"It is one thing to inquire whether the rates which have been charged and collected are reasonable,—that is a judicial act; but an entirely different thing to prescribe rates which shall be charged in the future,—that is a legislative act.
"We have, therefore, these considerations presented: First. The power to prescribe a tariff of rates for carriage by a common carrier is a legislative, and not an administrative or judicial, function, and, having respect to the large amount of property invested in railroads, the various companies engaged therein, the thousands of miles of road, and the millions of tons of freight carried, the varying and diverse conditions attaching to such carriage, is a power of supreme delicacy and importance. Second. That Congress has transferred such a power to any administrative body is not to be presumed or implied from any doubtful and uncertain language. The words and phrases efficacious to make such a delegation of power are well understood, and have been frequently used, and, if Congress has intended to grant such a power to the Interstate Commerce Commission, it cannot be doubted that it would have used language open to no misconstruction, but clear and direct. Third. Incorporating into a statute the common-law obligation resting upon the carrier to make all its charges reasonable and just, and directing the commission to execute and enforce the provisions of the act, does not by implication carry to the commission, or invest it with the power to exercise, the legislative function of prescribing rates which shall control in the future. Fourth. Beyond the inference which irresistibly follows from the omission to grant in express terms to the commission this power of fixing rates is the clear language of section 6, recognizing the right of the carrier to establish rates, to increase or reduce them, and prescribing the conditions upon which such increase or reduction may be made, and requiring, as the only conditions of its action—First, publication; and, Second, the filing of the tariff with the commission. The grant to the commission of the power to prescribe the form of the schedules, and to direct the place and manner of publication of joint rates, thus specifying the scope and limit of its functions in this respect, strengthens the conclusion that the power to prescribe rates or fix any tariff for the future is not among the powers granted to the commission.
"These considerations convince us that under the interstate commerce act the commission has no power to prescribe the tariff of rates which shall control in the future, and therefore cannot invoke a judgment in mandamus from the courts to enforce any such tariff by it prescribed."
The immediate effect of this decision was to put an end to any enforcement of decisions relative to rates by the Commission. The carriers immediately refused to obey any orders which the Commission issued for the redress of grievances. This policy was manifested with increasing clearness during the five years subsequent to the decision. It became more and more certain that the denial of the right, not only to pass upon the reasonableness of a particular rate, but to prescribe what rate should supersede it, meant the abolition of all control whatever over the scale of charges. The entire inadequacy of making rate regulation dependent upon the mere determination of rates as applied in the past, without reference to the rates which should prevail in the future, was apparent on all sides. More than this, all remedy for the parties who had borne the burden of an unreasonable rate would seem to have been removed. This was clearly described in the report of the Commission for 1897. It was illustrated by the rates upon oranges. In 1890 there had been a sudden advance on rates from Florida to New York from thirty to forty cents. The Commission after investigation ordered that the rate be reduced to thirty-five cents. As a matter of fact, how could this action redress grievances of those who had already paid forty cents per box? It was difficult in the first place to discover who bore the burden of the unreasonable charge; and in the second place it was certain that some of those who suffered could not legally sue in court. The actual shipper who alone could sue for repayment of unreasonable charges was a middleman who recouped himself in any event, either from the grower, the consumer, or both. He lost nothing by reason of the unreasonable rate. As a matter of fact, not any single individual but the locality, had been mulcted by five cents per hundred pounds, supposing that a rate of forty cents were unreasonable. Experience showed that almost no shippers or other parties injured, actually attempted to secure the restitution of moneys already paid for unreasonable charges. In only five out of 225 cases down to 1897 was a refund actually sought; and in those cases $100 was the maximum sought to be recovered. As a matter of fact the damage inflicted by the existence of such an unreasonable rate could not be measured by hundreds or perhaps by hundreds of thousands of dollars. The bearing of this citation is to show that any effectual protection to the shipper must proceed from adjudication of the reasonableness of rates before, and not after, they have been paid; that is to say, in advance of their exaction by the carrier. Power to pass upon the reasonableness of such rates prior to their enforcement, as a consequence, constitutes practically the only safeguard which the shipping public may enjoy. It will be observed that in this discussion reference is made simply and solely to that class of cases where complaint is made against the unreasonableness of a rate per se as applied to all shippers alike, entirely distinct from the exercise of powers by the Commission in respect of unreasonable discrimination as between two or more persons or places. That other question of relative rates was to come up in another connection.
Despite this denial by the Maximum Freight Rate decision of power to prescribe future rates, in substitution for others held to be unreasonable, there were still certain things which the Commission might do in the matter of rate determination. The only question was as to whether they afforded an adequate remedy for the redress of grievances. Were they really worth while? Complaint as to a rate, once paid, might still be made. The Commission might still hold it unreasonable; and even pass upon the degree of its unreasonableness. And the complainant shipper might then institute proceedings for repayment of the excessive charges under that particular rate. But the difference between this range of powers and those which had been claimed by the Commission for ten years was simply this: That under the original interpretation of the law the Commission had not only decided whether rates were wrong; it had also prescribed a remedy by issuing an order as to what rates were right, believing that these would be enforced by the courts. Not even the power to prescribe maximum rates remained to the Commission after this interpretation. The only action open to it would be to declare one rate after another unreasonable until the carriers had been brought to terms. Its inadequacy as a practical remedy was the main factor in bringing about the passage of the new law of 1906.
It must not be assumed that the Supreme Court in the Maximum Freight Rate decision intended to render the Commission an entirely superfluous body. But its functions, as set forth in the following quotation from the opinion, proclaimed the adoption of an entirely different policy concerning public control of rates from the one hitherto pursued. Whether it was adequate for the purpose in view will appear, as has just been observed, from the subsequent course of events.
"But has the commission no functions to perform in respect to the matter of rates, no power to make any inquiry in respect thereto? Unquestionably it has, and most important duties in respect to this matter. It is charged with the general duty of inquiring as to the management of the business of railroad companies, and to keep itself informed as to the manner in which the same is conducted, and has the right to compel complete and full information as to the manner in which such carriers are transacting their business. And, with this knowledge, it is charged with the duty of seeing that there is no violation of the long and short haul clause; that there is no discrimination between individual shippers, and that nothing is done, by rebate or any other device, to give preference to one as against another; that no undue preferences are given to one place or places or individual or class of individuals, but that in all things that equality of right, which is the great purpose of the interstate commerce act, shall be secured to all shippers. It must also see that that publicity which is required by section 6 is observed by the railroad companies. Holding the railroad companies to strict compliance with all these statutory provisions, and enforcing obedience to all these provisions, tends ... to both reasonableness and equality of rate, as contemplated by the interstate commerce act."
The nadir of government regulation for the time being was reached in November, 1897,—six months after the Maximum Freight Rate decision. A second opinion from the Supreme Court of the United States in the Alabama Midland (Troy) case, with one blow practically nullified the long and short haul clause.[567] The first opinion had put an end to control over the reasonableness of rates in and of themselves. This second one denied the right to establish their reasonableness relatively as between competing places or markets. In order fully to appreciate the significance of this decision it will be necessary to review cursorily the tedious litigation which led up to this result,—the entire emasculation of the Fourth section. The final outcome may be best described by Justice Harlan in his dissenting opinion in this leading case: