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There may, nevertheless, be some question as to the right of a state road which engages in interstate traffic to restrict its participation at pleasure, and thereby escape obligations which the act imposes.
In the performance of its duties auring the past year it has been made apparent to the Commission that the opinion is prevalent in many quarters that railroad companies whose lines are wholly within a single State and are managed independently are not subject to the act to regulate commerce, except in so far as by entering into joint arrangements with other companies they engage in interstate traffic, and that even in such cases the regulation to which they are subject is limited to the traffic which is covered by the joint arrangements.
In numerous cases the officers of such companies expressed surprise when they were called upon to make the annual report contemplated by section 20, and were at first inclined to insist upon their legal right to exemption. But the right of Congress to require from any corpora tion or organization which to any extent is engaged in interstate commerce a report upon such commerce, and upon all matters respecting the conditions and the work connected therewith which it may be important to have known, in order that the commerce may be most intelligently and effectually regulated, would seem to be very clear. And if any report may be required it would seem equally clear that it may be made to cover, in the case of a carrier whose line is entirely within a State, all the particulars in respect to organization, capital, debt and working operations, which carriers whose lines are interstate are required to furnish.
State traffic and interstate traffic are so intimately and inseparably blended in the provisions which the carriers make therefor; in the carriage, the management, the handling, and the rates imposed upon the one are so likely to affect those charged upon the other, that for the proper regulation of either species of traffic as carried on by a carrier engaged in both, it is indispensable that a complete exhibit as to both shall be made. And it is but just to say here in behalf of all the carriers who were at first inclined to object to making a report that when its importance was presented to them in correspondence, and especially the desirability of making the railroad statistics throughout the entire country as complete as possible, not merely for the immediate objects of the Commission but for the purposes of permanent public record, a courteous response was in general made and report furnished or a promise of it given. The work of the statistician was nevertheless very much delayed by the necessary correspondence, and even yet it is not so complete as it would have been if all the companies had recognized from the first that the obligation to make report existed.
Another topic in this connection which has been the subject of thought concerns the responsibility of a carrier operating a State line when for any reason in participating in interstate traffic it elects to limit the participation to one or to a few species of traffic. The claim has been made by some carriers that the participation may be limited or extended at pleasure; that they may form traffic arrangements for some classes of business and decline to make them as to others; and that over their discretion in the matter there can be neither control nor supervision. The fact that traffic arrangements and joint rates must necessarily be the subject of negotiation and agreement between carriers, and that no authority has in terms been conferred by law for the making of joint rates for them against their will is supposed to be conclusive in favor of this view.
The Commission has not believed this view to be correct. It has believed and still believes that when a carrier is engaged in interstate commerce to even a limited extent it must conduct such commerce under the requirements of the act. It must not give undue or unreasonable preferences or advantages to any particular description of traffic; it must afford reasonable, proper and equal facilities for the interchange of traffic; it must not be guilty of unjust discrimination. Now, if one species of traffic were provided for by a common arrangement between two or more roads, and the same roads should decline or for any reason neglect to make corresponding arrangements in respect to traffic that would be competitive, the unjust discrimination would in some cases be very plain. Whenever it should appear a violation of law would be equally plain, and the party wronged would clearly, it is believed, be entitled to legal remedy. But when the proper remedy came to be considered it might possibly, on investigation, appear very plain that nothing would give effectual relief except a requirement that the carriers guilty of the wrong should carry the competing traffic at rates prescribed for them, but measured, nevertheless, by those which they themselves had established for the traffic they had undertaken to favor. If this may not be done the law against unjust discrimination might in a great many cases be rendered futile and favoritism be practiced by interstate carriers at discretion. But unjust discrimination might not be altogether limited to cases like those supposed; it might be practiced in refusing to make joint rates for a traffic not competitive to any that was actually provided for by the joint arrangements. The act applies to the carriers as legal entities and prescribes for them the obligation of relative fairness; and when it is made to appear that they are guilty of subjecting "any particular species of traffic to any undue or unreasonable prejudice or disadvantage in any respect whatever," it intends that the wrong shall be corrected. It does not apparently intend that the carriers shall be at liberty to make provision for every branch of trade but one and leave that one to be crushed with a burden of successive and combined local rates. In all this there is no hardship whatever to the carriers. The rule prescribed by the statute is one of common justice, and the more fully it is complied with the greater will be the claim of the carriers upon the public favor. It is a rule that ought to be voluntarily applied, regardless of any requirement of law on the subject.
In one case decided by the Commission it appeared that a railroad company chartered for the building of a short road wholly within one State had built and was still owning it, but had never provided itself with rolling stock, and never itself operated the road. Instead thereof the road was used and operated as a means of conducting interstate traffic from certain coal mines upon it by companies owning connecting interstate roads. Owners of other mines on the short road offered interstate traffic for carriage and it was refused on the claim that the road was not subject to the act to regulate commerce. The Commission,on complaint being made to it, held this claim to be unfounded. It was its opinion that the road thus used was one of the instrumentalities of interstate commerce, and the carriers operating it in respect to the traffic offered them were subject to the same responsibilities and duties that they would be if in ownership it constituted a part of their lines. This decision was promptly accepted and conformed to, and the cause of complaint was thereby removed.
Some further suggestions upon this general subject will be found in subsequent portions of this report.
In the first annual report of the Commission attention was called to the carriers who conduct the express business of the country. It was then stated that of these carriers there are several classes. Some are partnerships or joint-stock associations, while some are corporations either specially chartered or created under the authority of general incorporation acts. All these have their several names as express companies, and as such they make bargains with the railroad companies for the transportation of their freight and of their agents at a compensation agreed upon. This compensation is likely to be a definite share in the gross receipts from the traffic; and each of the several express companies has a territory of its own, so that each railroad company carries the freight and the agents of one only.
It was further stated, however, that certain of the railroad companies had undertaken to do the express business on their own lines through their own agencies. The Baltimore and Ohio did this for a time, and then sold the business to one of the existing express companies. Some of the western railroads combine for the purpose, and for convenience create a nominal corporation to do the business over their several lines and divide the net proceeds. In organization and general methods this corporation resembles some of the fast freight lines of the country, the railroad companies being the nominal corporators, and the business done being in every sense railroad business, though for convenience carried on by the several companies through a common agency.
It was further pointed out that there is no recognized distinction between what shall be considered express freight and what not, except that which concerns the method of transportation. Express freight is commonly, though not always, taken in cars attached to passenger trains, and, however taken, it is expedited beyond what is possible with freight in general; any freight is taken express for which the owner consents to pay the charges. These charges are much greater than are made upon ordinary freight of like or similar kind.
The Commission.then proceeded to state and to consider the question whether this express business was subject to regulation under the act to regulate commerce. The objections made thereto by the several express companies on grounds of convenience were considered and pronounced to be of little force. The further and more important question, whether the language of the act by fair construction applied to them was not found to be easy of solution. So far as the business was done by the railroad companies themselves, either directly by their managing officers or indirectly and through nominal corporations created for the purpose, the Commission believed it was subject to their regulation, but it did not think that the terms of the act were sufficiently clear to warrant its asserting jurisdiction over the express companies which are independent of the railroads. In conclusion it was said:
The Commission is of opinion that the question is one which Congress ought to put beyond question by either expressly or by designation including the express companies or by excluding them. The railroad companies that see fit to do their own express business ought not, either as respects principles or methods, to be subjected, in the management of such business, to any different control or regulation from that which the independent express companies of the country are required to obey. If the latter are not within the contemplation of the act to regulate commerce, all ex
press business, by whomsoever carried on, should be excluded. Justice to the public, as well as to that business, demands that it be governed throughout the country by rules of general application, which shall not be dependent on mere forms or on the will of those who happen to be in the control of the railroads, and therefore have the power to determine by what agencies this important portion of the business of the roads shall be conducted.
The subject thus brought to the attention of Congress has not since then in any manner been taken in hand by the Commission. It has refrained from exercising such jurisdiction as it possessed for the reason that a limited and sectional regulation, when the great mass of the business was not touched by the rules established, would be at best of little value, and might seem unjustly to put the business regulated at relative disadvantage to that which did not submit to the like control. Nor has the subject in the mean time been acted upon by Congress.
In a general way it is known to every citizen that the express business of the country aggregates an enormous volume. What this aggregate is, however, is not known, and there are no statistics in any public office which purport to give it. The national census does not show it; it is not reported to Congress. By far the larger proportion of all this business is done upon the railroads of the country, and by the use of facilities which railroad companies supply. The state gives permission to build the roads; it employs the eminent domain to compel private citizens to submit to their being built across their lands, and it subjects the franchise to the condition that the persons and the property of the people shall be impartially and at reasonable rates transported on the roads when they are built. The express company takes advantage of the State grants and superimposes an additional burden upon the eminent domain for the benefit of a business which, though resembling the ordinary business of a carrier by rail, is yet so far distinct that it escapes the restrictions which are imposed upon such carrier as completely as if it were in no manner dependent upon the sovereign grants for the means whereby it may be carried on.
The founders of the express business probably never contemplated its present growth in volume or its expansion in subjects and methods. It began with the carriage of money and other valuable packages or parcels which could not be conveniently or profitably sent as freight; and though freight was also taken express where special care or charge was needed, yet the business in the carriage of freight proper was for a long time of comparatively little importance, and the provision for it was meager compared to what it now is. The ordinary arrangements of the railroad company were supposed to be adequate to the demands of freight transportation, and the services of the expressman were not demanded in respect of it.
The whole character of the carrying business of the country has greatly changed since the express business had its origin. Time has become a far more important factor than it was then; many kinds of business have sprung up to which speedy delivery is of vital importance. Of these the business of dealing in fresh fruit and vegetables is perhaps most conspicuous; the fruits of the Gulf States are sold in every Northern State as well as in Canada, and those of California find their way to the Atlantic sea-board. Fresh fish and oysters also find markets thousands of miles from where they are taken. But these must be handled with care and delivered promptly or they suffer depreciation and perhaps total loss. The merchant in the interior, who formerly replenished his stock twice in the year, keeping necessarily a considerable capital invested in goods that might not find a purchaser, now finds it to his advantage to order his goods day by day to meet the immedi
ate demands of his customers, which he can only do by the aid of a delivery more prompt than that which the freight lines afford. These are only illustrations of the general truth that time, in the transportation business of the country, has become a factor of vastly more importance than formerly, and that the agency which makes speediest delivery is likely to be the one called into requisition, ev en though its charges may be much the greater.
It thus happens that, in respect to a very large proportion of the freight which is offered for transportation, the railroad company and the express company, though not antagonistic, still occupy the position of competitors. Thus, if garden vegetables are to be taken from an interior point to one of the sea-board cities, the railroad company offers to take it as ordinary freight at a rate named, say 25 cents a hundred pounds, and deliver it by trains which average, perhaps, 15 miles an hour, at its station in the city of destination, where the consignee can call and obtain it. The express company, on the other hand, offers to convey it for a compensation perhaps four times as great, by trains averaging 30 or 40 miles an hour, and to deliver it to the consignee at his place of business. The question which these offers present to the consignee is, whether the time saved and the delivery at the consignee's place of business are of such value to the consignee as to constitute an inducement to the payment of the additional compensation demanded. The peculiarity of this competition is, that the railroad company receives the larger share of what is paid to the express company; and this share is so much greater than it would receive for the carriage of the same property as ordinary freight that it may be tempted to make its own offers of carriage less favorable than it ought in order to discourage their being accepted. Thus, the shipper of fresh vegetables might perhaps send as ordinary freight by a train moving 25 miles an hour, when if it moved only 15 miles an hour he would feel compelled to send by express. Any special inconveniences that might attend either the loading or unloading of his freight might equally determine him against the use of the ordinary railroad facilities, and induce a resort to the agency by whose assistance these inconveniences would be avoided. When thus in the competition for carriage the interest of the railroad company is quite as likely to be against as in favor of its own offer being accepted it is hardly to be expected that its managers will at all times show the same anxiety to make the best possible freight arrangements as they would if their interests all lay in that direction. Nor would it be surprising if a suspicion should occasionally be encountered, that the service as to some kinds of freight was made less satisfactory than it ought to be, with a willingness, if not a purpose, that the express business should be gainer thereby. In a case recently before the Commission, in which complaint was made of unsatisfactory service, it appeared that the express charges on the property carried were four times the charge which was made when it was taken as ordinary freight, and that one of the complaining parties had deemed it for his interest to send by express and pay this extra charge, though he would not have done so if as ordinary freight his property had been handled to his satisfaction. Of the justice of his complaint nothing will be said here; but it is easy to see that when thus the freight and the express business are mutually related, and the manner in which the one is handled must largely affect the volume and the profit of the other, the question whether the freight service is what it ought to be is one which can not be determined without careful consideration of how the express business bears upon it; and the difficulty in solving it satisfac