AMENDMENTS OF ACT TO REGULATE COMMERCE.

HEARING OF INTERSTATE COMMERCE COMMISSION BEFORE
SENATE COMMITTEE ON INTERSTATE COMMERCE.

U.S. Congress.

WASHINGTON, D. C., February 15, 1900.

The committee met at half past 10 o'clock a. m.

Present: Senators Cullom (chairman), Wolcott, Gear, Elkins, Kean, Lindsay, Chilton, and Tillman.

The CHAIRMAN. Gentlemen, the purpose of this meeting is to hear the members of the Interstate Commerce Commission, and we will Proceed to hear those of them who are willing to be heard.

I wish to say in advance that the commission is not here on its own motion, but on invitation of the chairman of the committee, and the purpose I had in view was to have the commissioners, so far as they might be able, explain the provisions of this bill, especially those portions which propose to give additional power to the commission to that which the law now existing gives. There have been several decisions of the Supreme Court which have weakened the power of the commission below what they supposed they had under the law, and I felt anxious that the committee might hear those gentlemen on those points.

Mr. Knapp, you being chairman of the commission, I suppose it is proper to ask you to talk to us in response to the suggestions I have made with reference to the bill, or to go over the bill, as you see proper, and give your views upon the matter.

STATEMENT OF MARTIN A. KNAPP, CHAIRMAN INTERSTATE
COMMERCE COMMISSION.

Commissioner KNAPP. Mr. Chairman and gentlemen, until I heard the statement just made by the chairman I had understood that the views of the commission were desired by the committee at this time mainly, if not wholly, with reference to the constitutionality of the pending bill. I am not aware in what respect this measure is deemed open to that objection, nor which of its provisions are said to be in conflict with the organic law. Until something in that respect appears which has not yet been brought to my attention I shall be unwilling to concede that the question of the constitutionality of this bill is seriously debatable.

More than seventy-five years ago the Supreme Court of the United States, speaking by Chief Justice Marshall, affirmed, in the broadest and most unqualified terms, the complete and plenary power of Congress to regulate commerce among the several States and laid down the proposition that that power was not confined to commercial transactions of an interstate character, but extended to and included all the agencies and instrumentalities by which interstate commerce is carried on. No words which I can use are so apt or forcible as those of the great expounder of the Constitution, who said, in that case:

"The power to regulate is to prescribe the rule by which the com

merce is to be governed. This power, like all others vested in Congress, is complete in itself, may be exercised to its utmost extent, and acknowledges no limitations other than are prescribed in the Constitution. If, as has always been understood, the sovereignty of Congress, though limited to specified objects, is plenary as to those objects, the power over commerce with foreign nations and among the several States is vested in Congress as absolutely as it would be in a single government having in its constitution the same restrictions in the exercise of the power as are found in the Constitution of the United States. "It is obvious that the Government, in regulating commerce with foreign nations and among the States, may use means that may also be employed by a State in the exercise of its acknowledged powers.'

The CHAIRMAN. You were quoting from Judge Marshall, were you? Commissioner KNAPP. I am quoting from the opinion of Mr. Chief Justice Marshall in the celebrated case of Gibbons v. Ogden, which was decided in 1824.

The extent of that power has been indicated in other decisions by comparing it specifically with the powers possessed by the several States in respect of their internal commerce. For example, it is said in a case referred to here, speaking of the present Interstate Commerce Commission, that

"This Federal commission has assigned to it the duties, and performs for the United States in respect to that interstate commerce committed by the Constitution to the exclusive care and jurisdiction of Congress the same functions, which State commissioners exercise in respect to local or purely internal commerce, over which the States appointing them have exclusive control. Their validity, in their respective spheres of operation, stands upon the same footing. What one sovereign may do in respect to matters within its exclusive control, the other may certainly do in respect to matters over which it has exclusive authority."

And Mr. Justice Brewer, more recently, said:

*

"Within the term 'regulation' are embraced two ideas: One is the mere control of the operation of the roads, prescribing the rules for the management thereof-matters which affect the convenience of the public in their use. Regulation, in this sense, may be considered as purely public in its character, and in no manner trespassing upon the rights of the owners of railroads. But within the scope of the word 'regulation,' as commonly used, is embraced the idea of fixing the compensation which the owners of railroad property shall receive for the use thereof."

In a more recent case, the Cincinnati Freight Bureau Case, as it is commonly called, decided May 24, 1897, the Supreme Court, speaking by Mr. Justice Brewer, said:

"Before the passage of the act it was generally believed that there were great abuses in railroad management and railroad transportation, and the grave question which Congress had to consider was how those abuses should be corrected, and what control should be taken of the business of such corporations. The present inquiry is limited to the question as to wha: it (the Congress) determined should be done with reference to the matter of rates.

"There were three obvious and dissimilar courses open for consideration. Congress might itself prescribe the rates, or it might commit to some subordinate tribunal this duty, or it might leave with the companies the right to fix rates, subject to regulations and restric

By Transfer

SEF 13 1929

A5

1900a

AMENDMENTS OF ACT TO REGULATE COMMERCE.

3

tions, as well as to that rule which is as old as the existence of common carriers, to wit, that rates must be reasonable."

The CHAIRMAN. Mr. Knapp, what did the commission do in that case, or what did it attempt to do?

Commissioner KNAPP. Let me answer that question by giving a brief statement in respect of that matter. The substantive features of this present law are found in its first three sections. Those are its fundamental principles. All the rest is nothing but machinery, designed to enable the administrative body to give effect to those declarations. For nearly ten years after the commission was organized it assumed and proceeded upon the theory that if in any case which was investigated upon complaint, and after notice and due hearing it found that the law was violated, as that law is declared in either of the first three sections, it could not only determine that there was that violation of the law, but could decide in what respect the conduct of the carriers complained of should be changed, so as to bring that conduct within the requirements of the law. It acted upon that theory, and there fore, if in any case where it was investigating rates complained of, it was satisfied upon all the proofs that such complaint was well founded and that there should be some change in the amount or adjustment of railroad charges it was accustomed to make an order directing the carriers for the future to make a certain reduction or certain change in the relation of rates, as believed by the commission to be necessary in order to bring those rates into conformity with the principles of the law. It exercised that jurisdiction, apparently without objection, apparently with the acquiescence of all the interests which were affected by its administration, until in the very case from which I have just quoted, decided less than three years ago, the Supreme Court held that that power had not been given, stating distinctly, as I have read, that it could be given, but that, in the judgment of the Supreme Court, the language employed in the act was not sufficiently explicit to warrant the inference that that power was intended as matter of law to be conferred upon the commission.

That was a case where, without going into details, the relation of rates from Cincinnati on the one hand and other points of origin on the other, to common destinations in the southern territory was complained of as being against the interests, and to a large degree prohibitive, of the business of the Cincinnati dealer. The order of the commission was that the rates from Cincinnati should be reduced, and directed the extent of that reduction, and prescribed the maximum rates which, in the judgment of the commission, ought to obtain on shipments of freight articles from Cincinnati to southern destinations. It was the exercise of that power in that case which the Supreme Court declined to uphold.

The CHAIRMAN. În doing that, you said: "This rate is too high, and it ought to be reduced to this rate;" that is, you changed it from one rate to another in your order.

Commissioner KNAPP. That is what the order did.

The CHAIRMAN. The court decided that you had not that authority under the present act?

Commissioner KNAPP. Yes. Among other of the arguments used by the Supreme Court was this: They called attention to the fact that in nearly every State commissions had been created and given certain powers, and in many of the States those powers included and specific

ally embraced the power to fix the rates of railroad carriers. The argument of the court was that if Congress had intended to confer like power with respect to interstate rates upon the Interstate Commerce Commission it would have used similar explicit language: that such a power as that could not be inferred from the vague and doubtful language which was found in this act.

Senator LINDSAY. What was that case, and where is it reported? Commissioner KNAPP. It is the case of the Interstate Commerce Commission against the Cincinnati, New Orleans and Texas Pacific Railroad Company (167 U. S., page 479). It was decided May 24, 1897. The CHAIRMAN. You are familiar with this bill. What is the substantive additional power that this bill contains that is not in the present act?

Senator TILLMAN. And in what sections are the changes?

Commissioner KNAPP. Speaking now in general terms, and having reference to its general theory and more important provisions, it is designed to give the commission substantially the same power that it assumed to exercise for about ten years, and until the Supreme Court said that it did not possess that power. That is the general proposition of the bill.

The CHAIRMAN. Your construction was that the statute, as it exists, gave you that power?

Commissioner KNAPP. That was the practical construction which was put upon the act for nearly ten years; and, as I say, the main purpose, the substantial feature of this bill, as I understand it, is to give to the commission in these cases where complaints are investigated, upon notice and opportunity to be heard, and with all the formality of a judicial inquiry, substantially the same authority to prescribe what shall be done in the future as was exercised by the commission for nearly ten years.

The CHAIRMAN. Judge Cooley was a member of the commission when that construction of the statute was made, in the beginning of the execution of the law, was he not?

Commissioner KNAPP. He was, and joined in those decisions. He occupied the position of chairman of the commission down to the 1st of January, 1892; and during that period various cases were decided which, in one form or another, amounted in principle to the exercise of the degree of authority which is contemplated by this measure.

Senator WOLCOTT. If Mr. Knapp has something to read there, I suggest that he get through with it, and let us have an opportunity to ask him some questions.

Senator ELKINS. He is through with it.

Senator WOLCOTT. I would like to ask him some questions.
The CHAIRMAN. Certainly; you may do so at any time.

Commissioner KNAPP. If you will pardon me one moment, in addition to this little typewritten brief which presents some extracts from the more important authorities, we have collated and put in pamphlet form all the Federal decisions which we have been able to find that bear upon the question. They are not arranged in any logical order, and include a good many propositions which apparently have no relation to any question which arises over this bill; but it may be of some interest as furnishing ready reference to the authorities on the general question.

Senator WOLCOTT. Mr. Knapp, I want to ask you a few questions,

and then I will be through. In reference to this document from which you have read, showing the constitutionality of the proposed measure, you say that was your only understanding of the purpose of the committee meeting. Had you been told that the committee was in doubt about the constitutionality of the measure?

Commissioner KNAPP. Such was my information.

Senator WOLCOTT. From whom; from any member of the commission?

Commissioner KNAPP. Do you mean from any member of the com

mittee?

Senator WOLCOTT. Yes; as to the question of constitutionality. The CHAIRMAN. Will you allow me to make a statement about that, Senator Wolcott?

Senator WOLCOTT. Certainly.

The CHAIRMAN. Senator Aldrich-I am sorry he is not here-made the statement, I think, in the presence of the members of the committee who were here, that there was no authority under the Constitution to give the commission any more power than they had, or words to that effect.

Senator TILLMAN. I think he contended that that was the interpretation of the opinion of the Supreme Court.

The CHAIRMAN. And hence I invited the attention of the commission to those features of the proposed bill.

Senator WOLCOTT. Is this a preparation of the commission officially or of you individually?

Commissioner KNAPP. You mean this brief?

Senator WOLCOTT. Yes.

Commissioner KNAPP. It was prepared by myself, but has been submitted to all my associates who are in the city.

Senator WOLCOTT. How many of your commission are there? Commissioner KNAPP. The entire commission consists of five

members.

Senator WOLCOTT. How many of them are lawyers?
Commissioner KNAPP. Four of them.

Senator WOLCOTT. And the four lawyers who are members of the commission joined in the brief to satisfy the committee that the proposed measure was constitutional?

Commissioner KNAPP. To say yes to that would not be to precisely state the fact.

Senator WOLCOTT. What is the fact?

Commissioner KNAPP. One member of the commission, who is a lawyer, ex-Governor Fifer, of Illinois, the junior member of the commission, has not been in the city for the last two weeks. He did not know, I assume, that this question had been raised, and is not aware, so far as I know, of this hearing or this brief that has been prepared.

Senator WOLCOTT. So three of the members of the commission who are lawyers have prepared this brief. Have you counsel appointed by the Government?

Commissioner KNAPP. We have counsel appointed by ourselves. Senator WOLCOTT. But paid by the Government, I suppose? Commissioner KNAPP. Out of our appropriation.

Senator WOLCOTT. Not out of your salaries?

Commissioner KNAPP. Oh, no, sir.