shipments, a thing which, in most cases, it was very difficult to do. Under the present law, it is only necessary to prove that some shipper has been charged less than the published rate, which is comparatively a simple matter.

4. A more important change resulted from the provision which confers jurisdiction upon the circuit courts to restrain departures from the published rates, or any discrimination forbidden by law, by writ of injunction, or by other appropriate process. If there is reasonable ground to believe that tariffs have been disregarded, any circuit court may now enjoin the offending carrier from continued violations of the law, and it may punish continued disobedience by the summary process of contempt of court.

Evidently these provisions are a great improvement over the old law. Within two months after the Act went into effect, the circuit courts had issued injunctions against more than thirty railroads.

But one other point remains to be considered in this connection. In the President's Message to Congress of December, 1905, he advocated a rather extraordinary policy, which has since received considerable support in Congress and throughout the country. It is that as soon as it has been proved that any railroad has been guilty of giving any secret rebates, the maximum charge which the railroad might enforce for the future should be immediately set by the Commission at the lowest rate accorded the most favored shipper.' It is marvelous that such a policy could emanate from so high an authority, and receive such strong support. Rebates will never be entirely eliminated any more than robberies, no matter how severe may be the penalties which are placed upon the statute-books. Suppose some over-zealous traffic manager at Kansas City were to give a rebate of twentyfive per cent on a shipment of grain to Chicago. If this

1 This provision was not embodied in the final draft of the Hepburn Act.

were to become known, the railroad, according to this plan, would be required to carry all shipments of grain to Chicago at a similar rate. Not only that, but all the competing roads would be compelled to meet this reduction, or to lose their proportion of the traffic. Then the roads leading to Galveston and New Orleans would see their traffic being taken away from them and diverted to the Eastern ports by reason of these lower rates to Chicago, and they would be compelled to make similar reductions in order to protect their interests. Furthermore, all the roads at Omaha, and at every other point competing with Kansas City, would also be compelled to make similar reductions or lose their share of the traffic. In short, rates over the whole country would be affected. It is quite possible that a permanent reduction of twenty-five per cent in the grain rates would practically bankrupt many of these Western roads. All this might come from the overzeal of a single traffic manager, in endeavoring to secure a shipment amounting, perhaps, to only a few carloads. Surely it would be better to mete out adequate punishment to the offending road than so severely to punish both innocent and guilty alike.

CHAPTER III

OBJECTIONS TO RATE-FIXING BY A COMMISSION

HAVING shown that Federal control of rates is necessary in order to avoid certain evils which have arisen in connection with our transportation system, let us now take up the general objections to a rigid system of public regulation, in order that we may be in a better position to devise a plan whereby many of the evils, alleged to be inherent in any system of public control, may be avoided.

The difficulties and dangers of government regulation have already been so thoroughly set forth by various writers, among whom the most prominent, perhaps, is Professor H. R. Meyer, in his recent work, "Government Regulation of Railway Rates," and by numerous railway advocates such as Mr. H. T. Newcomb, in almost countless polemical tracts and articles promulgated through the public press, that more than brief mention of the various points would lead to inexcusable repetition. Moreover some of these objections have already been considered in the preceding chapter, and most of them will reappear in connection with the discussion of the court decisions, while the legal objections will appear in the final chapter proposing an alternative policy to that of giving the Commission the power to fix rates at its discretion in all cases of complaint. Therefore, those points only will be considered which we do not believe to have received sufficient notice elsewhere.

The inference has been frequently drawn that once the Commission has been given power to fix rates, all intrinsic difficulties of the problem will adjust themselves. No such conclusion is warranted. As has been ably pointed out by

Professor H. R. Meyer, in the work referred to above, wherever government regulation has been tried, the difficulties have multipled rather than diminished.

First, then, among the objections which we shall consider is the utter lack of an adequate standard by which the reasonableness of a given rate may be adjudged. In all the agitation which has been going on for rate-fixing by a Commission, no one has yet volunteered any satisfactory information as to what principle ought to guide that Commission in the performance of its great task.

Suppose a specific rate were complained of before such a Commission. Obviously that body would be compelled to seek for some standard by which it might judge of the reasonableness both of the rate complained of and of the rate which it proposes to substitute for it.

The standard which has hitherto been applied in almost every case which has come before the Commission has been that of comparative rates either upon the same or upon other roads, with some allowance for a difference in conditions. Yet there are scarcely two important points in the whole country where the conditions are altogether similar. In the first place a great difference may exist in the relative costs of service. For instance, wherever the traffic is already very heavy, additional traffic can be carried only at great expense, but where the amount of traffic is light, and cars and engines stand idle for a considerable portion of the time, the cost of carrying additional traffic is comparatively trivial. Secondly, there may be a considerable difference in the respective forces of competition at the different points. Even though a certain amount of competition may be present at each of two points, it may be much keener in the one case than in the other.

Finally, there may be a vast difference in the relative possibilities of developing traffic at the two points. In such a case, it might be advantageous for the road to make

rates to one point so low that for the time being they might be unprofitable, in order to develop traffic for the future, while in the other case, it might be that no great amount of traffic could be secured whatever rates were charged by the railroad.

It would be only in rare and exceptional instances that these various factors would be of equal force at different points. If the Commission, therefore, is to use the standard of comparative rates for the purpose of determining the reasonableness of rates complained of, and if it is to proceed with any degree of fairness, it will be necessary for it to estimate the amount of the dissimilarity in conditions in terms of cents per 100 lbs. in the rate. Such a process is extremely difficult and incapable of being carried out with any degree of scientific accuracy.

In the first place, how is it possible to determine the relative costs of service where the conditions are in

any degree dissimilar? In one case there may be a movement of empty cars in the same direction as that of the traffic in question. In such a case, if there were any possibility of developing a large amount of traffic, a very low rate would be made by the railroad, for the additional cost of carrying this traffic would only be the difference in the cost of hauling empty and loaded cars. In the other case, the movement of empty cars might be in a direction opposite to that of the traffic in question. Under such circumstances, any increase in the amount of traffic would cost the railroad, not only the full amount of the expense of hauling a loaded car, but also that of hauling the empty car back to the initial point of shipment, since, under the assumption, it would be impossible to secure a return load.

Even if it were possible to ascertain the difference in the respective assignable costs of service in such a case, it is altogether unlikely that any Commission would admit of such a wide dissimilarity of rates as would result from