UC-NRLF LIBRARY OF THE UNIVERSITY OF CALIFORNIA. I FT OF Class REPORTS UPON RAILWAY COMMISSIONS RAILWAY KATE GRIEVANCES AND REGULATIVE LEGISLATION BY Professor S. J. Mel, E AN, Ph.D., M.A. OTTAWA PRINTED BY 8. E. DAVVSON, PRINTER TO THE KING'S MOST KXCELLENT MAJESTY 1902 No. 20 ! S)0ii I. Pi-icf. 10 c?.nt*. 1-2 EDWARD VII. SESSIONAL PAPER No. 20a A. 1902 REPORTS UPON BAILWAY COMMISSIONS RAILWAY RATE GRIEVANCES AND Professor S. J. McLEAN, Ph.D., M.A. OTTAWA PRINTED BY S. E. DAWSON, PRINTER TO THE KING'S MOST EXCELLENT MAJESTY 1902 [No. 20o1902]. . |M 1-2 EDWARD VII. SESSIONAL PAPER No. 20a A. 1902 RAILWAY COMMISSIONS RAILWAY RATE GRIEVANCES AND REGULATIVE LEGISLATION BY Professor S. J. McLELAJST, Ph.r)., M.^. OTTAWA, ONT., February 10, 1899. Honourable A. G. BLAIR, Ottawa, Canada. g IR) In accordance with your instructions I beg to submit a Report upon Railway Commissions as applicable to Canada, and showing the regulative policy of other coun- tries. I have the honour to be, sir, Your obedient servant, s. j. MCLEAN. THE GENERAL ARGUMENT FOR RAILWAY COMMISSIONS. In the earlier days of railway construction, the importance of rapid development was such that the question of regulation and control was given scant attention. When attention was devoted to such matters it was tacitly, and in many cases explicitly, assumed that whatever difficulties might arise would be settled by competitive forces. The prices of commodities in general were settled by the operation of the law of supply and demand. The price of railway service would be determined in similar manner. The competition existing prevented prices of commodities in general being exorbitant, the same force it was assumed would exercise a corrective power in regard to the charges for railroad service. There were few, it is true, who saw at an early time, that transportation problems differed from trade problems, and that the forces which controlled ordinary trade were not present in full force in railroad transportation. Such were, for example, Hon. Mr. Morrison, member in the Imperial Parliament for Inverness, and Mr. Stevenson, the engineer who, in uttering his famous statement ' where combination is possible compe- tition is impossible,' drew attention to some of the limitations attending the application of competitive principles to the transportation question. But to the majority this meant nothing ; to the majority there was no transportation problem. 4 RA IL WA YS A ND CA NA LS 1-2 EDWARD VII., A. 1902 The earlier point of view was that the railroad was under the domination of compe- titive forces. It was thought that there would be effective competition of different individuals on the roadbed of the railway company, thereby guaranteeing the public interests. The absolute necessity of unified control was not appreciated. The general point of view was that competition would exist on the railway as it did on the canal system. Even when it was seen that this method of control was not effective, the belief in competition was by no means given up. It was hoped that by means of competing lines the regulation of rates would be obtained. The crucial point in all discussions concerning railway regulations is the rate ques- tion. The extreme individualist point of view is that railway rates should be allowed to adjust themselves through the exercise of competitive forces in the same way as the prices of commodities in general. The parallelism between the merchant and the railroad company is inexact. Between merchants there is more effective competition than between railroads. The large amount of capital demanded by railroad construction, added to the question of situation, makes the railroad an economic monopoly. The prices charged under such conditions will be on a monopoly, not on a competitive basis. The presence of different roads to some extent offsets this ; but even here the competition is less effective than in ordinary business. There cannot be the same free play of supply and demand. The opportunities for choice between carriers by the shipper are much more limited than are the opportunities for choice by the buyer in ordinary business. The demand is relatively more urgent the supply in proportion to the demand is less. It may be urged that the effective way to control rates is through the establishing of competing lines. To a certain extent this is effective. But the limitations must be borne in mind. The competition is not of the same nature as in ordinary business. In railroading it is often the weaker road which forces upon the stronger road ruinous competition. The weaker road, when in a bankrupt condition, has nothing to lose and everything to gain by slashing rates. The restraining influence of solvency is not present, In fairness to railroads which are solvent, regulation of rates through such competition should not be relied upon. Such competition is not for the best interests of the public ; through the fluctuations in rates it renders business fluctuating. Again, such competition cannot be relied upon as a constant regulator. The stronger road may be forced, in self- defence, to obtain control of the weaker and bankrupt competitor. Such was the case in regard to the relation between the New York Central and the West Shore. Even were .the competing lines equally solvent the dependence upon continuing effective com- petition is futile. Each road occupies a quasi-monopolistic position. Although com- petition may exist for a time, yet in the long run the roads will find it more convenient to enter into agreements, formal or informal. The rate wars are not permanent. Recent experience in Canada in connection with the relations between the Grand Trunk and the Canadian Pacific are in point in this connection. The evidence presented to the English Select Committee on railways in 1882 showed that there was no effective competition between roads. They had found it in their interest to enter into agreements (Kept. Evidence Qns. 2,964 & 3,896.) The argument is often made that the railroad's interests are the interests of the people it serves and therefore the road may always be looked to to adopt the policy which is best for all. Theoretically this essential identity of interest does exist ; in practice some limitation must be made. A railway may consider it advantageous to build up one community or one individual at the expense of another. What the rail- way wants is traffic. If it can obtain this in bulk amount from one community or from one individual instead of from a number of scattered communities or individuals, then its interests are better advanced because it obtains the traffic and at the same time the cost of management and handling is lessened ; the net profit is under such conditions greater. The argument as to unity of interests as a preventive of evils has to face the exis- tence of preferences, discriminations, rebates, and the evil effects of uncontrolled com- petitive rates. The preferences, discriminations, and rebates are the means whereby the road is enabled to centralize its business and enable it to be more easily handled. As business is organized to-day through rates must be lower proportionately than local rates. KKi'OKT ON RAILWA Y COMMISSIONS 5 SESSIONAL PAPER No. 20a Otherwise the business would have to be local. The through rate cannot bear the rate the local business can, without substantial harm being done. This, however, is no argument in favour of the position that the local traffic should be unduly discriminated against on the ground that one rate is competitive, while the other is not. Such a rate is required as will best suit the interests of both. The interests of one species of traffic cannot be regarded as the dominant factor. This is a matter not indifferent to the public. The assumed essential unity fails here as in other respects. If the uncontrolled operation of competitive principles based on self interest can- not settle the question, cannot indeed operate in their entirety, some other method must apply. The matter of regulation has been forced to the front in recent years. ' No general question of government policy occupies at this time so prominent a place in the thoughts of the people as that of controlling the steady growth of and extending in- fluence of, corporate power and of regulating its relations to the public.' (Rpt. of Cul- lom Committee of 1885-86, p. 3.) The opposition to the exercise of government regulation over railroad transportation proceeds on the assumption that railroads are private business organizations, and that such regulation is a violation of private rights. This position is fallacious. It must be remembered that the railway occupies a dual position ; it is not only a body organized for gain, but also a corporation occupying a quasi-public position and performing public functions. The distinction was asserted in the control of the government over common carriers. The provisions of the common law do not adequately meet the problems pre- sented by the newer transportation system ; it is necessary to supplement them and pro- vide a more effective means of enforcement. The transportation problem is part of the life of the nation. Its management in harmony with the needs of the people is urgent. What the railroad wants is the greatest profit ; what the country wants is the greatest good for the country and the most uniform development of its resources. For a further example bearing on the point that these interests are not always in essential harmony the following may be cited. The entire net increase of population, in the period 1870- 1890, in Illinois, Wisconsin, Iowa and Minnesota, except in the new section, was in cities and towns possessing competitive rates ; all those having non-competitive rates decreased in population. (Stickney, The Railway Problem, p. 62.) The regulative legislation which has been passed in various countries, shows that the unqualified belief in uncontrolled competition as a regulative principle has passed away. Regulation of some sort must exist. In some countries it is exercised through the State owning the railways. In other countries it has been applied through special organizations. The question of regulative control can be met in one of two ways, State ownership or Commission regulation. There is no middle course. The attempt to regulate such matter through politically organized bodies has not succeeded. The regulation is essentially an administrative function ; an intermingling of this with political duties leads to lack of harmony and efficiency. The regulation of the railroad question, in the public interest, demands technical training. It demands all the time of those engaged in such matters. They should be concerned, not only with the settlement of grievances when they arise, but also with an attempt to prevent grievances. The duties of political officials prevent the exercise of such functions. Under a system of private ownership and management of railways, the only efficient method of controlling them in the public interest is through entrusting such matter to an efficiently organized Railway Commission. REGULATIVE POLICY OF VARIOUS COUNTRIES. All the .civilized countries of the world recognize the necessity of some form of regulative control. On the continent of Europe the question is divided between government ownership and private ownership. Where the former exists the whole matter is manifestly subject to regulation. Where private ownership exists there is also control, in France the initiative in rates comes from the company ; the govern- ment has a veto upon these rates. ' All tariffs are submitted to the ministry of public works and their acceptance or rejection is determined by a committee, composed of 6 RAILWAYS AND CANALS 1-2 EDWARD Vil., A. 1902 public and railway officials sitting under the presidency of the minister.' No tariff can be established or changed without such consent. Changes in the tariff must be published for one month before they go into effect. The minister may also conditionally assent to a tariff and may also withdraw such conditional assent at any time he sees tit. Through rates to meet international competition may be established on twenty-four hours' notice both to the minister and to the public. The minister has the right to forbid the intro- duction of such rates. Established international rates may be lowered, if five days' notice has been given to the minister and no objection has been made by him within that time. An increase in such rate requires three months' notice. In Italy, changes from the rates in existence at the time the roads were leased to private companies are subject to adoption or rejection by Parliament. Powers of reduc- tion of tariff rates are given to the government provided such reduction does not effect more than one-half of one per cent of the net income. In Austria the private roads are under rigorous government control. The same holds true in Holland. In other countries of the continent government ownership is favoured. Their ex- perience is not germane to the discussion. In Australia the policy of government ownership has been given a thorough-going application. Over (120,000,000 have been expended in the construction of about 12,000 miles of railway. There are only about 500 miles of privately owned railway in Australia. In Asia, Africa and South America, political exigencies have led to the construc- tion of railroads by the State, or under close relations between the railroad and the State. In Brazil, there has been an attempt for the last two years to dispose of the State railways to private companies. The precedents which bear most on the problem of regulation in Canada are to be found in the experience of England and of the United States. The extent to which railway development has been carried in both of these countries, the commercial vigour of these nations render their experience most valuable. The policy favoured has been one of private construction and management. Both of these countries have recognized the necessity of regulation. Both have recognized the quasi-public nature of railroads and of their services, and both have placed the regulative control in the hands of tribunals specially organized for this purpose. ENGLISH POLICY AND EXPERIENCE. Earlier methods of regulation. In one of the earliest railroad charters granted in England, that of the Liverpool and Manchester railway, (7 Geo. IV., cap. 49), maxima were indicated and it was further provided that when the dividend fell below 10 per cent the rates might be raised; when the dividend exceeded 10 per cent the rates were to be lowered one-twentieth. As time went on a more detailed policy appeared. In 1844 the House of Commons resolved that there should be inserted in all railway bills thereafter a clause stating that the railway was subject to any general law which might be passed. In 1845 preferences were forbidden (7 and 8 Viet., cap. 20, sect. 90). From 1845 onward people commenced to appreciate the existence of a railway prob- lem. In 1840 a parliamentary committee had reported that competition of carriers on individual lines, these carriers furnishing their own cars and locomotives and paying a toll for the use of the road, which had been relied upon as a regulator of rates, was in- effectual. This committee, of which Sir Robert Peel was a member, contented itself with expressing the belief ' that an enlightened view of their own interests would always- compel managers of railroads to have due regard to the general advantage of the public.' In 1844 a committee of which Mr. Gladstone was chairman, reported in favour of ulti- mate acquisition of the railways by the government. It was considered that this was the only effective means of regulation. As early as 1840, feeling in favour of some form of a Railway Commission had presented itself. In this year powers, similar to those now possessed by the Massachusetts Railway Commission, were conferred upon the Board of Trade. These were further de- tlK/'ORT ON RAILWAY COMMISSIONS 7 SESSIONAL PAPER No. 20a fined in 1842. There was not sufficient power given and so this organization was in- effective. In 1844 another commission which w^s to make reports to parliament on applications for railroad charters was appointed.. The board, thus established, was abolished in a year. 'It died of too much work and too little pay.' In 1846 another commission was appointed. In 1851 its powers and duties were transferred to the Board of Trade. The rule against unreasonable preferences, which had been set forth in the Railway Clauses Consolidation Act of 1845, was reiterated in the Act of July 10, 1854, 'an Act for the better regulation of the tariff on railways and canals.' ' And it was further pro- vided that in the case of connecting lines traffic should be handled and forwarded with- out unreasonable delay, and that no obstructions were to be placed in the way of con- tinuous lines of communication. It was provided that individuals aggrieved through any 'violation of the provisions of the Act by a railroad might bring suit' in England to a Court of Common Pleas, in Ireland to a Superior Court, and in Scotland to the Court of Session or to any judge of such court. If the Board of Trade issued a certificate to the Attorney-General in Ireland or England, or to the Lord Advocate in Scotland, alleging a violation of the provisions of the Act it should be lawful for either of these officials to apply to the courts already mentioned to try and determine the matter. If the court found that the provisions of the Act had been contravened, then a writ of injunction might be issued ; a penalty of 200 pounds per day was attached to a failure to obey the injunction. This Act established two leading principles of railroad regulation ; (1) every company should be compelled to afford the public the full advantages of the convenient interchange of traffic from one line to another ; (2) companies were under obligations to, and should, make equal rates to all under the same circumstances. In terms of the recommendation of 1844 which provided for the acquisition by the State, of the railways, on defined terms, at the end of twenty-one years, 1865 should have been the year for such purchase. A royal commission which was appointed in that year reported against the advisability of exercising the reserved rights of the Govern- ment, in this respect ; it made no recommendations of importance in connection with the matter of regulation. The movement for a commission with sufficient powers to handle railway matters had meanwhile been gaining ground. When the Act of 1854, Cardwell's Act, had been drafted it was intended that the questions which arose under it should be decided by the Board of Trade the powers of the former 'Commission having been transferred to it. As has been seen the jurisdiction was in reality conferred upon the court of Common Pleas and upon the courts of similar rank in Ireland and Scotland. This threw on the courts the adjudication of many questions of a technical railroad nature ; and the courts showed themselves unwilling to grapple with any except the more distinctly legal ques- tions that arose under Cardwell's Act. A committee appointed by Parliament, and which investigated railway conditions during 1865-67, saw this difficulty but made no conclusive recommendation. A committee appointed in 1872 reported that the only way to meet the existing difficulties was by appointing a railway commission with adequate posters. The more important findings of this committee bearing on the question of regulation are. as follows : (1) That a system of equal mileage rates or charges in proportion to distance was inexpedient (a) it would prevent railway companies lowering their fares and rates, so as to compete with traffic by sea or by canal or by a shorter or otherwise cheaper rail- way, and would thus deprive the public of the benefit of competition, and the company of a legitimate source of profit. (6) It would prevent railway companies making perfectly fair arrangements for carrying at a lower rate than usual goods brought in larger or constant quantities, or for carrying for long distances at a lower rate than for a short distance, (c) It would compel a company to carry for the same rate over a line which has been very expensive in construction, or which, from gradients or otherwise, is very expensive in working, at the same rate at which it carries over less expensive lines. (2) That the fixing of legal rates based upon the actual cost of the railways and calculated to yield a fair return upon such cost was impracticable. 8 RA IL WA YS A ND CA NA LS 1-2 EDWARD VII., A. 1902 (3) That the plan of maximum charges had been a failure and that such rates afforded no real protection to the public, since they were always fixed so high that sooner or later it became the interest of the companies to carry at lower rates. (4) That there should be publicity of rates and tolls. (5) That a new tribunal was needed to take supervision of the transportation interests of the Kingdom, and with authority to enforce the laws relating to railways and canals, to hear complaints and adjust differences, and to advise Parliament upon questions of railway legislation. THE RAILWAY COMMISSION. COMMISSION LEGISLATION. The Regulation of Railways Act, 1873, provided for the appointment of a railway commission. The provisions of this Act are so important that the following summary of the provisions bearing directly on the question is given. Provision was made for the appointment of three commissioners and not more than two assistant commissioners. The commissioners were to receive a salary of 3,000 per annum. One of the com- missioners was to be experienced in the railway business. The commissioners were not to be in any way interested in any railway or canal company, financially or otherwise. If they held investments in such companies at the time of their appointment they were to dispose of them within three months; and if during their tenure of office any such securities came to them by bequest or otherwise, they were to dispose of them within three months. The commissioners were to devote all their time to the duties of the office. Complaints arising under the Act of 1854 and subsequent Acts, with reference to matters of rates and equal facilities, might come before the Commission either upon the initiative of the party aggrieved or upon a certificate of the Board of Trade alleging that there had been a violation of the Acts in question, or upon complaint of some person authorized to institute proceedings by the Board of Trade. In hearing complaints and in enforcing decisions the Commission was to have the power conferred upon the courts and judges, in regard to such matters, under the Act of 1854, and of issuing similar writs and orders. Except, in so far as the courts were called upon to enforce the decisions of the Commission, they were to cease to exercise the jurisdiction conferred upon them by the Act of 1854. When a complaint was instituted against a railway or canal company the Commission might before instituting formal proceedings, communicate with such company so that it might make a rejoinder. Where under any general or special Act provision was made for the reference to arbitration of disputes between railway companies or between canal companies, or between a railway and a canal company, the matter at the instance of one of the parties to the complaint, and with the consent of the commissioners was to be brought before the Commission for determination. In the case of differences between suh companies and other parties, the application of the parties as well as the consent of the commis- sioners was essential. Power was given to hear and determine matters arising in connection with terminal charges, and to decide what constituted a reasonable terminal charge. Decisions under this head were to be binding on all courts and in all legal proceedings. The powers in respect to approval of working agreements between railway companies, and of the exercise by railway companies of their powers in relation to steam vessels, which had been conferred upon the Board of Trade by the Railway Clauses Act of 1863 were now transferred to the Commission. Each railway and each canal company was required to keep, in a book accessible to the public, at each of its stations, all rates charged from that station, including any special rates. The commissioners on the application of any interested party were empowered to direct such company to itemize the charges making up such rates. Violations of this provision are subject to a fine of 5 per day. REPORT OX RAILWAY COMMISSIONS 9 SESSIONAL PAPER No. 20a Decisions or orders of the commissioners might be made an order or a rule of any Superior Court and enforced, either by injunction as provided for urlder the Act of 1854 or in the same manner as any rule or order of such court. Complaints might be heard by the Commission either in public or in private; on application of a party to the complaint the matter was to be heard in public. On questions of fact their decisions were to be final ; on questions of law it was subject to appeal. The Commissioners were to determine which were questions of law and which were questions of fact. A yearly report was to be made to Parliament. It was to be laid before both Houses of Parliament within fourteen days after the report was made, if Parliament \vas then in session, if not then within fourteen days after the next meeting of Parliament. In lli<' ('itnii)i.i.^ioit. The Commission so appointed was in the nature of an experiment. It was appointed for five years. At the expiration of its term in 1878, it was continued from year to year. It was found that the Commission was not working as satisfactorily as had been anticipated, and so its working, as well as the rates charged by railways and canals, was investigated in 1882 by a special committee of the House of Commons. This committee found after a careful investigation that the Commission had been hindered in its work by its temporary character. The Commission notwithstanding this had been of public advantage in that it not only caused justice to be done more speedily in those cases which came before it, but also prevented differences from arising between railway companies and the public. An influence had thus been exerted much greater than that which pertained to its ' hearing and determining ' function. Recommendations of the committee. That the Commission be made a court of record. That the powers and jurisdiction of the Commission be extended to cover : (. 20a if it is then sitting, within three weeks after they are made ; if Parliament is not sitting then they are to be submitted within three weeks after the beginning of the next session. The auxiliary officers necessary to the carrying out of the process of the Commission are appointed by the Lord Chancellor, the Treasury consenting to the number. The salaries of such officers are determined by the Treasury. All the expenses of the Com- mission are to be met out of money provided by Parliament. The matter of classification and maximum rates is in the hands of the Board of Trade. Every railway company is required to submit to the Board of Trade within six months after the passage of the Act although a longer time may be allowed by the Board a revised classification of merchandise and a revised schedule of maximum rates, clearly indicating in the latter the terminal charge. Such terminal charge is to be reasonable. An attempt is to be made to obtain an agreement if possible. If an agree- ment cannot be arrived at, the Board itself may act in the matter. If the railway does submit a satisfactory arrangement this is to be put in the form of legislation applicable to the particular railway. A similar method is pursued where the arrangement is effected by the Board itself, with this exception, that any petition against such arrange- ment presented to Parliament, while such bill is pending, may be referred to a select committee or to a joint committee. Any person, by giving not less than 21 days' notice to the railway company, may apply to the Board of Trade to have such classification or schedule amended by the addition to it of any articles, matters or things. Every determination of the Board of Trade in this regard is to be published in the London Gazette and take effect from publication. The Board may from time to time make and rescind rules with reference to the form of classification and schedule. The provisions as to submitting these to Parliament are identical with those regarding the submitting of the rules of the Commission. Through Rates and Routes. In case of dispute about through rates and routes the railway company or person desiring to obtain such through rate or route, shall first indicate to the forwarding company the route and rate proposed ; if within ten days an agreement has not been arrived at between the company or person and the forwarding company, then the matter shall come before the Commission for decision. The commis- sioners are to consider whether the proposed route and rate are reasonable. When the railway companies do not agree as to the apportionment of the through rate it is to be apportioned by the Commission. In apportioning through rates the commissioners are to consider all circumstances of the case including special expenses of construction, or maintenance, or working of route, or any special charges to which the company may have been put. It shall not be lawful for the commissioners in any case to compel any company to accept lower mileage rates than the mileage rates which such company may for the time being legally be charging for like traffic carried by a like mode of transit; or any other line of communication between the same points, being the points of depar- ture and arrival of the through route. When part of the transportation is effected by steam vessels operating in connection with the railway (or canal) then the power con- ferred covers such case also. If a company refuses, or neglects to accept the decision of the Commission as to rates, routes or apportionment, and there is no reason for such refusal or neglect, the Commission may award such costs to the applicants as they see fit. The Commission may decide that a proposed through rate is just and reasonable, although the portion of the through rate allotted to the forwarding company may be less than the maximum rate it is entitled to charge. When preferences are charged the burden of proving that such preferences are not unreasonable is on the railway company. In deciding whether the preference is undue the Commission shall consider whether it is requisite in the public interest, in order to obtain the traffic in respect of which it is made ; but no difference in rates or treatment of home or foreign merchandise is to be sanctioned. The ' long and short haul ' clause of the Interstate Commerce Act appears. It is not absolute as in the American Act. The commissioners have power to direct that 110 higher rate shall be charged for similar services in respect of like descriptions of and like quantities of traffic for a shorter than for a greater distance on the same line of rail- way. It differs from the American Act in that it does not state that the lesser distance- 12 RA LL WA YS A XD CA NA LS 1-2 EDWARD -/I!., A. 1902 Is to be included in the greater. In this respect it resembles the ' long and short haul ' clause of the Massachusetts legislation. The railways may charge group rates. The determination whether the rates as so arranged constitute an undue preference is in the hands of the commissioners. Each railway is required to keep its general classification of merchandise and schedule of rates open to public inspection at every station where goods are received for conveyance. Each railway is required within one week after application made in writing by a person who has shipped, or intends to ship, goods over the railway in question to make an itemized statement of the charges made, in which the terminal charges and the dock charges, if such are charged, shall be differentiated from the charge for convey- ance. Any company intending to make any increase in rates shall give at least fourteen days public notice of the intended change by publication in such manner as shall be prescribed by the Board of Trade. No charge shall be effective unless this notice has been given. Any company failing to comply with the provision in this respect is liable, on summary conviction, for each offence, and for each day such offence continues, to a penalty not exceeding 5. PRESENT CONDITION IN ENGLAND. OPERATION OF THE COMMISSION LAW. It may be premised at the outset that immediate rectification of all the evils existing is Hot to be expected from the operation of any Commission law. The evils that have sprung into existence as. a result of freedom from regulation are too deep seated to be settled at once. The reasons for falling below the standard of expectations, if such failure is shown, are attributable both to the magnitude of the concrete problem to be dealt with, and the nature of the law which attempts to deal with the problem. Weakness in the law may vitiate the expected results. The questions of differential rates, exorbitant rates and of discrimination in favour of foreign trade against home trade have occupied an important place. During the period between 18731882 the question of differential rates occupied a prominent place in the public attention. This included both the matter of local discriminations and of a lesser charge for long distance traffic than for short distance traffic under the same civ cumstances. The matter of preferential rates occupied a considerable part of the time of the Commission in 1880. The select committee of 1S81-2 which was appointed to investigate this matter did not arrive at any very definite conclusion. Difficulties arose as between the larger and the smaller shippers, the former claiming that as a result of their larger shipments they were entitled to better rates than the smaller shippers. As regards the matter of the ' long and short haul ' it will be seen from the summary already given that the power in the hands of the Commission is discretionary. In the 'exercise of this discretion the commissioners have proceeded on the principle that it is not so much the damage of the particular individual as the damage, or otherwise, to the general public that has to be considered. And proceeding from such standpoint they have not uniformly negatived such arrangements of rates. The question of exorbitant rates has 'also occupied considerable attention within recent years. The agitation against preferences, which was prominent in 1880, soon took on another phase. An agitation for a reduction of exorbitant rates was begun, there being a desire for a general reduction of rates. The peculiar position occupied by the English railways, which are at about three- fifths of their stations exposed to water competition, brought up another important problem. There has been, and is, in England much complaint because the foreign producer is enabled to place his commodity in the English market at a more advantageous rate than the home producer. The American producer of grain, whose grain is sent into England at through rates has obtained at times relatively better terms than the English producer. In the south of England there has been a special complaint. For example RK 'PORT ON RAILWAY COMMISSIONS 13 SESSIONAL PAPER No. 20a the hops of France are brought into competition with the hops of Kent. French hops have been placed in the English market at one-half the rate charged for similar quanti- ties of English hops which were carried from intermediate points. The reason for this lies in the fact that the French product may be brought to London by water, while the English commodity must be brought by rail. If the English road is to obtain any share of this trade, under these conditions, it must meet the water rate. The rail and water rate will be equal to, or possibly less, than the water rate. Under such conditions the rail portion of the rate will be less than the rail rate in the case of the English goods, although the latter may be carried a shorter distance by rail. The important question the Commission has to face, has been that of rates. The Commission has not solved the rate question. Discriminations yet exist although per- sonal discriminations have practically ceased. The local discriminations are of import- ance. The rate question connects itself with the question of classification and revision of maxima. The Board of Trade grappled with the matter and the changes were made effective in the beginning of 1893. The classification of the railroads was reduced and made uniform. At present there are eight general classes (A, B, C, 1, 2, 3, 4, 5). In the revision of the maxima the commissioners, appointed for the work, proceeded from 110 general principle but simply empirically. The question of revision has not gone beyond the revision of the maxima, although there is in some quarters a desire for a revision of actual rates. 'The Commission has on the whole fulfilled its function.' To indicate what it has done it will be best to take up first the defects, later laying stress upon the good features. It must be remembered in the first place that, although the total railway system of England represents only some 20,000 miles, that it represents a compact and powerful interest. The large investment of capital, the steadiness of the English business system, the permanency of the traffic agreements some having remained in operation for four- teen years unchanged, the delimitation of railroad 'spheres of influence ' there being a division of territory between the different lines all co-operate to give the English rail- way system a peculiar strength. There has not been the same readiness of acquiescence in the dictates of regulative law as in America. And there has been a tendency to con- test the decisions of the Commission, if not to ignore them. To the conservative trend of English opinion, which, though powerful when aroused, is normally acquiescent, and to the fact that the roads had for a long time been free from any effective regulative control, this attitude must undoubtedly be attributed. This attitude has been helped on by the fact that under the earlier theory of the railway law which still has force in England the railways occupy a position analogous to that occupied by canals. Under the earlier theory they might engage in the transportation business themselves, or they might allow others to make use of their tracks on the payment of certain tolls. The con- sequence of this is that if the Commission finds a rate unreasonable and declares what rate shall be reasonable, the company may fall back upon this power and say that it is not engaged in the transportation business and that it is simply allowing its tracks be used in r turn for certain payments ; in this way it has the individual shipper at its mercy because, although the shipper has the option of using his own cars and engines in the transport of his goods, few shippers are in a position to take advantage of this ; under such circumstances the payment of the obnoxious rate without further protest ia the lesser evil. This is helped on by a technical defect in the phrasing of the Act of 1888. Section 24, which makes provision for the submitting of a revised schedule of rates and charges by the railway, makes no mention of tolls. The Board of Trade has taken the position that under the Act it has no jurisdiction in regard to tolls. This has rendered the work of the Commission more difficult. Of recent years, however, the railways have occupied a less antagonistic position. A further difficulty has arisen as a result of the attitude of the courts. The Com- mission has to look to the courts to enforce its decisions. The Act of 1873, whose pro- visions in this regard are not superseded by the later Act, states ' any decision or order made by the Commission may be made a rule or order of a Superior Court 14 RAIL WA YS A ND CA NA LS 1-2 EDWARD VII., A. 1902 .and shall be enforced ' Under this section whether or not the decision should be enforced by the court was discretionary. An example of the attitude of the courts is in point. Under the Act of 1854, a refusal by a railway to comply with the decisions of the Court of Common Pleas subjected the refractory railway to a fine of =200 per day for every day's delay. The jurisdiction conferred on the Court of Common Pleas by the Act of 1854 (section 3) was transferred to the Railway Commission by the Act of 1873 (section 6). Notwithstanding this the plea of the London, Chatham and Dover rail- way that it was not subject to such exercise of jurisdiction was upheld by the Exchequer Court. It was not until 1878 that a decision of the Court of Queen's Bench declared judicially that the Commission had the power which in terms of the enabling act had been expressly conferred upon it. Another difficulty turns on a point of jurisdiction. As has been stated the Commission has power to make final decision on matters of fact ; and it has also power to decide what constitutes a question of fact and what a question of law. However this power is invalidated by the fact that on writ of mandamus from a court of appeal the Commission may be compelled ' to state a case ' which may be made the subject of action in a higher court. Another difficulty has been in the matter of expense. When the Commission was created it was manifestly the intention to do away with the expense and delay connected with prosecuting matters pertaining to the violation of the railway law before the courts. The process is somewhat less expensive than it was, but it is unduly expensive yet. The difficulty arises because owing to the defects in the legislation there is a constant oppor- tunity for appeal to higher courts. The powers intended to be given by the legislation have not really been given. The sphere of judicial intervention has not been properly delimited. The legislation has not been symmetrically arranged. Coupled with this is the fact, already referred to, that much of the theory of English railway law is archaic. I do not regard the defect in the question of expense as intrinsic in the Commission. Another defect in the working of the Commission is connected with its membership. Provision is made that one of the appointed commissioners should be experienced in the railway business. No provision is made for the appointment of a business man on the Commission. This has militated against the usefulness of the body. This was recognized by the Select Committee of the House of Commons appointed in 1893. Such being the main defects, what has been accomplished by the Commission ? The Committee of 1882 indicated that the services of the Commission were not confined merely to the determination of those cases which came formally before that body, but that much had also been accomplished in preventing differences. That the work accom- plished had been satisfactory to the trading class is evident in the evidence present < CA NA LS 1-2 EDWARD VII., A. 1902 the individual, or individuals, damaged thereby a right to three times the damage sustained, together with the costs and a reasonable counsel fee. This is to be determined by the court before whom the case comes up. The common carrier is liable to the individuals aggrieved. This is subject to the proviso, that before suit for recovery is made that demand for the money damages should have been made on the common carrier, and 15 days allowed to elapse after the presenting of this demand, before the suit is instituted. THE WORKING OF THE STATE COMMISSIONS. Both types of commissions are alike in possessing statistical functions and powers of control over track conditions and safety appliances. In the case of Massachusetts the overshadowing influence of Boston brings in a great deal of attention to the transporta- tion industry as centering in that city. Much of the statistical information contained in the report is such as normally would be found in a report of a civic board of trade. In the matter of statistical returns the various Commissions are attending to uniformity ; the report form of the Interstate Commerce Commission, with such changes as are adapted to state needs, is being adopted. The most important functions of the advisory commissions may be summed up under the words supervision and advice. The regulative influence over railroad construction exercised through the right to grant or withhold a certificate of ' public exigency ' places an obstacle in the way of excessive construction ; it supervises in the public interests the railroad projects and excludes purely speculative enterprises ; it prevents the waste- ful expenditure of capital consequent on useless paralleling ; its object is to have a sys- tem developed which is in harmony with the needs of the people. The general attitude for the need of supervision in railroad construction is a marked characteristic of the rail- way legislation of the eastern states. In the west, on the other hand, the attitude towards railway construction is essentially different, and there has been as a consequence much wasteful investment of capital. The power of regulation over the issue of stocks and bonds possessed by the Massa- chusetts commission is very important. The result of this can be seen by turning to the statistical tables of the Interstate Commerce Commission. The various states are grouped, and in the New England group, in which the mileage of Massachusetts is the important factor, the capitalization is much less excessive than in the other groups. It has been a cardinal tenet of the American railway financing that the stock issued represents no necessary part of the cost of construction. Probably 90 per cent of the railroad construction of the United States has been done on the bonds. Under the Massachusetts system the stocks have been more than a mere perquisite. The last report of the New York Commission urges on the state of New York the necessity of conferring, in the public interest, similar regulative powers in this respect upon the New York Commission. In the commissions ' with power ' the attitude towards the matter of regulation of stock and bond issues has, except in the case of the Texas law, been on the whole one of indifference. Where it has been considered it is in connection with the matter of rates. Under the Texas law the commissioners have made revised valuations of the railroad properties within the state, in an endeavour to squeeze the water out. The intent has been to obtain a working basis for rate making on the cost of service principle. It will be seen that this differs essentially from the Massachusetts method. The matter of prime importance in connection with the western commissions is the rate question ; coupled with this are the questions of local and personal discriminations. The legislature has delegated to the commission the rate making power, and the legality of such delegation has been judicially upheld (Reagan vs. Farmer's Loan and Trust Co). In the eastern type, on the other hand, the rate making power is not possessed by the commission. In the case of Massachusetts there is a power to fix milk rates. The commission has no other power in regard to fixation of rates, and it has explicitly declared that it has no desire to have the power to fix rates (15th Rpt. Mass. Com., REPORT ON RAILWAY COMMISSIONS 23 SESSIONAL PAPER No. 20a 1884, p. 151). In New York there is no danger of the declared power of the legislature to regulate rates being exercised, since this power cannot be exercised until the rates produce a dividend in excess of 10 per cent. The exercise of the rate making function by the ' strong ' commission demands careful attention. Competition, in so far as it does exert a regulative force, is more important in inter-state than in intra-state traffic. The various commissions evidence, in their reports, their appreciation of the fact that the regulation of rates is a delicate matter, and that arbitrary interference is dangerous. It has, on the whole, been appreciated that the rate making must, at best, be a compromise. Even Kansas, whose name is usually regarded as a synonym for drastic regulation, appreciates this in its reports. The earlier laws and regulation looked to the adoption of equal mileage rates. As early as 1884 a condemnation of this principle is to be found in the report of the Kansas Commission. The objection was based on the position that it would deprive those living at common points of the advantage of competition. In the matter of rate making the commission ' with power ' has also used a system of classification of roads. In Illinois there are two general classes of roads arranged according to the degree of prosperity of the systems. The difference in rates between these groups is about 6 per cent. In Iowa the roads are divided into three classes. The first class takes the standard rate, the second 15 per cent higher, and the third class 30 per jent higher. In Georgia the matter of classification is carried much further. The roads are arranged as regards freight transportation in seven classes. Class one takes the standard rate, and on the others there is a complicated arrangement of additional percentages on some of the commodity classifications. The policy used is based on the use of maxima. In Iowa the rates are fixed on a mileage basis, the unit being five miles. Tables are prepared for all distances between five miles and five hundred. In general the policy of these distance tables, both in Iowa and the other western states, is that there is a fractional increase of rate per mile, the fractional additional increase per mile decreasing as the distance increases. The base of rate-making must be, on the whole, empirical. Normally the standard of rate-making must be what the traffic will bear ; and on this account the most careful consideration to effect what is at best a compromise is requisite. In Texas an attempt has been made by the commission to base rates on cost of service. It is impossible to make a thorough-going application of this principle. The attempt to do so in Texas has brought up endless disagreements and has resulted in the process of the commission being tied up by injunctions from the Federal courts. At the outset there was a disposition on the part of the railways to contest the exercise of regulative power, in regard to rates, by the commissions. This power has been judicially established and is generally recognized by railway authorities to-day. For example both in Iowa and Illinois the railways are manifesting a feeling that the Commission occupies a position, in regulating rates, as arbiter between the people and the railroads. In both of these states the rate regulation has proceeded with extreme care. The part the railway is playing in industrial development is appreciated. It must be admitted at the same time that there have been dismal failures in connection with the exercise .of rate making powers by the commissions. As has been said the Texas Commission has been involved in continual j anglings the reason for this has already been indicated. There has also been an inordinate belief in the efficacy of regu- lative power. In Kansas the law has not worked well. One great difficulty has been the lack of trained men to enforce the law. Political conditions, especially of recent years, have marred the efficiency of the system. Then again the people of Kansas are prone to look for quick results from their legislation ; and if these are not obtained they are equally prone to pass to other legislation from which they expect equally rapid results. California is another case often pointed to as an example of the inefficient working of the rate-making power. The trouble there was that the commission attempted, instead of proceeding by gradual steps, to revolutionize conditions ; the result was that at the outset it was discredited and its power was weakened. The more careful policy of Illinois, and more especially of Iowa, has .precluded such conditions. 24 RA IL WA YS A ND CA NA LS 1-2 EDWARD VII., A. 1902 One important general question, which has already been touched on, is how are the recommendations of the commissions obeyed ? As early as 1872 the Massachusetts com- mission stated its view that the power it possessed of influencing public opinion was much more potent than any more formal power. In 1893 this position was reiterated by it. The commission has undoubtedly worked well. It has had no vexatious interferences placed in its way when matters came up before the courts. Then again it is concerned with a thoroughly organized system of railway in a very compact territory. It must also be remembered that, while in the United States in general the relative proportions, between freight and between passenger traffic are 70 per cent and 30 per cent respecti- vely, in the case of the New England group the proportions are 49 per cent and 51 per cfiit. In Massachusetts they are evenly divided. When the passenger traffic is so important the regulative power of public opinion is, so' to speak, readily coerced into action if any grievance exists. In New York conditions have been somewhat different. At first the courts, when matters came before them from the Commission, were inclined {<> proceed de novo. A recent decision of the State Supreme Court has decided that the court is limited to inquiring whether the remedy applied by the Commission is just and reasonable. The Illinois Commission report for 1897 states ' that in the most of the cases which came before it with reference to discriminations, reductions in freight rates, itc., it was only necessary to call the attention of the railroad to the violation of the law to have it corrected immediately.' The conditions in Iowa are similar. A more ready obedience is shown in recent years. A further example may be taken from another source. The Georgia Commission in its current report states, ' during the past year the regulations of the Commission relative to traffic have been observed and enforced with reasonable promptness. The relations between the railroads and the public seem to be mosre harmonious than heretofore. Gradually a better feeling between the roads and their patrons is becoming manifest. This we believe is largely due to the enforcement of reasonable rates and uniform rules throughout the state, by which arbitrary acts and unjust discriminations, and the consequent strife and discord are prevented.' THE DEFECTS OF THE COMMISSIONS MAY BE INDICATED IN SUMMARY. (1.) Political considerations play too great a part in the choice of commissioners. This is especially true when they are elected. (2.) The term is usually too short. In Iowa this has been gotten around by the re-election of competent men. But where the political conditions are more evenly bal- anced this is practically impossible. (3.) The salaries are too low. This applies especially in the western commissions. Railroad supervision requires specialized knowledge, and to obtain the service of men who possess such knowledge good salaries must be paid. (4.) Lack of requirements as to technical fitness for office. In most cases there is no statement whatever made with reference to the qualifications for the position. (5.) Lack of general regulative power in the matter of railroad construction, and in the issue of stocks and bonds. THE RESULTS OF THE WORK OF THE CO .MM ISSIONS OF BOTH FORMS. The Advisory Commission (1.) The Massachusetts Commission has prevented useless paralleling. (2.) They have adjudicated upon a large number of complaints. Both types (3.) They have served to bring about a more harmonious relationship between the railroads and the people. (4.) Through informal action and correspondence they have settled a large number of disputes before it became necessary to adjudicate. REPORT ON RAIL WA Y COMMISSIONS 25 SESSIONAL PAPER No. 20a The Commission with power (5.) They have rendered rates more stable. (6.) They have redressed inequalities of rates through lessening discriminations and extortions. (7.) They have harmonized the differences which existed between intra-state and inter-state rates, thereby helping the interests of the local manufacturer. (8.) They have exercised a control over station accommodation. (9.) They have exercised an advantageous control in regard to crossings and safety appliances. (This holds true of both types). (10.) They have ensured a more adequate service on branch lines. THE INTER-STATE COMMERCE COMMISSION. ' PRELIMINARY STEPS. The limitations of the State Commissions must be borne in mind. The intra-state traffic does not constitute more than from 10 per cent to 20 per cent of the total traffic. The sphere of state activity being thus circumscribed the place occupied by federal regulation is suggested. The majority of the railroads of the United States have been chartered by the state legislatures. During the period from 1830 to 1850 the aid in developing the railway system came from the state not from the federal organization. The earlier court de- cisions favoured the exercise of regulative powers over traffic by the States. Under the constitution the power to regulate commerce between the States is placed in the hands of the Federal Government. The question of the advisability of the regula- tion of the transportation system by the central government was brought to the front in 1868. In that year a Senate Committee was appointed to examine into the ' expediency of regulating the various railroads in the United States that extend into two or more States, as to rates of fare, freight, &c.' A report was presented declaring the power of the Federal Government to control such matters, but in the absence of detailed informa- tion nothing was done. The matter was kept before Congress by the conditions of 1873 and the movements associated with the Granger legislation ; petitions for the exercise of the federal regula- tive power over railway transportation poured in. Various suggestions as to the necessity of publicity of rates, the prohibition of stock watering, and the maintenance of efficient competition through the opening up of several lines of waterway under gov- ernment control were made by the Committee of 1872, which was appointed to consider the question of cheap transportation to the sea-board. In 1878 Mr. Reagan, of Texas, now chairman of the Texas Commission, forced the matter to the front. The bill pro- posed by him and adopted by the House of Representatives was drastic. A judicial decision (Wabash Railway vs. Illinois Railway Commission) affirmed the lack of control, by the Illinois Commission, over traffic originating outside of the State. Prior to this, although it had been explicitly stated in the constitution that the exercise of such power pertained to the Federal Government, the exercise of such power by the state had been connived at. The definitive attempt of the Federal Government to deal with this matter dates from March, 1885, when a select committee of the Senate was appointed 'to investigate and report upon the subject of the regulation of the transportation by railroad and water routes in connection or in competition with said railroads of freights and pas- sengers between the several states.' After careful investigation and the obtaining of evidence from all shades of representative opinion, a report was presented in January, 1886. The findings of this committee, which was presided over by Senator Cullom, present a searching condemnation of the evils which had arisen from lack of control. These findings were returned under eighteen counts which may be summarized as follows : (1.) Local rates were unjustifiably high as compared with through rates. Rates at non-competitive points were unreasonably high as compared with those at competitive points. 2$ R'A IL WA YS A ND CA NA LS 1-2 EDWARD VII., A. 1902 (2.) That there was an extensive system of personal and local discriminations. (3.) The existing policy of secret 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 classi- fication. (5.) Capitalization and bonded indebtedness were not based, in many cases, on real assets. (6.) There was no adequate remedy under the existing common law for the redress of the grievances existing. The bill introduced by the committee was subject to various modifications before it became law. The House favoured more radical action, and the bill in its finished form was the result of a series of compromises. THE LAW OF THE INTER-STATE COMMERCE COMMISSION. . The commission is composed of six commissioners appointed by the President, by and with the consent of the Senate, for a term of six years each. Not more than three of the commissioners are to be appointed from the same political party. They are prohibited from holding any pecuniary or official relation to any common carrier subject to the provisions of the Act ; during their term of office they are not to engage in any other business. Each of the commissioners receives an annual salary of $7,500, the secretary of the commission receives $3,500. The commission has power to fix the compensation of such other employees as it may find necessary to the proper performance of its duties. (Under this provision there have been appointed an assistant-secretary who receives $2,500 per year, a statistician and an auditor, each of whom receive a salary of $2,500 per year, three law clerks, one of whom receives $2,500, the others $2,000 each, a special agent who receives $2,000, and a clerical force, as indicated in the report for 1897, of 113.) The expense of the commission, including travelling expenses, is borne by the United States. The provisions of the Act are made applicable to any common carrier or carriers engaged in transportation of passengers or freight by railroad, or by railroad and by water, under a common control for a continuous carriage or shipment from one state or territory or the District of Columbia to another state or territory or the District of Columbia, or from such point to a point in an adjacent foreign country, or the shipment from a point in the United States to another point in the United States through a foreign country, or from a foreign country to the United States, and carried to such place from the port of entry. The term ' railroad ' covers the road in use by any corpor- ation operating a railroad whether owned or operated under a contract, agreement or lease. The commission is required to examine into the management of all common carriers subject to the provisions of the Act ; it has the power to obtain from such carriers such information as it may consider necessary in order to enable it to perform its duties ; it sees to the enforcement and execution of the Act. Upon the request of the commission any district attorney of the United States is to institute, in the proper court and prosecute under the direction of the Attorney General, all proceedings necessary for the enforcements of the Act and the enforcements of the penalties attached to violations of the Act. The cost of this is to be paid out of the court appropriations of the United States. In enforcing the provisions of the Act the commission is empowered to require, by subpoena, the attendance and testimony of witnesses, and the production of all books, papers, tariffs, contracts or agreements and documents bearing on the matter. Applica- tion may be made to a court to enforce this. A commission may order the taking of evidence by deposition before certain judicial officials, subject to the requirements that they are not to be- interested in the case. Any person, firm, corporation, association, society, organization, railway commission or railway commissioner of a state or territory complaining of any omission or commission REPORT OX RAIL WA Y COMMISSIONS 27 SESSIONAL PAPER No. 20a in contravention of the provisions of the Act may apply to the commission, by petition,, briefly setting forth the facts of the case. A statement of the complaint is forwarded to the railway complained of ; an opportunity for rebuttal is given, or for rectification of the matter complained of. If the complaint is not rectified or if there seems to be reason- able ground for investigation the commission shall investigate it. The commission may also institute an inquiry of its own initiative. No complaint is to be dismissed because of absence of direct damage to the complainant. The findings and recommendations of the commission are to be regarded as primcc facie evidence in judicial proceedings as to each and every fact found. When a common carrier refuses to obey or perform a lawful order or requirement not founded on a controversy requiring a trial by jury, the commission, or any company or person interested in such order, may apply in a summary manner for its enforcement to a circuit court of the United States sitting in equity. The provisions of this section and the question of enforcement of the order or requirement by injunction or other process are practically identical with those of the similar clause already considered in the Iowa law. The main differences are that failure to obey the injunction or other process involves a fine of $500 per day instead of .$1,000. When the subject in dispute involves .$2,000 or more there is an appeal to the Supreme Court. The cost of the proceedings are met from the appropriations made for the United States courts. The features of difference from the foregoing procedure when the matter in dispute is founded on a controversy involving a trial by jury are, the application for enforcement is to be made to a circuit court sitting as a court of law ; the court is required to fix a time for trial, which shall not be less than twenty nor more than forty days from the date of issue of the order for the trial. The defendants are required to file their answer within ten days after the service of a copy of the petition and the order on them. The findings of fact of the commission are to be prima facie evidence. An appeal within twenty days, if the matter in dispute is in excess of .$2,000, lies to the Supreme Court. Persons claiming to be damaged by any common carrier shall elect between bringing a complaint before the commission and entering suit in the courts. The commission has an official seal which is judicially noticed. It may make and amend, from time to time, general rules of procedure, including forms of notices and the service thereof. These are as far as possible to conform to those in use in the United States courts. The commission is' empowered to require detailed statistical reports annually from all common carriers subject to the provisions of the law. These are to be made according to the forms prescribed by the commission, and are to give detailed answers upon all questions concerning which the commission may desire information. By an Act :>f 1893 the supervision of the use of automatic couplers and automatic brakes is lodged in the commission. It is required to see to the enforcement of the law. Rate*. All charges must be reasonable and just. Publicity of Bates. Every common carrier is required to keep open for public inspection the rates, fares and charges between the various places on its line. It shall also state separately whatever terminal charges or other charges may affect the aggregate of the rates, fares and charges. Such schedules are to be posted in two conspicuous places in all stations and offices where freight and passengers are received for transportation. This applies also in the case of traffic sent from one point in the United States through foreign territory to another point in the United States. The published rates are not to be deviated from. Advance and Reduction. When rates 'are advanced ten days' public notice is re- quired ; in case of reduction, three days' public notice. The proposed changes are to be shown by printing new schedules, or are to be otherwise clearly indicated. Joint Rates. No joint rate, fare or charge can be advanced until after ten days' notice has been given to the Commission ; in case of reduction, three days' notice to the Commission is required. The notification to the Commission must indicate the changes proposed and the time when they are to go into effect. The Commission may provide for the publication of such advances or reductions. Published joint rates are not to be deviated from. 28 SA IL WA YS A ND CAN A LS 1-2 EDWARD VII., A. 1902 Filing of Schedules. Each common carrier is required to file with the Commission copies of its schedules of rates, fares and charges which have been established and pub- lished in accordance with the foregoing requirements ; there must also be filed with it copies of agreements, contracts and arrangements with other common carriers in regard to traffic affected by provisions of the Act ; schedules of joint rates must also be filed. The Commission may provide for the publication of so much of these matters as it deems necessary in the public interest. Neglect or refusal to act in harmony with the foregoing provisions in regard to fil- ing are punishable by the provisions prescribed in the Act. In addition, obedience to the provisions is enforceable through the issue of a writ of mandamus by a Circuit Court. If such writ is not recognized, then a writ of injunction may be issued restrain- ing such offending company from engaging in transportation or the receiving of property. Discriminations and Preferences. Unjust preferences, by collecting from any per- son through any special rate, rebate, drawback or device of a greater or less compensa- tion for the transportation of persons or property than is charged for a like and con- temporaneous service is forbidden. The ' long and short haul ' clause, which prohibits the receiving of a greater charge for the transportation of passengers or like kind of property for a shorter than a longer distance over the same line, under substantially similar circumstances, the shorter distance being included in the greater, is only a peculiar form of unreasonable preference. In this case, however, it is provided that the Commission may, on investigation, relieve a carrier from the operation of the clause. All pooling of freights and divisions of earnings is forbidden. The influence of this legislation is seen in the similar clause in the Iowa law. Common carriers are to furnish facilities for interchange of traffic, through and local. Unjust discriminations through false billing, false classification, false weighing, or false report of weight, or by any other device, by a common carrier or its agent whereby the person so favoured obtains trans- portation for property at less than regular rates, or any similar action on the part of any person, or agent, or officer of any company or corporation shipping goods, or any attempt to obtain any such discrimination is classed as a misdemeanour. Punishments Under the Act. Violations of the provisions of the Act are punishable, on conviction in any district court within whose district the offence complained of took place or within which the offending railway has a representative, where the road is a foreign corporation, by a fine not exceeding $5,000 for each offence. In unjust dis- crimination the punishment is two years' imprisonment, or a fine not exceeding $5,000, or both in the discretion of the court. The individual or individuals aggrieved by the violation of the Act are to receive, in case the offence is proved, the full amount of the damages sustained, together with a reasonable counsel fee to be fixed by the court in every case of recovery. General Provisions. The provisions of the Act do not prevent the free carriage, or the carriage at reduced rates, of property for the United States, or for state or munici- pal purposes, or for charitable purposes, or to or from fairs, or issuance of mileage or commutation tickets, or the giving of free carriage by railroads to their officials or to the officials of another railroad. The Act does not abridge the remedies existing at common law or by statute, but is in addition to the remedies so provided. THE WORKING OF THE INTER-STATE COMMERCE COMMISSION. The attitude of general opposition on the part of railway officials to regulation has ceased. A glance through the columns of the Railway Age, which mirrors railway sentiment, will readily substantiate this statement. A further position is taken that it would be advantageous if it were possible to have that control centralized. (State Regulation of Railways, by H. P. Robinson, editor of the Railway Age, North American Review, April, 1898.) . The value of the statistical work accomplished by the Commission is uniformly admitted. From the outset this work has had the advantage of the trained oversight of REPORT ON It AIL WAY COMMISSIONS 29 SESSIONAL PAPER No. 20a Prof. H. C. Adams, of the Department of Political Economy in the University of Michigan. A wealth cf information with reference to the financial condition of the country has been accumulated. The routine of the commission is concerned with correspondence, preparation and distribution of the reports, including the statistical report, forms, opinions, orders and circulars, and the receiving, examination and filing of railway reports, tariffs, contracts and other documents. The Commission has, since its inception until the end of 1897, conducted 185 formal investigations, in which 932 points bearing on railway economy have been decided. It does not follow that the formal investigation and the decisions therein rendered exhaust the scope of the Commission's activity. 1 he mediatorial position occupied by the Commission is very important. From the outset it has taken the position that the principal part of its work should consist in bringing the parties together with a view to settling the disputes without proceeding to more formal pro- ceedings (4 I.C.C.R., p. 3). Through the instrumentality of correspondence the Com- mission has been able to settle a large number of minor difficulties that might have grown to greater proportions. The Commission has also, owing to the fact that it receives schedules, reports, &c., from the railways, an opportunity of supplying to the shippers and carriers such general information in this regard as they may require. This function has been of great value to shippers, carriers and investors (10 I.C.C.R., p. 55). When the Act was passed there were in existence a large number of classifications, general and local. The Commission urged on the railways the necessity of harmony. As a result of many meetings, the co-operation of the roads having been enlisted, the classi- fication has been so far simplified that there are now three leading classifications. An attempt is being made to obtain a uniform classification. The stress laid upon this is owing to the fact that classification is at the base of rate making. To change a com- modity from one class to another is to change the rate. The Commission has laid stress upon the advisability of having steady rates (2 I.C. C.B., p. 22). It believes that it is advantageous for the country that the rates should be reasonably remunerative (2 I.C.C.R., p.t23). From the outset the dual responsibility of the commission to the carrier and to the shipper has been in mind. The question of extortionate rates has engaged the attention of the Commission. In one-third of the cases brought before it, a reduction of rates has been directed (11 I.C.C.R., p. 22). The difficulties in reference to rates have come up in great degree in connection with the railway system of the South. The 'basing point' system which has been used there has worked a great deal of harm on the non-competitive points. In grappling with the rate question, a matter of jurisdiction, which is material to the whole of the rate-regulating power, has come up. Under the Act all charges are required to be just and reasonable. The enforcement of this provision is in the hands of the Commission. The Commission had to determine what constituted a reasonable rate. In their first report they virtually said that the only rule to adopt was what 'the traffic will bear' (1 I.C.C.R., p. 36). They said that in such determination they would take into consid- eration all such matters relating to business and condition of the road as were material (Ib., p. 96). The right of the Commission to regulate rates was asserted in the seventh report (7 I.C.C.R., p. 10-11). The claim that the Commission had power to ascertain what was a reasonable rate and enforce it was stated in the sixth report. This position is reiterated in succeeding reports, it being stated, for example, that the right to con- demn a certain rate implies the power to indicate what rate is reasonable. The right claimed has not been to fix initial but amendatory rates. An amendment to this effect \vas suggested, but nothing has been done. It would indeed appear that this was a legitimate and necessary inference from the powers conferred upon the Commission. Without the power to declare what constituted a reasonable rate, the proceedings under the Act would amount to but little. The absence of expressed power in this regard is a weakness in the Act. In a series of decisions the right claimed by the Commission was asserted and exercised. In COM Bros. vx. Lehigh Valley Ry., and in the 'Orange' case this power has been exercised in regard to freight. The right lias also been asserted in regard to passenger traffic (Case (S s" P3 '3 EIGHT tf o - eg 'o o PH* - IM s ^ eg - o ^ GO a O c6 fa : d c3 o PH ^< a 1 05 O 525 0| c3 .. ^> ^ ,8 -1-2 (C r3 ^ ft O cS PH GO a o >~> o> Is- O 'I g PH d sf o o -Oi-l o o < I IM IM < i C^l (M T-H iM N (M CXI CNJ . i-i I-H co co 10 n t- t^t^o o o co cocoo i-H TH ' ' * ' ' s ll If ll PI ill ill s |i -S-E 3^ |.|-i Is! M-g M Bf ti) '. bb 05 CL j- O- 1 11 fib REPORT ON RAILWAY COMMISSIONS SESSIONAL PAPER No. 20a -4CV-4N I-H r-l CJ 00 *< CO I-H O * CON H?l ' ~' t>- 00 O OO OO 00 SO -OCOO5t^ *,-4< : .oo5o ' i-H <-t 1 1 i 1 ooo 1 1 <*'COCOC<)COT) g = = : : fe g = = : : S | = = : : S g = - -2, : :S35 : : Sc : -ScS 'Sc5 ^O : : ^O : :gc5 : -'Sd s ... r^ ... ... jj 1 . ' . c8 t^PnpJ ^iPnp^ ^H^PH ^iP-iPn ^P-ipJ ^PHQ^' < PH PH ^1 PH PL,' O dl^'d dl^d dl^d dl^id dl^'d dzd ' * * * . Q a o in i" 1 co oo oo i cq ^ *t* Tt* o so so Oi cs o^ c^i ^i^/H r-n-HM > . . ' * ; ; ^ : ' : ' : : 'S : : : : : ^ : : : : : : : . . . o Eagle Bend . Verndale Virden.. . :s i i = 'S I J g^ g gJS fc c S w a C >-^ S a, O D . . pQ '-'3 L pQQ_iS5 HDnCQ ^ :| ^\i | :f 1| ||1 ||:j ^pq P3Q^ OOO" a ' , : & : ' r'- T C 4) 3 03 * 6^ 2J' Its ^: J III *'|| J- . be bo be tab ^ bb w ' 3 J a. ^"3 a j"3.| -c"3.- ^=1.^ -c^.S- ^3_S. ^^.S- o^ PH ^ S ^ ^ 2 "" ^ 'C ^ fi . i C i "^ j2 ^-2 fl c '3^' "^.ijtC ^^j'fC 5 S ^-^t* 3 *= t> ^ -uS s ^t> ; 20 4 50 RAILWAYS AND CANALS 1-2 EDWARD VII., A. 1902 A g 8 M M PH S X W g 02 a 02 so J Q i i HO) HO) HO) . . O> O O CO CS C^ * < OS - Oi CO CO Cl CO^COO CO t*~ Tt< ^ CO C: tO HO) o r-> CO X i-H -rti-iCOiH r- CO CO i-H CO CO CO CO CO CO CO CO -COCOCOCO CO '. '. '. ' '. '. ' '. '. CO Q coco : : : coco : : co.cJ : -cJco ::: 55co--'-co ; ---co Q O O O O i"^ ^ .... <^ if$ .... j^ ^ .... g\ &3 .... c"-i COCO -COCO COCO -COCO -COCO -COT? 5< PC o HO) HO) HOI O ^f O CO -t~OCOO COOlCOi-l -Oi-H-^f-i -^HiOOCO iHOir^Tf. . 10 CO CO CO i-H CO CO CO CO COCOCOCO - 2^ O H 1) f-* C K^ Ui 'U c3 ^j 3} Jj QJ C t^ PQ ^ fe ^ CM ^n tf* 1 h^ : " 1 r- ' ""TJ ^ _ r^ CC ^2 %* "S-go S |S2 "S flJ3 'S = >-3 D g s^-g s fflH CQO2DJ *3O5 Q 1 N 4 . * * * . > ! be 'tub fcJb 2.& ^3 S-^ 1 ^ & * J: i-2" -fi C3-2* - c s S 1 - 13 OM ^ CL) ^" r* p , C C i i C J5 C ^ S S -w S D -u t^ co^ Go2^ OcoP' Q REPORT ON RAILWAY COMMISSIONS SESSIONAL PAPER No. 20a HOMOl co - COt^CDIM -lOOt^CO COCOCO-* :*$ ? : : 83 : : O O5 ' i IN N **< So : ' : :co ' : '.S3 : : -oco . . 3 : 1010 ioi oco S -o . . . .ot2 . . Sg rH OS CD O CO IM CJ 1O1O COCS) fHOl Si 1 CO 1O 1 'COt>-aC CO CD CO CO CO O CO !*< CO CONOCO OOO'NCO (M IM CO 55 CD t^ ^ CO t^ t^ Tfi CO t- CO *! CO ; es *** HOMO) COl-H C5 <* 1OCO <*< -^ O O5 CO 00 1-1 CO iO O5 ' . CO t- OC S3 . SSsi 1 ; :iSfe \ '^Z !" s HOJ SS H H nS Ot^t^i ICOOO(NCOl O5OSCOO To w o 06 1- iB o N 5B t- oo

35 1 S 5S o - HOI i-ii-(N(N-.cO'*i't | in O ^ r- lOi 'C!CO^ >5 o *Q<^PQO ic^PQO '. .^^PQO ,c'*'1^^ . ct ^ ^ c8 ^ CL. -~ CH '-^ C^ ' ' J3 &* :|| s= ;|g = r ; ;! = = ; :gg = = : /_ ....CO.. K... ^<;p;d ; :'c- r 1 "^COO CslCDIO i 1 lit THCO ^'-flM (MCO IO CO O5 Tf CO-hX OOCOr-^ " 1 - t- I t 1-- t CO CC coo t-t- CO CO CO 00 -u s ^1 J 5 s * & C 'bb ^ =e!2 le Win P- : : : i ta : : : J : -W 2 be c 2 -nC 8.9 3 -.S :.>'S s s ^j=" 4-S s S^ I] EBo ^^2 S3J , to C o "'3J *3 "r g& (C >, ' : M 'o.~S a * c PnOj ^c 1 Si! Ill E s 9 ~ <- .S p eS TJ QJ ,^P ^^ !8 OS MO . Paul innipeg iliith . S3 '2 4J C3'^I ^ ^'f- p 1 C ^ p.^ *- 3 p.^ t> ?a j i^.i ^^ c . j. 1 1 be . 3 -. g ^P^ 20o 4| Q^^ 52 R A IL WA YS A ND GA NA LS o O Q O 1OCOCO CO t- CO C<5 -00 - 1-2 EDWARD VII., A. 1902 -*N-*N -(MCOOiOO 'rH rH IN O O5 rH .... . r~i r i T * * r* ri ~ : co : : : : '. : : : : : r- (M ... rH 1O -PJO -COOS woo -ooooo eo Tt< co eo S S 5 'i~ooi>. -ojoooot-. I-HC^OO (MlNrH WrHrH C^C-qrHrH '(MC^i IrH O t^I O CO CD CO CD ^* iO O O * rHrHN(MrHrHrHrH5NllM- ;o tC. B ....CD" w 1 .' w CO. ....CO.. I o3g = =: Sg = = ^2^^ b 22 = =: ' : 1 2 ::= j>2 I : : : : : : OH' f^PM PH_PH ^d, P^PH Q ^i O Z O ^O r^H O (M 00 O5 * co CO O1 (M oo II Qo cc . ' bo .CD CP '^=.S- -s 5- I | = g REPORT ON RAILWAY COMMISSIONS SESSIONAL PAPER No. 20a 53 HW HMe< O CO ... ;O .... |>_ , . rH .... XI ex) . . . if} ^} ... IQ ^ .... 2 f^ - .^f l C x; I !M(MCNl rOrHrHrHrH(MNl