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Mr. Bacon. We do not seem to have had any occasion to do that, for the reason that the railway opponents of the bill have not suggested any such necessity. I will say, however, that in the testimony presented by the commercial organizations, several of the members--four of the members of the Interstate Commerce Commission, did go into the question of the legality of this proposition, each for himself. And also Mr. Kernan, of New York, the distinguished lawyer who was four years chairman of the State railway commission of New York, went into it quite thoroughly before this committee.

The CHAIRMAN. You remember that Mr. Prouty stated to this committee that he did not know whether or not this bill was a wise one, do you not?

Mr. Bacon. At one time he said that he had not given it sufficient study to determine.

The CHAIRMAN. That was at the time he appeared before this committee, was it not?

Mr. Bacon. I could not say specifically, in regard to that; but I know that Judge Prouty, in his testimony, did advocate the bill very strongly, and he has since expressed his approval of it, as have also the other members of the Commission.

The CHAIRMAN. That is all I care to ask for the present.

Thereupon the committee adjourned until Tuesday, December 13, 1904, at 10.30 o'clock a. m.

TUESDAY, December 13, 1904.

STATEMENT OF MR. E. P. BACON- Continued.

The CHAIRMAN. Mr. Bacon, are you ready to proceed?

Mr. Bacon. Yes, sir; I am ready to answer any questions that may be asked of me.

The CHAIRMAN. Did you intend, by an answer that you made the other day, to say that the Interstate Commerce Commission had not aken an active part in the advocacy of your proposition to give them the power to establish railway rates?

Mr. Bacon. So far as the organization which I represent is concerned, they have not.

The CHAIRMAN. Has there been at any time an effort on the part of you or your organization to procure that result? Mr. Bacon. Not in the least; no, sir.

The CHAIRMAN. Were you cognizant of it at the time that the railway commission did, in a former meeting, instruct their secretary to prepare and send abroad a letter advocating, as the views of the commission, this increase of power or grant of power?

Mr. Bacon. That I have no knowledge of.
The CHAIRMAN. You have no knowledge of it?
Mr. Bacon. I know it is not in connection with this organization
which, as you understand, was formed in 1900.

The CHAIRMAN. Well, your organization was formed in 1900 ?
Mr. Bacon. Yes, sir; November, 1900.

The CHAIRMAN. But there was another meeting in the year before, out of which it was in part formed, was there not?

H. Doc. 422, 58-3-2

Mr. Bacon. It succeeded the organization known as the League of National Associations.

The CHAIRMAN. When you speak of your organization, do you exclude the prior organization?

Mr. Bacon. I speak only for the present organization.

The CHAIRMAN. Did you have no knowledge of the transactions of the other?

Mr. Bacon. I did have some partial knowledge.
The CHAIRMAN. You did have?
Mr. Bacon. Yes, sir.

The CHAIRMAN. Did you know, or was it through your advice or procurement, that on the 8th day of December, 1899, the Interstate Commerce Commission made the following order:

Cooperation with certain mercantile organizations to secure the adoption of an amendment to the act to regulate commerce being under consideration, it was unanimously voted to instruct the secretary to cooperate with the representatives of these organizations for the purpose of securing the adoption of necessary amendments, and particularly the passage of a bill which has been approved by such organizations at a meeting held in Chicago on November 22, 1899, and to that end to give the public information as to the present state of the law and the necessity of amending it by distributing such reports, papers, and documents, as are designed to accomplish that purpose, and to devote himself assiduously to such duties.

Did you know of the passage of that order?
Mr. BACON. I do not think I ever saw that order.
The CHAIRMAN. Did you know of its passage?
Mr. Bacon. I do not recollect of knowing of it.
The CHAIRMAN. Did you aid in securing its passage?
Mr. Bacon. I did not. I knew nothing of it.

The HAIRMAN. Did you urge in any way, as the representative of your committee, this cooperation on the part of the Commission?

Mr. Bacon. I did not; no, sir.
The CHAIRMAN. Were you at that time active in this matter?
Mr. Bacon. I was, to some extent.

The CHAIRMAN. Were there other agents of that society then cooperating with you?

Mr. Bacon. That can hardly be called a society. It was a convention similar to the one that was held in 1900, composed of delegates from national commercial organizations only.

The CHAIRMAN. Do you know what was the result of that action which I have called attention to?

Mr. Bacon. It resulted in pressing for the passage of the Cullom bill, which had been drawn just previously thereto.

The CHAIRMAN. Pressing by whom?

Mr. Bacon. I think by one or two members of the Commission; perhaps by several.

The CHAIRMAN.'What bill was drawn?
Mr. BACON. The bill known as the Cullom bill.

The CHAIRMAN. Yes, sir; but I am speaking more particularly about the results that followed this action that I have just read.

Mr. Bacon. Those results were simply an effort on the part of the organizations associated in that effort to secure the passage of the Cullom bill.

The CHAIRMAN. Do you know anything of the circular letter that was prepared by Edward A. Moseley, secretary of the Interstate Commerce Commission, and disseminated generally, or extensively?

Mr. Bacon. I do not recollect any circular that was prepared by him?

The CHAIRMAN. You never saw it?

Mr. Bacon. I have no recollection of it. I would not say that I never saw it, positively, but I have no distinct recollection of it. I could not say whether I ever saw it or not.

The CHAIRMAN. Are you familiar with that letter?

Mr. Bacon. No, sir. If I were familiar with it I would not say that I had no recollection in regard to it.

The CHAIRMAN. I beg your pardon. When I asked this last question I had not in mind that statement.

Mr. Bacon. Mr. Chairman, if I may suggest, it seems to me that whatever action was taken by that preliminary organization the present organization is not responsible for, because it was organized on different lines. The present organization consists of the various State and local organizations in connection with the national organizations that were associated in the original movement; but the present organization succeeded that and proceeded on entirely different and independent lines, and although it did ask and urge the passage of the Cullom bill, which was then in its second session before Congress, subsequent to that session it prepared an entirely new bill, the passage of which it urged, and since that it has prepared still another, each being modified by conditions and circumstances that have arisen during that provision.

The CHAIRMAN. But the same provision, substantially, with regard to the rate-making power, was found in all those bills ?

Mr. Bacon. That is common to them all; yes, sir.

The CHAIRMAN. Common to them all, and that was the feature of the bill most earnestly urged by the Interstate Commerce Commission, was it not?

Mr. Bacon. The Interstate Commerce Commission urged the passage of the Cullom bill which comprised a large number of provisions and was very extensive in its range, and designed to remedy a number of serious defects that have been developed in practice under the interstatecommerce act, and the subsequent bills were very much more limited in their provisions; and the final bill was confined to the particular point of conferring special power upon the Commission, together with preventing discriminations.

The CHAIRMAN. You said the other day—or at least I understood you to state—that the power of the Interstate Commerce Commission to make rates was conceded by everyone for ten years after its formation.

Mr. Bacon. I think I made a statement to substantially that effect.

The CHAIRMAN. Do you know that within three months after the Commission was organized, the then chairman of the Commission, Mr. Cooley, expressly declared that no such power bad been conferred upon the Commission, that it was utterly impracticable, and that that daty could not be performed? Do you know that he said that in an official capacity!

Mr. Bacon. I do not know that he made such a statement as that. The CHAIRMAN. You do not?

Mr. Bacon. I have a memorandum of what was stated by Judge Cooley.

The CHAIRMAN. Do you know that Mr. Schoonmaker, within eight

months after the organization of the Commission, substantially used the same language?

Mr. BACON. No, sir. My recollection is directly to the contrary.
The CHAIRMAN. To the contrary?
Mr. Bacon. Yes, sir.

The CHAIRMAN. Do you know that repeatedly, between that time and the decision in the maximum-rate cases, the courts declared that that power did not exist ?

Mr. Bacon. The courts declared that the power to make rates primarily did not exist in the Commission; and the decision of 1897–

The CHAIRMAN. Yes, sir.

Mr. BACON (continuing). Declared that the Commission had no power to determine what change should be made in a rate which was found to be unjust or unreasonable.

The CHAIRMAN. Yes.

Mr. BACON (continuing). And it declares that its power was limited to the denunciation of the rate and limited to declaring the fact that it was found to be unreasonable or discriminative, as the case might be. On that point I have a paper here which I will read to the committee, which will be of interest-a paper which, I may say, was drawn by the secretary or the assistant secretary of the Interstate Commerce Commission, at my request, in relation to this very point of the position of Judge Cooley.

The CHAIRMAN. You can file that with the committee.
Mr. Bacon. I would like to read it.

The CHAIRMAN. I think that it will be unnecessary. It will take up too much time.

Mr. Bacon. It will take me only two or three minutes to read it, and it is directly in answer to the question that you have asked me.

The CHARMAN. Very well. Who prepared that, do you say?

Mr. Bacon. It was prepared at the office of the Interstate Commerce Commission by either the secretary or the assistant secretary. [Reading:]

I know of no case wherein Judge Cooley said that the Commission had no authority to prescribe a reasonable rate when an existing rate had been found to be unreasonable. During all of the time Judge Cooley was on the Commission

The CHAIRMAN. Whose statement is that, now, if you please?

Mr. Bacon. It is that of either the secretary or the assistant secretary.

The CHAIRMAN. Well, who? Which one? Mr. Bacon. I am not quite sure which. Mr. Mann. It will be quite easy to ascertain, because the secretary of the Interstate Commerce Commission is here.

Mr. MOSELEY. Mr. Bacon, yesterday I got a letter from you stating that a question had been asked you, and asking myself, or the Interstate Commerce Commission, to state what the facts were. I handed the letter to Mr. Decker, the assistant secretary, and this is the first notice that I have had that he did reply to it. It is not that I want to shirk any responsibility, but I say that the letter was handed to Mr. Decker, the assistant secretary, who has been with the Commission since its organization, and if this reply was sent to you it must be the reply sent you by Mr. Decker.

The CHAIRMAN. Is that paper signed by anybody?

Mr. MOSELEY. From the Interstate Commerce Commission, I sup pose, and is a memorandum bearing directly on the facts in question.

Mr. LAMAR. Who handed that to you, Mr. Bacon?
Mr. Bacon. It was handed to me this morning.
Mr. LAMAR. Who handed it to you?
Mr. Bacon. It was handed to me at the office of the Commission.
The CHAIRMAN. Is it signed by any body?

Mr. Bacon. It is not signed and is not addressed. It is a memorandum handed to me.

Mr. LAMAR. Handed to you by whom?

Mr. Bacon. Handed to me by the assistant secretary. I think, Mr. Chairman, that in reply to your question I am entitled to present this paper. I beg the privilege of reading it to the committee.

Mr. WANGER. We can adopt this as his answer. Mr. Bacon. I make that a part of my statement. It is as follows: I know of no case wherein Judge Cooley said the Commission had no authority to prescribe a reasonable rate when an existing rate had been found to be unreasonable. During all of the time Judge Cooley was on the Commission it was believed that the Commission had this authority and he joined in the orders forbidding carriers not to charge more than the reasonable rate shown by the evidence in cases involving that question.

A case decided by the Commission in an opinion by Commissioner Schoonmaker has been cited as holding in 1887 that the Commission had no authority to prescribe | reasonable rates. This was the case of Thatcher against the Delaware and Hudson

Canal Company (1 1. C. C. Rep., 152). But that case did not involve the reasonableness of rates. The complainant shipped grain from his elevator at Schenectady, N. Y., to Boston and Boston points. He desired that the rates for that service should be less than those from stations on the same line nearer to destination. In other words, he wanted an order compelling the roads to depart from the principle of the long and short haul clause. The Commission said it might authorize the carriers upon their application to depart from the rule of that clause, but that it had no power to compel such departure.

The Commission further said the carriers might reduce the rate from Schenectady and also from the shorter distance points and so avoid making an exception to the long and short haul clause, but added that the complainant did not ask the Commission to compel such a reduction from the shorter distance stations, and that no evidence had been offered which would enable it to determine what would be proper and just rates from such stations. Right in this connection the Commission used the language which has been sometimes referred to as disclaiming the power to prescribe a reasonable rate on complaint. It said, as to rates from the shorter distance stations, concerning which no complaint had been made or any evidence offered: “It is therefore impossible to fix them in this case, even if the Commission had power to make rates generally, which it has not. Its power in respect to rates is to determine whether those which the roads impose are for any reason in conflict with the statute.” It was impossible to fix rates from the shorter distance stations, because the Commission had before it no complaint and no evidence, and if it had power to make rates generally, that is, without complaint or evidence, it could not have done so in the absence of some information upon the subject. At that time, if the rates were found to be in conflict with the statute, it was believed that the Commission had authority to prescribe the maximum reasonable charge. In that very case the Commission said:

"If the complainant thinks the rates from Schenectady and intermediate points to Boston and Boston points are excessive, he can raise that question directly and distinctly, and the Commission can then enter upon a full investigation of the facts bearing upon it."

That case was decided in July, 1887. Six months afterwards the Commission, including Judge Cooley, held, in the case of Evans against The Oregon Railway and Navigation Company (1 1. C. C. Rep., 325), that the wheat rate from Walla Walla, Wash., to Portland, Oreg., was unreasonable, and ordered it to be reduced so as not to exceed 239 cents during the existing grain season, the expectations being that there would be a further reduction for the next season. The decisions of the Commision in other cases showed the exercise of the authority to prescribe maximum reasonable rates

in cases arising on complaint up to May, 1897, when the decision of the United States Supreme Court was rendered holding that the statute did not confer that authority upon the Commission.

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