refused to do, and the Commission appealed to the Courts for the enforcement of its order.

The Circuit Court for reasons stated elsewhere,1 refused to enforce this order, and appeal is now pending in the Supreme Court of the United States.

1 Vide p. 30.

CHAPTER VI

A RATIONAL PLAN FOR PUBLIC CONTROL OF RATES

IN a preceding chapter, we have endeavored to show that a certain amount of public control of rates is necessary. Upon this point nearly all authorities agree. Circumstances frequently arise where some sort of rate control by the public would not only be advantageous to the public at large, but to the railroads themselves. In fact, even the most ardent of the railway advocates do not object so much to a system of public control in itself as to an irrational and rigid system of public control.

Nor has the right of the public to control rates been seriously questioned. Common carriers, from time immemorial, have been subject to peculiar obligations toward the public. They have always been held to be legally bound to render their services to all applicants upon equal terms, while, at the same time, the charges for those services should not exceed a reasonable figure. Furthermore, railroads have placed themselves under peculiar obligations to the public through their exercise of the right of eminent domain, a power which belongs to no individual or private corporation, unless it has first been conferred by the state.

According to the principles upon which our state and national governments are founded, private property cannot be taken by the state, or by a corporation or individual exercising the power of eminent domain conferred by the state, except for public purposes, and with due process of law. Private property cannot be taken for private purposes without the owner's consent, no matter what compensation may be allowed. Therefore it is not only the legal right,

but the duty of the state to see to it, that wherever it has authorized the taking of property, that property should continue to be used not solely for private but for public purposes.

It is extremely doubtful whether this end may in every case be fully attained where the final determination of railroad rates is left exclusively to the discretion of private individuals whose interests are none other than to secure the largest return possible from railway operations. Whereever extortion and unjust discriminations are practiced, it is certain that this end is not attained. No public purpose is pursued where the industries of one section of the country are destroyed for the purpose of the protection of similar industries in another section ill adapted to their development, and where the only object of such a measure is to secure some private advantage for the railroads concerned. However this may be, it is certain that the state may exact compensation for the valuable privileges which it confers upon railroads, and this compensation may take the form of a mandate that their rates and charges should be subject to reasonable control.

Another ground upon which the right of the public to control rates is based is the necessity of the service. It is not every necessary service that needs to be subjected to public control. Wherever the service is such that any person with a reasonable amount of capital may engage in business under conditions of free competition, we may safely trust to economic forces to protect the public from extortion. But this is not the case in the railroad industry. It is the monopolistic feature that renders public control essential. The right and the duty of the public to exercise a reasonable control over the agents of transportation is, therefore, so generally admitted that it is no longer an open question.

The main problem, however, is the determination of 1 See Kansas corn-meal case, ante, p. 34.

what constitutes a reasonable rate. Some have contended that, as long as railway rates are below the cost of transportation by other means than railways, the public has no right to complain. In fact, some railroad advocates have arrogantly assumed that the railroads have been the sole causes of the development of the resources of this country, and that the public ought to be glad to obtain any rate lower than cost of transportation without railroads. This contention, however, cannot be sustained. The railroads have not brought about the development of this country entirely unaided. In fact, the railroads themselves could have accomplished nothing whatever unless there had been capital, labor, and men of affairs ready to enter and develop the new territory which was made accessible by the railroads. Surely these factors have figured as strongly in the development of this country as the railroads themselves.

Nor is it the present stockholders of a railroad that have enabled it to exist. The countless inventions and improvements which have taken place within the past century are the result of the labor and study of thousands of individuals, many of whom never owned a single share of railway stock. The Government has partially recompensed these public benefactors by granting to them temporary monopolies in the production of the articles which they have invented. After the expiration of the brief period for which the limited monopoly has been conferred, the new process becomes public property. The only point of contribution which the railway managers have made with respect to these great improvements has been the readiness with which they have adopted them when they saw it was to their interests to do so. For this they are justly entitled to a portion of the advantages accruing from them.

But the public, which has encouraged the invention and made it possible by granting to the inventor a legal monopoly in the production of the article, is entitled to a

far greater portion of these advantages. It is evident, therefore, that the railroads, embodying as they do the accumulated results of the enlightened thought of the past, and enjoying the common advantages resulting from the growth of civilization and of the division of labor, cannot lay claim to all the advantages which their existence renders to society. Wherever, therefore, the railroads are unchecked by competition, or by other economic causes, public control is absolutely necessary to prevent them from demanding rates which will enable them to absorb the whole of the value of their existence to the community which they serve, for this they will surely do unless held in check by such regulation or by the fear of it. Fortunately, economic causes have thus far proved a most efficient regulator in all but a very few cases.

On the other hand, we have shown the dangers and difficulties which would be encountered in connection with any rigid system of rate control by a commission. We must, therefore, seek for some other plan by which the interests of the public may be protected, and at the same time the evils in connection with any rigid system of rate control, such as is embodied in arbitrary rate-fixing by a commission, may be avoided as far as possible. Let us, therefore, first examine the plan which has been in force since the passage of the Interstate Commerce Law of 1887 and see whether it has proved itself adequate to meet the exigencies of the situation.

In the first place it is quite evident that something must be wrong with a plan which has produced such general dissatisfaction. It is extremely doubtful whether the present widespread agitation for a better system of rate control could have come into existence unless there were serious evils in respect to which shippers have found themselves unable to obtain an adequate remedy under the present law.

Nevertheless, this system of rate control has accom