A.—THE COAL-CARRYING DECISION, U. S. SUPREME COURT.
Since this book was put in type the United States Supreme Court has sustained the Interstate Commerce Commission in an important suit brought by the Commission against the Chesapeake and Ohio Railroad, and the New York, New Haven and Hartford Railroad under the Elkins Act. The Chesapeake and Ohio agreed to deliver at New Haven 60,000 tons of coal at an aggregate cost which, after deducting the market price of the coal at the mines and the cost of transportation from Newport News to Connecticut, would leave the Chesapeake and Ohio Railway only about 28 cents a ton for carrying the coal to Newport News, while the published tariff was $1.45 per ton. Suit was brought by the Interstate Commission to enjoin the carrying out of this contract. The Government challenged the right of an Interstate carrier to perform a contract to sell and deliver merchandise (coal) whenever the price to be received by the railway is inadequate to cover its actual outlay, plus the published freight rates, upon the ground that the actual result would be discrimination and failure to collect the published tariff, in violation of the Interstate Commerce Law. The answer of the railway company was in effect that it charged the full rate for transportation, but sold the coal at less than market rates, at a price in fact which involved a loss, and that special circumstances justified it in so doing. The companies maintained that, when acting in good faith, they had, as dealers, the right to make contracts at a fixed price for sale and delivery extending over a series of years and then go into the market, buy the merchandise, and deliver it at destination, notwithstanding that what they received therefor might not be sufficient to yield them a net sum equal to the published freight rate, according to which shippers generally were charged.
In a strong decision rendered February 19, 1906, the Supreme Court upheld the contention of the Government, declaring that a carrier cannot deal in the goods it carries in such a way as to evade the provisions of the Interstate Commerce Act, and therefore a railway cannot buy and sell and underbid other owners of similar goods who are dependent on the railroad for the transportation of their goods to market. “The existence of such a power would enable a carrier, if it chose to do so, to select the favored persons from whom he would buy and the favored persons to whom he would sell, thus giving such persons an advantage over every other, and leading to a monopolization in the hands of such persons of all the products as to which the carrier chose to deal.... Because no express prohibition against a carrier who engages in interstate commerce becoming a dealer in commodities moving in such commerce is found in the act, it does not follow that the provisions which are expressed in that act should not be applied and be given their lawful effect.”
The Court quotes an English case, Attorney General v. The Great Northern Railway, in which the Vice-Chancellor decided on common-law principles that a railway could not deal in coal because such dealing was incompatible with its duties as a public carrier and calculated to inflict injury on the public.
The decision is important, and the railways, it is said, have already begun to part company with their coal mines. But it must not be expected that the evil at the bottom of this case can be so easily eradicated. It will be a simple matter to put the coal mines in the hands of special companies controlled by the same men who control the railways, and the coal company and the railway can together continue to do precisely what the railway alone has been doing in the double capacity of dealer and carrier.
Within a week of its decision sustaining the Commission in the coal-carrying case, the Supreme Court has reversed the Commission and the Circuit Court in the orange routing case. In 1899 all the railways of Southern California fixed a through rate of $1.25 per hundred on oranges from California to the Missouri River and the East, reserving the right to route the freight. The Fruit Growers Association complained of this as depriving shippers of their right to route their shipments and as virtually constituting a pooling agreement or combination in violation of the Interstate Act. The Commission and the Circuit Court sustained this contention, but the U. S. Supreme Court has now (March, 1906) sustained the railroad plea that they have a right to fix through rates on condition of determining the routing themselves.
B.—REGULATION OF RATES.
In the Boston Transcript for February 24, 1906, President Hadley, of Yale University, criticises the Hepburn Bill because it makes “the decision of the Commission itself final on all questions of fact,” and he predicts that if such a bill is enacted into law it will be a failure, although he does not believe it practicable to obtain a better measure now.
President Hadley bases his prediction of failure on his interpretation of the experience of England. He says that the English Railway Act, 1873, “had many points of resemblance to the Hepburn bill. It provided for a commission which, besides ascertaining the rates charged by railroads and making reports to Parliament concerning their management, should also be empowered to investigate complaints concerning unjust rates of discrimination in facilities and give adequate and speedy relief. It was intended to have the quick jurisdiction of these Commissioners supplant the slow jurisdiction of the older courts.”
“The twenty-sixth section of the act undertakes to restrict narrowly the opportunity for appeal from the judgment of the Commission. The Commissioners themselves may state a case; on the case thus stated, and no further, the courts on appeal may decide what is the law. This was intended not only to shut out the retrial of questions of fact, but to give to the Commission, as far as the circumstances admitted, the power of deciding which were questions of fact and which were not.”