Occasionally one strikes an exorbitant rise in the East, however, as in one instance where on imported iron pyrites used in making sulphuric acid, the rate, which in 1903 was $1.56, became $2.72 four years later.[660] And the hardship often lay in the fact that these increases were most marked in the case of the small shipper,—the very one who, in these days of large enterprises, we can least afford to spare. The rate on cotton goods from the South to the Pacific Coast rose only fifteen per cent, between 1896 and 1907 by the carload; for smaller lots it rose sixty-five per cent.[661] In 1907, 38,000,000 pounds of cheese were produced in southwestern Wisconsin. The shipper to Chicago by carload paid only about ten per cent, more in 1907 than eight years earlier; but the shipper in smaller lots was compelled to pay forty per cent. more.[662] As always, the change was along the line of least resistance. Such a policy made for larger dividends; but did it tend to the perpetuation of equality of opportunity as between great and small concerns? That was a social question of the very first importance, which had much to do with the demand for still further increase of the regulative power of the Federal government in 1910.
Under the new powers conferred by law, it was now possible to investigate scientifically many matters which heretofore had been privately governed by rule of thumb. For instance the reasonableness of the charges for refrigeration in the movement of citrus fruit is dependent in practice upon the methods employed in gathering and packing them for market.[663] Was it better business practice to ship oranges and lemons in ice-cooled refrigerator cars, or was it better to adopt the so-called pre-cooling process, combined with great care in handling? The former was the long-standing practice of the fruit-growers, while the latter, substantially supported by the investment of more than a million dollars in plant, was advocated by the carriers. One had been tested in practice, the other was yet in the experimental stage. But aside from rivalry of method, were not the shippers entitled to pre-cool or refrigerate their fruit privately if they so desired? The determination of this question meant an elaborate investigation with careful records in detail as to the results obtained in either case. The decision upheld the carriers in their charges for the older methods of treatment; but pre-cooling charges had to be reduced by seventy-five per cent. It appears, therefore, that authority to deal with one of the most serious grievances voiced before the Elkins Committee in 1905, may now be fairly and scientifically exercised for the public benefit.
A similar technical investigation concerned the methods of transporting the products of "creameries."[664] Shall dairy products be centralized at favored points, possessed of a sufficient supply from the surrounding territory to permit of large-scale manufacture; or shall the older local creamery method prevail, whereby the product is taken directly from country stations to the great centres of consumption like Chicago? The particular rate adjustment makes all the difference between creameries scattered throughout the countryside or, on the other hand, located in the great cities. One of the prime difficulties is in the sparsity and uneven distribution of the cow population. Here was an order requiring a very careful investigation of the entire business, followed by a nice judgment as to the economic merits of the case. The history and development of the dairy business in the West had to be thoroughly looked into. Quite irrespective of the resulting order, it is apparent that the public is certain to benefit from an exhaustive inquiry. Yet other general investigations of the same sort might be cited to the same end. The wool business was examined thoroughly in 1911.[665] The entire New England rate system as well as the conditions of operation were overhauled in the following year, and a general inquiry into the hard coal situation is just now under way. A general improvement of conditions is bound to flow from the free exercise of such general powers.
The leading Supreme Court decision construing the Hepburn law,—and, constitutionally, one of the most important in recent years,—was rendered in 1910 with reference to the relation between the exercise of power over transportation by the Interstate Commerce Commission and the right of review of such action by the courts.[666] The details of the controversy are indicative of the nicety of economic adjustment required in such cases. There was a shortage of equipment for the carriage of soft coal on the lines of the Illinois Central Railroad. This commodity, practically speaking; cannot be stored. It must be disposed of at once, so that the available supply of cars determines the output of each mine. If, in this case, all the cars had belonged to the Illinois Central Railroad to be used indiscriminately by the mine owners, it would have been a simple matter to have allotted the equipment among all the operators along its lines upon the basis of the established capacity of each. Unfortunately, diversity of ownership of these cars had brought about, all over the country, special rules for effecting the allotments. Some cars belonged to the railroad; others to the mine company, to other private parties, or to foreign railways. Certain railroads first deducted all fuel carried by other equipment than their own from the estimated capacity of each mine, and then divided up their own available cars pro rata among all the mines according to the net capacity thus fixed. Others allotted their cars according to the gross mine capacity, taking no account of the private or outside equipment which any particular coal mine possessed or might obtain. This second practice evidently favored the larger concerns, supplied with abundant capital for investment in cars or for renting equipment. For, in addition to their own cars, they could still demand as many more from the railroad on daily allotment as if they were entirely dependent upon it for the movement of all their coal. Which was the fairer practice? A nice economic question was thus raised. Has a shipper the right to exclusive use of all his own fuel cars, and, in addition thereto, a full share of the system cars of the railroad? Disputes of this sort have been before the Commission and the courts for years.
In this Illinois Central case, a colliery company complained of even a more minute detail of the rule employed by the railroad in making its daily allotment, affirming it to be discriminatory in effect. There was a shortage of cars and of coal. The railroad was employing many of its own cars in the special service of carrying fuel for its own use. The particular grievance was its insistence upon treating these special Illinois Central cars, for the purposes of allotment, as if they were merely ordinary private cars; that is to say, by supplying them in practice regardless of and outside of the daily allotment, otherwise agreed upon. It thus appears that the economic issue was highly technical in character. Similar complaints had been already variously decided by other tribunals. The Commission, moreover, was bound to consider this complaint with several others of a like sort. Exercising its best business judgment under all the circumstances, it decided against the practice, ordering the Illinois Central, under the powers conferred by the new law of 1906, to include all cars, however owned or for whatever purpose used, in figuring its daily allotments in time of shortage of equipment. The case went to the Supreme Court upon petition of the railroad to set aside the order of the Commission.
By contrast with the economic intricacy of this case, the fundamental legal question was simple. How broad was the right of review of the Commission's order, as conferred by the amendments adopted in 1906? Were the courts to rest content merely to pass upon the regularity and lawfulness of the forms of procedure adopted by the Commission, or might they go further, and, hearing all the evidence as to fact, proceed to settle the economic controversy as well as the law points, in entire independence of the Commission? In the former case administrative control would result. In the latter, regulative power would really reside in the judicial branch of the government. It was the same old controversy which by adoption of the second alternative had practically emasculated the law of 1887, and had necessitated its amplification by amendment in 1906.[667] A momentous issue was presented. To go forward would make for logical definition and separation of the powers of the Federal government; to retreat would be to precipitate anew the inevitable conflict in Congress, from which, it was hoped, we had emerged for good!
The importance of the Illinois Central decision is such that the conclusion should be stated by direct quotation, with our italics as to the main point.
"Beyond controversy, in determining whether an order of the Commission shall be suspended or set aside, we must consider, a, all relevant questions of constitutional power or right; b, all pertinent questions as to whether the administrative order is within the scope of the delegated authority under which it purports to have been made; and, c, a proposition which we state independently, although in its essence it may be contained in the previous one, viz., whether, even although the order be in form within the delegated power, nevertheless it must be treated as not embraced therein, because the exertion of authority which is questioned has been manifested in such an unreasonable manner as to cause it, in truth, to be within the elementary rule that the substance, and not the shadow, determines the validity of the exercise of the power. Postal Telegraph Cable Co. v. Adams, 155 U. S., 688, 698. Plain as it is that the powers just stated are of the essence of judicial authority, and which, therefore, may not be curtailed, and whose discharge may not be by us in a proper case avoided,[668] it is equally plain that such perennial powers lend no support whatever to the proposition that we may, under the guise of exerting judicial power, usurp merely administrative functions by setting aside a lawful administrative order upon our conception as to whether the administrative power has been wisely exercised. Power to make the order and not the mere expediency or wisdom of having made it, is the question."
On this cogent reasoning the Supreme Court, therefore, quite independently of its opinion upon the economic merits, declined to permit interference with the order of the Commission.