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Supreme Court of the United States in the year 1897 (167 U. S., 479), and the attempt to secure it by legislation has ever since been denied by Congress. It is a political heresy which should be resisted in its beginning, and under every guise and pretense of limitation.
That the attempts of the Commission to secure the rate-making power intentionally and of necessity involves the Eutopian idea of securing control of the internal commerce of the country is evident from the utterances of the Commission during the last ten years, but perhaps nowhere more strikingly than in the following declaration, found on page 10 of its seventh annual report:
To give each community the rightful benefits of location to keep different commodities on an equal footing, so that each shall circulate freely and in natural volume, and to prescribe schedule rates which shall be reasonably just to both shipper and carrier is a task of vast magnitude and importance. In the performance of that task lies the great and permanent work of public regulation.
This expression of its “high ideal” of the work of regulation is a clean-cut proposition by the Commission to commit the Government of the United States to the task of determining all the struggles involved in the commercial and industrial interaction of the wealthiest, the most enterprising, and the most virile nation on the globe, a matter with which the Government should not meddle, and which is opposed to its settled and time-honored policy. It is rank political heresy. It is wildly impractical. It is such a departure from the time-honored policy of this nation that it may properly be , characterized as revolutionary. .
The fact that of the 807 complaints of unreasonable rates filed with the Commission during the last three years only four, or less than one in two hundred, were susceptible of demonstration under known principles of adjudication, indicates that nearly 400 of the 407 complaints were struggles which can not properly be made the subject of governmental concernment. This clearly exposes the absurdity of the proposition " to give each community the rightful benefits of location," to adjust the commercial and industrial interaction of this great and growing nation, and to accomplish that purpose by setting up at the seat of the National Government a bureau endowed with the function of prescribing rates for the future, with the chimerical object in view of keeping different commodities on an equal footing” throughout the length and breadth of this land. This is a wide and most absurd departure from the views of public policy touching the interaction of commercial and industrial forces which were entertained by the founders of our Government, which operated as a barrier to any system of regulation of the highway for ninety-eight years, and which are dominant in this country to-day.
The fact is that the great mass of the complaints made to the Commission relate to fancied grievances, to the results of commercial struggles, which are not and never should be the subject of governmental concernment, and to the frictional resistances and incidental evils affecting the grandest system of transportation ever seen on this planet. In the face of all these evils, real or fancied, the American railroad system may fairly be said to be almost perfect.
As a further illustration of the fact that the complaints which are addressed to the Interstate Commerce Commission are mainly of the class not subject to governmental concernment, the fact may be mentioned that in its last annual report the Commission said: “The total number of proceedings brought before the Commission during the year was 340. These include formal as well as informal complaints. But only 10 decisions were rendered by the Commission during the year on formal proceedings, only 2 of which involved unreasonable rates or 1 in 170 complaints preferred. In a word, the complaints of all sorts brought to the notice of the Commission had their origin mainly in commercial and industrial conditions completely outside the purview of governmental regulation. .
I think, Mr. Chairman, that if you will carefully review the testimony of all the representatives of the various trades and industrial bodies who have laid their grievances before you during the last four years, you will find such grievances to be of the intangible character already described, being merely expressions of struggle for commercial advantage and not based upon any clearly defined errors or acts of injustice on the part of the railroad carriers.
It would be exceedingly difficult for Congress to differentiate between complaints which are based upon the conditions of commercial struggle and those complaints which are valid subjects of regulation under the terms of the act to regulate commerce, except in general terms expressive of the firmly established policy of the Government upon the subject. The distinction in concrete cases must be based upon
the specific facts which govern in each particular case. The only object had in view in this connection has been to utter a word of warning against a policy which would devolve upon the National Government full responsibility for the course of the commercial and industrial development of this country, with all the dangers of sectional political struggle which would be engendered hy such a departure from the principles of commercial freedom upon which our governmental institutions are founded.
There is another political aspect of the proposition to confer practically autocratic power upon the Interstate Commerce Commission to which I would here briefly alludé. On pages 15 to 22 of my recent pamphlet entitled A Political and Commercial Danger, I stated at some length the reasons which sustain the belief that any provision of law granting to the Commission the power to prescribe rates for the future would eliminate the Federal judiciary from the function of passing upon the reasonableness of rates. This view is fully sustained by Mr. Commissioner Knapp, on page 296 of the present hearing, as follows:
While the determination whether a given rate is—that it has been-reasonable or not is a judicial question, the determination of the rate to be substituted in the future, is not a judicial question, can not be made a judicial question, and that authority, if exercised at all under the circumstances, must be exercised either by the legislative body itself or by an administrative tribunal, to which some portion of the legislative power has been delegated. Now, that being so, of course you must bear this in mind, that it is incorrect and misleading to speak of an appeal from the order of the Commission.
Mr. Knapp has made a labored argument to the effect that the determination of the Commission a mere administrative body without permanent tenure of office, and subject at all times to the play of political forces-would be made in a judicial manner, and therefore would have practically the same effect as decisions rendered by the courts. This is too feeble for serious consideration. It would be superfluous to attempt any labored argument upon this point before a committee of the Senate of the United States.
The fact that the Federal judiciary is an independent branch of our Government has made it the bulwark of the liberties of the people. So long as the courts have final determination of all questions of commercial right, the time-bonored policy of noninterference in the competitive struggles of trade will be maintained; but when the courts are eliminated from the determination of such questions the storm of political demand for commercial advantage will break loose, and the Commission and the political representatives of the people in Congress will bend to the blast. Besides, it is clearly evident that the sectional political struggles which would ensue from such a policy would endanger the permanence of our governmental institutions.
The exceedingly limited, and in most cases utterly ineffectual, way in which commission rate making exists in certain of the States of the Union affords no conception of the results which would ensue from placing the interstate and foreign commerce of the country under the control of a body characterized by Commissioner Prouty as “partly political and to an extent partisan.'
COMMISSIONER CLEMENT'S ANALOGY.
At a recent hearing Interstate Commerce Commissioner Clements based his argument in favor of granting to the Commission absolute authority over the commercial and transportation interests of this country upon the regulation of cab drivers in our large cities-a mere matter of municipal police. Mr. Chairman, the attempted analogy is strained to the fast degree. There is no elementary principle of human government more clearly established than that in framing rules of public policy every tub must stand on its own bottom. Unless we observe this rule we shall stand our civilization on its head by forced analogies; for the course of human affairs does not run along any unbroken chain of causation except in the story books written for children. Every rule of public policy must be based upon its own peculiar state of facts and conditions.
It is difficult to conceive of anything more absurd than the idea that the regulation of the charges imposed upon the poor fellows who make a living by crying “Keb!« Keb!” “Kerridge!” “Keb!” justifies the policy of placing the internal commerce and the transportation interests of this vast country at the absolute dictation of five men, without the possibility of submitting the reasonableness of their decisions to the Federal judiciary. No, sir; this country is not prepared for any such bureaucratic rule in the face of the fact, clearly proved by the experiences of the Commission, that extortionate rates have no existence in this country; that on the average less than one case a year of unjust discriminations is proven in our courts, and that the great mass of complaints which salute the Commission arise from mistaken notions of right, and from those competitive struggles of commercial interaction which never have been and never will become the objects of governmental concernment in this land of liberty.
PREDICTIONS AS TO EXORBITANT RATES IN THE FUTURE.
Appreciating the fact that the experiences of the past afford no reason to apprehend an increase, but rather a decrease, of rates in the future, attempts are being made to arouse the impression that the
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strangulation of competition through combination will eventuate in a very large and disastrous increase in rail rates throughout this country. The Interstate Commerce Commission has lent itself to the propagation of this theory. It is without any foundation in the facts of experience or in the probable outcome of present tendencies. Certain reasons for this opinion may be mentioned:
First. The general results of rates now in vogue upon railroad properties is well known and constitutes evidence as to their reasonableness, which could be invoked in any court in case of an attempt to raise rates to an unreasonable or exorbitant standard.
Second. The competition of rival commercial and industrial forces constitutes a potential restraint upon any attempt to advance rates above what is just and reasonable. There is an irresistible tendency toward a parity of values throughout the commercial nations of the globe and the effect of this is constantly to depress transportation charges.
Third. There is another safeguard against excessive rates, and that is the use of substitutes. For example, if the price of beef goes too high we shall have improved cooking with substituted nutritious vegetable food. The same principle applies quite generally in regard to other commodities which constitute a considerable part of the railroad traffic of the country.
But it is unwise generally to expend time or anxiety in attempts to provide against imaginary troubles, so the cure of the evils of excessive freight charges in the future may well be allowed to await developments.
THE EVOLUTION OF THE AMERICAN RAILROAD SYSTEM. Mr. CHAIRMAN: Our intimately connected railroad system, which, in so far as relates to the interests of the traveler and the shipper, is operated as though it were a single organization under the control of one executive head, is the product of an evolution. At the beginning and until about the year 1855 each railroad was operated with no reference to any other railroad. Not only was the connection of lines avoided, but joint traffic had no existence. That, however, is of the dead past. The act of Congress of June 15, 1866, commonly known as The Charter of the American Railroad System, was the outcome of a general demand for railroad unity, embracing the juncture of tracks, the common use of cars over connecting lines, and those almost perfect facilities which we now have for continuous traffic over coterminous lines, embracing joint rates and joint traffic arrangements, which secure the practical unification of the railroad transportation interests of the country.
The organic unity of the railroads of the United States involved the necessity for railroad self-government, without which organic unity was of course impossible. This evolution and the consequent organization of lines into one great system of transportation involved as rules of self-government every one of those specific regulations which constitute the essential features of the act to regulate commerce. In. fact, that act was builded upon those rules of self-government. Among those regulations are those relating to published classifications of merchandise, published rates, the prevention of fluctuating rates, the prevention of violations of published rates, the prevention of unjust
discriminations, the prevention of unjust or undue preferences, the continuous carriage of freights, and the prevention of sudden fluctuations in rates. By the force of coercive experiences all those requirements became the common law of the railroad in this country, and as such they only needed the sanction of statutory enactment to give them the character of governmental regulation. This was accomplished by the act to regulate commerce, February 4, 1887.
That act was no experiment based upon the fancy or the hypothetical conception of any dreamer. It was the carefully wrought out product of practical statesmanship, based upon economic and commercial usages, sought out and set in order by railroad managers under the stress of the stern lessons of experience and amid the conflicts of contending commercial and industrial forces. In proof of this, allow me to read to you a few historic passages from a report made to me in the year 1875, in my then official capacity as chief of the division of internal commerce, by Mr. Albert Fink, one of the ablest railroad men of the country at that time, a leader of men in the formation of the American railroad system. In this admirable rep the ethical and commercial considerations which, in the view of its gifted author, should govern the railroad transportation interests of the American railroad system, and which subsequently, as the result of the patient investigations of Senator Cullom and his coadjutors on this committee, acquired the force of law in the so-called interstate-commerce act. I quote as follows from Mr. Fink's report, written twelve years before that act became law, and made a part of the appendix of my first annual report on the internal commerce of the United States:
A common carrier should strictly adhere to the rule to charge the same rate for transportation for the same articles between the same points, only discriminating on account of quantity as far as it influences the cost of transportation. He should not make any arbitrary distinctions, merely depending upon his will. Discriminations in rates of transportation should be based upon conditions and facts which can not be controlled by the railroad companies, and upon principles recognized as correct in all other business transactions. (See page 9.)
Under the present system of the management of competitive business of transportation lines and from the want of systematic cooperation between so many parties interested in this subject, nothing else can be expected but the constant fluctuation of rates of transportation, railroad wars, and unjust discrimination. Concert of action and cooperation become absolutely necessary in order to establish rates of transportation upon a proper basis and to maintain the same with some degree of permanency. (See page 10.)
The result is fluctuations in rates, unjust discrimination between shippers in the same locality, or between shippers in different localities. Rebates are generally paid and special contracts are secretly made, all in direct violation of the law that should govern common carriers. (See page 12.)
Not only the public suffer from these evils, but from the causes which produce them the proprietors of the railroads greatly suffer. (See page 13.)
I make part of my answer an article which I prepared explanatory of the principal features of the plan of organization and its operation, and point out to what extent the aid of the Federal Government may be required to carry more completely into effect the operation of the organization. (See page 13.)
In a word, this able report by Mr. Fink, written twelve years before the act to regulate commerce was enacted, stated clearly the principles of self-government and the particular expedients upon which that system of government of the American railroad system is based, which principles and expedients later on, as anticipated and hoped for by Mr. Fink, became incorporated into the interstate-commerce act.
I have said this much in regard to the origin and principles upon which the act to regulate commerce is based in order to prove to you