The Interstate Commerce Commission, in their fourth annual report, assert that "there can be no standard of expense which the courts can act upon and apply, but that the whole field is one of judgment in the exercise of a reasonable discretion by the managing powers, or by the public authorities in reviewing their action." Their views upon this subject are still more definitely stated in the following words contained in the same report:
"An attempt is made to give authority to the courts to interfere by the suggestion that property or charter contract rights, or both, are involved in the matter of fixing rates, and therefore that it is not possible the conclusions of administrative boards should be final. This is an endeavor, by the mere use of words, to confer jurisdiction upon the courts where the substance is altogether wanting. Property or contract rights are involved in these cases precisely as they are in numerous other cases of the exercise of power under the police authority of the State, either by the State itself or by its municipalities."
These views cannot fail to commend themselves to any unprejudiced mind. It is a well-established fact that all officials will, if permitted, extend their jurisdiction, and judges are no exception to the rule. It was therefore but natural that the courts should attempt to solve the problem of railroad rates.
The attempt so far has been fruitless, nor will it be otherwise as long as the courts persist in approaching with abstract legal maxims a question which, above all things, requires the light of experience and the exercise of sound discretion. The question of railroad rates will never be satisfactorily settled until it is definitely referred to expert administrative State and National boards empowered and prepared to meet the many contingencies that will always arise in the transportation business.
It is not difficult to account for the inability of the courts to properly adjudicate the question of reasonable rates. The legislature, or a board to which it has delegated its power, prescribes for a railroad company a classification and tariff. The company claims that the rates so fixed are unreasonably low and applies to the courts for redress.
Now, if the rates were based upon the cost of service only, it might, perhaps, be possible for a court to determine whether the prescribed rates are adequate or not. But even in such a case the question would arise whether the capitalization and the operating expenses of the road are not excessive, and its determination would require expert knowledge and sound discretion rather than legal lore. However, since the cost of service is not the only, and with railroad men not even an essential, factor in rate-making, it is evident that the rates upon single commodities can not be reviewed upon their individual merits, but the tariff must, in the judicial determination of the question whether it is reasonable or not, be viewed as a whole. But as it is impossible to foretell what effect a readjusted tariff would have on the revenues of a road, even courts are forced to admit that an actual trial of the tariff is necessary to establish its merits or demerits.
If the complaining company were as anxious to give the new tariff a fair trial as it usually is to demonstrate to the satisfaction of the court that it is devoid of every principle of justice, such a test might be accepted by the public as a reliable basis of judicial procedure. But railroad managers are not only striving to perpetuate their own high rates, but to show to the public that freight tariffs not emanating from a railroad company's office are of necessity crude and unjust to the carrier. They know that if they should succeed in convincing the public that administrative boards are incapable of dealing with that question, they might for years to come be left in undisputed possession of the power to make their own rates. This is certainly for the railroad manager a prize worth contending for, and no sacrifice is too great for him to make when there is any hope of ultimate victory. Being absolutely uncontrolled in his action, he finds it an easy matter, by temporarily diverting business from his line, by the increase of operating expenses and by repressing growing industries, and in many other ways, to curtail the business of his road and diminish its revenues. He can court losses in a thousand different ways discernible neither to the courts nor the general public. In short, it is in the power of any railroad manager to manipulate such a trial in his own interest, and, if determined, to obtain a verdict against any tariff not of his own making. This policy was pursued by several Iowa roads subsequent to Judge Brewer's decision that the alleged unreasonableness of the Iowa commissioners' tariff must be established by an actual trial, and was persevered in until the suit was withdrawn.
But even if the competency of the courts to properly determine such questions were admitted, there would still exist one serious objection to their jurisdiction. Courts necessarily move slowly, while all differences arising between the public and the railways, and especially those concerning rates of transportation, require prompt and decisive action. There are no fixed conditions in commerce. It is a kaleidoscope constantly presenting new phases. Competition at home and abroad, tariff duties, the condition of the crops and a thousand other influences affect it and may require a prompt readjustment of the tariff. So long as railroad companies are permitted to resort to injunctions and effect other delays rendered possible through the machinery of the courts, to prevent for years the enforcement of tariffs prescribed by administrative authorities, so long will the public be at their mercy. So long as they have nothing to lose and everything to gain by a judicial contest, it will be their policy to delay through the courts the enforcement of any tariff, whether prescribed by legislature or by an authorized commission, that falls below their standard. It is not to be understood that the acts of railroad commissioners should never be subject to a judicial view. If such boards clearly exceed their authority or are otherwise guilty of maladministration, if they violate constitutional rights, then railroad companies, if injured by their acts, should be permitted to seek redress in the courts; but they should not be permitted to nullify an official tariff by legal maneuvers. It is clearly not within the province of the courts to make rates or to lay down rules to be followed by those to whom the law has delegated the power to make them, nor should the courts aid the railroads in any attempt to nullify an official tariff that has been legally promulgated. A tariff prepared by sworn and disinterested officials is more likely to be just than one prepared by interested railroad men, and railroad companies should be compelled to adopt it and continue it in use until it is amended or revoked by legal authority.
Individual shippers are powerless as against strong corporations. Railroads apply to the courts for what they are pleased to term redress, and in the meantime refuse with impunity to accept an official tariff; but the shipper has no protection: he must pay their rates or go out of business. What reason can be assigned why the weaker should thus be discriminated against? A promulgation of a tariff prepared by a commission is equivalent to a declaration on the part of these officials that the rates or some of the rates charged by the railroads are unreasonably high. The railroad, in applying to the courts for protection, claims that the tariff prescribed by the commission is unreasonably low. Both tariffs are therefore impeached, one being that of an interested private company, the other that of a disinterested public board. It is evident that, even if the people should see fit to give the courts jurisdiction in such controversies, one of these tariffs must temporarily prevail pending the decision of the court, and sound public policy and justice to the patrons of the road certainly require that the official tariff be recognized by the courts and made to be respected by the railroad company until it is proved to be unreasonable and is set aside by lawful authority.
It is claimed by railroad men that they should be allowed to make their own tariffs because rate-making is so intricate a subject that none but railroad experts can do it justice. If this were so the courts would be even less competent to review a schedule of rates than a State or National commission would be to make one. Courts cannot be expected to have expert knowledge in all matters that are likely to be brought before them. They must rely upon the testimony of expert witnesses whenever technical questions are involved in the determination of cases. The identical sources of information from which courts draw are accessible, or may be made accessible, to a commission, which has the additional advantage that its members may be selected with special reference to their fitness for the duties which they will be called upon to perform and are expected to devote their whole time to the settlement of questions arising in the transportation business. Such a commission can practically be made a court with jurisdiction over all matters connected with railroad business. The railroad manager, no doubt, is thoroughly familiar with the wants and desires of his company; but it may fairly be presumed that he is less familiar with the needs of the public than a railroad commission whose members are in constant communication with the people, patiently listen to the complaints of shippers, court and receive suggestions as to needed changes in classification and rates, and study the relative advantages of the different sections and different interests of the State or the country as regards transportation. A railroad freight agent, on the contrary, is disposed to think that shippers ought to be satisfied with any rate lower than those charged fifty years ago for carting or other crude methods of transportation. He regards their views and suggestions as chimerical and not worthy of any notice, and does not even hesitate to inform them that rate-making is a branch of the railroad business wholly beyond their comprehension, and ought not to be meddled with or even inquired into by the public. The general freight agent is the employe of a company which rates his usefulness solely by his ability to constantly increase its revenues, and he invariably proceeds upon the theory that the best tariff is that which comes nearest imposing upon each commodity offered for carriage the maximum transportation tax that it will bear. A man who entertains such opinions cannot be supposed to be able to do justice to the shipper, and should not be permitted to act as arbitrator in rate controversies between the public and the company whose employe and advocate he is. Nor have we any reason to hope for a change in the present tariff policy of railroads. History has sufficiently demonstrated the fact that reforms must come from without. As long as human nature remains as it is, railroad officials will, if permitted, arrange tariffs in the interest of the men who give them employment, for if they did otherwise their services would soon be dispensed with. A freight tariff should be in the nature of a contract between the carrier and the shipper, and the assent of both parties ought to be essential to its validity. But as it is impracticable for all the parties interested to meet for the purpose of effecting an agreement, the power to make rates has in several States wisely been conferred upon railroad commissioners, and there is a strong tendency in others to adopt the same policy. Such boards have every opportunity to obtain any information needed for the efficient and faithful discharge of their duties. They can hear the representatives of the railroads as well as those of the shippers, investigate carefully disputed points, summon experts and witnesses, and obtain official information relating to classifications and rates from every State in the Union, and, if necessary, from every quarter of the civilized world. The assertion may safely be made that, with experience, a commission acquires more expert knowledge relating to the business of rate-making than a railroad manager. If there is any mystery connected with the business of rate-making which has so far been in the sole possession of railroad men, it is to their interest to initiate the commissioners into their profound secrets. It will be their privilege to enlighten the commissioners as to the actual cost of their respective lines, the cost of every branch of the railway service, and as to a thousand other matters which the public has both a desire and a right to know. If, after a schedule of rates has been prepared, and before it is promulgated, railroad men can suggest any improvement in it, they should have the privilege to do so; or if, after giving it a fair trial, they should be prepared to show that any rate is unreasonably low and injurious to them, their complaint should be carefully investigated, and, if found well grounded, the wrong should at once be righted.