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8
The Commoner.
,"'
VOLUMES, NUMBERS
FORAKER'S CHALLENGE IS ACCEPTED
As Senator Foraker is a member of the com-"
mitteo on interstate commerce, ho will havo a
voice and a vote in framing a bill for the regula
tion of railroad rates, and for that reason his
utterances arc of great public interest. In a re
cent interview given wide publicity by the press,
he issued a reply to Secretary Taft's speech at
Akron, which is also a reply to President Roose
velt's speeches. Among other things Senator
Foraker said:
There is no reason whatever why, if
h. . any locality thinks it is discriminated against
or any shipper thinks he is discriminated
against, application should not bo forthwith
made for relief, and relief secured if the
charge can be sustained, for the court is by
the statute expressly invested with full jur
isdiction to entertain the complaint and ad
minister a complete remedy. This statute
has been in force ever since the 19th day of
February, 1903. If Secretary Taft or any
body else will tell me wherein this remedy
is deficient, or tell me in what manner a bet
ter remedy can be provided by conferring
the rate-making power on the interstate
commerce commission, wo shall then have
reached the point where glittering generali
ties can bo dismissed and intelligent discus
sion may commence.
This challenge being general The Commoner,
through a gentleman who has had wide exper
ience in railroad affairs, will attempt to show
wherein the statute of .February 19, 1903, does
not provide a sufficient remedy, and wherein' the
conferring of the rate-making power upon the in
terstate commerce commission will provide a
practical remedy.
Tho gentleman to whom The Commoner re
fers has several times been quoted on this im
portant subject, and the reply he makes to Sen
ator Fdraker's challenge should be carefully read
by every one desiring to be accurately informed
on the subject of railway rate regulation.
Replying to the Foraker challenge this gen
tleman says: . . . " fa-
THE PRESENT LAW
no T?fl,rst thing is to lcw " wnat remedy the
frnm0fwbP1Jary ,19, 193' Provides. We quote
from that act as follows:
Section 3. That whenever the interstate
commerce commission shall havo rer-nable
ground for belief that any common carrier
is engaged in the carriage ot passengers or
freight traffic between given points at less
than the published rates on file, or to commit
ting any discriminations forbidden by law
a petition may be presented alleging such
facts to tho circuit court of the United States
sitting in equity having jurisdiction '
whereupon it shall be the duty of the court
summarily to inquire into the circumstances
and upon being satisfied of the truth
of the allegations of said petition said court
shall enforce an observance of the published
tariffs or direct and require a discontinu
ance of such discrimination by proper or
ders writs and process subject to
tne light of appeal as now provided by law:
THE OLD LAW
Wherein does this boasted remedy surpass
in efficiency that provided in the act, to regulate
commerce as amended March 2, 1889, section
16, which is substantially as follows:
T1iat .wJlenever any common carrier
shall violate or refuse or neglect to
obey or perform any lawful order '
of the commission it a .11 be lawful for tho
commission to apply m a summary
X S Vyc?ettitlou' t0 the circuit 'court of the
united States sitting in equity al
leging such violation or disobedience
and said court shall proceed t hear and
determine the matter and if it bo
made to appear to such court that-
sion iiaB Ueen violated ,.
obeyed it shall be lawful for such court to
issue a writ of injunction or other proper
.process to restrain such common carrier
from further continuing such violation or
disobedience of such order of said
commission, and enjoying obedienco to tho
same. tw- '?"" ,,-
- :. The original act contemplated a hearing by
.. tbeucommission, and a decision'.- order 'In
th? event, of refusal to comply with its orders
the courts were to .enforce them. The law of
February 19, 1903, makes it the duty of the court
to hear tho case instead of tho commission, and
then enforce its decision. So far as results are
concerned neither law has provided a practical
remedy, and results are what we want.
THE FATAL ERROR
' The fatal error in both these laws is that
the order or decision does not become effective
until it has been affirmed .by every superior
court in the land. Tho almost Interminable de
lays defeat the remedy. Not only that, but
knowing that relief can not be secured readily
many wrongs are endured rather than attempt
to secure it, and none knows this so well as the
railroads. That is why they object to having
the rate-making power conferred upon tho com
mission. When the fact . is realized that the
question of rates is not one of law, it becomes
at once clearly apparent .why the effort of con
gress to provide a method of securing' relief
through the courts is a failure. In its eighth
annual report, page 6, the commission refers to
a supreme court decision in the Reagan vs. Far
mers Loan & Trust company case, in which the
court distinctly stated that
Judicial interference with schedule rates
prescribed by the legislature, or the commis
sion is confined to restraining a
regulation of rates unjust and un
reasonable to the carrier such as to work
practical destruction to rights of property
and that prescribing charges for carriers is
held to be a legislative or mlnfsterial duty
rather than a judicial function.
A CONVINCING DECISION
In the fourth report of the commission, com
mencing at page 13, will be found a learned and
convincing discussion of this 3ubject, expressed
substantially as follows: .
A very common assumption Is that. the ':.
question of reasonableness or rates is one .
of lav, and that the decisions of-the commission-
must be subject to review by the .
courts. In order that tho question of rates
should be one of law it is essential that 'there ,
be some clear and definite rules whereby '
rates can I 3 made; rules obligatory upon the
carrier as well as upon the tribunals that
regulate them, and which may be enforced
against the carriers as well as in their favor
If such rules existed, stockholders might have
them enforceu against the action of the di
rectors, or other officers, in fixing the rates.
But every person familiar with the subject
of transportation by rail is perfectly aware
that there are no such rules. No managing '
officer claims that they exist, and not one
undertakes to regulate his action in the de
termination of rates by fixed, definite, un
changeable principles such as constitute rules
of law. On the contrary, every step leading
to the establishment of the rates that shall
be chargeJ begins and ends in the exercise
of discretionary authority. Rates are never
measured exclusively by either the weight
bulk or cost of the article, nor by valuo to
the -owner in having it transported; and if
all of these and other considerations bearing
SM SWef l arG taken int0 account in
the fixing of rates, as they always are, there
hownm!;Un f ,by W,hidl lt can be detenS
v Zf lmportance sllll De attached to
any one, or any combination of them. The
fhf 8hPi n r2;te-malinS is a classification of
the articles offered for carriage, and arrant
ing them into classes which are to bear dif
ferent rates In making this classification
all the considerations that can properly bear
upon it are to be taken into account In
every classification, therefore, articles whose
value b very great in proportion to the bulk '
or weight are classed high in the expect
tion that the rates imposed upon them wU
pay not merely the .cost of transDortnHm!
and a fair profit, but wil I coWbuto ahS
toward adequate remuneration for the car
riago of such articles ns can not bear pro
portionate charges. Thus the cost of EE
Jlaro to the carrier itself is no more a con"
trolling consideration than is thl value of !
the service to the owner of the propertv n !
any caurt were to undertakP m nV y
question of reasonable 'rates ofHw
sincation. It would necessarily undertiikA '
S ? in Jif ,lnPuence the actions of
the carrier in classifying the articles, though
it could only do this upon tho discovery f
some positive rule or rules of action L
as no railroad manager and no public 0S
ever invested with authority has i vi 1
able to discover. A mere" statemW Iho
case shows how impossible it is tha ,.
tion of classification should be one of law
QUESTIONS OF SOUND JUDGMENT
siosaidf Bm rePrt the com
An attempt is made to give authority in
the courts to interfere by the suggestion that
property or charter rights, or Doth, are in
volved in the matter of fixing rates and
that it is not possible the conclusions of' an
administrative board should De final. This
is an endeavor by the mere use of words
to confer jurisdiction upon the courts where
the substance is altogether wanting. Prop
erty or contract rights are involved in these
. cases precisely as they are il numerous
other cases of the exercise of power under
the police authority of the state, either by
itself or by its municipalities. It is said
. sometimes that the power may be exercised
to such an extent that the property of the
roads would in fact be confiscated, and most
alarming pictures have been exhibited to the
public of boards bent upon destruction.
The effort has sometimes been made to
- indicate a rule which' must constitute the
minimum of reduction in all cases, by not
making rates so low that the roaas could not
pay interest and dividends, after maintain
ing the road and paying running expenses.
This comes nearer to a suggestion of a rule
of law for these cases than any other that
has come to the knowledge of the commis
sion. But it is so far from Delng a rule of
law that it is hot even a rule of policy, or a
practical rule to which any name can bo
given, and to which the carriers themselves
or the public authorities can conform their
action. To attempt .to consider the condi
tion of- roads and their equipment, improve
ments to be made and the 'innumerable ques
tions that are involved in -running expenses,
it is very obvious that there can' be no stand
ard of expense which the dourts can act upon
and apply, but that the whole field is one
of judgment in the exercise of a reasonable
discretion.
Many roads rfever have and probably
never will be able to pay their obligations
and to pay dividends to thejr stockholders.
Many have become bankrupt. ' fcut such roads
are almost invariably operated J with benefit
to the sections of country served, and man
age to pay running expenses, and perhaps
partly pay interest on present indebtedness.
If the rule suggested is a correct, one and
must be adhered to by public authorities,
then it is entirely impossible tl;at those who
operate these roads can prescribe excessive
charges, since it is impossible to fix any .
rates that would bring their revenue up to
the point of enabling them to pay any divi
dend, for the reason that their competitors
would charge lower rates. But the rule sug
gested would also be one under which ihoso
roads would be entitled to charge, the most
which cost the most, and also those built with
money borrowed instead of with money of
the-stockholders; the larger the debt the
higher tho rates' that would be legal.
But over and beyond all this the attempt
to apply the rule suggested would be abso-
lutely futile for the reason that. 'the rates pre- ,
scribed for one road would necessarily affect
others that either directly or indirc 3tly came
in competition with it. If, there.'ore, a court
is to undertake to protect the one against
its rates being so reduced as to. endanger the
payment of its obligations, it must reach nut
and restrain any regulation by the public
authorities of tho rates of all competitors, ir
respective of the question whether they also
are or are not subject to the same risk.
The commissions created 'by lay for the reg
ulation of railway transportation do not deal
with questions of classification or of rates
as questions' of law, but as b;ejng what they
necessarily ' arequestions of '.discretion and -1
sound judgment, ' 'j.'
AN, $j)iyi)NISTRATIONi,iPUTY. . !
(jbngress hns been trving, jtq, saddle a leffis
lativeor administrative, duty uwm the judiciary
department, and has failed. The reUef sou&M
has not been attaihod, which conclusively proves
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