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price of stocks and bonds. The following is quoted from the report made in response to this resolution:

It may not be inappropriate, as bearing upon the extent to which reliance can be placed upon the figures submitted, to state the difficulties encountered in this computation. *

The chief difficulty was found in the fact that by far the larger proportion of railway securities are not subject to extensive purchase and sale, and on this account fail to disclose the market price. This report deals with over two thousand corporations, while the number whose securities were quoted on the stock market in such a manner as to enable a satisfactory computation of the value of the property which they represent, in conformity with the rule embodied in the resolution, did not exceed two hundred and twenty-five.

While market valuations of such securities as show a wide market may be of great use in checking values arrived at by other methods, or in enabling a correct interpretation of commercial conditions, the Commission does not hesitate to say, as a result of this experience, that the rule fails to justify a very great degree of confidence in the results to which it leads. If an authoritative and trustworthy valuation of railway properties is to be arrived at, the balance sheet, whether on the side of assets or of liabilities, can not be accepted as the starting point for investigation.

The third method of valuation is what may be termed the inventory method. This method recognizes that the value of railway property exists in two forms, namely, its physical plant and its ability to earn profits. Each of these forms of value is capable of extended analysis, and when analyzed each element is capable of separate appraisal. This Commission has already authorized a classification of construction accounts and requires that all betterments and improvements to the property be annually reported according to the classification.

The first step in the application of the inventory method would be an investigation and an appraisal by competent engineers of every physical element that goes to make up a railway property; the second step would be an analysis of operating accounts and a study of the history of the property, so far as this may be necessary to a just estimate of its commercial condition and business prospects. An inventory and an appraisal of the elements that make a business profitable are as necessary as an inventory of the physical elements of its plant and equipment. Should it be urged that the valuation of railway property by the inventory method would be attended with considerable expense, and that the inventory would, within a very short period, fail to represent the existing condition of the property, a partial answer at least is that the annual reports of railways to this Commission and to the State railroad commissioners if made in conformity with the established classification of “Operating expenses" and of “Construction expenses," and with the established form for the classification and report of earnings, would practically permit an annual correction of the inventory and consequently an annual declaration of values.

A large number of questions incident to the valuation of railway properties suggest themselves in addition to those which have here been mentioned. This report can not, however, enter into further detail. Sufficient has been said to indicate the importance of an authoritative determination of railway values. It is respectfully recommended that Congress take this matter under advisement with the view to such legislative action as may be deemed appropriate.

EMPLOYMENT OF SPECIAL ATTORNEYS IN CASES BEFORE COM

MISSION.

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Within the last year the Commission has prosecuted, upon its own motion and at its own expense, a much larger number of inquiries and investigations than formerly. It has also, in some instances, assigned its attorney to appear for the complainant in cases where formal complaint has been made by private shippers or public associations, such attorney acting either alone or in connection with counsel furnished by the complainant. This practice has, we understand, been the subject of some criticism, and it seems proper to state the theory upon which we have proceeded in this respect.

The act to regulate commerce was enacted for the purpose of correcting unreasonable rates and discriminating practices in the interstate transportation of freight and passengers by rail. In the very nature of things the wrongs aimed at are of trifling consequence to the individual, while of tremendous importance to the public as a whole. If a rate be extortionate the amount paid by a single shipper is usually small, but the total may amount to millions of dollars annually. Perhaps in most instances the freight rate is so small a part of the total cost of a commodity that the consumer is unconscious of the increase in rate. The middleman who pays the freight is not immediately interested in the absolute amount of that rate, provided he enjoys as favorable terms as his competitors. It results, therefore, that no one individual can ordinarily afford to sustain the burden of litigating the reasonableness of a freight rate; and this is equally true, in most instances, of discrimination between commodities or localities. To create merely a right of action in such instances and establish a court to which the aggrieved parties may apply would afford no substantial relief. The business of transportation by rail has been often designated as a quasi-public function. In many countries the public itself discharges that duty. In our country it has been left to private enterprise. If the public delegates to others this duty, it should at least provide some means whereby the reasonableness of the charges imposed and the fairness of the practices involved may be determined at the public expense.

In our view of the matter this was the leading notion in enacting the interstate commerce law and creating this Commission. The Com

mission is not a court. It is a Commission in the nature of an administrative body, invested with certain specified powers by the act which created it. In the exercise of those powers it is required at times to hear and pass upon complaints of individual shippers against interstate carriers. This, however, is but a small part of its duties, as an examination of the act itself conclusively shows. This in terms declares that “the Commission is hereby authorized and required to execute and enforce the provisions of this act," and the fullest power of inquiry into the methods and practices of interstate carriers is accorded. The 13th section, after stating who may make complaint, how such complaint shall be served upon the carrier, in what manner the complaint may be satisfied by the carrier, continues:

If such carrier shall not satisfy the complaint within the time specified, or there shall appear to be any reasonable ground for investigating said complaint, it shall be the duty of the Commission to investigate the matters complained of in such manner and by such means as it shall deem proper.

In Interstate Commerce Commission v. Brimson (154 U. S., 447), the Supreme Court of the United States examined at great length the scope and purposes of this act, saying, among other things (at p. 474):

All must recognize the fact that the full information necessary as a basis of intelligent legislation by Congress from time to time upon the subject of interstate commerce can not be obtained, nor can the rules established for the regulation of such commerce be efficiently enforced otherwise than through the instrumentality of an administrative body, representing the whole country, always watchful of the general interest, and charged with the duty not only of obtaining the required information, but of compelling by all lawful methods obedience to such rules.

In this view of the law we can not, when a complaint involving a question of general public interest is brought to our attention, merely say to the complainant: “Employ your attorney, file your complaint, produce your proofs, state your claims, and we will decide the issue.” Shippers could not and will not be to the expense of prosecuting complaints before the Commission ordinarily under those conditions, as appears both from the nature of the case and from the experience of the Commission; nor, in our view, should they be required to do so. The investigation is for the public benefit and should be conducted at the public expense. Whenever complaint is made which involves a question of general application, either as to the unreasonableness of a rate or the existence of some discriminating practice, we deem it our duty to investigate that matter without undue expense to the complainant. This investigation may be prosecuted in two ways. The Commission may begin a proceeding upon its own motion, or it may, in the language of the thirteenth section, “investigate the matters complained of in such manner and by such means as it shall deem proper.” It often happens that the most inexpensive, most effective, and the most expeditious method is to proceed in the pending case by

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appointing some one to appear at the expense of the Government in the public interest.

There is a further reason for this. The ordinary practitioner has no experience in conducting proceedings of this nature before the Commission. He does not understand the character of the questions involved, which are usually traffic propositions. The result is that, even where the ablest counsel has been employed by the complainant, the Commission finds, when it comes to a consideration of the case, that those facts which should have been brought out to warrant an intelligent disposition of the matter do not appear in the record. If our decision concerned the complainant alone it might with great propriety be said that he should take the consequences of his own laches; but where the decision is to become a precedent in numberless other instances, where its effect upon the complainant is utterly insignificant in comparison with its effect upon the general public, it will be seen that the rule can not properly be enforced. Broadly speaking, it may be said that whenever this Commission has notice by formal complaint, or otherwise, of an apparent infraction of the act to regulate commerce which ought in its opinion to be examined, and in the nature of things will not be or can not be without the assistance of the Government, we deem it our duty to proceed with as full an investigation of the matter as the time and means at our disposal will permit. After the facts have been fully developed such decision will be made or further proceedings had as seem to be warranted.

OPERATING DIVISION OF THE COMMISSION.

three years.

The administrative and supervisory work of the Commission is performed by the operating division. The duties of this division are necessarily diversified and miscellaneous in character. Reference is here made only to the more important of these duties, among which are the keeping of the formal complaint docket, which is a record of all proceedings of a formal nature that come before the Commission, including the filing and service of all papers in connection therewith. This branch of the work has shown a material increase in the past

In 1901 the number of such cases was 19, in which 19 hearings were had in 12 different cities; in 1902, 38 complaints were filed, in which 29 hearings were had in 17 different cities, while the year ending December 1 shows a still greater increase, 84 complaints having been filed during that period, in which 48 hearings were conducted in 20 cities.

The general correspondence of the Commission, which is also conducted in this division, has increased correspondingly with the complaints filed. Seven thousand two hundred and eighty-six letters were received, answered, indexed, and filed in 1901; 10,161 in 1902; and 18,167 in 1903. The number of letters sent out is considerably greater than that of the letters received, and shows an increase of more than 100 per cent in the last three

years. The act of March 3, 1901, better known as the accident law, requires all common carriers engaging in interstate commerce to make monthly reports of their train accidents, and of all accidents to their passengers or to employees while in their service and actually on duty. These monthly reports are examined, corrected, and checked as soon as they are received by the Commission, and memoranda of all errors and omissions are at once made and forwarded to the respective officers.

The reports are then separated into 33 different classes for the purpose of tabulation, and 24 of these classes are at present used in the compilation of statistics for the accident bulletin which is issued quarterly. This bulletin is distributed each quarter to more than 6,000 interested persons. Out of the total number of reports received each month an average of 125 are found to be incorrect, and in each case the attention of the officer responsible for the correctness of the report is called to the error or omission. On reports of one railway alone for one month as many as 89 corrections were necessary to make them conform to the instructions furnished by the Commission. To insure uniformity, the accident blanks for the use of the carriers are furnished by the Commission to the extent of 200,000 annually.

Another branch of the Commission's work, which has grown to a noticeable extent, is that performed in connection with the enforcement of the safety appliance law. On August 1, 1900, this law became effective and the number of men employed by the Commission in connection therewith has increased from 1 inspector of safety appliances at that date until at the present time 16 men are engaged in this service. Of this number 14 are continuously employed in examining the equipment of the various railroads, and reports are made by them to the Commission of all the cars examined and all defects found. Copies of these inspectors' reports are sent to the presidents of the railroads whose cars have been inspected, and correspondence is carried on with these officials for the purpose of calling their attention to the condition of their equipment. The proper arrangement and distribution of the field work of the inspectors and their operations are directed by this division.

For the year ending June 30, 1903, approximately 220,000 freight cars were examined, and of that number 60,000 were found to be defective. The proper tabulating of these defects for the use of the Commission's report requires great care and consumes considerable time. From the foregoing it will be seen that the execution of the safety appliance law increases materially the work of the operating division.

In addition to the duties previously enumerated is the keeping of the account of disbursements, which have more than doubled in the

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