This is in the interest of communities and the individual shipper. There must be elasticity for other reasons, in the interest of communities as of the railroads; in meeting changes in commercial conditions that necessitates reductions in rates for shorter or longer periods, as an illustration, to enable our grain and other products of the farm to reach foreign markets, which would be impossible in one period unless rates were lowered, whereas in other periods higher rates could be charged without injurious results. Understanding the conditions that surround this complex subject, it is manifest that if a single shipper, or even the Interstate Commerce Commission, is to have the power to prevent at any time that elasticity which involves an advance in rates, the natural result will be that reductions will not be made by the carrier, and the elasticity will be lost. The fear would be ever presented to the mind of the traffic official that the rate once reduced could not—at least, until after exhaustive and long-drawn-out hearings before the commission—be advanced.
The necessary fluctuation in rates to meet the changing conditions of commerce, when examined in the light of the reports of the Interstate Commerce Commission, is startling to one not familiar with the rapid change of commercial conditions in this country. There were 225,982 tariff publications filed with the commission in one year, all containing changes of rates, either reductions or increases, and rules governing transportation. These publications—many of them—contained a great number of different tariffs. The Pennsylvania lines, east of Pittsburg, issued 2,200 tariffs and 3,600 supplements. About 33-1/3 per cent of these covered advances, and 66-2/3 per cent were reductions. As the law exists today, there was no special inducement to the shipper to file protests against the advances. Suppose, however, that this amendment had been a part of the act to regulate commerce, how many protests would have been filed, and what length of time would it have taken the commission to have disposed of them? What uncertainty would have resulted to the commercial interests while waiting for the adjudication of these questions?
OPPORTUNITY FOR FRAUD AND DISCRIMINATION UNDER THE AMENDMENT.
7. One of the most serious objections urged to the passage of this amendment is the opportunity which such a law would present for the perpetration of frauds under it, and in the case of even honest protest to the advance of rates, where rates rest on a differential basis, in producing thousands of instances of unfair discrimination.
An example under the first proposition may be stated briefly, as follows: There are two men engaged in the same line of trade; they are both called upon to bid on a contract involving a large amount of a given commodity in which both deal. The carrier has given notice of an advance in rate, effective thirty days from the filing and publication of the schedule; the commodity is not to move for some days; one of the bidders files his bid, based upon the advanced rate, assuming that the notice of the carrier will be made effective; the other shipper and bidder waits until two or three days before the date the rate is to be made effective, files a protest, confident that it will take three or four months to have the matter adjudicated, files his bid against his competitor, based on the current rate, and being the lowest, secures the contract. An example under the second proposition would be in case of a rate published from St. Louis to be followed differentially from Chicago by a number of competing roads. A shipper on one of the lines, just prior to the taking effect of the rate, would file his protest as to the rate east of Chicago. The differential adjustment that has been made by all these roads will at once be destroyed, and the shipper on the road against which the protest was filed would have the advantage over all of his competitors on the other lines in shipping east.
These discriminations between shippers would be the direct result of the power placed by Congress in the hands of shippers and would have received the sanction of legislative approval, and, therefore, be lawful. The statute has taken it out of the power of the carrier to meet such a condition and to prevent the discrimination. It cannot change its rate under thirty days without a special order of the commission, and that order, it must be assumed, cannot be granted without a reasonable hearing. Congress since 1887 has sought by the most stringent measures of legislation to prevent discrimination and preserve equality among shippers. The original act was demanded more to accomplish that purpose than for any other. The Elkins Act was confined almost entirely to the subject, and the act of June 29, 1906, increased the penalties for the violation of these provisions. Should this policy, which has been followed for more than twenty years, be modified and an act passed, the tendency of which is to tempt the cupidity of the shipper to accomplish results which it has earnestly and vigorously fought to stamp out?
WOULD PREVENT REDUCTIONS, AS WELL AS ADVANCES, IN RATES, AND DESTROY THEIR FLEXIBILITY.
8. On the face of this amendment, it seems only to give to the commission the authority to prevent an increase in rates, but the practical result of such a law would be far more reaching. Such a law would mean a rigid freight tariff in place of the present flexible and elastic system of rates which exists alone in this country. Stability of freight rates is important, but not to the extent that the carrier shall not feel warranted in promptly applying remedies for the relief or assistance of shippers who find themselves no longer able to compete, due to advantages which other shippers have secured, or changes which have occurred in the conditions surrounding the marketing of their products.
A law which tends to minimize the commercial or competitive conditions existing at the present time will necessarily result to the disadvantage of shippers, to the carrier, and to the communities they serve. It is not necessary here to again refer to the presentation of the importance of the flexibility of rates, which is so clearly shown in the discussion of the influences which control in making reductions, as well as advances of rates by the chairman of the Southwestern Traffic Committee, as quoted under section 5 of this report. The more the committee has reflected upon the probable tendency of the principle announced by this amendment, if incorporated into the law, the more definite has become its conviction that it would ultimately result in destroying that important factor in American railroad management, "the flexibility of their tariffs—their adaptability to the changing commercial and economic conditions."