existing fourth section. No one will deny that that amendment involves the most far-reaching consequences. Yet, although the Commission did not approve it, it has earnestly solicited shippers all over the country to support the bill embracing that amendment.

In my argument before the committee I stated that the power of the Commission and the courts to prevent railroads from charging unreasonably high rates was precisely the same as the power exercised by the courts to prevent State railroad commissions from enforcing unreasonably low rates. With that wonderful adroitness as an advocate which Mr. Prouty's service as an Interstate Commerce Commissioner seems to have developed, he tries to create the impression that the cases are not parallel because, pending litigation, a State commission can not enforce its unreasonably low rate, while the railroad can enforce its unreasonably high rate. He implies that in the Reagan case the railroads were not compelled for one moment to put in the obnoxious rates. The fact is that those rates were actually put into effect and remained in effect for four months after the railways had brought suit to enjoin this further continuance, and their further continuance was only enjoined after the court had become satisfied that they were unreasonably low and should be enjoined. The further continuance of an unreasonably high rate can, in precisely the same way, be enjoined at the very same stage of the proceedings, i. e., just as soon as the court becomes satisfied that it is unreasonably high and should be enjoined. If the circuit court decrees the immediate enforcement of the order of the Commission, the carrier can not supersede that decree by an appeal. Mr. Prouty's statement, therefore, that under the present law in no way can a railroad be forced to put in a rate which is unreasonably low, and in no way can it be forced to take out a rate which is unreasonably high, is equally and wholly incorrect on both propositions.

Mr. Prouty insists that, even if the continuance of the unlawful rate adjustment be enjoined, this will afford no relief, because the carrier will make no substantial change in its rates. In this Mr. Prouty is simply theorizing, and theoretically at least he seems to condemn theorizing. The interstate-commerce act provides a certain procedure for correcting evils. Until very recently the Commission has never acted in accordance with that procedure. Recently it has, in a few cases, confined itself strictly to making the orders which the act authorizes it to make, but in only one of those cases has the circuit court found the Commission's order to be correct, and in that case the court saw proper to suspend the operation of its decree pending appeal. A case, therefore, has never yet been presented to test the practical efficacy of the preventive power which the Commission, in connection with the courts, can exercise under the present law, and yet, simply on the theory that such power when carried into effect will not be of substantial value, the Commission asks Congress to give it powers which are virtually unlimited. We earnestly submit that Congress ought to do no such thing until the powers which the Commission undoubtedly has shall have been fairly tested. The fact that thirteen years have elapsed without an adequate test of those powers is not due to any fault of the act or of the carriers, but it is due to the fact that the Commission has made the most egregious mistakes as to the extent of its powers, and has systematically continued to attempt to exercise an authority which it did not possess. As heretofore suggested, the Commission seems to be in a great hurry to get the new powers which it wants for fear that

delay may develop that the powers it already possesses afford substantial protection to the public. That the existing powers, when properly exercised, will afford ample protection against unlawful tariff rates seems clear. Congress evidently thought so when it passed the present act, and nothing has since occurred to disprove it. The Commission's course has been such as to afford no test at all.

Mr. Prouty insists that under this bill the effect of every order can be suspended while proceedings in review are going forward, and he implies that no change can be made until the Commission and the Supreme Court find that the rate is wrong. The fact is that no order can be suspended pending review, unless it plainly appear to the circuit court from an inspection of the record that the order is unreasonable and illegal, so that there is no chance of getting any suspension at all in any case unless on the face of the record the Commission's order is palpably wrong.

Great stress is laid by Mr. Prouty upon the fact that rates in certain sections are so adjusted as to favor the Standard Oil Company and other large enterprises. Every such rate adjustment as he describes is, if an improper adjustment, an undue preference of some locality or description of traffic, and directly in contravention of the present act, and susceptible of correction thereunder. Until the commission has at least made an intelligent and persistent effort in the exercise of the powers it already has to correct such evils, it certainly ought not to demand the unlimited powers which this bill confers.

In illustrating the meaning of the provision of this bill which authorizes the Commission to prescribe the regulations under which traffic shall move in order that the carriers shall conform to the law Mr. Prouty cited the case of storage facilities in transit being accorded at Buffalo to a miller at Minneapolis, and denied to another shipper by the same carrier. If such difference is unjustly made it is in violation of the present law, and the continuance of that violation can be prevented. The Commission contends, however, that it shall, in addition, have the power to prescribe the things which the carrier shall do for the future. Under this power the Commission could require storage facilities to be afforded to both of the shippers, and prescribe the extent and character of the storage facilities to be furnished to each. Nothing would be left to the discretion of the carrier; the Commission would relieve the carrier of all trouble in determining what it could afford to do for the shippers. This is a striking illustration of the way in which this bill will take the management of railroads out of the hands of the officers intrusted with their management by the owners of the property, and put that management into the hands of the Interstate Commerce Commission.

Mr. Prouty also refers to the Eau Claire case, and says that the Commission should have the power to prevent the difference in rates on lumber between Eau Claire and La Crosse. If the rates from Eau Claire and La Crosse to St. Louis were fixed and controlled by the same carrier, and if there was an unjust preference of one of those points over the other, the present law would afford ample opportunity to correct it; but if, as is the fact, the railroads which establish and control the rates from La Crosse do not reach Eau Claire at all, it is highly improper to give the Commission the power it wants. It is infinitely better for the welfare of this country to let different sections fight their own battles, aided as each will be by the railroads interested in it, than to turn over to the Commission absolutely (and in effect the

Commission's power would be absolute) the power to prescribe the comparative prosperity each section shall enjoy. The railroads controlling the rates from La Crosse to the west give La Crosse a substantially lower rate than Eau Claire, because in no other way could the lumber trade be encouraged at that point, since Eau Claire was nearer the forests and got its logs much cheaper, and if the same rates had been applied from Eau Claire and La Crosse the lumber business would have been centralized at Eau Claire. It seems eminently in the interest of the public that a railroad should in this way encourage the development of an industry on its own line, when otherwise such industries would be centralized at some point on another line possessing greater natural advantages. In this way the railroads of this country have done much for the wide dissemination of industry. Yet, in the Eau Claire case, the Commission pronounced this theory as "radically unsound," and implied that each place ought to be given the full measure of its natural advantages. Through the power to prescribe minimum rates the Commission would of course put entirely aside this "radically unsound" theory, and would proceed to weigh the natural advantages of various localities, and would enforce a rate adjustment as to give those localities such measure of prosperity as in the opinion of the Commission they should enjoy. In this way the Commission's power as arbiter over the commerce of the country would be supreme. Mr. Prouty intimates that the Commission had better be the arbiter than the carriers, but the point is that the carriers are not the arbiters. Each carrier is identified in interest with the section through which it runs. Its prosperity depends upon the prosperity of that section. It will not acquiesce in an unreasonable rate adjustment whereby some other section on some other railroad prospers at its expense. Each carrier will see to it that the places on its own line get a substantial share of the business, and will make rates accordingly. Of course this system is not perfect. No system is. But until a tribunal is to be appointed to settle every conflict of interest that arises in the agricultural, industrial, and commercial life of this country by self-executing decrees, there is no reason for giving to the Interstate Commerce Commission this power to settle absolutely the relative prosperity of various sections of the country. The country can not always hope to find a Commission composed of members of such superhuman integrity as to be beyond sectional influence, or so wise as to know precisely the amount of prosperity called for by the natural advantages of each locality in the country.

Mr. Prouty announces to the Commission that I am dealing with a subject about which I know nothing from a practical standpoint, and in the treatment of which theoretical knowledge is of no value. Of course, I do not hope that my arguments will be considered, except only so far as they are based on facts and appeal to the practical sense of the committee, but I prefer the committee rather than Mr. Prouty should decide whether my arguments are of value, as Mr. Prouty's employments as an Interstate Commerce Commissioner do not seem to be conducive to a judicial temperament. I must admit, however, that Mr. Prouty's statement that theoretical knowledge on this subject is of no value should command respect, for I am sure his own experience affords the amplest opportunity and occasion for such an appraisement. Respectfully,

WALKER D. HINES,
Assistant Chief Attorney.

THE PRESIDENT'S MESSAGE AND PROPOSED AMENDMENTS TO THE INTERSTATE-COMMERCE ACT-ALSO SOME COMMENTS ON THE "BACON" BILL.

The President's message and proposed amendments to the interstate

commerce act.

UNREASONABLE OR DISCRIMINATORY TARIFF RATES.

The President states in his message sent to Congress December 3, 1901, that the cardinal provisions of the act to regulate commerce were "that railway rates should be just and reasonable, and that all shippers, localities, and commodities should be accorded equal treatment. Tariff rates are thus required to be reasonable and nondiscriminatory by that portion of section 1 of the act reading as follows:

All charges made for any service rendered or to be rendered in the transportation of passengers or property as aforesaid, or in connection therewith, or for the receiving, delivering, storage, or handling of such property shall be reasonable and just; and every unjust and unreasonable charge for such service is prohibited and declared to be unlawful.

And by that portion of section 3 reading as follows:

That it shall be unlawful for any common carrier subject to the provisions of this act to make or give any undue or unreasonable preference or advantage to any particular person, company, firm, corporation, or locality, or any particular description of traffic, in any respect whatsoever, or to subject any particular person, company, firm, corporation, or locality, or any particular description of traffic, to any undue or unreasonable prejudice or disadvantage in any respect whatsoever.

The President indicates it is claimed that "while many rates are too low, many others are excessive, and that gross preferences are made affecting both localities and commodities." The President does not indorse this claim as true, and it is obvious that it is rarely, if ever, even partially true except in instances where rates are unjust or excessive as compared with secret cut rates accorded favored shippers.

The Hon. Martin A. Knapp, chairman of the Interstate Commerce Commission, in his statement before the Senate Committee on Interstate Commerce, March 18, 1898, said:

In the first place, as Senator Elkins says, the question of excessive rates-that is to say, railroad charges which in and of themselves are extortionate-is pretty nearly an obsolete question. I would not affirm there are not such rates; yet, broadly speaking, there are not many such. Those are not the rates of which the public complain. That is not the burden of the complaint. The discriminating practices which are accomplished either by compliance with the present law or in regard to it are things which really affect the public interest.

That rates are not excessive, per se, in this country may be regarded as generally conceded.

It is generally true also that tariff rates do not involve unjust discriminations either between different localities or different classes of traffic. The Interstate Commerce Commission has taken numerous cases involving supposed unjust discriminations of this character into the courts, and so far as the courts have gone into the merits of these cases they have almost without exception held that the adjustments in question were not improper and did not result in unjust discriminations. If this has been the view of the courts in cases which the Commission has picked out as involving such unjust discriminations, it can safely be assumed that the actual cases of such unjust discriminations

between tariff rates to or from different localities or on different kinds of traffic are very rare. Practically all the unjust discrimination of which complaint is made is due to secret concessions to particular shippers or at particular localities.

However, while this evil of tariff rates unreasonably high or unjustly discriminatory as compared with other tariff rates may be regarded as practically obsolete or merely theoretical, a substantial remedy exists under the present act to regulate commerce if any instances of such violation of the law actually arise. The courts will at the instance of the Commission compel the carriers to cease the continuance of any such excessive rate or unjust discrimination. It can be said with the greatest confidence and emphasis that this remedy for this evil has not only not been demonstrated to be insufficient, but that a fair examination of it will show that it is ample to correct substantially every violation of the law in the respect indicated.

As an illustration of the substantial power to correct adjustments of tariff rates which the Commission may believe to be improper may be cited the case of the complaint to the Commission that the rate on wheat was too low as compared with the rate on flour. The Commission, after investigation, expressed the opinion that the rate on flour should not exceed the rate on wheat by more than 2 cents per 100 pounds. The railroads, although not acquiescing in the propriety of that decision, realized the substantial power residing in the Commis sion, and have therefore uniformly complied with the Commission's decision, as has been stated by the chairman of the Commission in a recent communication. At the same time, complaint still continues to be made that the actual difference in the rates on wheat and flour in favor of wheat is very much more than 2 cents per 100 pounds and that this difference is brought about by secret rate cutting, thus illustrating anew that the real evil is the evil of secret rate cutting.

UNLAWFUL DEPARTURE FROM TARIFF RATES.

As indicated by the President's message, the carriers' tariff rates should be maintained and charged equally to all, without rebates or other forms of secret concessions to favored shippers or localities. All of this is required absolutely and unequivocally by the law as it now stands. Section 2 of the act to regulate commerce reads as follows:

That if any common carrier subject to the provisions of this act shall, directly or indirectly, by any special rate, rebate, drawback, or other device, charge, demand, collect, or receive from any person or persons a greater or less compensation for any service rendered, or to be rendered, in the transportation of passengers or property, subject to the provisions of this act, than it charges, demands, collects, or receives from any cther person or persons for doing for him or them a like and contemporaneous service in the transportation of a like kind of traffic under substantially similar circumstances and conditions, such common carrier shall be deemed guilty of unjust discrimination, which is hereby prohibited and declared to be unlawful.

Section 6 of the act requires the carrier to publish its rates, file them with the Commission, post them at stations, and to give similar notice of all changes therein, and further provides:

And when any such common carrier shall have established and published its rates, fares, and charges, in compliance with the provisions of this section, in shall be unlawful for such common carrier to charge, demand, collect, or receive from any person or persons a greater or less compensation for the transportation of passengers or property, or for any service in connection therewith, than is specified in such published schedule of rates, fares, and charges as may be from time to time in force.