January, 1886. The findings of this Committee1 present in a series of eighteen counts the evils attributable to the unregulated condition of the transportation system. These may be summarized under the following headings :

(1) Local rates were unjustifiably high as compared with through rates; rates at non-competitive points were unreasonably high as compared with rates at competitive points.

(2) There existed an extensive system of local and personal discriminations.

(3) The existing policy of special rates, rebates, drawbacks, concessions, and rate fluctuations favoured the larger at the expense of the smaller shipper.

(4) The shipping public was suffering from the lack of a uniform system of classification.

(5) Capitalization and bonded indebtedness were in many cases watered.

(6) There was no adequate remedy under the existing law whereby redress of grievance might be obtained.

The Bill introduced by this Committee was subject to various modifications before it was finally adopted. The House of Representatives favoured radical action; the Bill in its final form was the result of a series of compromises. This must be borne in mind in any investigation of the working of the Act. This Act differed from the earlier propositions, in that it provided for a special tribunal to see to the enforcement of the provisions of the law.

The Inter-State Commerce Commission began its work under fortunate auspices. The railroads, exhausted by various rate wars, were willing to give the new organization a trial. The name of the distinguished jurist, Hon. T. M. Cooley, who was made chairman of the Commission, gave the public confidence in its decisions from the outset.

There is no doubt that the railroad men of the United States have accepted as final the power of the Federal government to regulate railroad transportation. The possession of this power

1 The report of this Committee, usually known as the Cullom Committee, from the fact that Senator Cullom was its chairman, is vol. 2 of the Senate Reports for the 1st session of the 49th Congress.

2 See pp. 180-1 of the report.

3 Senate Bill 1093.

See an article by Mr. H. P. Robinson, editor of the Railway Age, a pro-railway journal, in the North American Review for April, 1898, "State Regulation of Railways." Mr. Robinson is of the opinion that it would be better if it were possible to place all railway regulation under the control of the Federal government. See also in connection with the matter under consideration the summary of the matters

has been so often judicially established, that it is no longer in question. The extreme individualistic attitude no longer finds such ready expression. The criticism now indulged in is directed against the details of the method of regulation, not against the principle of regulation itself. It has indeed been claimed by some railway men that the regulation of rates by the Commission has been one of the leading causes of railway receiverships. A careful observation of the course of business during the years in question will show that this position is untenable. It is now acknowledged by railroad men that the Commission has done much to better conditions.1

It will have appeared from the list of grievances contained in the report of the Cullom Committee that the rate question was central in its importance. It may at once be admitted that the Commission in dealing with this matter has had only a partial success; the reasons for this demand a detailed analysis in a later portion of this paper. The requirements with reference to publicity of rates have been rigidly enforced; this has done much to protect the shipper. The opportunity for sudden fluctuations in the open rate have been abolished. While discriminations and preferences are not so wide spread as formerly, their results are even more serious because they have undoubtedly added to the already great advantages of large corporations. This question will always be a difficult one to deal with.

While the rate question has not been settled, it is undoubted that the following results have been obtained-there is greater publicity of rates open rate wars have been lessened; and the long and short haul clause has lessened distance discriminations.

The Commission has had more success with the question of involved in the Florida Strawberry case. This will be found in the sixth report of the Inter-State Commerce Commission, p. 8.

1 The Railway Age in a series of articles on railway insolvencies and railway rates, states that "the principle of the right of the people to control the rates is for ever established." See in this connection the Passenger cases 7 Howard 416, Mobile v. Kimball 102 U.S. 691, and Brown v. Houston 114 U.S. 662.

2 An example of this point of view appears in the statement of M. M. Kirkman, Vice-President of the Chicago and North-Western Railroad. In his Railway Rates and Governmental Control, p. 56, he says that even when government aid has been granted, this does not justify governmental regulation, because the country obtains more than an equivalent.

3 See in this connection Economic Aspects of Railroad Receiverships, by H. H. Swain, pp. 75-76. See also " Recent Railroad Failures and their Lessons," by Simon Sterne, in the Forum for March, 1894.

See p. 14 of Railway Pools, their Equity and Public Value. This pamphlet is composed of a series of articles originally published in the New York Mail and Express by George R. Blanchard, who was commissioner of the now defunct Joint Traffic Association.

classification. In 1887 there existed a large number of classifications, both general and local. The complexity was such that it was difficult for a shipper to determine in what class his goods fell. Since classification is at the base of rate-making,1 a change of classification being identical with a change of rate, it was obviously essential in the interests of the shipper that there should be uniformity of classification. The provision for publicity of rates would otherwise have been of little value. The railroads had already begun to see the disadvantages of the existing system. The Commission took the lead in a new agitation for greater uniformity. As a result of this there exist at present four leading classifications. The attempt is being made to obtain one classification for the United States. It must be remembered that the Commission has no power to draw up a classification. Its power is only advisory. If a complaint arises with reference to classification, the Commission can deal with the matter only if there is a complaint concerning unreasonable rates. The Annual Convention of the Railroad Commissioners of the United States, at the meeting in Washington in 1898, recommended that Congress require the Commission to draw up a uniform classification.

In addition to the functions originally delegated to the Commission, Congress has given the further duty of enforcing the adoption by the railways, subject to its control, of automatic couplers and safety appliances. The Commission has from time to time extended the time within which the change by the railroads is to be made. Recently a further extension of six months has been granted.

The Commission has since its inception down to the end of 1898 the report for 1899 is not yet available-conducted 985 formal investigations in which points connected with the rela

1 See in this connection the opinion of the Commission as expressed in Coxe Bros. v. Lenigh Valley Railway. The portion of the opinion bearing on this subject will be found in extenso in the House Report on "Alleged Coal Combinations." H. R., vol. 1, Report No. 2,278, p. 196, 52nd Congress, 2nd session.

At present, January, 1900, there is a dispute between the shippers and the railroads concerning a new classification. This classification makes a considerable increase in the less than car-load rates in addition to increasing rates generally. The opinion of the Attorney-General was asked by the Commission as to whether this fell under the Anti-Trust Act. He advised the Commission that it did not, and that the matter would come within the Commission's jurisdiction only if it was shown that there were unreasonable rates or preferences. See opinion of AttorneyGeneral Griggs, A.P., despatch in St. Louis Republic, December 31, 1899.

The movement in this direction came in the first place from the New England States. Connecticut took the lead. See 15th Report of Massachusetts Board of Railway Commissioners, p. 20.

tionship of the railways to the public have been involved. It is not to be assumed that the formal investigations exhaust the scope of the Commission's activity. The mediatorial position occupied by the Commission has done much to prevent grievances coming to a head.1 The information concerning rates and the financial conditions of American railroads collected by the Commission has been of great value to shippers, carriers, and investors. Although the Commission has not dealt directly with the evils of stock-watering, complained of by the Cullom Committee, it has indirectly dealt with the matter. By requiring exact statistical statements from the railroads, the forms for all being the same, greater publicity has been given to railroad accounts and operations. This will in time affect the work of the State Railway Commissions, since they are, in as far as circumstances will permit, approximating their statistical methods to those of the national Commission.

The point of view of the Commission has been that it stands as an impartial tribunal between the shipper and the railroad. It has done much to educate both the shipper and the carrier. Its administration is, on the testimony of railroad men, judicious.3 The attitude of the public to the railroads is, thanks to the Commission's work, much less undiscriminating than formerly.

In turning to the other side of the shield it must be distinctly borne in mind that the act was the outcome of a compromise. Its details are by no means homogeneous; and divergent principles are contained in it. While it was intended to afford a readier procedure and a more drastic enforcement than formerly existed, the indefiniteness of the phraseology of the Act has helped to defeat its avowed purpose. Powers have been conferred without any adequate method of enforcing them. In the construction of the law the courts have been concerned with the strict letter of the law, not with questions of public policy, and consequently the defects in the law have been made more glaring, and the scope of the Commission's activity has been continuously more circumscribed. The decisions of the courts. have also narrowed the powers of the Commission in regard to matters that are stated with definiteness in the Act.

1 4 I.C.C.R.. p. 3.

2 See 10 I.C.C. R., p. 55. The statistical phase of the Commission's work has had the advantage, from the outset, of being under the direction of Professor H. C. Adams of the University of Michigan. Each road is required to make an annual report. For a time a system of monthly reports was adopted, but the system broke down.

3 See in this connection Blanchard, op. cit., P. 15.

In the matter of rate-regulation the position of the Commission has been that its function is not to interfere with competition, but to allow it to operate in the proper manner. It has laid stress upon the necessity of having rates which are both steady1 and reasonably remunerative. When the law was passed the question of extortionate rates was important. By 1893 this phase was of less importance; disputes in connection with preferences and discriminations were on the increase.3 Since this date the question of extortionate rates has again come to the front. Down to the present the Commission has directed a reduction of rates in about one-third of the cases brought before it. The rate situation at present is affording still further opportunity for complaints concerning extortionate rates. The railroads have recently increased their rates by about 25 per cent.5

The decisions of the Commission on the rate question have been subject to judicial construction. The commerce Act provides that rates shall be reasonable and just. Of course no exact criterion of what constitutes a reasonable rate can be given. The reasonableness or otherwise will be relative to circumstances. At an early date the Commission adopted the position that the only criterion was what the traffic would bear. In terms of the enabling Act the Commission claimed the right not only to exercise control over rates, and to determine what constituted a reasonable rate, but also to enforce such reasonable rate." In its ninth report the Commission stated that the power to condemn a certain rate implied the power to indicate the reasonable rate.10 In the report of the succeeding year this position is reiterated; it is claimed that when particular rates are found to be unjust, the Commission should have power, due notice

1 2 I.C.C.R., p. 22. 2 Ibid., p. 23. 37 I.C.C.R., p, 12.

411 I.C.C.R., p. 22.

They justify their action on the ground that since they have charged low rates while business was dull, they are justified in charging higher rates when business has improved. It is also urged that the increased cost of steel rails, as well as of general railroad equipment, justifies the upward movement. See in this connection an interview with T. S. Davant, general freight agent of the Norfolk and Western, in Memphis Commercial Appeal of December 28th, 1899.

6 Section 1 of the Act to Regulate Commerce.

7 In the Nebraska Maximum Rate case (Smyth v. Ames 169, U.S., 466) the court endeavoured to furnish a criterion of reasonable rates. In essence, however, the decision of the court amounts to a statement that the reasonableness of rates will be relative to circumstances. A résumé of the case will be found in 12 I.C.C.R., pp. 51-53. A discussion of the matter from a pro-railway standpoint will be found in "State Regulation of Railways," by H. P. Robinson, in North American Review for April, 1898.

8 1 I.C.C.R., pp. 36 and 96.

9 See 6 I.C.C.R., p. 12 and 7 I.C.C.R., pp. 10–11.

10 9 I.C.C.R., p. 21.

No. 38.-vOL. X