Quite like the preceding case was another concerning the reasonableness of advances of rates upon fir lumber from the Willamette valley to San Francisco. The Commission had ordered a reduced rate, from which the Southern Pacific appealed to the Supreme Court.[672] This tribunal set aside the order on the ground that, while seeking to protect an investment in lumber mills, it had not been governed by considerations as to the intrinsic reasonableness of the rates. The lumbermen then went back to the Commission with a new complaint, in response to which a slight advance was permitted to the railroad, apparently as a token of compliance with the opinion of the Supreme Court. But the Southern Pacific, not yet content, promptly appealed a second time under the Mann-Elkins law to the new Commerce Court. On June 4, 1912, this tribunal fully sustained the Commission in a most suggestive declaration of the obligation of a carrier, having once induced capital to embark in a new enterprise under promise of low rates, being subsequently estopped from charging to the full limit of what the traffic will bear.[673] This is a gratifying evidence of acquiescence of this new tribunal in the main line of interpretation laid down by the Supreme Court.
Federal decisions construing the law of 1906 during this period under review, revealed various shortcomings and defects which could be repaired only by additional legislation. They are to be considered among the causes contributing to the passage of the Mann-Elkins Act of 1910, shortly to engage our attention. Two in particular, the Orange Routing case and the Portland Gateway order, merit discussion. Neither directly involved monetary considerations, but a conflict between the rights of shippers and carriers. And both alike went on appeal to the Supreme Court of the United States.
The Orange Routing case against the Southern Pacific Railroad touched the right of the shipper to name the particular railways over which his fruit should reach Eastern markets.[674] Rates were the same by whatever route; but the railways denied the right of the shipper not only to name, but even to know, the route taken by his goods in transit. The same issue came up some years ago, concerning the right of cotton shippers at Memphis to designate the particular connecting railroads which should haul their goods. The purpose of the carriers in seeking to control this matter is obvious, and may be praiseworthy. Secret rebates cannot often be secured by shippers from the initial carriers, especially if, as in California, no railway competition exists. For the Atchison and the Southern Pacific have done away with that by pooling their fruit business. Secret rebates, if secured by shippers at all, must be wrung from the connecting lines, which bid for it at the great junction points, like Kansas City and Chicago. The initial road, by reserving the right to route the freight, is able most effectively to nullify all such pernicious contracts. But, on the other hand, this practice denies to the owner of the goods, control, or even supervision, over his own. Market conditions may easily change while the goods are in transit. It may be desirable to stop them off at Chicago, or divert them to New Orleans. And, moreover, damages for delay on such perishable goods as fruit are refused by the terms of the contract. The routing road exercises power without assuming responsibility. On these grounds, and in consonance with the long-established principles of common law, the Interstate Commerce Commission held that the shippers' rights were jeopardized. It was shown that freight was often diverted from one road to another in order to secure more valuable percentages of the through rate for the initial carrier. The Circuit Court in September, 1904, provisionally sustained the Commission; but its opinion was reversed by the Supreme Court in 1906. The court of last resort failed to find in the law any prohibition of such regulations concerning routes by the railroads. Incidentally it held that the Federal courts might enforce orders of the Commission, even although for reasons differing from those which governed the original order.[675]
The Portland Gateway case in 1910, before the Supreme Court,[676] also disclosed a defect in the law of 1906. It dealt with the right of the Commission to designate through passenger routes. Seattle, Washington, may be reached from the Middle West either by various lines to St. Paul and from thence due west by the "Hill lines," or by various railroads to Kansas City and thence by the Burlington and the Northern Pacific, also "Hill lines." There are also many routes first proceeding westward via the Union Pacific to Portland, Oregon, and from thence up to Seattle. By these latter routes most of the journey would be over the "Harriman lines," whereas by the former it would be by way of their competitors for the control of the northwest. Passengers all the way over the "Hill lines" were afforded every facility for through travel in the way of tickets and baggage; but if they chose the Portland route, great inconvenience followed from the refusal of the Hill lines to coöperate in facilities at the transfer point. In brief the "Hill lines" were working for the long haul over their own rails, as against the merely local haul from Portland to Seattle, which would follow the choice of the Harriman route.
The Commission upon its own motion investigated this situation, and, as a result, ordered the Northern Pacific to join with its rivals in establishing through routes via Portland to Seattle. This was done under authority in the law of 1906 to establish through routes and joint rates, provided "no reasonable or satisfactory through route exists." The Northern Pacific claimed, and was upheld therein by a dissenting opinion from the Commission, that there was already in existence such a route. Quick and comfortable travel via St. Paul already existed. Some eight thousand persons annually for one reason or another preferred, nevertheless, to go through Portland. The Commission held that this preference was reasonable, and that accordingly, with respect to such travellers, there was indeed no reasonable through route in effect. Passenger traffic, involving the element of personal choice, in other words, was different in law from freight business. The Circuit Court set aside this order upon the ground that a satisfactory alternative route over the Northern Pacific did actually exist. This decree was affirmed by the Supreme Court of the United States in 1910. But it was a hard-won victory for the carriers, inasmuch as Congress within six months specifically authorized the Commission to regulate such matters in future, without limitation as to the existence of other satisfactory routes.
The bitter rivalry between the Hill and Harriman systems for the control of the Northwest, as affecting the routing of freight traffic as well as of passengers through Portland, resulted in carrying a second case of the same sort before the Supreme Court. May temporary delay and congestion of business by way of any given line afford the Commission authority to designate another through route! In this instance, the Supreme Court has affirmed the order of the Commission.[677] It would appear, therefore, that this issue, for the present at least, is closed. The regulative power of the Federal government over routes and the division of joint rates is satisfactorily upheld.
Several Supreme Court decisions defining the power of the Commission to require testimony, both oral and documentary, in relation to matters which came before it, were rendered about this time. Its prestige and authority in this regard,—already affirmed in the late nineties,[678]—were considerably enhanced by an opinion delivered in April, 1904.[679] In the course of the proceedings, upon complaint of William R. Hearst against the Reading and other coal roads, certain contracts between the Lehigh Valley Coal Company and independent operators were called for. One Baird and others, including President Baer of the Reading company, declined to produce these coal purchase contracts. Others refused to testify concerning methods of fixing the price for anthracite coal at tidewater. Disregarding certain purely legal details, these refusals were based upon the contention that neither the Commission nor Hearst,—a well-known owner of various newspapers,—had shown any legal interest in the complaint. The court held, however, that the want of direct damage to the complainant was not essential to his standing before the Commission. Moreover, in this case, the Supreme Court overruled the Federal Circuit Court, which had held that the details of the contracts for purchase of coal by railroads from independent operators related wholly to intrastate transactions,—that, in other words, the selling of coal in Pennsylvania had nothing to do with interstate commerce. The Supreme Court adjudged that all the details of these transactions had a bearing upon the general question of the degree of monopoly in the coal business, and could not properly be withheld from examination as evidence by the Commission. In conclusion the court said: "To unreasonably hamper the Commission by narrowing its field of inquiry beyond the requirements of the due protection of rights of citizens, will be to seriously impair its usefulness and prevent a realization of the salutary purposes for which it was established by Congress." This sweeping decision by the court of last resort well buttressed the former decisions of that tribunal in the Brimson and Brown cases.