Charles Francis Adams.
But matters were rapidly passing beyond the sphere of State legislation. Each new consolidation of systems, each additional development of through traffic, made it more impossible to control railroad policy by the action of individual States. It could only be done by a development of the law in the United States courts or by Congressional legislation. The former result was necessarily slow; each year showed an increased demand for special action on the part of Congress. But such action was hindered by divergence of opinion in that body itself. One set of men wished a moderate law, prohibiting the most serious abuses of railroad power, and enforced under the discretionary care of a commission. These men were for the most part not unwilling to see pools legalized if their members could thereby be held to a fuller measure of responsibility. On the other hand, the extremists wished to prescribe a system of equal mileage rates; they would hear of no such thing as a commission, and hated pools as an invention of the adversary. Between the two lay a large body of members who had no convictions on the matter, but were desirous to please everybody and offend nobody—a hard task in this particular case. It was nearly nine years from the time Mr. Reagan introduced his first bill when a compromise was finally effected—largely by the influence of Senator Cullom. As compromises go, it was a tolerably fair one. The extremists sacrificed their opposition to a commission, but secured the prohibition of pools; the disputed points with regard to rates were left in such a shape that no man knew what the law meant, and each was, for the time being, able to interpret it to suit the wishes of his Congressional district.
The immediate effects of the law were extremely good. There were certain sections of it, like those which secured publicity of rates and equal treatment for different persons in the same circumstances, whose wisdom was universally admitted. Indeed it was rather a disgrace, both to the railroad agents and to the courts, that we had to wait for an act of Congress to secure these ends; and most of the railroads made up for past remissness in this respect by quite a spasm of virtue. In some instances it was even thought that they "stood up so straight as to lean over backward." But this was not the only part of the law which proved efficient. The very vagueness of the clause concerning the relative rates for through and local traffic, which under other circumstances might have proved fatal, put a most salutary power into the hands of the Interstate Commerce Commission, and one which they were not slow to use.
Thomas M. Cooley.
The President was fortunate in his selection of commissioners; above all in the chairman, Judge T. M. Cooley, of Michigan, a man whose character, knowledge of public law, and technical familiarity with railroad business made him singularly well fitted for the place. The work of the Interstate Commission, like that of its Massachusetts prototype, shows how much more important is personal power than mere technical authority. It was supposed at first that the commission would be a purely administrative body, with discretion to suspend the law. Instead of this, they have enforced and interpreted it; and in the process of interpretation have virtually created a body of additional law, which is read and quoted as authority. With but little ground for expecting it from the letter of the act, they have become a judicial body of the highest importance. Their existence seems to furnish a possibility for an elastic development of transportation law, neither so weak as to be ineffective nor so strong as to break by its own rigidity.
But the final test of their success is yet to come. They have laid down a few principles as to the cases when competition justifies through rates lower than those at intermediate points. But the application of these principles is as yet far from settled; and it is rendered doubly hard by the clause against pools, which does much to hamper the roads in any attempt to secure common action on the matter of through rates. Each ill-judged piece of State legislation, and each reckless attempt to attack railroad profits, increases the difficulty. There was a time when the powers of railroad managers were developed without corresponding responsibility. In many parts of the country we are now going to the other extreme—increasing the responsibility of railroad authorities toward shipper and employees, State law and national commission, and at the same time striving to restrict their powers to the utmost. Such a policy cannot be continued indefinitely without a disastrous effect upon railroad service, and, indirectly, upon the business of the country as a whole.
FOOTNOTES:
[28] In 1886 the capital stock and the indebtedness of the railroads of the United States amounted to about four thousand million dollars each. Most of the debt represents money actually paid in; but a very large fraction of the stock is a merely nominal liability on which no payments have been made. Some was issued as here described merely as a means of keeping control of the property; some, as the easiest method of balancing unequal values in reorganization; some, to represent increased value of the property, so as to be able to divide all the current earnings without calling public attention too prominently to the very profitable character of the business. On the other hand, some stock on which money was actually paid has been wiped out of existence; and something has been paid out of earnings for capital account without corresponding issue of securities. The net amount of "water," or excess of nominal liabilities over actual investments, in the capital account of the railroads of the country can only be made the subject of guesswork. Estimates of responsible authorities vary all the way from nothing to $4,000,000,000.