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power to make such an order on a proper state of facts, but on the ground that testimony had been produced in the circuit court showing the existence of facts which were not in proof before the Commission.
In this view of the case, the Commission understood the decision of the court to mean that the Commission had not been given and could not exercise the power to fix rates in advance of an investigation upon notice and opportunity to be heard, a power which the Commission had neither claimed nor attempted to exercise. But it further under stood that when, as in this case, the rates had been established by the carriers and afterwards challenged or complained of as unreasonable and the question of unreasonableness had been tried, the Commission could declare not only what rate was wrong but what would be right, and could lawfully petition the court to enforce the right. That is to say, when a rate had been established by the carriers, challenged by or on behalf of sbippers, and tried by the Commission in a proceeding ordered and regulated as near as may be in conformity with United States Court proceedings, the Commission had a right, and it became its duty, when justified by the facts, to declare the rate wrong, decide what rate would be right, and through the judgment of the court compel the carrier to perform its legal duty to receive and carry property at rates which are reasonable and just.
The Commission exercised this power in a case commenced in the second month after its organization and continued to exercise it for a period of more than ten years, during which time no member of the Commission ever officially questioned the existence of such authority or failed to join in its exercise. As already stated, the authority of the Commission to modify and reduce an established rate and to enforce a reasonable rate for the future was not questioned in the answer of the defendant in the Atlanta rate case, decided March 30, 1896, nor had it ever been denied in any of the answers made to more than four hundred cases previously commenced, many of them alleging unreasonable and unjust charges and praying the Commission to enforce a reduction and lower rates in the future. The circuit court of appeals of the sixth circuit either understood the decision as the Commission understood it or was in doubt as to its meaning, for that court certified a later case, involving the question, to the Supreme Court “to determine what powers Congress has given this Commission in respect to the matter of rates.” It also appears that in part the Supreme Court itself had the same understanding or misunderstanding as did the Commission, for in the later decision made in the case so certified one member dissented from the determination and judgment of the court, which was to the effect that the Commission may, after investigation, find and report what was wrong in the past, but can not find and order anything or enforce anything as to what rate the carriers shall charge in the future; that the duties imposed and powers conferred upon the Commission by the
act do not include the authority and duty of seeing to, enforcing, or giving effect in the future, to the provisions of the statute which declares unjust and unreasonable charges to be unlawful.
It further appears from this last ruling that the Commission, after the first of these decisions, proceeded on an improper basis, both "out of a misconception of the purposes and meaning of the act” and out of a misconception of the meaning of the decision of the Supreme Court of the United States.
The act to regulate commerce declares that all transportation charges shall be reasonable and just; that every unjust and unreasonable charge is prohibited and unlawful. The act creates a Commission and declares that it is authorized and required to execute aud enforce the provisions of this act; that the Commission shall investigate, inquire into, report, and order the discontinuance of all violations of these or other provisions of the law, and shall execute the law by petition to the court to enforce such order, which the act requires the court to do whenever the order is lawful.
The recital of these declarations, requirements, and purposes of the act, in connection with the preceding account or history of decisions of the Supreme Court and proceedings relating thereto, is not submitted for the purpose of showing that the questions involved should have been decided otherwise. It is assumed that the court of final determination must and does declare the law as it is found in the statute. We mention these facts and make these recitals to show why the general public had expected a more satisfactory and complete remedy for the transportation abuses the law condemned, and for which abuses it was believed tlie law had provided an efficient means of correction through the courts and the Commission; why the Commission had given a construction to the act which the court decides to be erroneous, and why additional legislation should be enacted in such unmistakable terms that the Commission can not misconstrue and the public will not be misled by it. If the decisions commented upon in our report of last year as significant may be so regarded, the more recent one, removing all doubt that the carriers may now establish their own rates and charges and may judge for themselves what rates are reason. able and just, independent of any regulating authority, must be considered startling; for, viewed from the practical standpoint of the ordinary shipper and the public, to obtain and secure reasonable rates is substantially the end and purpose of railway regulation. Rates to be just must be so to both carrier and shipper, and when so adjusted that all are given and all are made to pay reasonable and just rates practically all unjust discriminations and undue preferences disappear.
The same rule of interpretation which denies the authority of the Commission to fix a reasovable rate for the future, after issue made and facts found, will, when occasion arises, be found to leave the Commission without authority, in the absence of additional legislation, to
enforce any order to prevent unjust discrimination or undue preference in the future. The other sections and provisions of the law are in aid of and were intended to make effective the first three sections, which relate to and were intended to make unlawful and to prohibit unreasonable charges, unjust discriminations, and undue preferences; and without authority to make these three sections effective in the future practically all the Commission can do toward executing and enforcing the vital provisions of the act is to inquire into wrongs done in the past and report the result of its investigation to itself.
Before the Supreme Court, upon the hearing of the later or certified case involving the authority of the Commission, after investigation and trial, to modify and reduce an existing rate and to prescribe a reasonable rate for the future in the case heard, counsel for the defendants, denying such authority under the act, said by way of argument:
The first section simply enacted the common-law requirement that all charges shall be reasonable and just. For more than a hundred years it has been the affirmative duty of the courts “to execute and enforce” the common-law requirement that "all charges shall be reasonable and just;” and yet it has never been claimed that the courts, by implication, possessed the power to make rates for carriers. (Interstate Commerce Commission v. The Cincinnati, N. O. and T. P. Rwy. Co., 167 U. S., 479.)
The court treated these remarks of counsel seriously and pronounced them “pertinent observations. It was in respect to charges on interstate traffic that these alleged pertinent observations of counsel were addressed to the court. If any court in any case ever enforced the common-law requirement that all charges shall be reasonable and just on such traffic, we have been unable to find any report of the case. It is not believed that there is such a case or that the observation was based upon or was pertinent to any existing fact. This Commission had, before this decision, thought it to be its duty, and had been acting upon the belief, that the interstate-commerce act required something to be done to "execute and enforce the common-law requirement that all charges shall be reasonable and just,” which, whatever may have been the affirmative duty” of the courts to do, has not been done for more than a hundred years in respect to the transportation charges on interstate traffic. The Commission has been acting, or attempting to act, in the belief that when the law declared that all charges on interstate traffic shall be reasonable and just it was the rates which might be exacted in the future that were required to be reasonable and just.
Proceeding in this belief, when a rate established by the carrier was complained of, and when, after investigation, hearing, and trial, such rate was found to be unreasonable, this Commission has, as in the case last above referred to, petitioned the court to enforce the Commission's order directing carriers to perform their legal duty to receive and carry persons and property at reasonable rates; and the Commission did not, as the Supreme Court erroneonsly implies, in this nor in any other case “establish rates without inquiry and examination;" and did not, as the
court further implies, "evolve, as it were, out of its own consciousness, the satisfactory solution of the difficult problem of just and reasonable rates for all the various roads in the country.”
Subsequent to this decision of the court denying its authority to do so, the Commission has made no order requiring a lower rate in the future in any case investigated and in which the established rates were alleged and found to be excessive and unlawful. In one such case, hereinafter mentioned, the Commission found and reported that under the interstate-commerce act, as now construed by the Supreme Court, the carrier is given the right to establish and change its rates independent of the judgment of the Commission and independent of the action and judgment of any court or other tribunal; that the right to establish, demand, and receive unreasonable and unjust charges is not prohibited; and that in respect to the charges which may be demanded and received for any transportation service the carriers are made judges in their own cases as to what is reasonable and just.
The fact, if it be a fact, that, after protest, remonstrance, and the payment of excessive and unreasonable charges, the shipper may bring suit for the amount of the difference between the lawful and unlawful rate is neither an adequate nor an equitable remedy. Nor is it an actual execution of the law which requires charges to be reasonable and just. The growers of grain, domestic animals, cotton, the producers of property, making up the bulk of interstate shipments, are not as a rule shippers. They sell to dealers on the basis of the publislied rate, however unreasonable, and so actually pay the transportation charges, however excessive. Only the dealer who ships, to whom in the main it does not rightfully belong, might, if anyone could, recover the excess of unlawful charges. Prevention, by fixing and establishing reasonable rates of charges in advance, is the only practical legal remedy for extortion and unreasonable and unjust charges. Rates to competing and distributing centers are not, for the most part, unreasonably high; they are frequently quite low. The mass of less populous cities and towns, small, intermediate, financially weak, and less important shipping places, are made to pay the high rates. It is largely these weaker places and the shippers to and from them which most need to have reasonable transportation rates secured to them by a law which shall be so plain that neither the Interstate Commerce Commission nor the courts can misunderstand or misinterpret its meaning.
THE MAXIMUM RATE CASE.
It has been already said that the Supreme Court of the United States has recently determined that the Commission has no power to fix a rate for the future. This was decided in Interstate Commerce Commission 7. Cincinnati, New Orleans and Texas Pacific Railway Company (167 U.S., 479), in which it was held, after the fullest argument and the
most careful consideration, that the Interstate Commerce Commission had no power to prescribe a rate for the future, and that its power in passing upon the reasonableness or unreasonableness of a rate was entirely confined to determining whether that rate had been reasonable or unreasonable in the past. This case, with reference to the work of the Commission, is perhaps the most important since the enactment of the act to regulate commerce.
The great significance of the decision did not escape the Court. It is said, in the course of the opinion, page 494—
The importance of the question can not be overestimated. Billions of dollars are invested in railroad properties. Millions of passengers, as well as millions of tons of freight, are moved each year by the railroad companies, and this transportation is carried on by a multitude of corporations working in different parts of the country and subjected to varying and diverse conditions.
This states forcibly and justly the importance of the question from the railroad standpoint. We may suggest that it is of even greater 'importance from the public standpoint. The aggregate freight money paid to the railroads of the United States during the year ending June 30, 1896, was $786,615,837, and this sum was contributed, for the most part, by the people. A very slight change in rates upon any of the staple commodities amounts to an enormous sum in the aggregate. In most articles of daily use the transportation charge is a large and often the larger part of the cost to the consumer. The freight rate may determine whether the Kansas farmer shall burn his corn for fuel or send it to market. The traffic manager may decree whether an indus: try shall exist or a locality flourish. It is not only the billions of dollars invested in railway properties which this question touches, but the prosperity and welfare of the people at large throughout the whole nation. It is certainly, both from the standpoint of the railway capitalist and the humblest citizen, one of transcendent importance, and we invite earnest attention to the actual condition as this decision leaves it.
The first section of the act to regulate commerce declares that all interstate rates shall be reasonable and just, and prohibits the exaction of rates which are not reasonable and just. The twelfth section invests the Commission with power to execute the provisions of the act. In various parts of the act provision is made for the making of formal complaint to the Commission, or the proceeding by the Commission upon its own motion, and for the making of formal orders upon carriers after full hearing. Hitherto, whenever a rate has been challenged as in violation of the first section, we have notified the carrier and given all parties an opportunity for full hearing. If we found the rate unreasonable, we lave fixed a rate which in our opinion would be fair and ordered the carrier not to exceed that rate for the future.
The Commission has never claimed the right to prescribe the rate in the first instance. In one of the earliest cases (Thatcher v. Delaware