The so-called "Immunity Bath" Federal Court decision in 1906 materially affected, not so much the scope of authority of the Commission as its mode of procedure in eliciting testimony in railroad cases.[680] A resolution of the House of Representatives in 1904 had directed the Commissioner of Corporations to conduct an investigation into the affairs of the so-called "Beef Trust." In the course of this inquiry, Federal officials from the bureau held interviews in Chicago with prominent members of the beef-packing establishments. Important evidence was obtained, with the understanding that this was merely a general investigation having no relation to the Department of Justice, nor intended to be used in the prosecution of any suits at law. At the same time, agents examined the books of these companies. The accountants, however, in all cases refused to certify to their accuracy under oath. The material thus secured was incorporated in a report of the bureau in the following year. Not long afterward, when the prosecution of this combination was undertaken by the Department of Justice, the attorneys for the government made use of data in this report of the Bureau of Corporations in presenting their case. Consequently, on behalf of the packers under indictment under the provisions of the Sherman Anti-Trust Act, it was urged that the interdictions of this law were inoperative as to them, inasmuch as they had virtually been made to testify against themselves. The District court affirmed this immunity from prosecution under the provision of the Constitution forbidding any person from being compelled in a criminal case to be a witness against himself.[681]
The direct bearing of this decision upon subsequent prosecutions for rebating, as in the notable Chicago and Alton case in the following year, is apparent. No general investigation of any subject, evidently, could be undertaken either by Congress or the Interstate Commerce Commission, in the course of which testimony had been elicited under pressure, if it was intended that criminal prosecution by the Department of Justice was subsequently to take place. The eagerness of witnesses to secure the privileges of the "Immunity Bath" by frank avowal of material facts might otherwise thwart the government in the pursuance of its ends.
Another important decision of the Supreme Court touching the right of the Commission to compel testimony was rendered in 1908 in connection with the investigation of the Union Pacific system.[682] Mr. Harriman, the dominant factor in the management of this system, had caused the Union Pacific to purchase certain stocks of the Atchison and a number of other railroads in different parts of the country. The purchase price being known, the witness was asked whether he had a personal interest in the securities thus acquired by the road under his control. He declined to answer, on the ground that the power to require testimony was limited to the only cases where the sacrifice of privacy was necessary, namely those where the investigation concerned a specific breach of the law. The court, with three justices dissenting, sustained Harriman in his refusal, on the ground that this particular investigation was undertaken, not in pursuance of a complaint of specific violation of the law, but merely for the sake of general information as to the manner and method in which the business of common carriers was being conducted. No question was raised as to the right of the Commission to undertake general investigations of this sort; it was merely held that in the course of such investigations there was a limit to the inquisitorial power of this administrative body.
It may be added in this connection that the amendments added by the Mann-Elkins Act of 1910 most specifically defined the authority of the Commission in this regard.
The "commodity clause" of the Hepburn amendments to the Interstate Commerce Law, because of its unfortunate ambiguity, has already twice been before the Supreme Court.[683] The first interpretation was given in a decision concerning the Delaware and Hudson Railroad, handed down in May, 1909.[684] This affirmed the constitutionality of the statute at all points; but, at the same time, emasculated it most effectually. For, in order to harmonize the opinion with prior ones holding that ownership of stock in a corporation did not constitute legal ownership of the property of the company, it was necessarily held that a railroad by owning the share capital of a coal company did not thereby possess an interest, direct or indirect, in the coal mined. Moreover, a railroad which was the legal owner of coal at the mine might escape the interdiction of the law by selling the coal before transportation began. A handy means of evading the intent of the law could not have been more plainly indicated.
An attempt specifically to prohibit stock ownership in coal mines by railroads,—thus meeting in part the situation arising out of the foregoing decision,—was made in connection with the Mann-Elkins Act in 1910; but to no avail. The Senate, by a vote of twenty-five to thirty-one, rejected an amendment proposed by Senator Bailey of Texas, to prohibit stock ownership so clearly "that not even a judge of the Supreme Court could fail to understand it." The negative votes were all cast by the so-called "regular" Republicans. In the meantime, the clause had been carried to the Supreme Court for further interpretation in a suit against the Lehigh Valley Railroad.[685] The government in the lower court had already been defeated in an attempt to raise questions of fact as to the pecuniary interest of the road in the coal transported, irrespective of the technicalities as to legal ownership. The outcome in this case was more satisfactory. The Circuit Court was held to have erred in ruling out these considerations. It was unanimously decided by the Supreme Court that it was in violation of the law to use stock ownership for the purpose of destroying the entity of a producing corporation, while still so "commingling" its affairs in administration with the affairs of the railroad as to make the two corporations virtually one. This was a distinct gain for the government. It necessitated a compliance with the law in good faith. Upon the basis of this decision the Department of Justice instituted a new action against the Lehigh Valley Road, which was promptly met, however, by a readjustment of its corporate affairs.
The economic results under the "commodity clause" have been quite different from those doubtless anticipated by Congress. A salutary separation of coal mining from transportation is being effected; but in the case of the anthracite properties at least, in such manner as to hold out small hope of any direct benefit to the general public.