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supported him; but you are correct in stating that he was not the author of the present interstate-commerce law, and I think that both Mr. Reagan and myself at that time were very much in the position of Mr. Bacon at the present time, namely, that we felt something ought to be done, but we were not exactly sure as to how it should be done and to what extent it should be done.
I would ask that the words “its father” be omitted from the first page of my statement submitted to your committee on Wednesday (see copy herewith). I also wish to answer more fully one of the questions which was asked me on Wednesday.
Mr. Stevens, of your committee, just at the close of the hearing asked me whether I was the Thurber who was connected with the agitation for the Cuban reciprocity treaty, and as this may have a bearing on Mr. Stevens's (and possibly others) opinion of my view of the bill now under consideration, I wish to answer his question more fully than is possible by yes or no, viz: The Cuban chambers of commerce sent a committee here to try and get a reciprocity treaty which would admit their products into the United States and our products into Cuba.
They came to me as president of the United States Export Association for advice and help. I told them to put the facts before the American people and I thought they could get it. They didn't know how to do it and hadn't means to do it, yet they were paying to the United States insular government a million and a quarter dollars a month in duties on imports into Cuba, which was being expended for police, sanitation, education, etc. I told them that if they could get an infinitesimal part of this appropriated for publicity, it would help Cuba and help American producers. Through General Wood they got about one-tenth of 1 per cent of a single year's duties, or $12,500, appropriated for that purpose. Then they couldn't get any more and were short, and I got Mr. Havemeyer to contribute $2,500 more for this purpose. This money was expended in printing, postage, and clerk hire.
I told the whole story to the Senate Committee on Cuban Affairs, and the beet-sugar interests, which were opposing the treaty, sought to make it appear that something improper had been done.
If it is wrong to try and widen our markets for all American products, I was wrong in doing so. If it was commendable, I am entitled to credit. At any rate, I did what I thought was right for the greatest good of the greatest number, and those who know me will testify that I always do this; and that is my position on the bill under consideration, which I believe in its present form would be against the interest of the producers and shippers of the United States.
THURSDAY, January 12, 1905. The committee met at 10.30 o'clock a. m., Hon. W. P. Hepburn in the chair.
Mr. Davey. I desire to move that the hearings in regard to all the bills relating to the increase of the power of the Interstate Commerce Commission be considered as closed January 23, and that the committee proceed to consider on January 24 the different bills before them.
The CHAIRMAN. That is inopportune now. It would be proper to consider a matter of that kind in executive session. Later on we will take that up.
Mr. Spencer, will you proveed, if you please.
STATEMENT OF MR. SAMUEL SPENCER, PRESIDENT OF THE
SOUTHERN RAILWAY COMPANY.
Mr. Chairman and gentlemen, before going into the matter before us, I may say that it is not my purpose to discuss the subject in its entirety because it would be impossible within the limit of time that is now before us.
I am here representing, of course, among others, the Southern Railway Company, of which I am the executive; but not that company alone. As may not be known to the members of the committee, during the winter I am resident in Washington, where our chief operating offices are, and, growing out of that fact, several of the other railroads of the United States, with some of which I am connected, have asked me, after consultation, to do what I now propose. Therefore it is not one railroad's representation that I propose to make, por is it the particular claim of any railroad or group of railroads. I have preferred, so far as I have anything to say to the committee, to put it upon the ground of a broad, open, and, I hope, a fair discussion of the principles involved in the question which the committee is considering.
To the present status we need devote very little attention. The Commission has had eighteen years of service and experience. It is a well-known fact that important results have been accomplished within that time through the law and by the Commission, and I want to emphasize the fact that that condition is recognized by the railway companies. The great, the very great, abuses and irregularities at which the act was originally aimed have largely been eliminated. The rebate, the secret contract, the discriminatory devices of various kinds were the rule instead of the exception in those days. Now the reverse is the case.
The Commission itself bears testimony that rates are substantially maintained. The law has been strengthened from time to time in order to enable the Commission and the courts to proceed more promptly, more efficiently, by more direct methods, to deal with these questions, and there is a large power now lodged in the hands of the Commission for the remedy of those offenses which are regarded as the worst, and which were so prevalent, and which led logically to the numerous complaints which were then made before the Congress or before the public or before the Commission.
I want to say eniphatically, for a very large proportion of the railroads of this country-a very much larger proportion than I have any direct right to speak for, but I say it unhesitatingly-that there is no difference of opinion between the railroads, the country, the Congress, and the President on the subject that rebates are wrong; that they must be stopped; that secret and discriminatory devices of all kinds must meet with the same fate, and, to use the President's own expression: "The highways of transportation must be kept open to all upon equal terms." On that basis the railway companies are ready and anxious to aid and cooperate.
I might add, while I would not suggest, and do not think that any
additional legislation is required to strengthen the hands of the Commission in order to proceed against that particular class of abuses, that if such legislation does appear to the country, to your committee, and to Congress to be necessary the railways will certainly stand-and I have no hesitation in saying so—in a position of cooperation and aid toward that end. That particular phase of regulation of railways has already been pronounced by the Commission as fully covered by existing statutes. It becomes a question of the enforcement of the law.
The question before you, however, as I understand it, is not of that character, and I have alluded to it merely to emphasize the views which I have expressed on behalf of the railways, and for a reason which will come later in whạt I may have to say in connection with the proposition which is before you to give the Commission power to name a rate, after hearing and complaint, which it has been claimed will be a means of stopping rebates and irregularities. That I have no hesitation in denying, and I will treat it further as we go into that branch of the subject.
Now, in a general way, first, is there a necessity for such legislation? Let us review the situation as it has developed for the last eighteen years. Without burdening you with figures or occupying your time with elaborate statements, summed up, that situation is this: About 90 per cent of all the claims or questions of various kinds which have been presented to the Commission during that period have been adjusted without even formal hearings and decisions upon the part of the Commission. That certainly does not indicate either a defiant or a noncooperative position upon the part of the carriers of this country. Of the remaining 10 per cent, scarcely 2 per cent have been the subject of litigation. That is to say, 90 per cent have been disposed of without formal hearings or decisions upon the part of the Commission; 10 per cent have been the subject of formal hearings and decisions upon the part of the Commission, and less than one-fifth out of that 10 per cent-namely, 2 per cent of the total--have been the subject of litigation under the decisions of the Commission growing out of matters covered by the interstate commerce act. That is for the period of eighteen years.
Reducing the suits to figures, there have been within that period but 43 suits out of 194 cases which were decided against the railroads. The railroads acquiesced in four-fifths of those formal decisions, covering only 10 per cent of the total which were made by the Commission.
The litigation was upon 43 cases. Those cases grew out of various questions, but, as we are discussing the question of rates, I may say that out of the 43 which went to litigation 25 related to rates. In 22 out of the 25 the decision of the Commission was reversed by the courts. One case out of the 25 was affirmed absolutely by the courts, and two were partially confirmed and partially reversed.
Now, looking at general results, I ask what condition of affairs does this indicate in respect to the multitudinous rates over this country for eighteen years, with now 210,000 miles of railroad, and at the beginning of that period 135,000 miles of railroad, covering a country from the Atlantic to the Pacific and from the Lakes to the Gulf. Does the fact that a total of 43 cases of litigation have arisen, and that 25 cases have arisen with respect to rates, indicate that there is a necessity for legislation in respect to the regulation of those rates, when 90 per
cent, if you will allow me to repeat, of all the questions that have arisen have been disposed of without even a hearing by the Commission, and four-fifths of those on which they have rendered a decision have not required litigation in the judgment of either the railroads or the Commission, and the remaining one-fifth of 10 per cent, namely 2 per cent of the total complaints, have gone to litigation?
I shall not comment further upon the fact of how successful that litigation was, because it might have various causes. Certainly I do not mean to suggest to this committee any cause which is disrespectful or derogatory to that Commission. The Commission in its personality is certainly entitled to the respect of this country and ourselves. In its legal position as a tribunal of this country it has, and is entitled to the respect, cooperation, and aid of the railway interests in the carrying out of those purposes for which it was appointed, and those purposes were very important and the results have been very large.
I will come now specifically to the bills which are now before you, or, rather, to the bill, because I shall address myself only to one, namely, the
bill, which is before you; and I shall not undertake in this limited time to discuss more than one phase of that, namely, the power which it proposes to confer upon the Commission, after hearing and complaint, and the decision upon its part that an existing rate is unreasonable, to substitute a rate therefor, to put it into effect at a fixed time, and the provision that it shall remain in effect thereafter, subject only, on the one hand, to change by the Commission in future, in the exercise of similar power, or, upon the other hand, of appeal to the United States courts upon the part of the railways, to set that rate aside; the rate, however, remaining in effect pending such appeal to the courts.
Various advantages and reasons have been assigned for the passage of such an act conferring such powers. They are, first, that it would be merely restoring a power which the Commission substantially for ten years has exercised. That has been repeatedly stated, officially and unofficially, directly and indirectly, and probably as often contradicted. Exactly what is meant by the denial I hope to make clearer to you. What is meant, exactly, by the assertion that they did exercise such power, I must confess that I am at a loss to understand. Certainly in the very first report to the Interstate Commerce Commission the chairman of the Commission distinctly stated in words that the Commission had no such power. It was reiterated by Commissioner Schoonmaker, and the citations which have been made as to the specific cases in which they exercised that power, I must be pardoned for saying, do not cover the case. There is abundant proof of record, to which I can refer you (but for the time I shall not do it, simply leaving it with you, if you desire), that it was claimed and asserted, not only by members of the Commission itself, but by lawyers, counsel for the railways, counsel for others, that the law did not give any such power to the Commission. When the question came to be reviewed by the courts, the courts were emphatic in stating that the power was never there. It is possibly useless for me to elaborate that any further. The authorities are there, and they can be given at any moment that you want them.
I come now to what I consider the only possible basis which could be made for the claim that the Commission once, and for ten years,
substantially exercised that power, namely, the cases which it decided during that period which did affect' rates and did result in several cases in their being changed as directed by the Commission. I can cite you a case, or numerous cases, since 1897, where precisely the same thing has happened. The exercise of it at that time, or what is called the exercise of it at that time, was simply this: That the Commission took up those cases, investigated them, rendered a decision, and that decision in many cases was acquiesced in. The railroads did not contest the case. There is authority in the utterances of Judge (afterwards Justice) Jackson to the effect that in that respect the Commission occupied the position of a general referee for all the circuit courts of the United States in respect to such cases. Now, we all know, whether lawyers or not, that the decision of a referee frequently decides the case; that is, it is acquiesced in without further litigation. That is the history of those cases in which it has been claimed the Commission exercised the power of making rates.
The record of the last five years will show that there are numerous similar cases. In 1897 the decision was finally reached by the courts which it was claimed cut off a power of the Commission which it previously had. The reason that it arose was that the Commission undertook to name and to put into effect what it regarded as reasonable rates in contradistinction to what it claimed were unreasonable rates as fixed by the carriers, and it reached that famous case, the Maximum rate case, one of such magnitude and such importance that in mere self-preservation the numerous railroads against which it was aimedfor it was not one-had no alternative but to test that question. What the result of that test was we all know. It was not a cutting off from the Commission of any power which it had previously possessed. It was simply invoking the powers of the courts to prevent the exercise of what would have been a very disastrous action upon the part of the Commission under a power which it never possessed.
It has also been claimed-it is difficult to conceive that it is seriousthat this power would be a weapon in the hands of the Commission to prevent rebates. This is what I alluded to at the beginning: A very few words should dispose of it. A rate fixed by the Commission can be rebated and evaded as easily as any other. Therefore it would not put a stop to that.
The claim has been made, I believe not officially, that with that power in the hands of the Commission it would act as a deterrent in the matter of secret rebating or other devices for evading the tariff rates. That could scarcely be considered a serious claim. If it should answer as such a weapon, the effect of the use of that weapon would simply be to punish not the guilty party who evaded the rate, because he was already accepting less, but to punish every innocent party that had obeyed the law and not evaded the rate; that is to say, if because there was to be a rebate the Commission might put all rates down to certain figures those who had not put the rates down would be the sufferers, because the party that had put the rate down, as I say, had already been accepting the lower rate, and therefore would suffer no punishment under the use of this particular weapon. Therefore it would be a weapon to punish the innocent and not to punish the guilty. If it is not to be used, it ought not to exist at all for that purpose.
Probably the most important claim in the whole situation is that such a power would enable the Commission to prevent discriminations