reduced their rates the same. A further attempt was made-an attempt at negotiation was made to agree on a differential to approach the decision of the Commission, if not to comply with it entirely; but the lines from La Crosse and Winona refused utterly to make any change in their rates which would produce a differential of less than 5 cents a hundred pounds from Eau Claire. And that case stands in the same way to-day, and that country, that lumber country, is subjected to that disadvantage of 3 cents a hundred pounds on its lumber as compared with the competing lumber section around Winona and La Crosse. The CHAIRMAN. They got a lower rate, did they not? Mr. BACON. They got a lower rate, but nevertheless it was just as largely discriminative; there was just as much discrimination in the second case as in the former. The CHAIRMAN. Was the general shipper hurt by that or the locality? Mr. BACON. The lumber-producing interest in that locality was subjected to that disadvantage unjustly as compared with the lumber interests in another locality. The cases that come before the Commission are largely of that character-cases of discrimination between sections. Mr. MANN. This bill then would give to the Interstate Commerce Commission the right to keep up or raise rates? Mr. BACON. It has not worked out in that way. Mr. BACON. No; in this case there would have been no change in the rate whatever if the case had not come before the Commission, and the ruling of the Commission would have been to put the rate down from Eau Claire and not down from La Crosse or Winona. Mr. MANN. If the company had attempted to put it down at the other place, then the Commission would have ordered them to raise it. Would not that have followed? Mr. BACON. Yes. Mr. MANN. How long would an order of that sort remain in existence; how long a time must elapse before a railroad company can reduce its rates after the Interstate Commerce Commission has decided what is the reasonable rate at a particular time under this bill? Mr. BACON. I will state that the provision of our bill is that an order of the Commission shall continue in force two years, and if the rate is then changed by the carrier the public has the right to present its objections to the Commission and have the case considered by the Commission, and pending its consideration the previous rate shall continue in force. Mr. MANN. During that time, then, the railroad company would not be permitted to reduce its rates? Mr. BACON. Well, sir, the operation of the proceedings of the Commission has always been in the direction of reducing rates. Mr. MANN. That is not the case, Mr. Bacon, before us. It is a question of power here. We know that the railroad company changes its rates on grain from the West several times a year. Mr. BACON. Yes. Mr. MANN. Necessarily the rates are lower, I suppose, in the summer time, when they have lake competition. At any rate, they are changed. Possibly the Commission would not require so low a rate in the winter time. Do you say that the railroad companies under this bill could not change their rate? Mr. BACON. It would not affect that. Mr. MANN. Why not? It fixes a reasonable rate. Mr. BACON. It fixes a reasonable rate that may not be exceeded. Mr. MANN. Is that your bill, "That it may not be exceeded?" That would not change the power now of discriminating rates. Mr. BACON. The cases brought before the Commission are always those of being too high or discriminating. Mr. MANN. I think sometimes the rates are too low; that that is the trouble; that they are too low from another point. Very often one city claims the rates are too low to another city. Mr. BACON. In these cases one has been too high or the other too low; but as a general thing it has been the former, and the actual fact has been that in every case of that kind the rate has been reduced; the higher rate has been reduced. Mr. MANN. Under this bill, when the Interstate Commerce Commission fixes a rate, can the railroad company change that rate within two years' time? Mr. BACON. There is nothing to prevent its reducing it except in case of relative rates. In cases of rates between two competing points, if one railroad reduces the other must reduce correspondingly and preserve the differential which has been prescribed by the Commission. In relation to the question of reducing rates I would say, however, that it is no benefit to the public to have rates unreasonably low; it is no benefit to the public to have rates so low that the railroads can not furnish proper service and can not be of the value to the public that they would be otherwise; and the purpose of this bill is not to reduce rates; it is to produce equality, equity, and rectitude. Mr. MANN. In the language of the bill to establish or maintain”. Mr. BACON. Read a little further, please. Mr. MANN (reading): The relation and to prescribe a rate or rates to be observed. Mr. BACON. And to prescribe rates in order to maintain the relation. Mr. MANN. That would be prescribing a rate which could neither be changed nor reduced, because if they could reduce it that would not maintain the relation. I do not take any side on the thing; I simply call attention to this. Mr. BACON. I beg to say that it seems to me to be a far-fetched conclusion. Mr. MANN. The Commission, under this provision, then, could not be effective, if they can reduce ad libitum. Mr. BACON. Yes. Mr. MANN. That would not affect at all, then, discriminations between two points? Mr. BACON. If the Commission has decided that discrimination between two points must be stopped by observance of a certain relative difference in rates, that relative difference must be maintained. Mr. MANN. But you would confer power to prescribe rates. Mr. BACON. That is the one means by which the differential can be determined. Mr. MANN. They do not say what the differential shall be. Mr. MANN. If they can reduce rates from one point, there is no way of preventing discrimination. Mr. BACON. The party injured in such case can bring a second complaint and obtain a reduction at the competing point. Mr. MANN. Not unless it is more than a reasonable rate. Mr. BACON. It is not only a question of reasonableness but of justice. The bill all through proceeds upon enforcing reasonable and just rates, just rates being those that are just with relation to each other. That is one of the fixed principles of the present interstatecommerce act that the rates shall be reasonable and just. The word "just" means just with relation to each other. Mr. MANN. No; the word just, I think, means just in itself. Mr. BACON. Just is one word and reasonable is another. The proceedings of the Commission have regarded the term "just" in that see tion of the bill as relating to the justice of relative rates, and the term has always been used in that sense in its opinions. Mr. ADAMSON. Do you think that what is a just rate is not always a reasonable rate? Mr. BACON. Just in relation to other rates; that is the meaning of the word "just." Mr. ADAMSON. It would be reasonable in regard to other rates also? Mr. BACON. No; reasonable in itself. The rate must be reasonable in itself and it must be just in relation to other existing rates. That is the construction that the Interstate Commerce Commission has given to it in all its cases in its decisions and opinions. I wish to call the attention of the committee to another provision, which has been incidentally referred to a little more specifically, and that is the one by which the evidence before the Commission in any case is to be treated as evidence in the review of the case before the circuit court, and also to the fact that any additional evidence that either party may desire to introduce must be taken before the Interstate Commerce Commission, the case being referred back to the Interstate Commerce Commission to receive the additional testimony, and certified up to the court; the object of this being the necessity that the full case shall be developed before the Interstate Commerce Commission, instead of a large portion of it being left to be developed before the court. Heretofore the carriers have often only presented a part of their testimony before the Commission, and the Commission has decided the case on that testimony, and then the case has gone up to a court and the court has taken additional testimony and the case decided by the court has been, consequently, an entirely different case from the one decided by the Commission. This provision in the bill renders it essential for the parties to produce all their testimony before the Commission, and the court must pass upon the case under that testimony as certified by the Commission. The CHAIRMAN. Why should you make an innovation of that kind? Ordinarily, in criminal affairs in the preliminary investigation I think the defendant is not required to develop his case at all; neither is he before a grand jury; and yet when it comes to the trial no one would say, it seems to me, that he should be prohibited from making a defense. He may have waived an examination and not introduced any testimony in the preliminary hearing. The same way before a Federal commissioner in all criminal matters. Mr. BACON. The particular reason for that is that the decision of the Commission should be given upon full possession of the facts. The CHAIRMAN. Facts that they have? Mr. BACON. The full facts of the case. The Commission is clothed with authority to make its investigation and receive the testimony of both parties. The CHAIRMAN. Yes; but, after all, it is only preliminary. Under the provisions of the bill the action of the court is confirmatory. Mr. BACON. The principal object of that is to obviate delay. That has been one of the means that has been made use of by the carriers for producing delay in the courts, and to expedite these cases and bring them to a conclusion at the earliest possible moment, it has been deemed wise by all who have given study to the subject to require the entire testimony to be taken before the Commission. Mr. MANN. There is one Interstate Commerce Commission and there are quite a number of circuit courts and quite a number of district judges who hold circuit courts. Now, you propose that all testimony throughout the United States shall be taken before one commission. Mr. BACON. Yes. Mr. MANN. Instead of permitting it to be taken before any of the courts, on the ground that it will expedite matters to take it before one commission. If you want to take testimony relating to California the Commission has to go out there and take the testimony. Mr. BACON. That is the course pursued by the Commission. It proceeds to the most convenient point for all parties concerned to take the testimony. Mr. MANN. It never goes where a Federal court sits. Mr. BACON. Yes; but when evidence is taken before the Commission and the case is appealed to the Federal court and additional testimony taken, it occasions additional delay in determination of the case. Mr. MANN. That would not cause any delay by the Commission; that is the charge against the court. I do not suppose it causes any additional delay. Mr. BACON. It affords an opportunity to the carrier who is desirous of promoting delay to accomplish that purpose. Mr. MANN. Do you think it would permit any more delay than to permit the defendant, after a case has been heard, to file an affidavit saying he had more testimony to take, and then after the circuit court had certified to the Commission that it needed this testimony and directed the Commission to take it, wait for the Commission to go to California to take that testimony? Which would create the most delay; to do that, or to allow the court to take the testimony? Mr. BACON. I do not think there would be any material difference in such a case as that; but if this was the law, the actual working of it would be that the carrier would present all his testimony before the Interstate Commerce Commission. Mr. MANN. If he wanted to delay, why should he? Mr. BACON. Especially it would be his object, if the order of the Commission is to be immediately effective. It would then be to the interest of the railroad company to expedite it as much as it is to the interest of the public to do so. Let me read you what the Industrial Commission says under the head of "Delay and appeals to courts." It says: Inasmuch as the final decision in any important case can not be rendered until the courts have passed upon the case, and since the courts will not accept the find 1 ngs or evidence before the Commission as final, it has become more and more common for the carriers to refuse to open their cases in full before the Commission at all. * * *The Commission thus is compelled to issue its orders not upon a full and complete hearing of the case, and is obliged, moreover, to have its findings reviewed by the courts upon the basis of entirely new considerations. The cases passed upon originally by the Commission, and later by appeal, by the courts, may be, and often are, essentially different. *The entire history of proceedings before the Interstate Commerce Commission is one of delay and inefficiency in the equitable settlement of grievances by reason of the facts above enumerated. * * That is the opinion of the Industrial Commission after a thorough investigation of the subject. Mr. MANN. May I ask--I do not ask for an answer now, howeverfor the authority of Congress to confer upon the Commission this power of taking testimony? Mr. BACON. I think you are a better judge of the authority of Congress than I am. Mr. MANN. I respectfully direct your attention to that. You propose here that a court trying an original case shall not take any testimony, it being admitted that the Interstate Commerce Commission is not a court, and can Congress clothe it with judicial power? Mr. BACON. Not being a lawyer I can not answer that question. You understand such a question as that far better than I do. Mr. COOMBS. Does the idea that a court can review a commission of this kind presuppose that it can go into a trial de novo? Mr. BACON. I do not understand your question. Mr. COOMBS. Does not the very jurisdiction of the court, the very idea that the court has the power to review the case of the Commission, suppose it goes into facts; is not that inherent? Mr. BACON. The court is to review the case that has been under consideration by the Commission. The Commission, it seems to me, is entitled to have all the evidence before it renders its ruling, which is to be reviewed, and it is unfair to the Commission, it is unfair to the complainant, it is unfair to the public, that part of the evidence shall be given to the Commission on which its ruling is to be based and then that other evidence shall be submitted to the court. Mr. MANN. The review imposed in a judicial body over commissions of this kind is for the ascertainment of facts, to ascertain whether justice has been done, to ascertain whether rates have been fixed commensurate to the amounts invested, and all of those questions, and it is held, as I understand it, that that is inherent in the courts. So when you deprive it of its jurisdiction, the right of review, the facts, the right of a trial de novo, it seems to me you get away from the fundamental idea that the court has jurisdiction at all. Mr. BACON. No; it still has the power to review the case de novo, but under evidence which has been produced before the Commission. Mr. COOMBS. That is not de novo, though. Mr. MANN. Here is an authority conferred upon courts by the constitution, practically, a separate branch of the Government, the courts, a power which the Congress can not take away from them. The Interstate Commerce Commission says a railroad has fixed a rate in violation of the act to regulate commerce. You say, that question being presented to the court, the court can not take evidence. Mr. BACON. The court is particularly instructed by the provisions of this bill, if further testimony is offered by either party and it considers that evidence important, to instruct the Commission to take that additional evidence and pass it up to them. |