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had no power to prescribe what would be a reasonable rate in its stead. It could make orders commanding the carrier to cease and desist from practicing discrimination, or from continuing to charge an unreasonable rate, or to make reparation for losses sustained. But the orders were not obligatory until suit was brought by the Commission to enforce them. Pending the protracted delays which necessarily ensued, during which period the acts forbidden by the order were also prohibited by injunction, the discouraged shipper became exhausted. He found his business ruined by the acts complained of. He was helpless. As between carrier and shipper the latter was practically remediless.

Thus the carrier, with unlimited resources at its command, has been able to evade the law and defeat the beneficial provisions of the statute, by reason of the lack of power conferred upon the Interstate Commerce Commission.


But graver abuses than rebating and discrimination grew out of the practice of carriers engaging in business, and dealing in the commodities which they transport, Not only were shippers discriminated against and driven out of business by rivals, who, by means of secret rebates, could secure freight rates much lower than that paid by the competitor, but in many instances the rival and competitor of the helpless shipper was the carrier itself, who, contrary to public policy, was permitted to become a dealer in the very commodities it transported. A familiar instance of the evils resulting from the practice of the carrier engaging in business will be found in the mining regions of Pennsylvania and West Virginia, where the coal lands were largely absorbed and the coal business monopolized by the carrier. By mining and dealing in coal, the carrier, either directly or through subsidiary companies, found no difficulty in driving its competitors from the field by refusing them cars and facilities for transportation, and discriminating against them by secret rebates. The carrier was also the miner and shipper of coal, and in this dual capacity was enabled to establish a complete monopoly and to control absolutely the price of the commodity to the consumer.

The carrier in the exercise of the tremendous power which attaches to the control of rates of transportation upon the public highways was able to make its own markets, and to establish its own market towns. Communities were destroyed because rates were made lower to certain points at greater distances than the rates given to localities situated nearer to the place of the origin of the shipment. This sort of discrimination frequently destroyed communities, and built up rival localities, and market points at the expense of those destroyed. In one instance (the Tift case 1) the carrier, under the guise of increased freight charges, took a pro rata share of the increased profits realized from the business of a prosperous shipper.

LEGISLATION OF 1906. The President of the United States, Hon. THEODORE ROOSEVELT, carefully studied the conditions resulting from the criminal acts of the carriers, and the abuse of their great powers. He realized the difficulties attending the stupendous problem, and the far-reaching consequences of conferring upon some body or tribunal the rate-making power. He aroused public opinion to the importance of the subject, and the pressing need of a remedy for the evils complained of. In his annual message to Congress (December, 1905), he recommended that the power be vested in the Interstate Commerce Commission, in these memorable words:

“ The Interstate Commerce Commission should be vested with the power, where a given rate has been challenged and after full hearing found to be unreasonable, to decide, subject to judicial review, what shall be a reasonable rate to take its place; the ruling of the Commission to take effect immediately and to obtain, unless and until it is reversed by the court of review.”

Had this recommendation been enacted into law, the rights of the shipper would have been restored, and the power of

1 Tift v. Southern Ry. Co., 138 Fed. Rep. 753.



the carrier to exhaust and ruin the shipper by interminable delay, and to continue to grant rebates, and to exercise unreasonable discrimination in its own behalf, would have been materially checked. The carrier would have been obliged to obey an order made after a fair trial, and to carry, upon the terms and conditions prescribed in the act, and to treat all shippers, similarly situated, alike. The struggle which resulted in Congress over the rate regulation recommended by the President became memorable. One phase of it was the strenuous effort to prevent the rate, made by the Commission, from taking effect immediately. This effort was successful. The act, passed June 29, 1906, vested in the Interstate Commerce Commission power to fix a maximum rate, the order of the Commission to take effect within such reasonable time, not less than thirty days, and continue in force for such period of time, not exceeding two years, as shall be prescribed in the order, unless the same shall be suspended or modified or set aside by the Commission, or be suspended or set aside by a court of competent jurisdiction.”

RESULTS ACHIEVED BY LEGISLATION OF 1906. Nevertheless, great and lasting results were achieved by the legislation of 1906. The task of securing efficient remedial legislation was difficult. The law must be just. The carrier must have reasonable compensation for services rendered. The shipper must be protected absolutely from unjust discrimination by the carrier. One man must not be charged more than another for the same service. Facilities of shipment and instrumentalities of commerce, including switches and sidings, must be open to all, and none unjustly excluded from their use. A railroad is a public highway and cannot, in the nature of things, be operated as a private way so as to permit its use by those only who are chosen by the carrier. Such discrimination would make the highway private. In order to secure these ends, the following provisions, in addition to the power to fix rates, will be found in the new law:

The Commission is given power, not only to fix rates generally, but to prescribe joint through rates, and part rail and part water rates.

Carriers, that is railroad companies, as distinguished from pipe-line companies, are expressly forbidden to deal in the commodities they carry, other than timber and the manufactured products thereof. This provision is to go into effect May 1, 1908.

Private car lines, including those operating refrigerating and ventilating cars, express companies, and sleeping car companies are made common carriers. Pipe line companies, persons and corporations engaged in the transportation of oil or other commodities, except water, or natural or artificial gas who transport by means of pipe lines, or partly by pipe lines and partly by railroad, or partly by pipe lines and partly by water, are also declared to be common carriers.

Carriers must keep uniform books, which, at all times, shall be accessible to the Interstate Commerce Commission. All reports made by carriers to the Commission must be uniform.

Switches, sidings and terminal facilities may be ordered by the Commission, and may also be directed to be furnished by the court by writ of mandamus.

Damages sustained to goods sent over a joint through route shall be borne by the initial carrier.

An appeal from an order of the Commission fixing a rate, if sustained by the court below, must be taken directly to the Supreme Court of the United States, thus abolishing intermediate appeal.


The law, as to free passes, and free transportation, will require judicial interpretation. Congress in the Act approved June 29, 1906, enacted new legislation in this regard, but in so doing did not amend section 22 of the Commerce Act, which relates exclusively to the subject, but inserted the new legislation as part of section 1 of the Act. The amending Act declares “ that all laws, and parts of laws in conflict with the provisions of” the Act of June 29, 1906, are repealed. So much, and such parts of section 22, therefore, as conflict

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with the provisions of section 1, relating to free transportation, are repealed. But if the provisions of section 22 do not directly conflict with the provisions of section 1, in this respect, both sections must stand. Under section 22 carriers could handle or carry property for the United States, State or municipal governments free, or at reduced rates. There is nothing in section 1 which is inconsistent with this provision. Under section 22, however, free passes could lawfully be given, only to officers and employees of railroads; and the principal officers of any railroad company could exchange free passes or tickets “ with other railroad companies for their officers and employees.'

The class of persons to whom free passes may issue, after January 1, 1907, will be no longer confined to the officers and employees of a railroad company, but may include the officers and employees of any “common carriers," namely, the officers and employees of any oil company using pipe lines, any express company, sleeping car company, or railroad company, their families, agents, surgeons, physicians, and attorneysat-law; and also “ witnesses attending any legal investigation in which the common carrier is interested.” To this class belongs also persons engaged in religious and charitable work.

A person transacting the business of a common carrier, or representing it in any capacity, is an agent of the carrier. Pipe line companies are engaged in refining and selling oil. Any person or corporation engaged in this business which does not use a pipe line, can not derive any benefit under the law which sanctions free transportation; but a competitor using pipe lines, could secure free transportation for its salesmen, employees, agents and attorneys. All salesmen or traveling agents of such persons or corporations, throughout the United States, would thus be enabled to carry on business free of charge, so far as transportation for these traveling agents is concerned. This exemption from charges for transportation, would give them an advantage in the market over a competitor, which would result in securing to the pipe line company a monopoly. Free transportation under such circumstances, would operate as a commercial weapon, equally as formida

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