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sions); Cleveland and Cincinnati, Ohio; Dallas, Tex.; Detroit, Mich.; Fort Worth, Galveston, and Houston, Tex.; Jacksonville, Fla.; Sioux City, Iowa; Kansas City, Mo.; Louisville, Ky. (two sessions); Memphis and Nashville, Tenn.; New Orleans, La.; New York City (two sessions); Philadelphia (two sessions); Savannah, Ga.; St. Louis, Mo. (two sessions), and Bluefield, W. Va. At these special sessions and inquiries the fares, rates, charges, practices, or business management and the manner of conducting the same, of five hundred and ten common carriers were examined, investigated, or inquired into.

The earlier reports of the Commission contain the information annually collected and considered of value, the recommendations as to additional legislation deemed necessary by the Commission to the regulation of commerce, and the determination of questions connected there with as required by the act making provision for such regulation. In connection with such annual recommendations for the years 1887 to 1893, inclusive, the Commission considered and discussed the aims and purposes of the act and the principles upon which it was based; and in connection with recommendations in 1894 and 1895 the Commission reported to Congress some of the hindrances and obstacles to the enforcement of the act, with suggestions as to remedies therefor. Reasonable opportunity was thus afforded to the public, and to shippers and carriers as well, to become familiar with the provisions and requirements of the statute preparatory to the more rigid application of its provisions to the correction of transportation abuses; and time was thus given the carriers not only for obtaining knowledge as to its requirements, but also for bringing their rates, charges, practices, and methods into conformity with the law.

In thus indicating the hindrances to regulation and checks upon the enforcement of the act, it was shown that these restraints resulted largely, if not chiefly, from the discoveries and decisions of the courts giving to the act an interpretation contrary to the general understanding of its scope and purposes; and in consideration of the construction of many leading provisions of the act respecting its enforcement, the powers conferred and duties imposed on the Commission, then recently made by the United States Supreme Court, the Commission in its report for the year 1896 assigned to the court's decisions special significance in connection with its duty to report information collected and recommendations for necessary additional legislation. Recent adjudication had, it was believed, shown defects in the act, or so increased the difficulties of administering it as to render its enforcement as a remedial statute practically impossible.


Of these decisions, the one then deemed of most consequence had been rendered in the matter of railway transportation charges on imported goods, the Chief Justice and two associate justices dissenting

(162 U. S., 197). The Commission had decided after investigation and trial that carriers could not lawfully make any greater transportation charges on domestic goods or freights originating at seaboard points, and shipped thence to interior or other seaboard points by rail, than the charges at the same time made for the like service ou similar goods and freights originating in foreign ports; that "Imported traffic transported to any place in the United States from a port of entry or place of reception, whether in this country or an adjacent foreign country, is required to be taken on the inland tariff governing other freights;" the Commission further holding that no circumstances and conditions which exist beyond the United States seaboard could be lawfully considered in justification of lower rates on import than on domestic traffic. In the case considered and decided by the court the rate on some classes of freight over the Texas and Pacific Railway and connections appeared to be more than three times greater on domestic than on imported freights of the same kinds carried from New Orleans to San Francisco, and the complaint was that any higher charge on domestic business was unjust discrimination and undue preference in favor of imported goods.

The Commission did not, and decided that under existing law it could not, take into consideration the circumstances and conditions affecting transportation of traffic by reason of its foreign origin and carriage by sea, and petitioned the court to enforce the order of the Commission requiring the roads to afford and maintain the same inland rates on domestic traffic as were charged inland on shipments from abroad. The court refused its sanction to the enforcement of the Commission's order, and decided that in consequence, or "out of a misconception of the purposes and meaning of the act," the Commission had proceeded on an improper basis, and had "declined to consider certain circumstances and conditions which under a proper construction of the act it ought to have considered;" that "among the cir cumstances and conditions to be considered as well in the case of traffic originating in foreign ports as in the case of traffic originating within the limits of the United States, competition that affects rates should be considered." In rendering its opinion the court correctly assumed that it could not be supposed that Congress intended when regulating commerce to interfere with and interrupt sources of trade and commerce already existing, nor to overlook the property rights of those who had invested money in the railroads of the country, "or destroy an existing branch of commerce of value to common carriers and to the consumers of the United States."

The question in dispute in this case was, whether common carriers subject to the act may lawfully charge more for hauling freights originating at New Orleans to San Francisco than they charge for the same service on freights shipped through New Orleans to San Francisco from a foreign port. If, to avoid the destruction of an existing branch of

commerce of value to common carriers and to consumers in any such case, the competition arising out of circumstances and conditions at foreign ports, in foreign countries, or on foreign seas, which affects rates must be considered, as the Supreme Court apparently believes it must, then the effect of such competition must be ascertained, measured, and the circumstances out of which it arises must have and be given the full weight of its influence on the through rate, including the charges for the inland carriage of imported traffic.

The freight transportation cost of reaching our various ports from the same foreign port, as well as the cost of reaching any one of our ports from every foreign port, is unequal, free from legal restraint or control, and ever varying. The difficulty, if not the practical impossibility, of giving effect and proper weight to the competition arising out of such conditions can hardly fail to suggest itself even to the inexperienced and such as are not experts.

Take the article of sugar, for instance, and only by way of illustration, for severe competition may, and trade relations or arrangements with Hawaiian producers probably do, keep that which might otherwise be carried from or through New Orleans out of San Francisco. Apply the requirements of the decision of the Supreme Court that competition arising in foreign countries must be taken into consideration by the Commission, as it is and will be by the carrier, in the determination of the rate of charges which may be made on imported sugar carried from New Orleans to San Francisco; this enables the carrier to so adjust his rates for the inland service that, when added to the charge for ocean carriage, the through rate will be substantially the same as the through rate by other routes, whether wholly by sea or partly by rail; and to be carried at all, the freight must be delivered at place of destination, in this instance San Francisco, at substantially the same cost and price, irrespective of the place of origin, or the traffic will reach destination by other routes.

This article is imported raw from as many as two dozen places of foreign production, and the refined article from half as many, the distance to the port of New Orleans by water being as various as the distances between that port and the various countries from which the product comes. The distance to Cuba is little more than 500 miles; to European and South American ports ten times, and to Asiatic ports more than twenty times, greater. The ocean transportation cost of reaching New Orleans would be different from each of these places; and, to equalize the rate to place of destination, the inland rail rate would vary to correspond with and be as variable as the ocean rate from the various foreign ports. Take a train load of eleven cars, one of New Orleans sugar and a car each of sugar from China, Austria, Germany, England, and a half dozen other foreign countries of vary ing distances, and under the act as now declared the rail rate to San Francisco would be the same on no two cars in the train. Testimony

before the Commission shows that, while it is not a profitable rate, 100 pounds of sugar can be moved between New Orleans and San Francisco for about 50 cents. The rate from San Francisco to New Orleans is 65 cents, and it is sometimes carried for less. Probably with no intention of carrying any, the rate from New Orleans to San Francisco is $1.65. Without legislation prescribing a method by which competition arising abroad is to be adjusted in its relations to inland carriage, the influence which such foreign competition may rightly have upon the inland rate can not be properly determined.

Acting on the assumption that under the decision of the Supreme Court they may take into consideration and avail themselves of competitive conditions arising on or beyond the seas, the common carriers establish and change their rates on imported traffic as the ocean transportation charges vary, and since this decision was rendered the rate of charges on imported traffic has been made and changed at the will of the carrier without regard to inland rates, discriminations, or preferences, and in disregard of any legal requirement to charge the same rate on import traffic to all persons.

The carriers further insist that under the statute the rules applicable to the establishment and maintenance of rates inland on import traffic are applicable in the inland carriage to the seaboard of traffic for export, and that the circumstances and conditions arising beyond the limits of the United States that affect through rates on export traffic are lawfully taken into consideration in connection with and in justification of rates to the seaboard on traffic for export, without regard to the rates maintained on freight to the seaboard cities for domestic use. This makes transportation abuses easy and affords a convenient means of giving rebates by carrying for domestic use under pretext of carrying for export.

The Commission is unable to recommend any practical rule or additional legislation by which the inland rail charges on import traffic shall be measured, other than that indicated in the matter or case above referred to, in respect to which the court discovered that the Commission had proceeded on an improper basis. The rule so indicated by the Commission was:

Imported traffic transported to any place in the United States from a port of entry or place of reception, whether in this country or an adjacent foreign country, is required to be taken on the inland tariff governing other freights.

In view of these further considerations, in addition to those submitted in our last annual report, we again appeal to Congress for appropriate legislation.


Another decision of the United States Supreme Court, considered and treated as of special importance in our last report, was that made March 30, 1896, as to the reasonableness of an Atlanta rate. (Cincin

nati, New Orleans and Texas Pacific Railway v. Interstate Commerce Commission, 162 U. S., 184.) In this case it now appears the court decided that the Commission had not been vested with power to modify or reduce any rate of charges established and fixed by the carrier, or to prescribe any lower rate for the future, a power which the Commission had exercised from the time of its organization. In the opinion the court said:

Whether Congress intended to confer upon the Interstate Commerce Commission the power to itself fix rates, was mooted in the courts below, and is discussed in the briefs of counsel.

We do not find any provision of the act that expressly, or by necessary implication, confers such a power.

It is argued on behalf of the Commission that the power to pass upon the reasonableness of existing rates implies a right to prescribe rates. This is not necessarily


The reasonableness of the rate, in a given case, depends on the facts, and the function of the Commission is to consider these facts and give them their proper weight. If the Commission, instead of withholding judgment in such a matter until an issue shall be made and the facts found, itself fixes a rate, that rate is prejudged by the Commission to be reasonable.

We prefer to adopt the view expressed by the late Justice Jackson, when circuit judge, in the case of the Interstate Commerce Commission v. Baltimore and Ohio Railroad Company (43 Fed. Rep., 37), and whose judgment was affirmed by this court (145 U. S., 263):

"Subject to the two leading prohibitions that their charges shall not be unjust or unreasonable, and that they shall not unjustly discriminate, so as to give undue preference or disadvantage to persons or traffic similarly circumstanced, the act to regulate commerce leaves common carriers, as they were at the common law, free to make special contracts looking to the increase of their business, to classify their traffic, to adjust and apportion their rates so as to meet the necessities of commerce, and generally to manage their important interests upon the same principles which are regarded as sound and adopted in other trades and pursuits."

In the syllabus of the case the official reporter of the court said: The Interstate Commerce Commission is not empowered, either expressly or by implication, to fix rates in advance.

When the matter before the court in this case was passed on by the Commission an issue had been made and the facts found after notice and due hearing; it did not, therefore, prejudge the rate fixed by itself to be reasonable. Complaint had been made that the rate established by the carriers was unreasonable and unjust. The defendant companies denied that the rate was unreasonable, but did not question the legal right of the Commission to prescribe a lower rate for the future when the existing rate was shown to be unreasonable. The Commission had, after investigation and trial, found the rate to be unreasonable and unjust, and ordered it to be reduced; had fixed a lower rate, and ordered that the road should not charge more than the rate so fixed. This order came before the court for approval and confirmation. The power of the Commission to make the order was not called in question, and the court refused to enforce it, not because the Commission had no

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