BURDEN IMPOSED ON THE COMMISSION.—CONFLICT OF JURISDICTION.—HOW RATES ARE MADE.
5. Your committee has deemed it proper that it should report to the Senate the legal objections to the incorporation of this amendment in the sixth section of the act of the 29th of June, 1906, but although giving due weight to these objections, the committee has been more strongly influenced in its adverse report upon this bill because of the strong and forcible practical objections which have been urged to the adoption of this amendment as a part of the interstate commerce law.
Should this amendment become a part of the law, it would be in the power of any shipper, whether interested or not in the result, to file a protest against the advance of the rate which under the proposed amendment would at once suspend its going into effect, and under the amendment offered in committee would place it in the power of the commission to order its suspension, if a prima facie case was presented in the protest. The shipper in filing a protest assumes no responsibility, either as to the effect of his action upon the carrier or liability in any way for cost accruing during the proceeding. Considering the thousands of articles transported by the carriers of the country, the hundreds of thousands of rates published for the transportation of these articles, and the thousands of shippers interested in their movement, some idea of the number of protests that probably would be filed on the advance of rates can be imagined. The burden that would be thrown upon the commission in its effort to meet this responsibility would, as Judge Cooley well remarked, require "superhuman" efforts on its part. He said:
"Moreover, an adjudication upon a petition for relief would in many cases be far from concluding the labors of the commission in respect to the equities involved, for questions of rates assume new forms, and may require to be met differently from day to day; and in those sections of the country in which the reasons or supposed reasons for exceptional rates are most prevalent the commission would, in effect, be required to act as rate makers for all the roads and compelled to adjust the tariffs so as to meet the exigencies of business while at the same time endeavoring to protect relative rights and equities of rival carriers and rival localities. This in any considerable State would be an enormous task. In a country so large as ours, and with so vast a mileage of roads, it would be superhuman. A construction of the statute which should require its performance would render the due administration of the law altogether impracticable, and that fact tends strongly to show that such a construction could not have been intended."
If the advance of rates was ultimately decided to be reasonable, the carrier would have been deprived during the period of suspension of the additional earnings to which it was entitled, and under such a provision of law would be required to maintain, at enormous expense, a large force of attorneys to answer and defend these protests. It would confer upon the commission the powers now exercised by the courts, and the jurisdictions over the same subject by both the courts and the commission would necessarily produce conflict and confusion.
The Supreme Court in the case of Texas Pacific R. R. Co. v. Abilene Cotton Oil Co. (204 U. S., 426), construing the ninth and twenty-second sections on the right of a shipper to apply to the courts for pecuniary redress for an alleged unreasonable rate held that, until the protested rate was condemned by the commission, there was no relief in the courts. This decision avoided a conflict of jurisdiction between the courts and the commission. It would lessen very greatly the value of the amendment of the act of June 29, 1906, which requires thirty days' notice in a change of rate, which was adopted, with a view of investing rate conditions with a greater degree of stability than formerly. Under existing law, the shipper is assured of that degree of stability, and can predicate his sales and purchases accordingly. Under the amendment, shippers would never know whether or not a rate is to become effective on schedule time, or at any future time. The effect of the amendment would, therefore, be to a considerable degree to nullify the permanency which this amendment to the act to regulate commerce sought to impress upon the law.
We must remember in considering this question that the majority of advances have resulted from the practice of the roads in the reduction of rates to meet certain commercial and economic conditions at the time, which have usually been the result of appeals from shippers and suggestions from commercial organizations.
We desire to direct attention to the statement filed before the Committee on Interstate and Foreign Commerce upon a similar bill to this by the chairman of the committee of the Southwestern Traffic Association, which is as follows:
"A very small percentage of the changes in freight rates, either reductions or advances, is evolved by railroad officials. Practically every change in rates is the result of suggestion from one or more shippers, who find that by some modification in the existing schedules their business in a certain territory can be increased by enabling them to meet competition which they encounter from other sources of supply, which are in most cases served by rival railroads. Their representation is that by the proposed change their profit or business will be increased, and consequently the railroad serving them will share in an augmented traffic which, at the time of the suggestion, is being handled by the rival shipper and carrier.
"Ninety or more per cent. of these suggestions are for reductions in rates or for changes in rules and regulations beneficial to shippers and classed as reductions. The railroad company is anxious at all times to increase its traffic and gives a keen ear to such pleas of the shipper. The railroad official to whom such requests are made carefully investigates the conditions recited by the shipper and, by correspondence with such railroad's representatives at the points of origin and destination, confirms, if possible, the views of the shipper and the effect of the proposed change on the tonnage and revenue of the company. The traffic official of the railroad thus being daily engaged in investigations of this kind becomes very proficient in his knowledge of the factors surrounding the movement of the principal articles of commerce and becomes, after experience, a ready judge of the merit of such propositions. When thus convinced, he becomes the agent of the shipper in securing the proposed adjustment. This may take the form of suggesting to a rival railroad that the advantage which its shippers have enjoyed is unjust and that he should be permitted, without any corresponding reduction on the part of such rival railroad, to reduce his rate that the complaining shipper may profitably secure an increased share of the competitive traffic in question. Being unable to thus persuade the competing railroad of the merits of such a contention he is forced to proceed by reducing his own rate without regard to the possible change which may follow on the part of other railroads as a consequence of his reduction.