FOOTNOTES:

[487] U. S. Industrial Commission, XIX, 1901, pp. 272-290; Annals of the American Academy of Political Science, 1898, pp. 324-352.

[488] Revenue per ton mile in index to the Senate (Elkins) Committee Hearings, 1905, vol. IV.

[489] Compare conclusions as to rebating in 1900; U. S. Industrial Commission, XIX, p. 285. When, as in 1887, a general departure of 50 per cent. from published rates characterized transcontinental traffic, the difference between the theoretical and actual revenue, as measured by the published rates, is very great. 21 I.C.C. Rep., 349.

[490] The movement of average trainloads in connection with ton-mile revenue bears upon this point. Thus in 1905, the increased trainload, accompanied by a lower ton-mile revenue, points specifically to an increase in low-grade traffic.

[491] Senate Finance Committee Report on Prices, 1893, Part I, p. 437.

[492] The effect of periods of depression, such as 1903 and 1908, upon the proportion of low-grade tonnage is a moot point.

[493] U. S. Statistics of Railways, 1910, p. 64.

[494] Mileage of roads represented on June 30, 1910—130,395.46 miles.

[495] Cf. Ripley Railway Problems, p. 509. Cf. also p. [103], supra.

[496] Senate (Elkins) Committee, Digest, App. III, p. 63, brings out the high proportion of local business in the South. On the L. &. N. 80 per cent. is thus classed.

[497] Mass. Commission on Commerce and Industry, 1908, p. 117.

[498] McCain, in Senate Finance Committee Report on Prices, 1893.

[499] I.C.C., Annual Rep., 1903, p. 150.

[500] Emphasized in the case of wool rates. 23 I.C.C. Rep., 151.

[501] Samuel O. Dunn, The American Transportation Question, p. 65.

[502] 22 I.C.C. Rep., 617; 11 Idem, 296; 13 Idem, 418; 23 Idem, 7; 9 Idem, 382, etc.

[503] J. R. Commons, Bulletin, Bureau of Economic Research, No. 1, July, 1900; unfortunately not continued to date.

The best data giving actual rates and classifications is the Forty Year Review, etc., published by the Interstate Commerce Commission, as "Railways in 1902," part II, 1903; continued in Senate (Elkins) Committee, Digest, App. II, 1905; and 58 Cong., 2nd sess., Senate Doc. No. 257, savagely attacked in Bull. II, Chicago Bureau of Railway News and Statistics, 1904. The largest collection of material is in the Senate (Aldrich) Committee Report on Prices, 1890, I. pp. 397-658, covering the period 1852-1890. Also Bulletin 15, Misc. Series, Div. of Statistics, U. S. Dept. of Agriculture, 1898, pp. 1-80.

[504] The continuation of Commons' index number of freight rates to date, seemed inadvisable on account of the changes in traffic conditions which have taken place. Originally well selected, the thirty-seven rates chosen in 1900 are not now representative. There are, for instance, no transcontinental quotations at all; none from the southern states, such as on raw cotton; none for the great staples elsewhere moving under commodity ratings, such as iron ore, chemical fertilizers, lumber, citrus fruit, etc. Moreover, twelve of the thirty-seven items chosen by Commons were rates on petroleum which now moves in bulk in pipe lines except locally. Several of the quotations for coal, and for all the other carload rates, as a matter of fact, have been so affected by changes in carload minimum rules, that the mere rate by itself has little significance.

Rejecting Commons' particular index number by reason of its inherent defects does not, however, lessen the desirability of choosing some other combination of rates which may be used as a standard for measurement of rate changes year by year. Yet the selection of such an index number is open to all the difficulties attaching to a similar index number of prices. Is the object, for example, an academic determination of rate changes per se; or is it intended to ascertain the financial burden of such charges upon the community? In the former case the volume of traffic affected would not be an important consideration. Local rates on indigo or millinery would be given the same weight as similar changes in the rate on wheat between Chicago and the Atlantic seaboard. The latter mode of approaching the question, on the other hand, would correspond to an index number of prices, weighted according to the volume of consumption. A doubled freight rate on hard coal to Perth Amboy would outweigh an equal change in the charge on castile soap in exact proportion to its commercial importance as measured by the total tonnage transported. Many such details would call for careful consideration before the final adoption of the rate items chosen to constitute the index number; but the Interstate Commerce Commission might well consider the initiation of such a statistical project, endeavoring to do for railroad rates what the Federal Commissioner of Labor performs so satisfactorily in officially recording current changes in the price of commodities. Such a record of railroad rates extending over a series of years, supplemented by data for ton mileage revenue, would be invaluable in the determination of the reasonableness of rate advances in future; even as the rate increases of 1910 clearly pointed to the need of a similar standard for purposes of comparison from year to year in the past.

[505] U.S. Industrial Commission, XIX, pp. 281-291; 58th Cong., 2nd sess., Sen. Doc. 257.

[506] 16 I.C.C. Rep., 85. For other instances compare 12 I.C.C. Rep., 149, and 23 I.C.C. Rep., 158.

[507] 9 I.C.C. Rep., 382.

[508] For further examples supplementing our concrete instances above, the following citations are significant; For cattle, 11 I.C.C. Rep., 238, 296 and 381; 13 I.C.C. Rep., 418; 23 I.C.C. Rep., 7; for soft coal, 22 I.C.C. Rep., 617; for hay, 9 I.C.C. Rep., 246; for transcontinental rates in general, U. S. v. Union Pacific Railroad, etc., Supreme Court, 820. October Term, 1911, p. 558. The record, so far as the general advances of 1910 are concerned, will be considered in connection with the legislation of that date, in chapter XVIII.

[509] Annals of the American Academy of Political Science, 1898, pp. 324-352.

[510] Discussed in chap. XX.

[511] Quarterly Journal of Economics, 1907, p. 618.

[512] Calculations of C. C. McCain on the Diminished Ratio of Railway Rates to Wholesale Commodity Prices, in connection with the increases in 1910.

[513] Well expressed in a recent soft coal case; 22 I.C.C. Rep., 617.

[514] Further details in our historical summary in chap. I.

[515] The main sources of the following chronicle have been the files of Annual Reports of the Interstate Commerce Commission and of the Railway Age and Age-Gazette.

[516] A carload of bamboo steamer chairs across the continent for $9.40 is a cut to the bone indeed. 21 I.C.C. Rep., 349.

[517] 54th Cong., 2nd sess., Sen. Doc. 115, is as fine a picture of utter rate demoralization as can be found.

[518] Shown by diagram at p. [32], supra.

[519] Senate (Elkins) Committee, 1905, pp. 2730 and 2874.

[520] Cf. p. [405], supra.

CHAPTER XIII
THE ACT TO REGULATE COMMERCE OF 1887[521]

Its general significance, [441].—Economic causes, [442].—Growth of interstate traffic, [442].—Earlier Federal laws, [443].—Not lower rates, but end of discriminations sought, [443].—Rebates and favoritism, [445].—Monopoly by means of pooling distrusted, [446].—Speculation and fraud, [447].—Local discrimination, [448].—General unsettlement from rapid growth, [449].—Congressional history of the law, [450].—Its constitutionality, [451].—Summary of its provisions, [452].—Its tentative character, [453].—Radical departure as to rebating, [454].

Due appreciation of the significance of the great body of Federal legislation concerning railroads which has accumulated during the last quarter century in the United States, depends upon a clear understanding of the economic events of the period. Great laws are not the figments of men's minds, conjured up in a day. They are a response to the needs of the time. Their true causes are thus immeasurably complex. Nor does a wholesale public demand for legislation arise overnight. From small beginnings the pressure steadily grows, oftentimes for years; until, perhaps through a conjuncture of particularly aggravating events, matters are at last brought suddenly to a head. Yet while this culmination of industrial or social pressure may finally result in legislation under some particularly strong political leadership, to assign such personal influence as even the remote cause of legislation, is to belie all the facts and experience of history. No clearer illustration of the close relationship between economic causes and statutory results could perhaps be found, than in the field of our Federal legislation concerning common carriers. It forms one of the most important chapters in our industrial history.

Several of the economic causes of the Act to Regulate Commerce of 1887, are deep-rooted in the preceding decade. A few even run back to Civil War times. Foremost among these was the rapid expansion of the railway net; and particularly, as outlined in our introductory historical chapter, its phenomenal growth during the eighties. More new mileage was laid down in the year of the Act itself than at any other time in our entire history within a single twelvemonth. Of equal significance, however, was the far more than commensurate development of long distance, that is to say, interstate business. The through carriage of livestock and grain to the seaboard for export attained immense importance; and the settlement of the Middle West called for a corresponding westward movement of manufactured goods. The Windom Committee of 1874 on "Transportation Routes to the Seaboard"[522] bears eloquent testimony to the growing importance of this through traffic as a factor in legislative activity. According to the Cullom Committee Report twelve years later,[523] approximately three-fourths of the railway traffic of the country was already at that time interstate in character. On the trunk lines, excepting the Pennsylvania Railroad which still relied more largely on Pittsburg-Philadelphia tonnage, more nearly nine-tenths of the traffic consisted of through, as distinct from local, business. Obviously, this pointed to the assumption of authority by the Federal government, if any were to be exercised; inasmuch as the separate states, as will shortly appear, were held by the Supreme Court of the United States in 1886 to be powerless to deal with interstate commerce.

The growing disposition of Congress to assume control over interstate business had already been evinced in the passage of two Federal statutes. One in 1872 had dealt with abuses in the carriage of livestock. And another, even earlier, had sought to remove obstacles set up by local jealousy and monopoly to the through carriage of goods. Some railway charters actually prohibited railroads from making connections with other lines; or from allowing cars to leave their own rails. The Erie, for example, was thus hampered; lest the trade of southern New York be diverted to rival seaports. But the military necessity of through transport of troops, and the impediments to speedy and cheap carriage of mails and goods through delays at junction points, impelled Congress to authorize, though not as yet to compel, the formation of through routes and the issue of through bills of lading by the Act of 1866. The immediate response to this permissive legislation was the rise of the private car lines, elsewhere described, in connection with personal discrimination and also in the general historical review.[524]

No widespread demand for a general reduction of railroad rates seems to have existed in 1887. In this regard the situation is strikingly in contrast with that which prevailed during the protracted hard times succeeding the panic of 1873. Acute industrial depression during that period had aroused deep public feeling against the "extortions of soulless railway corporations." It was but natural that all the farmers in the newly settled states should actively participate in the Granger movement. The popular war cry in this agitation was lower freight rates. This demand is voiced in the President's message of 1872, calling for "more certain and cheaper transportation, of the rapidly increasing western and southern products, to the Atlantic seaboard." The proposals of the Senate to attain these objects are contained in the above-mentioned Windom Committee Report of 1874. Competition is to be stimulated by the development of waterways and new trunk lines. A bureau of commerce is proposed. The long and short haul principle in rate making is to be enforced. Stock-watering is to be prohibited; and publicity of rates to be brought about. On the whole, reduced charges are to be secured rather by means of natural competition among carriers than through legislation. But the keynote of the Windom Report of 1874 is cheaper carriage of goods,—a general reduction of rates all along the line.

Many things happened during the next twelve years to modify this demand. By 1886, according to the Cullom Committee, "the paramount evil chargeable against the operation of the transportation systems of the United States, as now conducted, is unjust discrimination between persons, places, commodities, or particular descriptions of traffic." Purely economic events had brought about this change of opinion. The rate wars of the seventies; a revival of general prosperity in 1879; and great mechanical improvements and economies in operation, had brought about the desired decline of freight rates.[525] For the time the bogey of extortionate charges was laid at rest. The Act of 1887, elaborate as it was in form, seems not to have been intended to deal with rates in any general way. It was in the main aimed at the prevention of specific abuses. "The practice of discrimination in one form or another is the principal cause of complaint." Consequently, the long succession of bills introduced in the House of Representatives year after year for more than a decade by Judge Reagan of Texas and others, made no attempt to provide administrative machinery by which to fix rates in general; but sought merely to prohibit these specific abuses by statute.[526] The proposition for a permanent commission to deal with rates in a more comprehensive way, seems, as we shall see, to have emanated from the Senate at a later time. But this more statesman-like proposition from the upper chamber was essentially different from the response in the House of Representatives to popular feeling against discriminatory practices, which slowly gathered force during more than a decade of agitation and debate.

What now were some of the specific "discriminations" which these various bills in Congress aimed to prevent? And why did the movement come to a head in 1887? The evidence is conclusive that personal favoritism as between rival shippers took first place. The indiscriminate and cut-throat competition of the carriers, particularly in connection with the trunk line rate wars, offered a golden opportunity to those in search of secret and preferential rates.[527] The chief offender, of course, was the Standard Oil Company under the direction of John D. Rockefeller. The Cassatt revelations in 1877 as to exclusive contracts with the great trunk lines for the carriage of oil, greatly stirred public opinion. Congressional attention had been directed to the subject some years before by complaints from the Pennsylvania field. But the abortive results of the investigation of 1875 demonstrated nothing beyond the shameful impudence of the chief offenders. According to the New York (Hepburn) Committee investigation in 1879, few shippers had ever seen printed tariffs. The Assistant General Freight Agent of the New York Central testified that one-half the business out of New York, and nine-tenths out of Syracuse went on special rates. At this time there was also unrest in the anthracite coal trade. Moreover, the activity of the "eveners" in the cattle business in 1875-1879[528] had laid the foundation for still other monopolies built up by means of rebates. But the constant irritant in the public eye was the Standard Oil Company.[529] The Lake Shore case, fought through every Ohio court and then on appeal up to the Supreme Court of the United States in 1886, widely advertised the discriminatory practices of the railroads. But the most spectacular disclosures of all took place in 1885-1888 in the George Rice cases in Ohio. The Cullom Committee in recommending publicity of rates as its primary remedy for the evils of the time, specifically cites "this most impudent and outrageous" proceeding.[530] In the protracted struggle in conference committee upon the provisions of the act, elimination of rebates was the only subject upon which both House and Senate conferees were in thorough accord from the start. Whatever the commercial crimes chargeable to the founder of the Standard Oil Company, he should, at least, be credited with the performance of a great public service in finally crystallising public opinion in 1887 in favor of railroad legislation for the prevention of rebating.

Distrust of monopoly has always loomed up large in the public eye. The dread of it is voiced in every public document of the time. The Windom Committee in 1874, as we have seen, looked to the stimulation of railway competition as its chief remedy against high rates. Five years later, the Hepburn Committee in New York vehemently denounced railroad monopoly as an evil to be sternly repressed. But, in the meantime, the carriers, almost prostrated by the excesses of their rate wars, were slowly learning how to coöperate for the maintenance of more stable charges. Railroad pools and traffic agreements, first essayed about 1875, were gradually elaborated; until by 1886 nearly all parts of the country were covered by them.[531] From small beginnings in 1877, the Trunk Line Association under Albert Fink was in its heyday of activity. The Southern Railway Association was restoring order out of chaos, south of the Ohio river. By 1886 all competitive traffic north and west of Chicago was pooled. This was especially true of the highly competitive business between the Missouri and Mississippi rivers. Even in remoter regions, such agreements threatened to deprive the public of the benefits of rival railroad construction. In Colorado and New Mexico public sentiment was deeply aroused over the tripartite division of territory between the carriers then in the field.[532] The helplessness of independent railroads was made evident in connection with the attempt of the (now) Colorado & Southern road to gain a foothold. Its suits in both state and Federal courts, and the attempted remedial legislation by Colorado in 1885, disclosed the great power of monopoly over the public welfare in that region. In Texas, the Gould-Huntington apportionment of the field between the two systems in 1881,[533] was doubtless perceived as to its results, even if its precise terms were secret. The Texas Traffic Association, also, organized in 1875, embraced all the lines in that vicinity. May it not well be that the final inclusion in the Act of 1887 of the prohibition of pooling, upon direct insistence of the Texas representative in Congress against the protest of the Senate, had some connection with these events? It seems clear that the marked interest of the railways in eliminating competition all over the country at this critical time, carried great weight with Congress in shaping the law.

The years since the Civil War had witnessed an ever increasing volume of speculation and fraud in railway affairs, which reached its climax in the frenzied construction period of the eighties.[534] Jay Gould, "Jim" Fisk and their successors who contributed to the "railway panic" of 1884, had done their work well in arousing public hostility to the railroads. The Hepburn Committee Report in New York is symptomatic of the state of feeling in its vehement denunciation of these practices.[535] The Windom Committee, five years earlier, had officially registered its opinion that of all the abuses of the time, "none have contributed so much to the general discontent and indignation as the increase of railway capital by stock watering and capitalization of surplus earnings. The murmurs of discontent have swollen into a storm of popular indignation. Your committee believe the evil to be of such magnitude as to justify and require for its prevention the coöperation of both Congress and the States."[536] Nor is the Cullom Committee less emphatic in 1886; although its condemnation is shifted from the trunk lines, particularly the New York Central and the Erie, to the newly constructed "unnecessary roads." "This practice (of stock watering) has unquestionably done more to create and keep alive a popular feeling of hostility against the railroads of the United States than any other one cause."[537] All were agreed that the remedy must be applied by the states, from which the companies derived their charters. But a powerful impulse toward publicity of accounts and operating details as well as of rates, to be enforced by the hand of the Federal government, was unquestionably imparted by the financial scandals of the time. It was hoped that fraudulent construction concerns, subsidiary companies for "milking" the main corporation, unnecessary paralleling of existing lines for purposes of blackmail, speculative bankruptcies and all similar practices of the period might be restrained in part by letting in the light of day upon their affairs.

Then again, there were the discriminations in rates, so vehemently denounced, against the small towns and local business, in favor of the large cities mainly interested in long distance traffic. Such jealousies and rivalries of course antedate the railroad. They are almost as old as trade. And yet the course of affairs since the panic of 1873, had lent peculiar force to them by the middle of the eighties. It had been a period of ruinous railroad competition all over the land, but especially in trunk line territory. Through rates had fallen tremendously; without any corresponding change in local charges.[538] The great western cities and the remote farmers were the immediate beneficiaries, of course. But there were the older communities of the East to be reckoned with,[539]—the farmers of New England and Middle New York and the secondary cities which had once been terminal points but were now become way stations. In the South, new towns were springing up, anxious to divide distributive trade with the older cotton concentration points. Nashville, soon to take first place in a celebrated case, was being built up by a favoring railway; and Atlanta, a purely railroad town, was in rapid growth at the expense of older rivals. The separate states had long sought to deal with this ancient evil of local discrimination in rates by means of long and short haul clauses; but to little effect. What wonder that the Cullom Committee in 1886, heads its long list of "complaints against the railroad system of the United States" by two forms of this alleged evil!

In brief, the contemporary evidence all goes to show that,—quite aside from evil intent,—the railroad business of the United States in the middle of the eighties, was in a highly disorganized state. Phenomenal economic development since the resumption of specie payments in 1879, had perhaps outstripped the capacity of managements to scientifically order their affairs. Collateral evidence as to this is the extraordinary wastefulness, of operation which prevailed. Competition had run mad. All of the tricks and vagaries of roundabout routing of freight found place.[540] To keep pace with mere operating demands was a heavy enough task,—to say nothing of constructing well-ordered tariffs, keeping straight accounts, and providing adequate funds for growth. And out of this unsettled condition of affairs there had sprung the usual mushroom crop of speculation, fraud and corruption which is bound to flourish at such times.

And then, finally, in seeking to understand the economic situation in 1887, the intolerable arrogance of great railway managers must be kept in mind. Honorable exceptions there must have been, to be sure. But the "Public be damned" attitude of the old Commodore Vanderbilt was evidently a general, although perhaps a somewhat exaggerated one. It is certain that there was no well-defined sense of responsibility to the public. All attempts at investigation or reform were treated as "interference with private business." The rising tide of popular feeling was increased by evidence of corrupt political practices, as well as of mere crude contempt for the rights of patrons. Read the congressional debates upon the Camden and Amboy monopoly in New Jersey; the special laws "jammed" through the state legislature by the New York Central Railroad;[541] and the revelations as to corruption in the Credit Mobilier and other proceedings in Congress.[542] Such things added fuel to the flames in the East, kindled and kept alive in the West by the Granger movement. The time for an attempt to curb the second great manifestation of corporate power in the United States was indeed at hand. The only question was as to the form which it should assume.

The congressional history of the Act of 1887 extends over a period of nearly fifteen years. The first general bill to pass the House of Representatives in 1874, had for its object a reduction of rates; but the movement for the elimination of discriminatory practices did not begin until two years later. Then in 1877, came the first of the long series of bills which finally led up to the statute in its final form, prepared by Representative Reagan of Texas. But it was not until 1884 that the Senate, ever tardy in its response to public sentiment, began to take the matter seriously. Its earlier interest in reduced rates had dissipated, ten years before, with the Windom Committee Report. Now, however, under the leadership of the Senator from Illinois, the Cullom Committee brought in a bill, the distinctive feature of which was provision for a permanent administrative commission. The various House bills, in their distrust of executive appointments and authority, had favored leaving the elimination of abuses, once clearly defined by law, to the Federal courts. A legislative deadlock between the two chambers resulted upon this point; as well as concerning the status of pooling. For the House sought to prohibit all traffic agreements; while the Senate would permit them under proper administrative supervision.

At this critical juncture the Supreme Court decision in the Wabash, St. Louis, and Pacific Railway case[543] was handed down. It specifically denied to the individual states, power to regulate the ever-increasing volume of interstate traffic. This decision put the match to the long train of influences making for action. The Senate and House bills were therefore taken up in conference committee, with the usual outcome of give and take. The Senate gained its point of administrative, rather than judicial, control. A commission was provided; but the courts were accorded power to entertain appeals. On the other hand, the House conferees insisted upon the prohibition of pooling and a more stringent long and short haul clause. All were agreed in respect to the publicity features. The series of votes at different times with steadily growing majorities, leading up finally to the passage of this compromise statute by both houses, is significant of the progress of public opinion upon the matter.

House of RepresentativesSenate
1874Passed121 to 116"
1877"139 to 104"
1884"161 to 7543 to 12
1886"192 to 4147 to 4
1887"219 to 4137 to 12

The constitutionality of the Act to Regulate Commerce of 1887 need not long concern us.[544] Everything depended upon the interpretation of the clause in the Constitution conferring upon Congress power over commerce with foreign nations and among the states. A generation earlier the regulation of railroads by Federal statute might not have been sanctioned. But Lincoln and Grant had dealt a death blow to the old states' rights idea. And the positive legislation after the Civil War prior to this time, had already denoted a much more progressive and liberal point of view. The far-reaching decisions of the Supreme Court following Munn v. Illinois in 1876 had clearly upheld the power of the several states to regulate commerce. The situation called only for definition of the dividing line between state and Federal authority. This was accorded in the Wabash case, which, as has already been stated, terminated the congressional deadlock, and brought about an agreement upon the terms of the law. Nor is it without significance, in the light of subsequent events, that the Wabash case was an appeal by a common carrier to Federal authority for protection against a state statute.

A brief summary of the main provisions of the Act to Regulate Commerce, at this point, will be convenient for future reference.

Section 1. It applies to freight and passengers by land; or by land and water in cases of continuous or through shipment, even to foreign countries. All charges shall be reasonable and just; and every unjust and unreasonable charge is prohibited.

Section 2. Rebates and personal discrimination of every sort forbidden.

Section 3. Local discrimination forbidden; equal facilities for interchange of traffic with connecting lines prescribed.

Section 4. Long and short haul clause: "That it shall be unlawful for any common carrier subject to the provisions of this act, to charge or receive any greater compensation in the aggregate for the transportation of passengers or of like kind of property, under substantially similar circumstances and conditions, for a shorter than for a longer distance over the same line, in the same direction, the shorter being included within the longer distance; but this shall not be construed as authorizing any common carrier within the terms of this act to charge and receive as great compensation for a shorter as for a longer distance: Provided, however, That upon application to the Commission appointed under the provisions of this act, such common carrier may, in special cases, after investigation by the Commission, be authorized to charge less for longer than for shorter distances for the transportation of passengers or property; and the Commission may from time to time prescribe the extent to which such designated common carrier may be relieved from the operation of this section of this act."

Section 5. All pooling and traffic agreements prohibited.

Section 6. All rates and fares to be printed and posted for public inspection at all stations; and filed with the Commission at Washington. No advance in rates except after ten days notice. All charges, other than as published, forbidden.

Section 9. Procedure by complaint before the Commission or Federal courts. Power to compel testimony and production of papers.

Section 10. Penalty of $5000 for each offence in violation. (Amended in 1889, adding imprisonment.)

Section 11. Interstate Commerce Commission of five members established; by Presidential appointment; term six years.

Section 12. Powers of Commission to inquire, with right to obtain full information necessary to exercise of its authority. Power over witnesses and production of papers, to be sustained by U. S. Circuit Courts.

Sections 13-14. Procedure before Commission by complaint. Parties competent to appear. Decisions to include findings of fact upon which based, for courts on appeal.

Section 15. Duty of Commission to notify carriers to "cease and desist" from violation, or to make reparation for injury done.

Section 16. To enforce obedience, procedure by petition of Commission in Federal courts, which may issue writs.

Section 20. Annual detailed reports from carriers as to finance, operation, rates or regulations in prescribed forms as desired by the Commission.

Such is the substance of the statute which marks the real, beginning of subjection of the railroads to control by the Federal government. It was avowedly tentative in character. It was a compromise, entirely satisfactory to no one. Many of its provisions were not new. Administrative commissions had already been in existence some time in several of the states. Pooling had also commonly been condemned. The long and short haul clause in the statute constitutes no innovation. It was based specifically upon a number of state laws, more or less similar to it in tenor.[545] In Vermont, for example, since 1850; in Virginia, since 1867; and in Massachusetts, since 1874, long and short haul clauses had been in force. Some seventeen states, prior to the enactment of the Interstate Commerce Act in 1887, had conceded the wisdom of such an adjustment between local and long hauls. Nor were such statutes disregarded, as a rule. Thus, in Massachusetts they were enforced to the extreme degree of prohibiting any concession in rates at Provincetown, on the point of Cape Cod, one hundred and twenty miles from Boston by land, while only thirty-six miles in a direct line by water, below the rates at any of the intermediate points on the roundabout rail line along the Cape. The debates in Congress at the time this section of the Act was under discussion show that the bill as finally passed was a compromise between an absolutely inflexible prohibition, in the House, and a more elastic measure, providing for exceptions, in the Senate.

In one respect the law of 1887 marks a profound revolution in both commercial theory and practice. Its provisions concerning equality of rates to all classes of shippers denote a great moral uplift in the business standards of the country. Prior to this time the English common law, while requiring reasonableness of charges by common carriers, by no means insured that such charges should be stable and uniform. This flowed perhaps from the circumstance that rebating was an essentially American abuse. Neither in England, nor on the continent for that matter, had business rivals ever made such use of the services of carriers to suppress fair competition in trade. With us, on the other hand, in the early free-and-easy days, entire freedom of contract between shipper and carrier had been the rule. Published tariffs were only the starting point for "higgle" and "dicker." It was not bad form for a shipper to "go shopping" freely among the freight agents of competing lines. The location of new enterprises, new opportunities for the expansion of old ones, were all more or less conditioned by the special favors which were so readily obtainable on demand. Nor was the accompaniment of secrecy necessarily due to fear of moral condemnation by the community. Secrecy was an economic essential of the device, as has elsewhere been shown.[546] By this new statute all was suddenly changed. Rebating was made a crime, punishable as such. Is it any wonder that, almost from the outset and for nearly fifteen years, this part of the law was the storm centre of litigation; and that in respect of rebating, the need of supplementary legislation should first become apparent?