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rates and charges for transportation is an attribute of sovereignty, because in operating a public highway, a transportation corporation exercises the power of the sovereign. This power over public highways, constructed for public use, to accommodate public travel, and secure public convenience, is a matter of public concern and is absolutely essential to government. The sovereign cannot surrender this power, because, like the taxing power, the entire community has an interest in preserving it undiminished. Two sovereigns cannot exist in the same jurisdiction. One must be supreme, and the supreme power must, of necessity, be the Federal government. And so it was ordained when our fathers wrote into the Constitution the words declaring that that instrument and the laws made in pursuance thereof “shall be the supreme law of the land," and in express words subordinated the judiciary of the several States by declaring that “the judges in every State shall be bound thereby, anything in the Constitution or laws of any State to the contrary notwithstanding."
The assumption, therefore, by the Federal government of this power to control interstate commerce is not an assumption of the power of the States, because this particular power does not reside in the States, but in the Federal government. Indeed, before Congress assumed to exercise this power by enacting the Interstate Commerce Act, Chief Justice WAITE, in 1877, speaking for the Supreme Court of the United States, declared that “State legislation which seeks to impose a direct burden upon interstate commerce, or to inter fere directly with its freedom, does encroach upon the exclusive power of Congress."1 This doctrine has always prevailed and must prevail, if Congress is to exercise its right to regulate interstate commerce.
RAILWAYS OF THE UNITED STATES. Our unrivalled railway system, the finest in the world, is the growth of seventy-five years. In 1830 there were but twenty-three miles of railroad in operation in the United
1 Hall v. De Cuir, 95 U. S. 485.
States. On January 1, 1906, the total trackage was 215,000 miles, exclusive of second, third, and fourth tracks, yards, and sidings. If these be included, the aggregate will be 300,000 miles of track. The circumference of the earth is but 25,000 miles. The mileage of railways in the United States embraces two-thirds of the railway mileage of the world. The capital of these transportation corporations is estimated at $13,000,600,000. The aggregate value of their capital stock represents $6,339,899,000, and, in 1905, their income from freight and passenger receipts reached the handsome total of $5,500,000 per day. Some idea of the colossal proportions of the freight business alone may be learned from the fact that an increase of one mill per ton per mile, on the traffic for the year 1905, would produce $174,522,089. They employ 1,600,000 men. Their disbursements include operating expenses, fixed charges, floating indebtedness, improvement of road bed, necessary repairs, and dividends which may be declared from time to time on the capital stock. The vast power, exercised by the carriers of the country, are controlled by a directorate, dominated, it is said, by about a hundred men.
The principal railways of the United States are under the control of seven great systems, as follows: (1) The Vanderbilt System ;1 (2) The Pennsylvania ;2 (3) The Gould System ;3 (4) The Harriman Lines ;4 (5) The Hill System ;"
1 Comprising New York Central; the Lake Shore & Michigan Southern; the Michigan Central; the Cleveland, Cincinnati, Chicago & St. Louis ; the Pittsburg & Lake Erie, and the Erie Railway Company (formerly New York, Lake Erie & Western).
2 Including the Pennsylvania, and controlling the Baltimore & Ohio; Chesapeake & Ohio; Norfolk & Western, and holding jointly with the New York Central a controlling interest in the Philadelphia & Reading, which latter controls the Central Railroad of New Jersey.
3 Comprising the Wabash; the Missouri Pacific; the St. Louis Iron Mountain & Southern; the Texas & Pacific; the St. Louis Southwestern; the International Great Northern; the Wheeling & Lake Erie; the West Virginia Central: the Denver & Rio Grande; the Western Maryland, and now constructing the Western Pacific
4 Comprising te Union Pacific; Southern Pacific; Central Pacific; Oregon Short Line; Oregon Railway & Navigation Co., with large interests in the Illinois Central; the Chicago & Alton, and Kansas City Southern.
5 Including the Great Northern; the Northern Pacific. and the Chicago, Burlington & Quincy.
(6) The Rock Island System;' and (7) The Southern Railway System.
These facts give force to the pertinent observation of Hon. John F. DILLON, speaking of the danger of railway consolidation, “that uncontrolled power in a few men by any form of corporate device, to control the railway systems of :' great country, is a power too great to be compatible with the public weal, and one which would not be permanently endured by the people.”
RAILWAY LEGISLATION PRIOR TO 1906. The first general law by which Congress assumed to exercise control of commerce among the States and with foreign nations was approved February 4, 1887, and is known as the Interstate Commerce Act. It embraced legislation affecting only common carriers, and was supplemented by the Sherman Act, approved July 2, 1890, which included not only common carriers, but manufacturers and producers. The Sherman Act prohibits contracts and agreements of every kind in restraint of trade and commerce. This legislation as to carriers was further supplemented by the Elkins Act, approved February 19, 1903. Two causes contributed to hinder efficient administration of this railway and antitrust legislation. One was occasioned by the unavoidable delay in reaching the Supreme Court of the United States, as an appeal in the first instance was to the United States Circuit Court of Appeals. Another obstacle resulted from the difficulty of securing evidence to prosecute violations of the law. To obviate these difficulties Congress passed the Expediting Act of February 19, 1903, abolishing intermediate appeals to the Circuit Court of Appeals, when the government was a party, and authorizing an appeal directly to the Supreme Court, and giving cases so expedited a preference over all other litigation, except criminal causes. In order to compel witnesses to testify Congress passed several
1 Including the Chicago, Rock Island & Pacific; the St. Louis & San Francisco; the Chicago & Eastern Illinois, and the Choctaw, Oklahoma & Gulf.
2 This system controls nearly all the important railways of the South.
POOLING — COMPETITION.
statutes, approved, respectively, February 11, 1893, February 14, 1903, February 19, 1903, and February 25, 1903, each containing an express provision making the testimony of the witness compulsory, and securing immunity to the person so testifying, by prohibiting any prosecution of the witness on account of any matter to which he might be compelled to testify, except perjury in giving the evidence.
Congress also provided a method of securing information through an investigating bureau, known as the Bureau of Corporations in the Department of Commerce and Labor, created by section 6 of the act approved February 14, 1903, giving the Commissioner power to investigate the organization, conduct, and management of the business” of corporations or joint-stock companies engaged in interstate commerce. This legislation was designed to promote Federal control in the field of interstate commerce.
COMMUNITY OF INTEREST AMONG CARRIERS. The Commerce Act, among other provisions, prohibited pooling among railroads in order to stimulate competition among carriers. The consolidation and merger of competing systems of railway has been condemned by the Supreme Court of the United States as contrary to law and public policy and in violation of the Sherman Act. Yet from official data in the records of the Interstate Commerce Commission, and from testimony taken before that body from time to time, it would seem that the railways of the United States are practically merged and operated under a sort of gentlemen's agreement, which substantially eliminates competition. Mr. Edward A. Moseley, secretary of the Commission, is authority for the statement that 65 per cent. of all the railroads in the country are so closely united as to amount to a practical community of interest; while the remaining 35 per cent. are absolutely dependent upon these great consolidations. “Competition,” says Mr. Moseley,“ between carriers by rail, which formerly prevailed and acted as a check or restraint again unreasonable rates, has been to a great extent suppressed and destroyed. As a result of these consolidations, the shipper can no longer safely rely upon competition to insure rates reasonably low, and to prevent rates unreasonably high. The principal and powerful lines are now controlled by a few, whose common interests make it desirable and profitable to act in concert and refrain from competition.”
Other objects sought to be secured by the Commerce Act originally, and by the legislation of 1906 amending it, were (1) to give to every shipper equality of opportunity, and prevent the carrier from charging one man more than another for transportation of property; (2) to forbid one carrying company to combine with another, so that there could be no merger of public highways, which could only result in eliminating competition, thus establishing a monopoly; (3) to compel a carrier to carry, and to prohibit it from engaging in any other business.
The Interstate Commerce Act was experimental legislation. Experience has shown that its provisions, even as amended by the Elkins Act and other supplemental legislation above referred to, failed to accomplish the benefits which it was designed to secure.
NEED OF SUPPLEMENTAL LEGISLATION,
One radical defect in the law was its failure to create a tribunal with power to fix rates and charges for transportation. When the act was passed the far-reaching consequences of conferring this sovereign power was ably discussed. Should it remain in the carrier ? Should it be vested in a judicial tribunal or court, clothed with jurisdiction over this particular field, to be known as the Court of Interstate Commerce (Congress undoubtedly has power to create such a court), or should supervision be conferred upon an administrative or quasi-judicial body. The latter expedient was adopted and the Interstate Commerce Commission was created with certain specified powers and duties.
The Commission, however, prior to 1906, was not clothed with power to fix rates and charges for transportation. It could take testimony as to whether or not a given rate was reasonable, but if it found that the rate was unreasonable, it