Railway Rates: English and Foreign

by James Grierson

[ [93] The rates for “interstate” traffic in the United States are not at present subject to any Government control, but are made at the discretion of the companies to meet the requirements of trade, competition by rail and water, and of cities. Two Bills for the regulation of the interstate traffic of railways have recently been before Congress; one, the “Reagan” Bill, which proposes to fix the charges, to prohibit any discrimination, and to make it illegal for railway companies “to combine or to pool” their receipts without stringent provisions and penalties. The other Bill, entitled the “Cullom” Bill, proposed the appointment of an Interstate Commission consisting of five members, but did not provide for any specific or maximum rates for the transportation of passengers or merchandise, except that they should be reasonable and that there should be no unfair discrimination; while laying down the principle that the rates should be in proportion to the distance carried, it proposed to give to the Commissioners power, in their discretion, to allow lower rates to be charged for long, as compared with short distance traffic. The former Bill passed the House of Representatives and was rejected by the Senate; the “Cullom” Bill passed the Senate, and was rejected by the House of Representatives.

[ [94] Report of the Committee of Commerce, House of Representatives of the United States, March 8th, 1886.

“The Committee on Commerce, to whom was referred the bills (H. R. 309) to establish a Board of Commissioners of interstate commerce, and for other purposes; (H. R. 770) to regulate interstate commerce through a national court of arbitration (H. R. 1,572) to create an interstate commerce commission, and to regulate its powers and duties; (H. R. 1,669) to establish a bureau of transportation in the Department of the Interior; (H. R. 2,412) to regulate interstate commerce and to prevent unjust discriminations by common carriers; and (H. R. 3,929) to establish a Board of Commissioners of interstate commerce, and to regulate such commerce, beg leave to report said bills back to the House, and ask that they be laid on the table, and to report the accompanying bill as a substitute for H. R. 2,412, and recommend its passage.

“The subject matter of these bills has been so fully and elaborately discussed for several years past, that it is not deemed necessary in this report to enter into an elaborate explanation of the provisions of the bill reported to the House. Your committee may state, however, that the several bills referred to them rest upon three different theories.

“House bills 309, 1,572, 1,669 and 3,929 are framed upon the idea of providing a governmental commission, and of making detailed regulations of freight rates. The theory of these bills did not need the approval of the committee.

“House bill 770, ‘To Regulate Interstate Commerce through a National Court of ‘Arbitration,’ looks to the establishment of a court with power extending in some measure to the regulation of commerce between States, with provisions extending to the regulation of subjects not believed to be within the jurisdiction of Congress, and not embracing in its provisions matters of regulation believed to be necessary in a bill of this kind; and a single court to be held at Washington City, as provided in this bill, would not be sufficiently convenient to the people.

“The bill which we report to the House, and which is an amendment of House bill 2,412, is based upon the theory of furnishing civil remedies in the courts of ordinary jurisdiction to parties for the most conspicuous grievances complained of in railroad management, prohibiting what should not be done, and commanding what should be done; proposing remedies for the violation of its provisions, and avoiding any attempt at detailed regulation of freight rates. This was deemed best as the first effort at legislation upon this subject. The interests involved are so large, and their successful management so important to the country, that it was not deemed advisable to run any risk of embarrassing the management of the railroads of the country, and at the same time it was deemed necessary for the protection of the interests of the people to control and circumscribe the exercise of the monopoly powers of these corporations, to prevent them from making extortionate charges and unlawful exactions upon the people.

“The examination of this subject will show that the attempt to establish a system of legislative rates is impracticable, for the reason that what would be a reasonable rate for one road would be ruinous, perhaps, to others, as the charges for the transportation of freights are largely controlled by the amount of business done by the several roads.

“For instance, what would be a reasonable rate of charges on the Pennsylvania Railroad would not be a reasonable rate upon a road in the new States and in a sparsely settled portion of the country.

“The same difficulty lies in the way of attempting to protect the people by the adoption of maximum rates. What would be a reasonable maximum upon one road would not be reasonable upon others. A maximum high enough to protect the railroads against harm would be too high to benefit the people on most of the roads, and a maximum low enough to protect the people on some roads would be ruinous to the interests of many other roads, so that it is not believed best to attempt to protect the interests of the public by the legislative rates or by the maximum rates.