Government in the United States, National, State and Local

by James Wilford Garner

Likewise, the states cannot impose taxes on passengers passing through their territory bound for points in other states, or require interstate trains to stop at county seats, or impose taxes on telegraph messages sent to points in other states, or on bills of lading of freight destined to points in other states, or on goods intended for exportation, and so on.

Regulation of Interstate Railway Traffic.—For a long time Congress took no action toward regulating railway traffic among the states, thus leaving the railroads free to carry on their business as they pleased, regardless of the interest of the public whom they served. But with the enormous development of the railway system of the country gross evils began to creep in, in the form of excessive rates, discriminations, combinations for the suppression of competition, inadequate provision for the safety of passengers, etc., in consequence of which a widespread demand grew up for legislation bringing the railroads under governmental control. The outcome of this agitation was the interstate commerce act of 1887, the provisions of which have been amended and extended by several subsequent acts, notably the Elkins act of 1903, the railway rate law of 1906, and the interstate commerce law of 1910.

Interstate Commerce Commission.—The law of 1887 created an interstate commerce commission which now consists of eleven members appointed by the President and paid a salary of $12,000 a year each, which commission has general supervision of the execution of the several acts mentioned above. It hears complaints against the railroads, makes investigations upon petition, and to this end may summon witnesses and compel the production of papers and records, and conduct hearings. If, after an investigation, it finds that the law is being violated by a railroad company, it may request the proper federal authorities to institute a prosecution of the offending company, and the law requires that such a prosecution shall be made. For a long time the commission had no power to fix rates, but only the negative right to say that a given rate was unjust and unreasonable. But by the act of 1906 it was given the power, after a full hearing, to determine and prescribe just and reasonable maximum rates and charges, as well as to prescribe regulations for the conduct of railway traffic.

The Laws Now in Force prescribe that all railway rates and charges for carrying freight and passengers must be just and reasonable; that no rebates, drawbacks, or special rates shall be granted to particular shippers; that no discriminations shall be made as to rates or service to certain persons or places; that no free passes, with certain specified exceptions, shall be granted; that no greater charges shall be made for a "short haul" than for a "long haul"; that no railroads shall be allowed to transport commodities which they are engaged in producing, with certain exceptions; that competing railways shall not be allowed to pool their freight or earnings; that schedules showing rates, fares, and charges shall be published and kept open for inspection and cannot be changed except after thirty days' notice to the commission; that all railroads shall keep their accounts according to a uniform system prescribed by the commission; and that they shall make annually to the commission a full and complete report of their business and earnings.

An important extension of the interstate commerce act was made in 1906, when express and sleeping car companies, pipe lines used for transporting oil from one state to another, and telegraph, telephone, and cable companies engaged in sending messages from one state to another or to foreign countries, were brought under the operation of the law and their business subjected to the same conditions and restrictions as those applying to railroads. By an act of 1912 railroads were prohibited from owning, controlling, or having any interest in competing water carriers, and by an act of 1913 provision was made for preparing a valuation of all railroads in the United States.

Congress has also enacted laws requiring interstate railroads to equip their cars with automatic couplers and other safety appliances, fixing the liability of railway employers for injuries sustained by railway employees, encouraging the arbitration of railway strikes, and establishing an eight-hour work day on railways (1916). An act excluding the products of child labor from interstate commerce (1916) was declared unconstitutional by the Supreme Court.

In pursuance of acts of Congress passed in 1916 and 1918, the President in 1918 took over the control of railroads, telegraphs, and telephones for the duration of the war.

Federal Anti-trust Legislation.—The commerce clause of the Constitution has also furnished the authority for some important congressional legislation against what are popularly known as "trusts," that is, combinations of corporations or business associations formed to avoid the wastes of competition and to secure economy of management. But the control of the supply of a commodity means the elimination of competition and usually the maintenance of high rates to the injury of consumers. For a long time the greater part of the business of the country was conducted by individuals, companies, or corporations, and the advantages of competition were preserved to the public, but in the course of the economic development of the country, corporations began to consolidate for the reasons stated, with the result that the supply of many commodities came to be controlled by single combinations. At first the states undertook to deal with the problem by passing anti-"trust" laws, but the business of so many of the more powerful organizations was interstate in character that state legislation was inadequate to deal with them.

The Sherman Anti-"trust" Law.—Finally, in obedience to a widespread popular demand, Congress took action in 1890 by passing what is popularly known as the Sherman anti-"trust" act to protect trade and commerce among the states against unlawful restraint and monopolies. This act declared that every contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce among the states or with foreign nations was illegal, and it prescribed appropriate penalties for violations thereof. This law, however, applies only to "trusts" which are in restraint of trade among the states or with foreign nations. It has no application to those whose activities are confined entirely within the boundaries of a single state; with such "trusts" the states alone have the power to deal.

In pursuance of the act of 1890, prosecutions have been instituted in the federal courts against a large number of "trusts," and some of them have been broken up, but the larger number have escaped. In 1911, for example, the Supreme Court decided that the Standard Oil and tobacco "trusts" were illegal, and their dissolution was decreed.