The New International Encyclopædia/Interstate Commerce Act

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INTERSTATE COMMERCE ACT. The popular name for an act of Congress, approved February 4, 1887, and officially designated as “An act to regulate commerce.” The name is due to the fact that the law rests upon the constitutional provision which empowers Congress to regulate commerce between the States.

The rapid development of railways in the United States after the Civil War, the sharp competition between competing lines, and the growing dependence of the agricultural and industrial interests of the country upon the transportation agencies developed a strong antagonism between the railroads and the public. The railroads were charged with making extortionate rates and with the rankest favoritism. The welfare of individuals, of localities, and of industries depended in a high degree upon their action. It was in their power, by special privileges to individual shippers like the Standard Oil Company, to crush out competition. By special rates to favored localities other points were placed at a disadvantage, while in making rates on different products nice questions arose which naturally affected the welfare of great industries. The States had endeavored without avail to cope with the problem. Most of them had created railroad commissions. Some of them, particularly in the States of the middle West, had been clothed with drastic powers to fix maximum rates and to supervise minutely all phases of railroad management. Others, like the Massachusetts commission, had only advisory powers. All had the effect of throwing light upon the operations of the roads and creating a public sentiment in favor of reforms which railroad managers found it difficult to disregard wholly.

The failure of the State commissions to provide an adequate regulation of railways was due not so much to their methods as to their geographical limitations. The consolidation of roads and mutual agreements for through freight took a large part of the traffic out of the jurisdiction of the State commissions. Hence, a general demand arose for regulation by the Federal Government. National regulation was recommended by President Arthur in 1883, and, after protracted debate, was finally obtained by the act of 1887.

The law subjects to its provisions all common carriers by rail, or by rail and water, which engage in interstate commerce business. It prohibits special rates to individuals, and declares that no undue or unreasonable preference shall be given to any particular locality or to any particular description of traffic. It prohibits higher rates for a short distance than a long distance on the same route, when the shorter distance is included in the former, unless under exceptional circumstances and with authority of the commission. It makes unlawful any arrangements between roads whereby traffic is pooled and the proceeds divided. It prescribes that all roads shall make their rates public, that they shall not depart from such published rates, nor change them without due notice.

The act creates a commission of five members, with power to require reports from railroads on their operations, to hear complaints and make investigations relative to any alleged infraction of the act. In making such examinations the commission may compel the attendance of witnesses, and, in case of refusal to attend or testify, may invoke the aid of the United States courts to enforce its commands. If the commission finds that the railroads violate the law in any way, it may enjoin upon them to discontinue the practice. Offenses against the act are made misdemeanors. The actions of the commission are subject to the review of the courts, and a person injured may elect to take his case either before the commission or, disregarding the commission, before the courts, although he cannot do both.

The operation of the act has not been all that was hoped for. The most satisfactory result of the law has been the publicity which it has given to railroad affairs. The numerous hearings before the commission have brought out a mass of evidence on all points concerning rate-making and other aspects of railroad management. The statistical service prescribed by the act has been most efficiently performed, and, through the powers lodged in the commission to prescribe uniform methods of accounting, excellent results have been obtained in the Annual Report on the Statistics of Railroads. The clause of the act designed to prohibit pooling has accomplished this result, but has rather helped than hindered the unified management of railroads which it was designed to prevent. The framers of the act believed in competition as a regulator of the railway business and sought to maintain competition by prohibiting pooling arrangements. The courts, especially in the Trans-Missouri Traffic Association case, have been obliged to uphold this section of the law rigorously. The result has been to hasten the process of railroad consolidation. As uniform administration was impossible by means of agreement, it has been effected by means of lease and purchase.

The second purpose of the act was to prevent discriminations and unjust rates. In the accomplishment of this result the commission has been hampered by a variety of circumstances. As the evidence in all cases must be obtained from the persons directly concerned in the alleged wrong-doing, there has been great difficulty in forcing them to testify. The promise of immunity from criminal prosecution on account of such testimony, as given in the original act, was not deemed by the courts sufficiently complete, and a satisfactory formulation was not obtained until 1893, when an amendatory act was passed. More important in its results for the effectiveness of the commission's work have been its relations to the courts. On appeal from a decision of the commission, the courts have subjected the whole matter in controversy to review. The action of the commission is final neither as to the law nor the facts. The introduction of new testimony discredits the work of the commission, which becomes a mere preliminary investigation.

Again, the commission has no power to prescribe rates. It may declare a rate to be unjust, and may enjoin the railroads to change it, but it cannot prescribe what change shall be made. If the new rate made by the roads is unsatisfactory, the same wearisome process of complaint and hearing must be gone through with before the commission can declare it to be unjust and again order it to be changed.

The commission has pleaded with Congress for years for an amendment of the act. It has asked that pooling, under regulations to be prescribed by the commission, shall be permitted. It has asked further for legislation which shall make the finding of facts conclusive, which shall make the appeal to the courts on the law only, giving the latter power to order a new hearing of facts by the commission, but none to undertake such hearing on its own account. It has asked further that it be given power to establish rates in controverted cases. Various measures looking to these ends have been introduced into Congress, but none have been enacted into law. See Railways.

The best discussion of the powers of the Interstate Commerce Commission is found in the Reports of the Commission, especially that of 1895. Consult, also, Meyer, “The Interstate Commerce Commission,” in Political Science Quarterly, September, 1902.