Mr. WILCOX. The most dangerous thing about this matter, it seems to me, is the provision as to fixing the just relation of rates. Before I take that up, however, I assume that the committee is thoroughly aware now that the bill gives the Commission the power to fix rates, or, as was said in the maximum-rate case, all rates could be fixed in one proceeding. It is therefore inconsistent with the language of the President's message, which is to the effect that it is not desirable to give a general rate-making power to the Commission. It has been claimed in recent publications by Mr. Bacon and Mr. Moseley that nothing of the sort was sought, and yet we have the language of Judge Brewer, holding, in terms, that that would be the necessary effect of this change.

Now, you take the just relation of rates. The illustration of that in the differential case, I believe, has been presented to the committee, where the Commission wrote an opinion saying that the question was how far New York was entitled to its commercial supremacy-how far it was to be permitted to retain it and stating that the policy of the country was that the trade should be distributed in different ports, and the Commission proceeded to make an award affirming the differentials in part, in the face of that constitutional provision that no regulation of commerce or revenue shall give any preference between different parts of the United States.

In absolute flat disregard of that, just lately, the Commission has said that it is no part of its functions to equalize natural advantages by adjusting rates. So that those varying rules could be applied, apparently, according to the fancy of the Commission, as occasion might arise. In one case it might be held that the commerce of a place like Chicago, for instance, was to be distributed, and in another case it might be held that it was not within the function of the Commission to equalize natural conditions, because it is on record both ways. Suppose it could do this; suppose that it could equalize such advantages? Is there anything that would stop competition more than that? Is there anything that would limit the productive activities of various commercial centers more than the effort to give to each one some little territory in which it had a natural advantage, because it was near at hand, perhaps, and to keep everybody else out? Because that would be the effect of it if such a system could be carried out. I doubt whether it could be, but if it could be carried out it would absolutely limit competition and prevent the process which is going on all the time of developing business, so that manufacturers and carriers can reach farther markets. That will be at an end. So, too, under the Quarles-Cooper bill, a condition of ridigity of rates would arise as soon as the Commission had acted, because the rates under the provisions of that bill can not be changed except by the action of the Commission itself-not by the court even, but only by the action of the Commission.

And that condition would constantly go on. Rates would gradually become fixed everywhere, and the enterprising manufacturer who wanted to reach another market would be shut out from doing so. The CHAIRMAN. The hour has arrived at which we must adjourn. This committee is not allowed to hold its sessions during the sitting of the House.

Mr. WILCOX. I am greatly obliged to you and the gentlemen of the

committee, Mr. Chairman, for hearing me, and, as I have said, I expect to file a brief with you right away.

Thereupon (at 12 o'clock m.) the committee adjourned until Monday, January 23, 1905, at 10.30 o'clock a. m.

The interstate commerce act-The legislation now proposed is unnecessary and, if effective, would be very dangerous-The remedy for any grievance lies in thorough enforcement of the law rather than in further experimental statutes.

THE SCOPE OF THE INTERSTATE COMMERCE ACT HAS NEVER BEEN DIMINISHED BY THE COURTS.

It is sometimes said that the preliminary debates in Congress indicate an intention that the scope of the interstate commerce act should be either broader or narrower than that which it now has. But it has often been ruled by the Supreme Court of the United States that expressions used in such debates have no force in determining the meaning of statutes-that meaning is to be gathered solely from the language of the statute as finally enacted (3 How., 224). Accordingly, nothing of the sort ever had the slightest bearing upon the meaning of the interstate commerce act. The powers of the Commission which it created were those only which were specified by the language of the statute. The act provided that rates should be reasonable and there should be no preference, and it was made the duty of the Commission to enforce these rules. Under settled principles of construction these provisions referred to action regarding existing conditions, and not to establishment of rates or regulations for the future. Accordingly, promptly after the act became effective, the Commission decided that it had no power or jurisdiction regarding future conditions. Commissioner Walker said as to the suggestion that the Commission could "construe, interpret, and apply the law by preliminary judgment" (1 I. C. R., 19), that "a moment's reflection will show that no such tribunal could be properly erected. Congress has not taken the management of the railroads out of the hands of the railroad companies. It has simply established certain general principles under which interstate commerce must be conducted." (Id., 20.) Commissioner Cooley said that in case the Commission had preliminary power to suspend the long and short haul provision it "would, in effect, be required to act as rate makers for all the roads and compelled to adjust the tariffs, so as to meet the exigencies of business, while at the same time endeavoring to protect relative rights and equities of rival carriers and rival localities. This, in any considerable state, would be an enormous task. In a country so large as ours, and with so vast a mileage of roads, it would be superhuman. A construction of the statute which should require its performance would render the due administration of the law altogether impracticable, and that fact tends strongly to show that such a construction could not have been intended.

No tribunal is empowered to judge for it until after the carrier has acted, and then only for the purpose of determining whether its action constitutes a violation of law." (Id., 280, 281.) Commissioner Schoonmaker said that the Commission had no power in any case to fix rates for the future, but "its power in respect to rates is to determine whether those which the roads impose are for any reason in conflict with the statute." (1 I. C. R., 357.) This language was later cited by the Supreme Court (167 U. S., 570) as showing that the Commission at first did not deem itself to be possessed of rate-making power.

After a time the Commission changed its attitude in the matter and made various attempts to regulate future conditions. This course naturally led to litigation. It is frequently said that the Commission exercised this power for ten years without objection or suggestion that its course was unauthorized by law. (Annual report of the Commission for 1897, p. 11.) This statement

As for example, too, in The Transportation Tax, issued by the Cattle Growers' Interstate Committee, Denver, Colo., 1904, p. 26.

H. Doc. 422, 58-3—16

As will be shown below at length, when the Commission made the attempt to establish future rates by wholesale (4 I. C. R., 592), that attempt was promptly resisted in the courts, and as soon as the courts could act the Commission was held to have exceeded its authority. (162 U. S., 184; 167 U. S., 511.) The rules thus laid down by the Supreme Court were foreshadowed at circuit as early as 1889 and 1890. (37 Fed. Rep., 567; 43 Fed. Rep., 37.)

It was settled in 1889, by a judgment of the eminent Judge Howell E. Jackson (37 Fed. Rep., 567), that the Commission had none of the character of a court and its decisions could be enforced only through aid of the judicial tribunals, and in this view the Supreme Court, through Justice Harlan, later concurred. (154 U. S., 485.)

It is interesting to recall the language of Judge Jackson, which was as follows:

"The functions of the Commission are those of referees or special commissioners appointed to make preliminary investigation and report upon matters for subsequent judicial examination and determination. In respect to interstate commerce matters covered by the law, the Commission may be regarded as the general referee of each and every circuit court of the United States, upon which the jurisdiction is conferred of enforcing the rights, duties, and obligations recognized and imposed by the act. It is neither a Federal court under the Constitution, nor does it exercise judicial powers, nor do its conclusions possess the efficacy of judicial proceedings." (37 Fed. Rep., 613.)

An effort was made in the Fifty-second Congress (Senate bill No. 892) to change these rules by giving the Commission judicial character, but the effort was not successful. Shortly (in 1894) the Commission sought to fix future rates upon an extensive scale (4 I. C. R., 592) and brought suit to enforce this action. In due course this suit reached the Supreme Court of the United States. A decision upon the subject was first made on March 30, 1896. (162 U. S., 184, 196, 197.) The court said:

"It is argued on behalf of the Commission that the power to pass upon the reasonableness of existing rates implies a right to prescribe rates. This is not necessarily so. The reasonableness of the rate in a given case depends on the facts, and the function of the Commission is to consider these facts and give them their proper weight. If the Commission, instead of withholding judgment in such a matter until an issue shall be made and the facts found, itself fixes a rate, that rate is prejudged by the Commission to be reasonable. Subject to the two leading prohibitions that their charges shall not be unjust or unreasonable, and that they shall not unjustly discriminate so as to give undue preference or advantage to persons or traffic similarly circumstanced, the act to regulate commerce leaves common carriers as they were at the common law, free to make special contracts looking to the increase of their business, to classify their traffic, to adjust and apportion their rates so as to meet the necessities of commerce, and generally to manage their important interests upon the same principles which are regarded as sound and adopted in other trades and pursuits."

The last sentence was quoted from a case decided by Judge Jackson at circuit on August 11, 1890 (43 Fed. Rep., 37), and affirmed by the Supreme Court in 1892 (145 U. S., 263).

The question was again before the Supreme Court upon May 24, 1897, in an action brought by the Commission. (167 U. S., 479.) Regarding the claim that the Commission had power to fix rates for the future in a case where it had held the existing rate unreasonable, the court said (p. 509): "The vice of this argument is that it is building up indirectly and by implication a power which is not in terms granted." Accordingly it repeated the language quoted just above and said further:

"Our conclusion, then, is that Congress has not conferred upon the Commission the legislative power of prescribing rates, either maximum or minimum or absolute. As it did not give the express power to the Commission, it did not intend to secure the same result indirectly by empowering that tribunal to determine what, in reference to the past, was reasonable and just, whether as maximum, minimum, or absolute, and thus enable it to obtain from the courts a peremptory order that in the future the railroad company should follow the rates thus determined to have been in the past reasonable and just."

In response to the suggestion that this construction of the act rendered the Commission useless, the court said (p. 506):

"But has the Commission no functions to perform in respect to the matter of rates; no power to make any inquiry in respect thereto? Unquestionably it has,

and most important duties in respect to this matter. It is charged with the general duty of inquiring as to the management of the business of railroad companies, and to keep itself informed as to the manner in which the same is conducted, and has the right to compel complete and full information as to the manner in which such carriers are transacting their business. And with this knowledge it is charged with the duty of seeing that there is no violation of the long and short haul clause; that there is no discrimination between individual shippers, and that nothing is done by rebate or any other device to give preference to one as against another; that no undue preferences are given to one place or places or individual or class of individuals, but in all things that equality of right which is the great purpose of the interstate-commerce act shall be secured to all shippers. It must also see that that publicity which is required by section 6 is observed by the railroad companies. Holding the railroad companies to strict compliance with all these statutory provisions and enforcing obedience to all these provisions tends, as observed by Commissioner Cooley in In re Chicago, St. Paul and Kansas City Railway (2 Int. Com. Com: Rep., 231, 261), to both reasonableness and equality of rate contemplated by the interstate-commerce act."

In these constructions of the interstate-commerce act all of the justices of the Supreme Court concurred at various times, with the exception of Justice Harlan. It has since been pertinaciously asserted that these decisions either read into the act something which was not in it or read out of it something which it originally contained. Apparently in order to lend emphasis to this claim, terms grotesque in the discussion of judicial decisions have generally been employed. Thus a recent writer in the North American Review speaks of the Supreme Court as having "annulled" and "set aside" the act and "eviscerated" the Commission; it has frequently been said that the court "emasculated" the statute; the Commission speaks of the courts having made "discoveries" contrary to the general understanding (Annual Report for 1897, pp. 6. 9), by which sections of the statute were eliminated' " and "stricken from the act" (Id., p. 43), and refers to the effect of these adjudications "in defeating the purposes of the act" (Annual Report for 1898, p. 5; Annual Report for 1901, p. 5), and the Commissioner of Corporations, in his recent report, says that "the force of the interstate-commerce act has been seriously weakened by judicial interpretation."

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These fashions of speech, if serious, are founded upon misconception of the processes of jurisprudence. The act contained no provisions in terms authorizing action in regard to future conditions. Accordingly, the Commission promptly held that it had no power in that regard. Thereafter the Commission adopted a contrary view and sought to exercise control over future rates. Thus it became necessary for the Supreme Court to decide which view was sound. It decided that the view first adopted by the Commission was the correct construction of the statute. This, of course, settled by authority the meaning of the act as originally passed. It took nothing therefrom and added nothing thereto. The court decided merely that nothing contained in the statute as it was passed in 1887 conferred any power regarding future rates; no more and no less.

It is therefore idle and foolish to speak of these decisions as having in any way qualified the act as Congress passed it.

PROPAGANDA FOR FURTHER LEGISLATION.

The action of Congress as thus finally construed was not accepted in all quarters as sufficient. A propaganda was at once set on foot for further legislation increasing generally the powers of the Commission. The statement has often been made that this movement originated largely with and has been kept alive by the Commission itself. This statement is supported by the facts that in each of its annual reports since these decisions of the Supreme Court the Commission has vigorously criticised those rulings and urged legislation for the purpose of enlarging its powers, and has generally submitted drafts of statutes for that purpose; that at each session of Congress one or more acts of the sort have been introduced, with its approval; that members of the Commission have appeared before Congressional committees and strongly advocated such legislation, and have urged the same in numerous articles, addresses, and interviews; that one of the Commissiones attended and urged such action and submitted a draft of an amended statute at the formation upon November 22, 1899, of what

is now known as the Interstate Commerce Law Association-the organization which is principally active in support of the legislation now proposed, and that by formal order on December 8, 1899, the Commission instructed its secretary to "cooperate assiduously" with any mercantile or agricultural organizations in efforts to secure the result sought and especially the passage of the bill to which reference has just been made (Senate bill 1439, 56th Cong., 1st sess.),

By a circular letter dated February 3, 1900, the secretary of the Commission accordingly stated that said bill was designed to give to the Commission "the authority intended to be conferred by Congress when the bill was originally enacted; that the shippers of the country, with the approval of the Interstate Commerce Commission, seek such an amendment as will empower the Commission to proceed on the lines and to the ends contemplated by the original act; that it is respectfully suggested that (the person addressed) take action expressing (his) approbation and support to the Senators and Representatives from (his) State, and to the Committees on Interstate Commerce, and that the secre tary would be pleased to be advised of any action taken in the premises." Such action has followed naturally from the view that the "purpose of the act was to provide a means by which the public could array itself against the carrier." (Annual Report for 1897, p. 19.)

The Commission, too, has every year taken Congress and the courts severely to task for failing to agree with its views. The decisions regarding the statute have rendered "its enforcement as a remedial statute practically impossible." (Annual Report for 1897, p. 6.)

Nearly every essential feature of that act has failed of execution." (Id., 37.)

"By virtue of judicial decision, it (the Commission) has ceased to be a body for the regulation of interstate carriers." (Id., p. 51.)

"The requests of the Commission for needful amendments have been supported by petitions, etc. * * * yet not a line of the statute has been changed and none of the burdensome conditions which call for relief have been removed or modified." (Annual Report for 1899, p. 5.)

"Until further legislation is provided the best efforts of regulation must be feeble and disappointing." (Id., p. 5.)

"This (the power to make future rates) is the point to which the attention of the Congress has been repeatedly called; this is the defect in the regulating statute which demands correction. In previous reports this question has been frequently and fully discussed. We have commented at length upon the weakness and inadequacy of the law as its provisions have been construed by the courts." (Annual Report for 1903, p. 12.)

"The popular demand may eventually take that form (the original ratemaking power) under the stress of continual delay in remedying ascertained defects in the present plan of regulation." (Annual Report for 1904, p. 8.)

It would be impossible to state in detail the efforts which, incidentally to this propaganda, have been made to stimulate public feeling. One or two instances must suffice. Thus the expression "transportation tax" (Annual Report for 1900, pp. 9, 13, 24; Annual Report for 1903, pp. 14, 15, 17) has been habitually applied to the charges of the carriers, apparently for the purpose of arousing the same sort of prejudice against the payment of such charges as is felt by many against the payment of taxes. The expression, of course, has no more accuracy than would such an expression as the "wheat tax," or the "beef tax," or the "corn tax," or the " clothing tax," or the " newspaper tax" have in describing what is currently paid for those articles of general use. The individual consumer has no more to do with fixing the prices thereof than with fixing the charges of the carriers. And those prices are far more of a universal burden than are transportation charges; for, as the Commission said in its annual report for 1900 (p. 9), “generally a slight increase in the rate does not materially affect the price to the consumer;" and, again, in its annual report for 1903, "so, too, with the great volume of traffic, the cost of transportation is not a sufficiently large factor in the total cost of the article to the consumer, so that a reduction of the freight rate would stimulate consumption to a sufficient degree to justify the reduction" (p. 16).

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'Perhaps in most instances the freight rate is so small a part of the total cost of a commodity that the consumer is unconscious of the increase in rate.” (Id., p. 32.)

But the general body of the consumers creates the demand which settles the amount of the transportation charge quite as much as the price of the goods