The Railroad Question Part 19

The State of Texas is not so productive in proportion, but is much greater in extent than Iowa, and upon the whole resembles it much in its prominent characteristics. Both are thrifty, progressive States, with no large commercial or manufacturing centers where their people can easily organize to protect their financial interests.

The people of Texas endured patiently the abuses so prevalent in railroad management until a few years since they enacted a railroad law similar to that of Iowa. The Wall Street managers of the Texas railroads are at the present time using all of their familiar methods to influence the people of that State to repeal their law. The following letter serves to show the spirit with which they are approached:

"23 BROAD STREET, NEW YORK, November 30, 1891.

James B. Simpson, Esq., Dallas, Tex.

"DEAR SIR: Yours of the 26th is received and contents carefully noted. Very likely you have valuable franchises, or what would be valuable in almost any other state than Texas; but while there are many places in Texas where we would like to build some railroads--mostly short ones--we cannot do anything so long as the disposition exists that now seems to in Texas; that is, to do all the harm they can do this kind of property, and I think my views are shared by all people who have money to invest. No one is disposed to create property which, after being created, is not to be controlled by its owners.h.i.+p. Of course, we all expect to be subject to the police regulations and to pay the taxes of any State even as other property, but whenever anything is done beyond that it checks this kind of improvement, and where it approaches so near confiscation as the sentiment of Texas tends it entirely prevents capital from being invested.

"I think there is no road in Texas that is to-day earning its operating and fixed charges. Every road, I think, has been or is in the hands of a receiver, excepting our great east and west line, which is supported by business going entirely through the State, which business could also be sent another way, and would be so sent, excepting that we believe the people of Texas will some time take a sober second thought and treat the railroads as they do other kinds of property. When that time comes I shall be ready to talk to you about your franchises, if it comes in my day, and I believe it will, as I think no other people are suffering from an unwise policy persistently pursued as are the people of your State.

"Yours truly, C. P. HUNTINGTON."

"Now, in the name of all the G.o.ds at once, Upon what meat doth this our Caesar feed, That he hath grown so great?"

It was but a few years ago when this Mr. Huntington was keeping a small retail store in the city of Sacramento, and he exhibited then no greater ability, except perhaps that he was a little more venturesome, than thousands of others engaged in the same occupation; subsequently he engaged, with several others, in the Central Pacific Railroad scheme, and received from the bounties of our generous Government as his share of the profits in that enterprise several million dollars, which sum has ever since been continually swelled by the exercise of a power scarcely inferior to the power of taxing the property of the Pacific Coast. He has been so successful for years in manipulating Congressmen and State legislatures and shaping the policies of States that he now considers it impertinent and short-sighted for a people to take steps to limit his levies upon them. It is to be hoped that the boycotting and intimidating methods resorted to will have no more effect upon the people of that State than they had on the people of Iowa.

Iowa is the queen among the States of the Union. No other State has so little waste land or is so productive. Her annual output of staple products amounts to hundreds of millions of dollars in value. Her people are intelligent, progressive and just. None are governed more by the precepts of the golden rule, or are more disposed to render unto Caesar the things that are Caesar's. She can well be proud of the progress she has made in State control of railroads. Let no backward step be taken.

CHAPTER XII.

THE INTERSTATE COMMERCE ACT.

The Const.i.tution 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 Const.i.tution relating to the subject of interstate commerce were made broad and far-reaching. Section 8 of Article I. of the Const.i.tution 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 Const.i.tution 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 Pa.s.senger 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 const.i.tuent 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 Const.i.tution 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 Const.i.tution."

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 pa.s.sed in July, 1866. It authorized railroad companies chartered by the States to carry pa.s.sengers, 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 pa.s.sage of this act, it should be remembered, was urged by the railroad companies themselves. Seven years later an act was pa.s.sed 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 a.s.serted 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 pa.s.sed 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 chairmans.h.i.+p 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 princ.i.p.al causes of such excessive rates they a.s.signed 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 compet.i.tion would not permanently remedy the existing evils, and laid it down as a general rule that compet.i.tion 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 compet.i.tion, 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 pa.s.sengers 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 s.h.i.+ppers, 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 pa.s.sed 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 s.h.i.+ppers, 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 pa.s.sage in both houses. It was approved by the President on the 4th day of February, 1887, and took effect sixty days after its pa.s.sage, 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 c.u.mbersome. 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 pa.s.sengers 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 s.h.i.+pment 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 pa.s.senger 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 s.h.i.+pment 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.

Section 11 establishes the Interstate Commerce Commission, to be composed of five commissioners appointed by the President by and with the advice and consent of the Senate. It provides that the commissioners first appointed shall continue in office for the term of two, three, four, five and six years, respectively, from the first of January, 1887, the term of each to be designated by the President, and that their successors shall be appointed for terms of six years, except that any person chosen to fill a vacancy shall be appointed only for the unexpired term of the commissioner whom he shall succeed. No more than three commissioners may be appointed from the same political party, and the President has the power to remove any commissioner for inefficiency, neglect of duty or malfeasance in office. Authority is given to the commission to inquire into the management of the business of all common carriers subject to the provisions of the act and to require the attendance of witnesses and to invoke the aid of any court of the United States for that purpose.

Section 13 authorizes any person, firm, corporation or a.s.sociation, any mercantile, agricultural or manufacturing society, any body politic or munic.i.p.al organization to file complaints against any common carrier subject to the provisions of the act, with the commission, whose duty it is made to forward a statement of the charges to such common carrier and call upon him to satisfy the complaint or answer the same in writing, and to investigate the matters complained of, if the complaint is not satisfied. The commission is also charged with the duty of making such investigations at the request of State or territorial railroad commissions and may even inst.i.tute them at its own motion. Section 14 requires the commission to make a report in writing of any investigation it may make and to enter it of record and furnish copies of it to the complainant and the common carrier complained of. Section 15 makes it the commissioners' duty, when it is found that any law cognizable by it has been violated by a common carrier, to serve notice on such carrier to desist from such violation and to make reparation for an injury found to have been done. If any lawful order or requirement of the commission is disobeyed by a common carrier, it becomes their duty and is lawful for any company or person interested in such order to apply by pet.i.tion to the Circuit Court of the United States sitting in equity in the judicial district in which the common carrier complained of has its princ.i.p.al office, and the court has power to hear and determine the matter speedily and without the formal pleadings and proceedings applicable to ordinary suits, and to restrain the common carrier from continuing such violation or disobedience. It is further provided by this section that on such hearings the report of the commission shall be accepted as _prima facie_ evidence.

Section 17 regulates the proceedings of the commission. A majority const.i.tute a quorum for the transaction of business. The commission may from time to time make or amend rules for the regulation of proceedings before it. Any party may appear before it and be heard in person or by attorney, and every vote or official act of the commission must be entered of record and its proceedings made public upon the request of either party interested.

Section 19 provides that the princ.i.p.al office of the commission shall be in Was.h.i.+ngton, but that for the convenience of the public it may hold special sessions in any part of the United States.

Section 20 authorizes the commission to require annual reports from all common carriers subject to the provisions of the act, to fix the time and prescribe the manner in which such reports shall be made, and to require from such carriers specific answers to all questions upon which the commission may need information.

Section 21 excepts from the operation of the act the carriage of property for the United States, State or munic.i.p.al 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 pa.s.ses or tickets among the princ.i.p.al 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 princ.i.p.al provisions.

When the law was pa.s.sed its friends well realized that its success would greatly depend on the character of the commissioners whom it was inc.u.mbent 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 leaders.h.i.+p the commission has been more than a purely executive board. It was under the Const.i.tution 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.