide upon its efficacy for the abatement of the evils on account of which it has been invoked.


I invite your attention next to the various attempts of the Interstate Commerce Commission to acquire both judicial and legislative power.

1. The Commission at first assumed that it was invested with dispensing power in the matter of granting relief from the provisions of section 4, the long and short haul provision, but it was soon overwhelmed with applications for relief and reversed its policy, declaring that the companies must first decide for themselves whether they are or are not authorized by the law to charge more for the shorter than for the longer haul, and that in case of complaint the Commission would hear and determine each case upon its merits. The latter method of procedure has been found to be entirely adequate to the prevention of unjust discriminations of this particular character. It is the legal method of procedure in regard to controversies in contradistinction to the American and autocratic method of exercising dispensing powers not subject to judicial review.

2. The Commission having assumed to exercise the judicial function in the case of the Kentucky and Indiana Bridge Company v. Louisville and Nashville Railroad Company, Judge Jackson, in the United States circuit court for the district of Kentucky, decided in the month of January, 1889, that the Commission is not a court, and that Congress has no power to invest an administrative body with the judicial function. (37 Fed. Rep., 613.)

In its annual report submitted November 29, 1890, the Commission denied the doctrine of constitutional law announced by the court and stoutly maintained that with respect to administrative questions its “conclusions should be a finality even though their enforcement might require judicial aid.” (4. I. C. C. R., p. 13.)

A bill expressive of its peculiar ideas was then drawn by the Commission, and at its instance was introduced in the Senate on December 15, 1891. (Senate bill 892, Fifty-second Congress, first session.) At hearings before the Senate Committee on Interstate Commerce from February 3 to February 24, 1892, the proposition was strenuously opposed by eminent counsel, mainly upon the elementary principle of constitutional law and of rational government that it is absurd to attempt to invest a single governmental agency with the functions of detective, witness, party complainant, prosecutor, and judge in the same proceeding. That savored too much of the Pooh "Bah style of government.

The attempt of the Commission to secure the desired power was disregarded by the Senate Committee on Interstate Commerce before which the hearings took place.

3. In the maximum-rate case the Commission assumed, by an order dated May 29, 1894, that by necessary implication the act to regulate commerce conferred

upon it the power to prescribe the relation of the rates which should prevail as between points north of the Ohio River and points in the South Atlantic and Gulf States with reference to rates from points in the North Atlantic States to the same southern points. The result of this order of the Commission, if it had been allowed to take effect, would have been to endow the Commission with absolute control not only over the transportation interests but also of the commercial interests of the country, thereby eliminating the courts from any power to restrain the action of the Commission in the issoance of such orders. But the Supreme Court of the United States in its decision rendered May 27, 1897 (167 U. S.), overruled the order of the Commission. At every subsequent Congress, however, the Commission has been a somewhat importunate claimant before Congress for the powers which the Supreme Court of the United States declared were not conferred upon it by the act to regulate commerce.

Furthermore, the Supreme Court ruled, in the maximum-rate case, that if such power over rates as that claimed by the Commission were conferred upon it by Congress it would be in the nature of a delegation of legislative power, and as such be exempt from all judicial control or modification, and therefore constitute practically a grant of absolute or autocratic power.

This conclusion of the Supreme Court of the United States was also strenuously denied by the Commission, and ever since the Commission and its coadjutors have been strenuously engaged in the attempt to secure the power to prescribe absolute and relative rates for the future. The present contention before the two committees of Congress grows out of this struggle for power.



In the course of the controversies upon the general question of granting to the Commission the power to prescribe rates for the future, the advocates of the measure have had much to say to the effect that such power if granted would be subject to judicial review. This is strenuously denied. The question being vital to the whole subject of governmental regulation of the railroads, it seems proper to consider it upon its merits.

The Supreme Court of the United States, in the maximum-rate case, already cited, announced the following rule of constitutional law:

It is one thing to inquire whether the rates which have been charged and collected are reasonable—that is a judicial act; but an entirely different thing to prescribe rates which shall be charged for the future—that is a legislative act.

And again: The power to prescribe a tariff of rates for carriage by a common carrier is a legislative and not an administrative or judicial function. (167 U. S., 479.)

In a word, the Supreme Court has declared that it will have nothing to do with a rate for the future made under legislative authority. The business of the judiciary relates to legally contested cases. Its normal expression is the lawsuit-not the administration of the affairs of the busy world. It looks to the past and not to the present or the

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