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THE POLITICAL STATUS OF RAIL-
ROAD REGULATION IN
CONGRESS.
JANUARY 20, 1909.
By JOSEPH NIMMO, Jr., LL.D.,
Statistician and Economist.
From recent events in the Senate and House of Repre-
sentatives, it is evident to the entire country that during the
present short Session of Congress there can be no legislation
in regard to the regulation of the railroads.
On January 6, by special message, the President recom-
mended further legislation “IN THE WAY OF AMENDMENTs
TO THE EXISTING LAW WHICH WILL CONFER UPON THE IN-
TERSTATE COMMERCE COMMISSION, SO FAR As CoNGRESS HAs
THE CONSTITUTIONAL POWER TO DO SO, THE AUTHORITY
CLAIMED FOR IT IN THE CASE RECENTLY DECIDED AGAINST IT
BY THE SUPREME COURT.”
The case referred to has reference to the decision of the
Supreme Court in Harriman versus The Interstate Commerce
Commission. It is safe to say that Congress will pay no
attention whatever to this recommendation.
In the last paragraph of the same message the President
".-*3.
{T}_
º
s
said:
2
“T FURTHER RECOMMEND THAT THE COMMISSION
BE EXPLICITLY EMPowerED BY ORDER To Postpone
THE APPLICATION OF ANY INCREASE OF RATES BY ANY
RAILROAD PENDING EXAMINATION BY THE SAID COM-
MISSION INTO SAID INCREASE TO SEE WIHETHER OR NOT
IT IS JUSTIFIED. THE REGULATION OF THE RAILROADs
SHOULD BE PUT AS COMPLETELY AS POSSIBLE IN THE
HANDS OF THE COMMISSION, FOR IT CAN ONLY BE REN-
DERED EFFECTIVE BY BEING PUT COMPLETELY UNIDER
THE CONTROL OF SOME BRANCH OF THE NATIONAL
EXECUTIVE, THE ACTION OF THIS BRANCH TO TAKE
EFFECT IMMEDIATELY.”
This message was read in the Senate a few minutes after
Senator Elkins had submitted an adverse report upon Senator
Fulton's bill providing for practically the same legislation
which the President recommended in the last paragraph of
his message.
The Fulton bill, thus adversely reported upon by Senator
Elkins from the Senate Committee on Interstate Commerce,
was quite similar to H. R. 22901 by Mr. Townsend, of
Michigan, which provides that the Interstate Commerce
Commission shall have the power, in its discretion, to pro-
hibit the taking effect of any advance in rates against which
any shipper or any number of shippers may file with the
Commission a protest in writing. For the present session
of Congress, and perhaps for all time, the adverse report of
the Senate Committee on Interstate Commerce will operate
as a barrier against both the Townsend bill and the Fulton
bill.
It may be remarked in this connection that the Fulton bill
and the Townsend bill are both based upon the following
recommendation in the annual report of the Interstate Com-
3
merce Commission of December 23, 1907, page 19, which is
repeated by the Commission in its annual report of January
14, 1909:
“WE THEREFORE RECOMMEND THAT WHEN AN AD-
VANCE IN RATES OR A CHANGE IN ANY REGULATION
OR PRACTICE IS ATTACKED BY COMPLAINT TO THIS
CoMMISSION, THE COMMISSION SHALL HAVE THE
POWER, IN ITS DISCRETION, AFTER NOTICE TO AND
HEARING OF THE PARTIES, TO PROHIBIT THE TAKING
EFFECT OF THE ADVANCE OR CHANGE UNTIL THE
MATTER HAS BEEN FINALLY HEARD AND DETERMINED.”
THE PERSISTENT EFFORTS OF THE COMMISSION
TO SECURE ADMINISTRATIVE SUPERVISION
AND CONTROL OF THE PHYSICAL AND FINAN-
CIAL INTERESTS OF THE RAILROADS.
The efforts of the Interstate Commerce Commission to
secure the administrative Supervision and control of the
physical and financial interests of the railroads have been
persistent, eclectic, and, to a degree, protean. In a word they
are fanciful. This is shown as follows:
In an argument addressed to the Senate Committee on
Interstate Commerce on March 16, 1892, the Commission
made the following astounding declaration: -
“THE COMMERCIAL DEVELOPMENT OF THE COUNTRY
HAS OTJTGROWN THE CAPACITY OF THE COMMON LAW
AND THE ORDINARY JUDICIAL TRIBUINALS TO ADAPT
THEMSELVES, UNDER CERTAIN CIRCUMSTANCES, TO THE
COMPLETE AND EFFECTIVE ADMINISTRATION OF JUS-
TICE.”
In its annual report for the year 1893 the Commission
declared at pages 10 and 11 that it ought to be invested not
4.
only with the power to determine rates, but also with the
power to determine the relative commercial status of the
Various towns, cities, sections, and industries of this vast
Country. This was expressed as follows:
“TO GIVE EACH COMMUNITY THE RIGHTFUL BEN-
EFIT OF LOCATION, TO KEEP DIFFERENT COMMODITIES
ON AN EQUAL FOOTING SO THAT EACH SHALL CIRCU-
LATE FREELY AND IN NATURAL VOLUME, AND TO PRE-
SCRIBE SCHEDULE RATES WHICH SHALL BE REASON-.
ABLY JUST To BOTH SHIPPER AND CARRIER Is A TASK
OF VAST MAGNITUDE AND IMPORTANCE. IN THE PER-
FORMANCE OF THE TASK LIES THE GREAT AND PERMA-
NENT WORK OF PUBLIC REGULATION.”
At page 59 of its ninth annual report, submitted Decem-
ber 2, 1895, the Commission said:
“THE GUARDIANSHIP OF THE PUBLIC INTEREST so
FAR AS INTERSTATE COMMERCE IS CONCERNED IS,
UNDER EXISTING LAW, INTRUSTED TO THIS COMMIS.
SION. * * * TO SOME ExTENT EVERY QUESTION
O]; TRANSPORTATION INVOLVES MORAL AND SOCIAL
CONSIDERATION, SO THAT A JUST RATE CANNOT BE
DETERMINIED INT).EPENDENTILY OF THE THEORY OF
SOCIAL PROGRESS. THIS ARGUMENT IS PERHAPs AS
:NDEFINITE AS IT IS COMPREHENSIVE.”
It seems to go without saying that these ideas express the
most fantastic idealism. No legislative or administrative au-
thority can ever be intrusted with the power to determine
the course of the commercial or industrial development of
this country.
These fantastic views are based upon the Commission’s
ideas as to the meaning of the terms of the original Act to
Regulate Commerce, which the Supreme Court of the United
States has declared to be without any authority of law, and
5
upon the judicial definition of the word “regulate” as pre-
scribed in the two commercial clauses of the Constitution,
namely, article 1, section 8, and article 1, section 9. The true
meaning of the constitutional word regulate was given in a
case decided by the Supreme Court on March 23, 1908 (No.
73, October term, 1907), in which the Court rendered a
unanimous decision Sustaining the refusal of a circuit court
to enforce an order of the Interstate Commerce Commission.
In this opinion rendered March 23, 1908, the Supreme Court
said:
“IT MUST BE REMEMBERED THAT RAILROADS ARE
THE PRIVATE PROPERTY OF THEIR OWNERS; THAT
WHILE, FROM THE PUBLIC CHARACTER OF THE WORK
IN which THEY ARE ENGAGED, THE PUBLIC HAS THE
POWER TO PRESCRIBE RULES FOR SECURING FAITH FUL
AND EFFICIENT SERVICE AND EQUALITY BETWEEN
SHIPPERS AND COMMUNITIES, YET, IN NO PROPER
SENSE, Is THE PUBLIC A. GENERAL MANAGER.”
The Interstate Commerce Commission assumes to be not
only “general manager,” but president of the road and board
of directors in so far as relates to the supervision and control
of the physical and financial interests of the railroads of this
country.
THE ACT TO REGULATE COMMERCE WITHOUT
ANY QUASI-JUDICIAL AMENDMENT IS AMPLY
SUFFICIENT FOR THE PURPOSES OF ADMINIS-
TRATIVE REGULATION. -
On January 16, 1905, Senator Elkins, chairman of the
Senate Committee on Interstate Commerce, introduced in
the United States Senate a resolution of inquiry, addressed
to the Interstate Commerce Commission, for information in
6
regard to what had been accomplished under the provisions
of the Act to Regulate Commerce with respect to formal and
informal complaints, hearings, decisions of the courts, ex-
orbitant rates, unreasonable rates, and rebates during the then
preceding 18 years of the work of the Commission. The
answer of the Commission, dated May 1, 1905, embraced the
following valuable data:
Number
in eighteen
years.
Total number of complaints heard by the Commis-
S1911. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,099
Total number of complaints disposed of through the
mediatorial offices of the Commission. . . . . . . . . . . . 9,054
Number of informal complaints. . . . . . . . . . . . . . . . . . 8,319
Number of formal complaints. . . . . . . . . . . . . . . . . . . . 770
Number of cases appealed to the courts. . . . . . . . . . . . 45
Number of cases sustained by the courts. . . . . . . . . . . . 8
Number of cases of unjust discrimination sustained
by the courts. . . . . . . . . . . . . . . . . . . . . . . . . . . . ... e. e. e. e. 8
Number of cases of exorbitant rates sustained by the
Courts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
From private sources of information it appears that the
total number of freight transactions on the railroads of the
United States during the eighteen years covered by the above
data amounted to approximately three thousand millions
(3,000,000,000).
The figures furnished by the Interstate Commerce Com
mission show that of the total number of complaints which
reached the Commission, amounting to 9,099, the total num
ber disposed of through the mediatorial offices of the Com
mission amounted to 9,054, or more than 99 per cent of the
total. The cases appealed by the Commission to the courts
amounted to only 45, constituting only about one-half of
one per cent of the total number of cases. Of the 45 cases
appealed to the courts by the Commission only 8, or less than
one-fifth, were sustained by the courts, all of which involved
unjust discriminations, and not a single case involved an
exorbitant rate. Of the total number of complaints made to
the Commission, 8,319, or 91 per cent., were of so simple or
unimportant a nature that they were disposed of informally
by a mere exposure of the facts in the several cases. This
work was performed mainly by subordinates in the employ
of the Commission. -
From the above data it appears that the complaints enter.
tained by the Commission amounted to about one case in
330,000 freight transactions. The chairman of the Inter-
state Commerce Commission has declared that exorbitant
rates in this country is practically an obsolete question.
This marvelous record of compliance with the require.
ments of law, constitutes an anomaly in the history of statu.
tory provisions regulative of human conduct. It is not only
highly creditable to the lawmaker and the railroad com-
panies, but it also reflects credit upon the Commission on
account of its marked success in the administration of the
law. It seemed to be an ideal method of regulation.
Besides, it utterly refutes the populistic idea that the com-
mon law, existing statutory laws, and the Ordinary judicial
tribunals are inadequate to the complete and effective admin-
istration of justice in the regulation of the railroads of the
United States.
The Commission, in its annual report on December 23,
1907, stated that the number of complaints brought to the
attention of the Commission was comparatively very small;
that a vast number of controversies have been settled by the
parties to them without resort to the Commission, and that
8
“in numerous instances a settlement is effected by the
friendly intervention of the Commission through correspond.
ence or personal interviews between the shipper and carrier
directly concerned,” a result corresponding with the reply
of the Commission to the Senate Committee on Interstate
Commerce, noted on page 21 of this paper, which proves that
the most important function of the Commission consists in
its value as an office of conciliation and arbitration.
THE UNSPEAKABILE FOLLY OF ATTEMPTING TO
INVEST THE INTERSTATE COMMERCE COMMIS-
SION OR THE DEPARTMENT OF COMMERCE AND
LABOR WITH JUDICIAL POWERS.
The foregoing official facts clearly demonstrate the folly of
attempting to invest any administrative office with judicial
powers:
In the language of the celebrated Montesquieu, “there is
no liberty if the power of judging be not separated from the
legislative and executive powers,” a sentiment which Alex-
ander Hamilton quoted with approbation in the Seventy-
eighth number of the Federalist, addressed to the “People
of the State of New York,” in advocating the adoption of
the Constitution of the United States. And yet during the
last six years certain prominent gentlemen have advocated
the delegation of judicial powers to an administrative board,
a subordinate branch of the executive power of the United
States. Both the Interstate Commerce Commission and the
Bureau of Commerce and Labor are committed to this enor-
mous political heresy.
A few years ago Senator Knox, of Pennsylvania, who is to
9
be Secretary of State under the next Administration, force.
fully and eloquently said:
“Judicial review of every substantial controversy
affecting persons and property is a right. This right
was painfully won from the tyrannies of the past, and
is established now beyond the power of any presen
tyrannies to destroy, in whatever guise they may
come, and even if masquerading in the name of the
people.”
In no particular has the wisdom of the framers of the
Constitution been more clearly vindicated by the lessons of
experience during the last one hundred and nineteen years
than in the creation of the Federal judiciary. It appears
safe to say that there is no political principle which today
is so deep seated, or so firmly fixed in the minds and con-
Sciences of the American people as the conviction that
there can be no liberty in this country, true to the high
ideals of the founders, if the power to determine the justice
and reasonableness of transactions in the course of human
interaction does not find its final expression in the adjudi-
cations of THE JUDICIAL Pow BR OF THE UNITED STATES.
Ours is a triune Government, based upon the legislative
power, the executive power, and the judicial power. The
judicial power had its origin in the political philosophy of
the Greeks, and it became the basic principle of the Roman
law. It has had a progressive development and has attained
its most exalted expression in the Constitution of the United
States, where it is made a fundamental branch of our Na-
tional Government. For reasons stated by Hamilton in the
Federalist (No. 78), it is explained that under the Constitu-
tion all judges who may be appointed by the United States
are to hold their offices during good behavior, or practically
10
for life, in order “to secure a steady, upright, and impartial
administration of the laws” and to remove them entirely
from political influences and distractions. It may be safely
Said that at no period in the history of our country has the
Federal judiciary of the country commanded a higher degree
of respect for its decrees from the legislative branch of the
Government than at the present time—even than at the time
when the Supreme Court was presided over by the renowned
John Marshall.
But the fact must be recorded that about thirty years ago a
political party styled “Populists,” led by deluded theorists as
to the relations of individuals to human society and to the
nature and constitution of human government, arose in this
country. “Masquerading in the name of the people,” they
announced a new theory of government, one of the tenets
of which was that a bureau of the administrative department
of government guided solely by its own conceptions of what
is just and reasonable may proceed under its own views of
public policy and its own conceptions of the eternal fitness
of things to determine great questions of justice and of
reasonableness.
The Populist party has practically disappeared, but certain
of its errors still live in the minds of advocates of radical
railroad regulation of both the great political parties of the
country. Regretfully it must be said that the Interstate
Commerce Commission and the Department of Commerce
and Labor still adhere to the idea that they should be invested
with judicial powers even to the extent, as recommended by
their most distinguished champion, that the Constitution of
the United States shall be amended in such manner as to
effect that object.
11
THE INTERSTATE COMMERCE COMMISSION AND
THE DEPARTMENT OF COMMERCE AND LABOR
AT WARIANCE.
The Interstate Commerce Commission, as organized by the
act of Congress approved February 4, 1887, was created as a
bureau of the Interior Department, but by the act of Con-
gress approved March 2, 1889, it was made an independent
branch of the Government, and was required to report di-,
rectly to Congress. This independent position was placed in
jeopardy by the creation of the Department of Commerce
and Labor by the act of Congress approved February 14,
1903, at which time it was proposed to place the Interstate
Commerce Commission under the new Department. This
was strenuously resisted by the Commission and its pro-
ponents in Congress. Finally their demand prevailed at the
risk of defeating the whole project to create the proposed
Department.
But there was organized in the new Department a Bureau
of Corporations, between which and the Interstate Commerce
Commission some friction and considerable jealousy has ex-
isted. Recently it has been announced that the President-
elect, Mr. Taft, has resolved to reorganize the governmental
instrumentalities for regulating interstate commerce, namely,
the Interstate Commerce Commission, the Department of
Commerce and Labor, and the Department of Justice. Hope.
fully such reorganization will avoid the strenuous objections
of the judicial power of the United States, which from the
beginning has opposed any attempt to confer judicial powers
upon any administrative board or bureau. Besides, there
is a constantly growing number of Senators and Members
of the House of Representatives who strenuously object to the
12
plan of conferring upon any administrative board or bureau
of the Government the power to supervise and direct the
conduct of the physical or financial interests of the rail-
roads of this country, believing it to be an unwarranted and
un-American interference with the feedom of commerce and
a despotic assumption of administrative power. These men,
in common with the entire Federal judiciary, stand for gov-
ernment by law and as vigorously oppose the populistic
heresy of government by any sort of administrative bureau
or commission. Their triumph will place the Interstate
Commerce Commission and the Bureau of Corporations in
the place where the Constitution of the United States has
placed them and will no longer enable them to aspire to the
powers which belong solely and entirely to the judicial power
of the United States at the threat to amend a vital part of our
national charter and to plunge this country into conten-
tions which would wreck our nationality.
THE DISASTROUS RESULTS OF DRASTIC RAIL-
ROAD LEGISLATION.
From the time when the act of June 29, 1906, commonly
known as the Hepburn act, took effect there was a marked
depreciation in the value of railroad securities. The alarm
thus created in the minds of financiers and leading railroad
officers was quite general. The prominent gentlemen who
expressed such opinions prior to March, 1907, were Mr.
James J. Hill, president of the Great Northern Railway
Company; Mr. W. W. Finley, president of the Southern
Railway Company; Mr. W. C. Brown, senior vice-president
of the New York Central Railroad System; Mr. Howard
Elliott, president of the Northern Pacific Railway Company;
13
Mr. George F. Baer, president of the Philadelphia and Read-
ing Railway Company, and Mr. J. B. Thayer, vice-president
of the Pennsylvania Railroad Company. This depreciation
in the value of railroad and other corporate securities in the
United States continued until it amounted to nearly five
thousand million dollars, an amount in excess of the total
cost of the Civil War. Financial matters steadily grew worse,
until the monetary crisis of October 16, 1907, occurred. Even
to the last the Interstate Commerce Commission and the
advocates of its policies maintained that the growth of the
American railroad system still continued. In its annual re-
port dated December 23, 1907, the Commission declared that
the car shortage “still exists,” and that the great need of the
country arises from insufficient car and track capacity. Soon
thereafter the truth in regard to railroad affairs burst upon
the country. The deficiency of cars suddenly changed to a
surplus of 206,156 idle cars on December 24, 1907, and to
323,261 idle cars on January 8, 1908. More than 100,000
cars were thrown out of employment during the two weeks
from December 24, 1907, to January 8, 1908. By the mid-
dle of April, 1908, the number of the cars was in excess of
400,000. The value of idle cars and locomotives at that time
is estimated at $475,000,000. In the month of April, 1908,
it was estimated by competent judges of labor conditions that
2,000,000 laboring men had been thrown out of employ-
ment. No public mention has been made of these facts by
either the Interstate Commerce Commission or the Bureau of
Commerce and Labor. - -
But even the foregoing statement falls far short of meas-
uring the full extent of the financial depression of 1907 and
1908, the results of which still continue. The number of
idle cars in the country decreased during the summer of
14
1908, but Mr. Arthur Hale, chairman of the Committee on
Car Efficiency at Chicago, reports that the cars out of service
increased from 110,928 on November 28, 1908, to 333,019
on January 6, 1909. -
Pending the discussion in Congress over the so-called Hep-
burn bill, which was enacted into law on June 29, 1906,
political campaigns were waged in many States upon the
issue of a general assault upon the integrity of railroad prop-
erty and management. There followed a wild raid in which
over one hundred and seventy acts more or less confiscatory
of railroad property were enacted by the legislatures of more
than a score of States. The consequences to the transporta-
tion system, to railroad construction, and through these to
the price of farm products and to the success of every form
of business have already made themselves felt, and the coun-
try shivered under the blow. In one instance a circuit court
judge of the United States was impelled to characterize the
rate law in a certain State as “almost a disgrace to the civil-
ization of the age.”
Oppressive railroad legislation in Congress and in the
States affected the manufacturing, mining, and general in-
dustrial interests of the country much more seriously than
the agricultural interests. The financial interests of the
country also suffered severely. In the language of that as-
tute financier and railroad builder, Mr. James J. Hill:
“PERHAPS THE CONTROLLING FACTOR OF THE SITU-
ATION IN THIS COUNTRY IS THE SHOCK GIVEN TO CON-
FIDENCE IN our INVESTMENTS ALL OVER THE WORLD,
AND THE CONSEQUENT LIMITATION OF CREDIT. UPON
CREDIT ALL MODERN BUSINESS IS BUILT; AND EVERY
PANIC HAS STRUCK. ITS HEAVIEST BILOWS BY DESTROY-
ING THE VALUE AND SHRINRING THE VOILUME OF THAT
.15
MEDIUM BY MEANS OF WIFIICH MORE THAN NINE-
TENTHIS OF ALL OUR BUSINESS IS TRANSACTED. CREDIT
IS THE ATMOSPHERE WEITCH INFLATES THE LUNGS OF
BUSINESS; AND WHEN IT IS GREATLY LESSENED, BUSI-
NESS MUST BE REDUCED IN PROPORTION OR BE QUIETLY
SMOTHERED.”
The truth of this statement is recognized by every practical
student of finance.
None of these disastrous results above enumerated have
been reported upon by the Interstate Commerce Commission
or the Department of Commerce and Labor.
The destruction of credit in railroad securities by legisla-
tion, both State and national, was the primary cause of such
financial and commercial disasters. The main fault of such
vicious legislation consisted in the fact that it attempted in
various ways to substitute administrative Supervision and
control of the physical and financial interests of the railroads
and other public utilities for judicial control of the same
under judiciously devised statutory provisions applicable
thereto.
Mr. Justice Brewer has significantly declared that “legisla-
tion may be turning everything over to commissions, but the
courts have not yet been heard from.” He added, in the
same connection, “when the matter of legislation by com-
mission gets to the courts, they will be found upholding the
Constitution with the same fidelity in which it has been held
since the days of John Marshall.”
Since the Constitution of the United States became the
supreme law of the land, in the year 1789, the judicial power
of this nation has been the protector of life, liberty, and
property to every citizen. During the last two years dema-
j6
gogic doctrines and academic theories, not based upon any
political experiences, have induced hostile legislation, which
has caused a loss of confidence and a consequent depreciation
of values in this country amounting to more than the cost
of the Civil War. The bane of such legislation has been
its denial of the time-honored right of the judiciary to deter-
mine finally what is just and reasonable in human transac-
tions. The faith of the commercial world is based primarily
upon the protection which the courts extend to property.
Any doubt as to the efficiency of that power would not fail to
invite fresh and overwhelming disaster. The idea of trans-
ferring that sacred trust from the judiciary to an adminis-
trative board shocks the moral sense of the civilized globe
and destroys our credit at home and abroad. The crisis of
October, 1907, was inevitable, and it came perhaps none too
soon. That is evident to every careful student of political
forces. -
The Supreme Court of the United States has steadfastly
maintained the inviolability of this doctrine. -
In the recent case of Kansas v. Colorado the Supreme
Court of the United States declared by a unanimous vote that
section 1 of article III of the Constitution granted to the ju-
diciary “the entire judicial power of the nation.”
Many years ago the Supreme Court of the United States de-
clared that the Interstate Commerce Commission is not a
court, and cannot be invested with any judicial function,
among the reasons assigned being the elementary fact that no
administrative body is competent to exercise judicial powers
which at the same time is charged with the duties of de-
tective, witness, party complainant, and judge in the same
proceeding.
17
The Supreme Court has also declared in Interstate Com-
merce v. Brimson, 154 U. S., 485, that “without the aid of
judicial process of some kind, the regulations that Con gress
may establish in respect to interstate commerce cannot be
adequately or efficiently enforced.”
A constitutional limitation upon the power to regulate
railroads was clearly defined by the Supreme Court of the
United States in the year 1907. For the sake of brevity, I
quote the syllabus of that case as follows:
“The public power to regulate railroads and the
private right of ownership of such property coexist,
and do not one destroy the other; and when the
power to regulate is so arbitrarily exercised as to in-
fringe the rights of ownership, the exertion is void
because repugnant to the due process and equal pro-
tection clauses of the Fourteenth Amendment”
(White, J., 206 U. S., 1, 25, 26).
It is a well-established fact of political history that admin-
istrative boards are prone to exaggerate the authority in-
trusted to them under the general terms of their organiza-
tion. It appears to be their common infirmity to claim by
assumed “necessary implication of law” what is completely
outside of their delegated functions. The Supreme Court
of the United States noted a striking instance of this sort on
the part of the Interstate Commerce Commission Maximum
Rate Case (167 U. S., 479). -
My objection is not to legitimate and beneficent govern-
mental regulation, but to governmental regulation run mad.
18
THE ANNUAL REPORT OF THE INTERSTATE COM-
MERCE COMMISSION OF JANUARY 11, 1909.
By a manifest euphemism this report Ostensibly relates to
“THE TEMPORARY FINANCIAL DEPRESSION FROM WIHICH THIS
COUNTRY IS NOW EMERGING” instead of to “THE AWFUL FI-
NANCIAL AND COMMERCIAL DISASTER WIHICH THIS COUNTRY
HAS SUFFERED DURING THE YEARS 1907, 1908, and 1909, IN
CONSEQUENCE OF THE ATTEMPT TO SUBSTITUTE ADMINISTRA-
TIVE DISCRETION FOR JUDICIAL AUTHORITY.”
This report of the Commission is upon its face misleading.
It is for the year ended June 30, 1907. During the first six
months of the year the traffic was mainly in excess of the car
capacity, but during the last six months there were many
idle cars, amounting at one time to over 400,000. The gross
earnings for the year ended June 30, 1908, was reported by
the Commission as being only $164,464,941 less than during
the year ended June 30, 1907, whereas, according to the
Commercial and Financial Chronicle, an accepted authority,
the depression in railroad earnings during the calendar year
1908, as compared with the earnings during the calendar
year 1907, amounted to $275,000,000.
The Commission makes this astounding statement: “Per-
haps the most serious practical question concerns the right
of the courts to review the orders of the Commission.” But
a much more serious question arises from the assumption of
the Commission that it has the power to deny the right of
the courts to review the orders of the Commission. This
latter assumption has been the main cause of the financial
troubles of the years 1907, 1908, and 1909.
The Commission renews its recommendation of one year
ago that it be given authority to restrain the advance of a
rate pending the proceeding before it to determine the rea-
sonableness of such advance; but only five days before its
report was issued the Senate committee had submitted an
adverse report on this very proposition. The present recom-
mendation of the Commission contravenes the scope of regu-
lation in the original Act to Regulate Commerce, namely,
that the Commission may hear complaints and report upon
them, “and such findings shall, in all judicial proceedings,
be deemed prima facie evidence as to each and every fact
found.” -
The presumption appears to be fixed in the minds of Con-
gress that the objection on the part of the Commission to
reviews of its orders by the courts was the main cause of the
depreciation in the value of railroad securities and the con-
Sequent commercial and financial crisis which ensued.
In Speaking of “preliminary injunctions to annul orders
of the Commission,” of which several are before the Supreme
Court of the United States for argument, the Commission
says: -
“It is believed that the decisions of that court in
these cases must go far toward determining the effect-
iveness of the present act; and indeed the possibility
of any effective railway legislation UNDER THE PRES-
ENT CONSTITUTION OF THE UNITED STATES.*
* In his annual message to Congress submitted December 2, 1902,
President Roosevelt suggested the posible need of a constitutional
amendment “so as to secure beyond peradventure the power sought to
regulate the interstate trade of the country.”
Again, in his annual message to Congress On December 5, 1905, Pres-
ident Roosevelt said that in order to control great corporations “such
Commission (the Interstate Commerce Commission) should be made
unequivocally administrative,” embracing the power to establish both
maximum and minimum rates. In the same COnnection President
Roosevelt stated that in his belief it might become necessary “to
Confer in fullest form such power upon the national Government by a
proper amendment to the Constitution,” i. e., by an amendment to the
power of Congress to regulate commerce with foreign nations and
among the States.
20
For several years the Interstate Commerce Commission
has by direct statement or by inference declared that the
Constitution of the United States ought to be amended in
regard to the provision which gives to Congress the power to
regulate commerce with foreign nations and among the
States.
This provision of the Constitution is held to be most sacred,
and the bare mention of the propriety of abolishing it Sug-
gests the necessity of abolishing the present Interstate Com-
merce Commission and the present Bureau of Corporations,
which holds to the same view, and in lieu thereof creating a
new Commission pledged to the views which characterized the
original “Act to Regulate Commerce” reported by Senator
Cullom of Illinois, together with the Elkins law of February
19, 1903, and other wholesome and American provisions for
regulating the railroads and the commerce of the United
States.
The Commission is also responsible for the recommenda-
tion of its statistician and accountant, Professor Henry C.
Adams, in favor of administrative Supervision as practiced
in Germany, instead of judicial supervision under the au-
thority of the judicial power of the United States. This was
officially endorsed by the Commission on pages 145 and 146
of its annual report dated December 23, 1907.
HOPEFUL SIGNS OF PROMISE FOR THE FUTURE.
During the last two years of assaults upon the railroad
transportation interest of the country railroad presidents and
other executive officers of the railroad corporations of the
country have been led to explain to shippers and the general
public many of the vexatious commercial and economic
21
problems with which they have to contend in the practice
of their difficult profession. Thus a vast amount of useful,
practical information has been disseminated among the
people of the country generally in regard to transportation
by rail. Among the gentlemen who have been engaged in
this evangelistic Sort of work at the South there may be men-
tioned, hopefully without invidious distinction, the names of
Mr. W. W. Finley, president of the Southern Railway, and
Mr. L. E. Johnson, president of the Norfolk and Western
Railway Company.
It is now quite certain that during the remainder of the
present session of Congress there will be no legislation in the
nature of railroad regulation such as that which during the
last two years of turmoil and financial disaster has character-
ized the attempted policy of administrative Supervision and
control of the physical and financial interests of the railroads.
Hopefully, and in all probability, during the incoming ad-
ministration the policy will be inaugurated and firmly estab-
lished of government by law, which will for all time Super-
sede government by any sort of administrative bureau or
commission. The proposition of President-elect Taft to re-
organize the instrumentalities for regulating the interstate
commerce of the country gives promise of this much-needed
reform.
Jose.P.H. NIMMO, JR.
1831 F STREET N. W.,
WASHINGTON, D.C., January, 1909.
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