Matters were finally brought to a head by the determined attitude of President Roosevelt. In his annual message to Congress in 1904 he made railroad regulation "a paramount issue." The remedies proposed differed little from those of the bills above mentioned. The cardinal point was that the Interstate Commerce Commission was to be given power to prescribe actual rates, to be effective until reversed by the courts. Under this spur, the House of Representatives passed the so-called Esch-Townshend bill—an administration measure—by the impressive majority of 326 to 17. It was now the Senate's turn to delay. It, however, authorized its Interstate Commerce Committee to sit during the spring and summer, and to report in December.[595] A mass of testimony was taken, which despite the activity of a powerful body of paid railroad attorneys, proved to be most convincing. But even more cogent proof of the need of control was the outrageous attempt of the carriers to influence popular opinion through so-called publicity bureaus.[596] An extensive service, regardless of cost, was set up with headquarters at Washington and with branches in all the leading cities, headed by the President of the Southern Railway. Bogus conventions, packed for the purpose,—such as the "Alabama Commercial and Industrial Association,"—passed resolutions unanimously, to be scattered broadcast by free telegraphic despatches all over the country. "Associations for the Maintenance of Property" held conventions; the fact being duly advertised. Palpably garbled news items from Washington were distributed without cost, especially during the hearings of the Senate Committee. Even more insidious and misleading methods were employed. An elaborate card catalogue of small newspapers throughout the United States was made; in which was noted all of the hobbies, prejudices, and even the personal weaknesses of the editors. One of the cards is reproduced on this page. Magazine sections or "ready to print" insides were also made up, in which appropriate and subtle references to railroad issues were concealed in a mass of general reading matter. Two or three weekly letters were sent gratis to minor newspapers without regular Washington correspondents, containing "good railroad doctrine," together with spicy local news items. Dakota farmers got suggestions as to the danger of the proposed legislation affecting their rates. Kentucky planters were warned of the probable effect upon tobacco prices. As an indication of the formidable proportions of this campaign of education, the Chicago office, alone, employed some forty highly paid experts. Regular reports were rendered by this news service to the railroads' committee, as to the results achieved; setting forth the number of columns of news matter distributed and the changes effected in the proportion of "pro" and "con" items published. It was indeed a most astounding demonstration of the lengths to which organized corporate power would go to defeat regulative legislation. That it proved upon exposure to be a boomerang for the railroad cause, is to be inferred from the entire absence of all such political methods from the succeeding campaigns dealing with further amendment of the law.
| Town | Name of Paper | Circulation | Date of Issue | Politics |
|---|---|---|---|---|
| 600 | Wkly | Dem | ||
| 1167 xxxxxx 10870 C M St P | xxxxxxxx Owner & Nd | Infl. small 2nd paper Farmers Weak Eds 1 50 | Sat 6- | Anti-beef Anti-oil Anti-harvester Anti-corp Anti-Rep Machine Pro-R R Pro-Roosevelt |
| S. D. xxxx is weak and bibulous man. Tractable to R R suggestions. Many Bohemians in region. Rich county. Junction town. | ||||
Duplicate copied from a card in the Chicago Publicity Bureau's index of newspapers. These cards furnish, in the last column, detailed information as to the position of the editor on public questions. At the bottom they indicate by what opening he could be persuaded to accept railroad "doctrine." The data which would identify the paper and editor on this card have been erased.
The President again insisted upon action in the annual message of 1905, this time recommending control over maximum, not absolute, rates.[597] Executive pressure was brought to bear heavily upon Congress. The public was plainly becoming insistent; with the result that the so-called Hepburn bill was passed by 346 votes to 7. Whether the Senate, under the influence of one of the most powerful lobbies ever let loose upon a legislative body, would have yielded even then, had it not been for an extraordinary conjuncture of economic events, one dare not surmise. The general causes of dissatisfaction, already described, such as the spread of combination, the growth of autocratic power, the steady rise of freight rates and the abuses of personal favoritism had been long at work. But now at the psychological moment came the general breakdown and congestion of railroad service all over the country;[598] the insurance investigation in New York; the Pennsylvania Railroad coal car scandal;[599] the Atchison rebate disclosures, with "barefaced disregard of the law," besmirching a member of the President's cabinet;[600] and the exposure of the outrageous publicity campaign methods of the carriers. The evidence was cumulative and overwhelming as to the need of action. The Senate was forced to acquiesce in a conference committee bill, passing it at the end with only three dissenting votes.[601] On June 29, 1906, the Hepburn bill became law. The fundamental principle of governmental control over the most powerful corporations in the country had been fully affirmed. It was an historic event,—the most important, perhaps, in Theodore Roosevelt's public career,—and a not insignificant one in our national history.
The Hepburn law of 1906, in the first place, greatly broadened the field of Federal regulation.[602] This was now extended to cover both express and sleeping-car companies. Pipe lines,—such powerful factors in the creation of monopoly in the oil business as opportunely showed by the Report of the Commissioner of Corporations in 1906,—were expressly included. "Transportation" was now broadly defined as comprehending among other things, "all services in connection with the receipt, delivery, elevation, and transfer in transit, ventilation, refrigeration or icing, storage, and handling of property transported." Whether certain of these powers, especially over pipe lines, are practically enforcible as well as legally sound, remains yet to be seen. The inclusion of all switches, spurs, and terminal facilities, with appurtenances of all sorts, was an added detail of importance, in view of the complicated uses made of them in connection with rebating, as elsewhere described. And the express power to require facilities for shipment, as well as to regulate joint rates and services in every detail, was yet another notable extension of Federal authority. Part-rail and part-water transportation was included; but coastwise and inland traffic exclusively by water, was left out. In view of its intimate relation to rates and services by rail, this omission was unfortunate. The notorious instability of water rates and the difficulties incident to the enforcement of the long and short haul clause, render such water-borne traffic of great importance in the proper regulation of carriers on land.
The significance of the Hepburn law, however, was not primarily in the wider scope of Federal control. The heart of it consisted of its more intensive character. The rate-making power of the Commission was greatly increased. Two other points were contested with equal vigor, viz., the scope of judicial review of decisions of the Commission, and the question as to whether its orders in cases appealed should take effect at once, or only upon final judgment by the Federal court. Viewed in a large way, however, all three of these propositions depended upon the determination of a basic issue. A clear separation of powers between the legislative, executive and judicial branches of government was a fundamental principle in our Federal Constitution. It was generally agreed that a considerable confusion of functions, laid upon the Commission by the original law, must in future be avoided. Here, it was said, was a body which, if empowered to make rates, would be exercising a legislative function; if applying and enforcing them, would be acting administratively; and if hearing complaints, would be serving as a court. It was generally conceded, nevertheless, except by a few extremists, that the time had now come when some competent tribunal must be provided for the effective and prompt settlement of transportation disputes. To which one of these three branches of the government should this important duty be assigned? In other words, disregarding mere matters of detail, should the Interstate Commerce Commission or the Federal courts be charged with the real control of the common carriers of the country?
The alignment upon this question was clearly defined. The administration and the representatives of the shippers and the general public, were unanimously agreed that control of rates and regulations, to be effective must be through an administrative agency,—a body, that is to say, attached to the executive branch of the government. Their reasons will be set forth in due time. On the other hand every railroad proposition was based upon the exercise of real control by the judiciary. The Commission, as an administrative body, was not to be abolished; but in all matters of rate regulation it was to be subordinated to the courts. The motives for this policy will also appear shortly. Senator Foraker of Ohio,—soon retired because of his uncompromisingly pro-railroad attitude,—proposed to strip the Commission of all rate-making power whatsoever; and to reduce it to an initiating body which should merely certify all complaints to the Federal courts for settlement. Senator Elkins of West Virginia,—an equally ardent railroad representative,—introduced a bill to create a special transportation court, subordinate only to the Supreme Court of the United States on questions of law. Until this tribunal had heard the cause, and had sanctioned interference on the ground of unreasonableness, the Interstate Commerce Commission might not intervene.[603] And in any event its functions were to be mainly connected with the enforcement, not the promulgation, of orders as to rates or service. These plans favoring the carriers' interests, as we shall see, were all based upon the proposition that Congress could not constitutionally delegate general rate making, that is to say, legislative power to an administrative body.
The constitutionality of clothing an administrative body with large regulative power by act of Congress, was, of course, essential to the administration's plan. It was urged that there was one exception to the general rule that power delegated to Congress to legislate under the Constitution could not be further delegated. "There may be such delegation where the purpose in the original conferring of the power can be subserved only by its delegation to an agent. Obviously Congress cannot spend time and labor upon rate making, even were it economically competent to do so. If the power is to be exercised at all, practically, it can be done only through an agency like the Commission." Congress certainly could not delegate such legislative power, viz., power to make rates, to the courts. That would even more flagrantly transgress the constitutional rule. In brief, any plan for judicial control meant the exclusion of rate regulation in any thoroughgoing way. And that, of course, was the reason why the "railroad Senators" all insisted upon such a plan. Other support for the administration plan was found in the dictum of the court in the Maximum Rate case;[604] and in opinions cited by the Attorney-General in a special message on the subject to the Senate.[605] These and other points, such as the bearing of the so-called "preference clause" of the Federal Constitution requiring equality of treatment in commerce between all ports of the United States, need not detain us further. The constitutionality of the amendments have now been duly upheld. But, inasmuch as the particular form which the law assumed was the outcome of these debates, it is essential that they be reviewed. Other questions of interpretation at a later time, also follow the same line of cleavage in debate.