Prior Laws Pertaining to

Federal Regulation

The Federal regulation of railroads in the United States virtually began with the enactment in 1887 of the Interstate Commerce Act, creating an Interstate Commerce Commission of five members to be appointed by the President with the advice and by the consent of the Senate. The Act applied to interstate and foreign freight and passenger traffic carried by railroads, or in the case of continuous shipment, by rail and water, but it did not apply to intrastate traffic, nor to interstate or foreign traffic carried entirely by water.

The Interstate Commerce Commission was vested with important powers with respect to the transportation systems of the nation. Among other things, the Act prohibited pooling, and all unjust personal discriminations in the form of special rates, rebates or otherwise, forbade discriminations between localities, commodities and connecting lines, and required the provision of reasonable and equal facilities for the interchange of traffic. The Act also provided that all charges should be just and reasonable, and required rates and fares to be printed and posted for public inspection.

Although the provisions of the law appeared to be sufficiently comprehensive, it never accomplished the results anticipated by its framers, partly because, under the law, the orders of the Interstate Commerce Commission were not binding upon the railroads unless a

Circuit Court of the United States compelled obedience, but chiefly because the courts so interpreted its main provisions as greatly to limit its scope. It was intended that the functions of the courts in connection with investigations by the Commission were to be confined to reviewing questions of law which might be involved in the enforcement of the Commission's orders. The courts, however, went much further than this and permitted the introduction of evidence which had not been submitted to the Commission. This practice naturally reduced the effectiveness of the Commission as an investigating body, inasmuch as it led to much duplication of effort, caused long delays in adjudication, and greatly increased the expense of litigation, thereby discouraging the submission of grievances to the Com

mission.

In spite of the failure of the law to accomplish the ends most desired, many beneficial results came from the legislation, among which may be mentioned publicity of rates, reduction of the number of freight classifications, and a better adjustment of charges, as between different shippers, different localities, and different commodities.

The next important step in the development of Government regulation of interstate commerce was the enactment of the Elkins Act of February 19, 1903, which made corporations as well as their agents liable for violation of laws relating to interstate commerce, and made deviation from the published schedules of rates the sole test of discrimination. The Expediting Act of 1903 gave all cases pending in any Circuit Court of the United States and brought under the Interstate Commerce Act, the Sherman Anti-trust Act of 1890, or any other acts having a like purpose, in

which the United States Government was the complainant, precedence over all other cases.

In 1906 the Hepburn Amendment was enacted, which greatly increased the powers of the Interstate Commerce Commission, and extended the scope of the original act, making it applicable to express companies, sleeping-car companies and pipe lines for transporting 'oil or other commodities except water and gas, and increasing considerably the things included in the terms "railroad" and "transportation." The law specifically invested the Commission with rate-making powers which had been denied to it under the interpretations which the courts had placed on the provisions of the Act of 1887. The prestige of the Commission was also greatly increased by a provision to the effect that all its orders except those for the payment of money should take effect within such reasonable time, not less than 30 days, as the Commission should prescribe. This law also conferred upon the Commission the power to prescribe a uniform system of accounts for railroads engaged in interstate commerce, and contained provisions further discouraging rebating.

The enactment of the Carmack Amendment of 1906 was of great advantage to shippers, since it required. the carrier receiving traffic for interstate shipment to issue a bill of lading for such shipment, and made it liable to the lawful holder of the bill for any loss or damage caused by any carrier over whose lines it might pass. The initial carrier was allowed to recover from the carrier on whose lines the damage occured.

In 1910 the powers of the Commission were still further increased by the Mann-Elkins Amendment. Among other things, this Act vested the Commission

with authority to suspend new rate schedules proposed by carriers until opportunity had been afforded the Commission to determine by investigation whether the proposed increases were justified.

The Panama Canal Act of August 24, 1912, prohibited any railroad company or other common carrier subject to the Act from owning, leasing, operating, controlling, or having any interest in common carriers by water or any vessel carrying freight or passengers operating through the Panama Canal or elsewhere in competition with such railroad or other carrier. This Act also vested in the Commission the authority to require the connection of rail and water carriers where reasonably practicable; to establish through routes and maximum joint rates over rail and water lines; to establish maximum proportional railroad rates to and from ports; and to order any railway, entering into any arrangements with a carrier by water operating from any port in the United States for handling through business between an interior point therein and a foreign country, to enter into similar arrangements with any or all steamship lines operating from that port to the same foreign country.

There were two important measures affecting the railroads enacted on July 2, 1890, and on October 15, 1914, respectively. The former was the Sherman AntiTrust Law which made contracts, combinations in the form of a trust or otherwise, or conspiracies in restraint of interstate or foreign trade or commerce illegal. Many illegal combinations were dissolved after the enactment of this law. The Clayton Act forbade all corporations engaged in interstate commerce to acquire stock of another such corporation where the competition might thereby be lessened, commerce restrained

in any section, or a monopoly thereby created of any line of commerce. It was expressly provided that the law should not apply to corporations purchasing such stock for investment purposes solely, nor be construed as prohibiting a carrier, through the acquisition of stock, from aiding in the construction of short branch lines, nor prevent the extension of its lines through acquisition of such stock where no substantial competition existed between the purchasing and selling corporations. The Interstate Commerce Commission was vested with authority to compel compliance with those sections of the Clayton Act applicable to common carriers.

Under the Act approved August 29, 1916, the President was empowered to take possession and assume control of any system or systems of transportation and to utilize them to the exclusion, as far as necessary, of all other, traffic for the transportation of troops, war material, and equipment, and for needful and desirable purposes connected with the prosecution of the war. Acting under the authority vested in him by this Act, the President on December 26, 1917, issued a proclamation assuming control of all systems of transportation located wholly or in part within the boundaries of the continental United States, such control becoming effective on December 28, 1917.

On March 21, 1918, the Federal Control Act was signed by the President. This Act provided for the operation of the properties of the carriers during the war and for a reasonable time thereafter, not exceeding 21 months from the date of the President's proclamation of the exchange of ratification of the treaty of peace, and for compensation for the use of their properties while under Federal Control.