January, until six months or more have elapsed, and it delays the publication and formulation of these reports in a way that is very undesirable. An accumulating penalty of $25 a day for every day would correct the whole thing. There would be no hardship to the railroads about it. The reports would be promptly made and no penalties incurred.

I am very much obliged to you, Mr. Chairman and gentlemen, for your attention.

COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

April 26, 1902.

STATEMENT OF MR. JOSEPH NIMMO, JR., STATISTICIAN AND

ECONOMIST.

Mr. NIMMO. Mr. Chairman, I do not propose to range over the entire subject which you are now considering. I have recently written a pamphlet to which I have devoted three months of my time and effort. It expresses very fully my thought in regard to the particular phases of the subject to which I shall now invite your attention.

There is one matter of great importance, Mr. Chairman, which I desire to bring to your attention. I refer to action taken about a month ago before the United States circuit court at Chicago which has an important bearing upon the particular bill-the Corliss bill-which you are now considering.

It turns out that the act to regulate commerce has two arms, the right arm of the civil remedy and the left arm of the criminal remedy. The criminal remedy is provided in section 10, and the Interstate Commerce Commission has for the last fifteen years been working this left arm alone. The whole situation has been described to you by others, and I will not repeat it. It is very interesting. Recently the Commission seems to have discovered the efficacy of the right arm of judicial remedy provided in section 16 of the act to regulate commerce, and they have had recourse to that section in a case which came up before Judge Grosscup in Chicago in March last.

Judge Crosscup in that case said:

The question presented by this application is a new one and a very great one, and I will not pass upon it finally until there have been elaborate arguments on each side. If the United States courts, sitting in equity, have the power called for it will make them master of the whole rate situation, for an inquiry instituted by them to inquire whether the injunction has been violated or not will, much more readily than criminal proceedings, probe to the bottom of the railroad's doings. For my own part, I believe that railroad rates ought to be as stable as postage rates, so that every shipper would know, as certainly as the sender of a letter, how much it would cost him and the fact that no one else could send it for less. An injunction something like this has been granted in other cases, notably in the Debs case, but an important distinction between that case and this is that in the Debs case the things complained of were in their nature temporary, while in this case the injunction will be against conduct running continuously into the future. The interstate-commerce act has hitherto been ineffectively executed, but the taking of such power by the courts, as this injunction implies, might turn out to be the vitalizing of the act.

That is hopeful. I concur in all that the learned judge said in regard to the evils complained of. I have no comment to make on that. The injunction is a feature of the case which we may look forward to hopefully. The injunction will be against conduct running continuously into the future. That is a very cheering aspect of the As has been said, it will be a remedy for the future.

case.

And Judge Grosscup says in conclusion:

The interstate-commerce act has hitherto been ineffectively executed, but the taking of such power by the courts as this injunction implies might turn out to be the vitalizing of the act.

There is thus a hope held out that after having expended its energies upon the criminal remedy for fifteen years, within a month the Interstate Commerce Commission has had recourse to the civil remedy. It might turn out to be the vitalizing of the act.

So the suggestion I have to make to you practically is this: If there is such a hope held out why not postpone legislation of this kind until you have seen whether this vitalizing is going to take place? If we have waited fifteen years to get at section 16, why not wait a little while in order to see how the judicial procedure under it will turn out?

There is another important aspect of this question, and that is that section 3 of the Corliss bill in effect takes the vitality out of this vitalizing section. I will not argue that. I think if you will read the first two pages of section 16 as it is printed in the ordinary print of the interstate-commerce act and compare that with the substitute which is proposed in section 3, repealing the former, you will see that it takes the vitality out of what Judge Grosscup called the vitalizing

of the act.

Another point. The courts have no power whatever under this act to overrule a ruling of this Commission. In theory it may seem well to give this Commission this unlimited power, but to throw upon five gentlemen not only the power to say whether a specific rate is right, but to order a whole schedule of rates on a road, on a system of roads, and even on a great series of systems, is giving them a tremendous power. It is a great political power. With that power given to the Commission you would be besieged by claims in a way which you can hardly imagine. You gentlemen here know how you are troubled with claims and applications from your constituents throughout the country, asking for offices and clerkships and all sorts of favors. All that would be as nothing in comparison with what would ensue under this bill. It would be simply intolerable from the political point of view, however plausible in theory it may be.

The CHAIRMAN. Why do you say that there would be no judicial review? Does not the amendment provide specifically for that?

Mr. NIMMO. Mr. Chairman, excuse me for not fully discussing that aspect of the case just now. I state that to you as a fact. I have gone into this in the book I have recently written. That is the opinion of the best lawyer I have consulted. I have gotten the best legal view I could. In the Supreme Court decision in the maximum rate case the court held that it is one thing to inquire whether rates that have been made are reasonable that is a judicial act; but it is an entirely different thing to prescribe rates for the future-that is a legislative act. In the Joint Traffic Association decision the Supreme Court decided that public policy is what the law directs. I think it is a principle well established that the courts will not overrule a law of Congress on the ground of its not being reasonable, or even on the ground that it violates an abstract principle of justice.

The CHAIRMAN. But has not the Supreme Court on several occasions held that where this legislative power was directly exercised by the legislature of a State in fixing rates that those rates were confiscatory and have set them aside?

Mr. NIMMO. Yes, sir. I will read right here from the pamphlet

already referred to my view on that particular point. That is the very focus of the whole contention:

While it is unquestionably constitutional law that no carrier can be compelled to carry freights at rates which are in effect confiscatory, yet a broad line of distinction lies between remunerative rates and confiscatory rates which in practice excludes the courts from the power to condemn any rate on the ground it is unjust or unreasonable. Without doubt the discretionary power proposed embraces the entire range of commercial profits which in practice justifies the construction and the operation of railroads. In a word, it is an autocratic and absolute power.

Now, there is a subject stated by Judge Knapp in regard to which I take issue with him on a question of fact. I think that in his zeal he las misstated a great fact. Judge Knapp declared that rates are exorbitant, and that they have not been reduced within the last ten

years.

Judge KNAPP. I made no such statement as that.

Mr. NIMMO. The statement made was exactly this, that there has been no substantial reduction in rates during the last ten years. Mr. KNAPP. I made no such statement.

Mr. STEWART. Judge Clements made that remark.

Mr. NIMMO. I want to be entirely right.

Mr. CLEMENTS. I made that remark in respect to the rate involved in the case I was then talking about.

The CHAIRMAN. It is not necessary that we discuss that matter.
Mr. NIMMO. I have the record here-

The CHAIRMAN. Our record will show what was said.

Mr. NIMMO. Judge Knapp said that there has been an apparent reduction in rates during the last year; that that apparent reduction, however, is deceptive; that it has been the result of the fact that there has been an enormous and disproportionate increase in the carriage of coal and other low freights. Am I right?

Mr. KNAPP. I said that. Mr. NIMMO. That I deny. There is the issue of fact. I deny that statement by Mr. Knapp. Now I will come right to the point. Here I have compiled a statement. The Interstate Commerce Commission divides the railroads of the country into ten groups and works out a charge per ton per mile according to the statistics of the internal commerce of the country. I take the report of 1890 furnished me by the Interstate Commerce Commission, and also the one for 1900. Now, here are the rates, the charges for 1890 and the charges for 1900. This shows the reduction-16, 26, 21, 29, 24, 16, 22, 16, 28, 35, and for the whole United States 224 per cent.

Revenue per ton per mile charged by railroads of the United States, according to statistics of the Interstate Commerce Commission.

Here we see by the Commission's own figures that comparing data for 1900 with the data for 1890 there was a fall in the average rate in each one of the ten groups ranging from 16 to 35 per cent, and that the average reduction for the whole country was 22 per cent.

So I am compelled to say that the recent declaration of Mr. Prouty at Chicago as to advancing rates is absolutely erroneous or that the data upon the subject published by the Bureau of Statistics and the Interstate Commerce Commission are absolutely erroneous.

The attempt is made to refute these figures upon the ground that there has been an inordinate increase in the tonnage transported of low-grade rates, such as coal and ores. But I have shown in this statement, which I desire to submit as a part of my remarks, that there is not a particle of truth in this assumption, the general increase of tonnage having been proportionately greater than the increase in the tonnage transported of iron ore and coal.

The data just given is not affected by changes of classification, as it embraces freights of all descriptions without regard to class.

Now I come to the statement of Judge Knapp that these reductions in rates have been due to the inordinate increase in the carriage of coal, ores, and other low freight, and I assert to you that the reverse is true, namely, that the increase in the freights other than coal, iron, and so on has been more rapid than the increase in the total of iron, coal, and other low freights. I make this diametrically opposite statement, and I base it upon the statistics of the United States Government, published in the statistical abstract of the mining resources of the United States. The total tons carried 1 mile on railroads in the United States increased in ten years 86 per cent, while the coal marketed and the iron ore produced, according to the statistics of the Geological Survey, increased only 74 per cent. That is, coal and iron. The production in those articles did not increase as fast as the increase in the general merchandise of the country.

As a special example, I have taken group No. 2, which embraces the States of New York, Pennsylvania, and Maryland, and compared them with Pennsylvania, West Virginia, and Maryland, three great coalproducing States, as to the amount of coal produced, and I find that the traffic on those roads of general merchandise increased faster than their traffic in the carriage of coal.

Now, in order to be specific, Judge Knapp made the statement to me verbally, and he has set me to work on these figures. I have written to six or eight railroads in different parts of the country, and I have brought to their attention this specific statement of Judge Knapp, and asked them if the rates I have read increased or decreased during the ten years.

There is one aspect of this case which seems to be lost sight of by Mr. Knapp. He says seven or eight hundred charges have been filed lately of increases in railroad rates. Here is a fact in railroad economics.

A classification or a schedule gets stale in about a year. This is a great and growing country; conditions are continuously changing, and so the classifications have to be changed. A railroad schedule may be all right to-day but it will be stale in about a year or two. This has been going on ever since we have had railroads. They have to meet together occasionaly and adjust their classification. I have asked cer

tain gentlemen to send to you and let you know whether the average cost of charges on those things has gone up or gone down.

Gentlemen, this whole talk about exorbitant rates in this country is sheer moonshine; without any feeling of disrespect I say it is nonsensical. In March, 1898, Mr. Knapp, the president chairman, who is present with us to-day, said:

The question of excessive rates, that is to say, railroad charges which, in and of themselves, are extortionate, is pretty much an obsolete question.

The Supreme Court has in no case decided that a rate charged is in itself exorbitant, and I think I am not mistaken in saying that the question as to the reasonableness of any rate per se has never been proved in any Federal court.

In all these millions of transactions $20,000,000,000 worth of property moves every year, probably $25,000,000,000, and yet there has never been any rate which has been proven in a Federal court to be extortionate. The amount just stated is about twice the value of all the railroads of the country.

I next come to the question of discriminating rates. The question of discriminating rates was thrashed out in the Senate committee about two years ago. A resolution of inquiry, submitted by Mr. Elkins, who is now chairman of the Senate Committee on Interstate Commerce, was addressed to the Interstate Commerce Commission asking them certain questions about discriminating rates.

The Commission answered promptly, and this is about the result in all the United States during the ten years from April, 1890, to April, 1900. The total number of cases decided by the Commission was 180. The number of appealed to the court was 35.

The Commission was sustained in 4 cases; the Commission was reversed in 17 cases.

I now refer to something here which is highly commendatory, very highly complimentary, to the Interstate Commerce Commission. I like to compliment the Commission, because they are estimable men. In its last annual report the Commission says:

The great mass of complaints are handled and disposed of by the Commission by preliminary investigation and correspondence. The total number of proceedings brought before the Commission during the year was 340, but only 19 formal proceedings were instituted before the Commission, or only 1 in 18 of the complaints preferred. There were only 10 cases decided by the Commission during the year, or 1 in 34 of the complaints entertained. This admirable results indicates the high degree of perfection to which the railroad system of the country has attained. It is also creditable to the act to regulate commerce and to its administration.

Now, the efficiency of this law has been questioned and denied, but with this section 16 put in force it is going to turn out to be a much better law than anybody thought it was going to be. Here is a Commission that hears these cases, 340 a year, as a conciliatory body and as an arbitration body, and they settle informally 321 cases out of the 340 cases submitted to them. Where is there a court in the United States that has such success as that?

This is a sort of a demonstration. This Commission has been looking with disdain upon the most admirable feature of this law. That is its conciliatory feature, its arbitration feature. It has a power to settle things out of court, and it has succeeded admirably in doing it. Why, sir, I regard it as one of the ornaments of our civilization, and am proud that we have a jurisdiction here that can settle 19 out of 20 I-C L-23