And finally, the Stetson bill provided that the State Board of Railroad Commissioners should have power to fix absolute rates, thus insuring stability of rate schedules, while the Wright bill provided that the Commissioners should fix maximum rates only, thus permitting the famous "fluidity" of schedules advocated by machine lobby and Southern Pacific attorneys.
The contest between the supporters of the Wright and the supporters of the Stetson bill, finally narrowed down to the question of providing for absolute or maximum rates.
The provision for the maximum rate in Senator Wright's bill, authorized the railroad regulating Commission to fix the highest charge which a railroad may exact from a shipper. This is called the maximum rate. The transportation company is authorized to lower the rate at will, but it cannot charge a rate beyond the maximum as fixed by the Commission. This leaves the railroads to fix a sliding schedule of rates, so long as they do not exceed the maximum. It gives the railroads the advantage of that "fluidity" of schedules, which railroad attorneys insist is necessary for railroad prosperity.
The maximum rate is provided in the Interstate Commerce Act, but the Interstate Commerce Commissioners, finding it impracticable, have for years been clamoring for Congress to authorize the fixing of absolute rates. The cry of the Interstate Commerce Commission has been taken up by the shipping interests, and from one end of the country to the other there is growing demand that authority be placed somewhere to make railroad rates, when fixed by a regulating Commission, absolute.
The absolute rate, or the fixed rate as it is better called, which was provided in the Stetson bill, can neither be lowered nor raised by the railroads. Once fixed by the regulating Commission, it must remain until the Commission grants permission for its change. The railroads cannot lower it any more than they can raise it.
The advantages of the absolute rate are many. In the first place, where the absolute rate is established, there can be no discrimination, because the rate is known, it can neither be raised nor lowered, and the railroads have no opportunity to favor one shipper at the expense of another.
In the second place, the shipper is guaranteed a stability of rate schedules which is deemed necessary for settled business conditions. The merchant, for example, includes transportation charges in the cost price of the goods in which he deals. But if the transportation charges on the same class of goods are subject to frequent change, the merchant can never tell when his competitor is to be given the advantage of a sudden lowering in freight rates. This uncertainty unsettles business. The merchant holds that transportation rates should be just as stable as tariff rates. On this account, the merchant advocates fixed rates and stability of schedules as against maximum rates and constantly shifting schedules.
The supporters of the Stetson bill, then, backed the shipping and merchant classes; while the supporters of the Wright bill backed the contentions of the transportation companies.
The Campbell and the Stetson bills had been originally referred to the Senate Judiciary Committee, while the Wright bill had been referred to the Senate Committee on Corporations. For the first few weeks of the session, no particular note had been taken of the Wright bill, attention being centered on the amendment of the Stetson bill.
Things were going swimmingly with the Stetson bill, when the machine lobby awoke to the fact that something was wrong in the Senate. There was at least some indication that the Senate would pass an effective railroad regulation measure.