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of the Commission should be effective until the court has declared against it. There are, manifestly, however, instances in which this ought not to be true. Probably the court should be invested with power, when application for review is made, to determine whether or not the order shall take effect pending such proceedings.
Subject to this right of review we believe that the order of the Commission should be conclusive and effective. The rights of the carrier are thereby fully protected. What ought to be a fair trial is had before the Commission. If there is any miscarriage of justice in the result of that trial ample protection is afforded by an opportunity for review in the courts, and the court has full power to protect the carrier by directing that the order shall not operate meantime. The court can not finally make an order, and this is in analogy to the idea that the functions of the Coinmission are legislative. Courts may de are unconstitutional an act of the legislature, but they can not, in theory at least, affirmatively legislate. It is doubtful whether it would be wise to invest courts with any greater powers of governmental railway regulation than they would thereby obtain.
When an order has become conclusive, either because the time for review has elapsed or because proceedings in review have resulted in its affirmance, in what way should it be enforced ?
It should be borne in mind that this order is not an ex parte one. It has been made in the first instance upon the fullest investigation. The carrier has been given the opportunity to question its correctness by an application to the courts. Under these circumstances it is plain that some measure should be provided which will insure obedience to it, and that in so doing no hardship is or can be inflicted upon a carrier affected by it.
The ordinary way is to provide severe penalties for willful disregard of such an order. These penalties should be directed both against the carrier and against the individual, and should be sufficiently severe to make compliance certain.
Sometimes the order is made conclusive in the first instance and the carrier is allowed to defend against it in a suit brought to recover the penalties. Such a proceeding is unjust to the carrier, since the burden of determining whether the order is lawful is thus cast upon it. It can not raise that question without incurring the liability of heavy loss. But under the plan suggested the carrier may in every case take the opinion of the court before determining whether to obey.
Provision should be made in addition for an application to the Federal courts to enforce the order by mandatory process. It is suggested that this can not be done, since the courts in executing an order of the Commission would be merely a ministerial body, whereas under the Federal Constitution they can not be invested with that duty. But are courts, when they enforce an order made under these circumstances, performing a mere ministerial function? However this might be if they were simply compelling obedience to an order upon the application of the Commission itself, it can hardly be true when they are doing so upon the application of a person injured by disobedience of that order. If the Commission establishes a rate, that is tantamount to an act of the legislature. Certainly if Congress enacted that no interstate carrier should exact above a certain rate it might invest the courts with authority to compel obedience to that rate.
The problem of the regulation of our interstate carriers is an important and a delicate one. The necessity for such regulation is universally recognized. It is at the present time resorted to in nearly if not every civilized country in the world. Most of the States have adopted some such measure. The experience of other countries and of individual States can not, however, be taken as an infallible guide in determining a national policy. What is efficacious in one section might be entirely without efficacy in others. What would work satisfactorily in the narrow limits of a State might utterly fail when applied to the vast distances of the nation. The competing forces which are brought under that regulation are so much more intense, the conditions so much more complicated, the temptations to abuse so much greater, and the opportunities so much more numerous, that State and national supervision hardly stand in the same class.
The enactment of the act to regulate commerce was in obedience to a popular demand and to remedy admitted evils. The experience of ten years has demonstrated the necessity and justice of such an act. Nearly every essential feature of that act has failed of execution. There is to-day, and there can be under the law as now interpreted, no effective regulation of interstate carriers. If there is to be under this act, it must be amended. From the best consideration we have been able to give the subject we believe that the most essential features of such an act must be those previously indicated. A tribunal which regulates the common carriers by railroad of interstate traffic, which can stand for justice and fairness between these carriers and the people, must have the power to fix a maximum rate, to fix in certain instances a minimum rate, and its orders when made must mean something.
There are many other defects in the law. When amended in these respects it would not possess the strength which it was originally understood to have, but it would possess some strength and would be a beginning, to which additions could be made as the necessity for them was developed.
THE LONG AND SHORT HAUL SECTION.
It is stated in the foregoing pages that there was pending before the Supreme Court of the United States a case arising under the fourth section, the decision of which would determine the future usefulness of that section. Since the above was written that case has been decided adversely to the contention of the Commission. It is proper, therefore, to further state the nature and bearing of that decision.
The case is entitled “Interstate Commerce Commission v. The Alabama Midland Railway Company and others,” and was decided November 8, 1897. The original complaint was brought by the Board of Trade of Troy, Ala., against the Alabama Midland Railway Company and the Georgia Central Railroad Company and their connections. The facts, in brief, are these: Troy, Ala., is situated upon the Alabama Midland Railway, 52 miles east of Montgomery. Rates from all points in the East and Northeast are higher to Troy than to Montgomery via the Alabama Midland, although the traffic orer that line passes through Troy on its way to Montgomery. Rates on cotton from Troy to eastern seaports, like Savannah, are higher than rates on cotton from Montgomery, although the Montgomery cotton passes through Troy upon its way to Savannah.
There were other questions in the case, but these sufficiently illustrate what was decided in reference to the fourth section. Troy is reached by two railroads, the Alabama Midland and the Georgia Central, and both these lines actually compete at that point for all kinds of traffic. Montgomery is the converging point for several lines of railway, which also compete for all kinds of traffic. The defendants claimed that the lower rate at Montgomery was justified and made necessary by this competition between the different lines centering there, which did not affect the rate to Troy.
The fourth section provides that more shall not be charged for the short than for the long haul when the transportation is under " substantially similar circumstances and conditions." The defendants insisted that the fact of railway competition at Montgomery made the circumstances and conditions at Troy and at Montgomery dissimilar, and that therefore the inhibition of the fourth section did not apply. The Commission had held in many previous cases, and held in this case, that railway competition between carriers subject to the provisions of the act could not of itself create the necessary dissimilarity in circumstances and conditions. This contention is not sustained by the Supreme Court, which holds that such competition does create that dissimilarity, and that the higher rate to Troy is not prohibited by the fourth section.
In order to understand the full significance of this decision, it is necessary to have in mind the evil which that section was intended to remedy and the bistory of proceedings under the section up to the present time.
The condition of things which led to the adoption of the fourth section is well known. Originally the rates upon railroads were undoubtedly established somewhat upon the basis of distance; the more distant point paid a higher rate, if not one higher in proportion to its distance. When, lowever, the same points came to be connected by competing lines, rates at the points of competition were forced down, while rates at mtermediate points remained the same, and it soon happened that the intermediate rate was higher than the more distant competitive rate, and often very much higher, although the cost of service to the intermediate point was less. Instances were numerous where a greater charge was made for transporting merchandise 500 miles than for transporting the same merchandise in the same direction over the same line 1,000 miles, and the charge to the nearer point was often two or three times that to the more distant. Without going into details, the practice had become so general and was felt to be such a gross abuse that there was a very general sentiment in favor of putting a stop to it, which found expression in the enactment of the fourth section.
It was seen, however, that while, as a rule, this system was a most pernicious one, there were particular instances in which the charging of the higher rate to the intermediate point was justifiable, and to meet those cases the section itself provided that upon application to the Commission, after investigation, leave might be granted to the carrier to make such charges as would otherwise be in violation of that section.
There was apparently little question at the outset as to the meaning of this section. The words 6 similar circumstances and conditions" evidently took the place of the words "same circumstances” in the English act, and the meaning of that phrase had already been defined by the English decisions.
The English act of 1845, known as the Railways Clauses Consolidation Act, provided in the ninetieth section that railways should exact the same rates from all persons for services rendered “under the same circumstances."
This is ordinarily known as the equality clause and corresponds to the second section of our act. The first measure of railway regulation in England was enacted in 1854, and the second section of that act provided, among other things, that no company should give any “undue or unreasonable preference or advantage to or in favor of any person or company or any particular description of traffic,” etc. This is commonly known as the undue preference clause and corresponds to our third section. The words “same circumstances” do not occur in that section.
Previous to the enactment of the interstate-commerce act the English courts. had decided that under the equality clause the words “same circumstances” had reference entirely to the carriage of the merchandise itself, and not to other conditions leading up to or surrounding such carriage. It had been several times expressly decided that competition did not create different circumstances. Nor has any English court ever yet held that competition would justify a departure from the equality clause. It was held in Phipps v. London and Northwestern Railway, 1892 (2 Q. B. D., 229), which is referred to by the Supreme Court as an authority for the Troy case, that railway competition might be considered under the undue preference clause, and it was put by some members of the court distinctly upon the ground that that clause did not contain the words same circumstances."
It should be further remarked in passing that previous to the English
act of 1888 it had never been formally held that competition could be taken into account in determining the question of undue preference. The railway companies had strenuously insisted that it should be under some circumstances, and they secured in the act of 1888 a provision that the Railway Commission might, in deciding whether a lower charge created an undue preference, take into consideration, in addition to other considerations affecting the case, “whether such lower charge or difference in treatment is necessary for the purpose of securing in the interests of the public the traffic in respect of which it is made.” This was understood to confer upon the English Commission legislative authority for considering that element, and that Commission had acted upon that theory before the decision of the Phipps Case.
The holding of the English courts as to the meaning of the words "same circumstances” where they occur in the English statute was well known, and it was generally understood that the words “substantially similar circumstances and conditions” would receive an interpretation upon the same lines. The carrier might charge more, for instance, for the carriage to the nearer point if that was in part carloads as against full carloads to the more distant point. And in general whatever went to the cost of the service might be considered, but not the interest of the carrier or shipper.
That the section was so understood by the railroads abundantly appears from the fact that the same companies which afterwards insisted upon the opposite construction at first applied to the Commission for relief under the proviso. In fact, the Commission was overwhelmed by the multitude of these petitions. They came from every part of the country. What to do with them was a serious problem, for apparently it would have been physically impossible to hear and decide upon their merits even a fraction.
The most superficial examination of the questions involved showed that as a matter of fact there was a broad difference between different kinds of competition as related to this question. The water carrier did not stand like the carrier by rail. The highway over which he operated cost him nothing. His vessels were comparatively inexpensive and could readily be tranferred from place to place. The cost of carriage was ordinarily much less. Above all, he was not subject to the provi. sions of this act. He was compelled to publish no rate, to respect no schedule; he was free to go into the market and to take whatever transportation he could obtain at whatever figure he chose. Manifestly there was no similarity between competition with this carrier and competition with a railway subject to the provisions of the act to regulate commerce.
The same thing was true to a limited extent with railroads in foreign countries. The Canadian Pacific Railway could make any rate it chose from the Atlantic to the Pacific, could vary that rate at pleasure, and could fix its terminal rate without any reference to intermediate points.