m3 j
This correspondence hae been printed for the purpose
of such reference as trill be lllteiy i o secure competent
opinion in reyat d to lerjal and constitutional questions
involved in the Cullom Bill.
CORRESPONDENCE
BETWEEN
Hon. MARTIN A. KNAPP,
Chairman of Interstate Commerce Commission,
and
JOSEPH NIMMO, JR.
RELATIVE TO THE PROVISIONS OF THE
CULLOM BILL, S. 1439, 56TH CON¬
GRESS, 1ST SESSION.
June iith to July 21st, 1900,
ubrary cf congress'card a17-14s4
PREFATORY NOTICE.
On June IJth I had an interview with Hon. Martin A.
Knapp, Chairman of the Interstate Commerce Commission,
upon the various provisions of law and questions of public
policy involved in the Cullom Bill (S. 1439, 56th Congress,
1st Session). Speaking earnestly, Mr. Knapp said :
" Do you forget that the Cullom Bill provides that rates
prescribed by the Commission are to be made subject to re¬
view by the Courts ? "
I answered :
" Do you not know that the Supreme Court has declared
that making rates for the future is a legislative act, and
that it will not attempt to reverse an Act of Congress by
judicial legislation? Furthermore, if Congress should
authorize the Courts to set aside rates which the Commis¬
sion had made in pursuance of the authority conferred
upon it by law it would be a governmental solecism. If
of any effect whatever, it would simplj^ bring you hack to
the status which you hold under the x\ct to Regulate Com¬
merce—the present law."
On returning to my office I enclosed to Mr. Knapp copy
of the statement found on pages 20 to 24 of my " Statement
before the Senate Committee on April 13th, 1000," entitled
The Courts cannot and will not attempt to prevent the
Political or the Commercial evils of Commission Rate-mak-
jng." The following correspondence then took place.
JOSEPH NIMMO, JR.
Huntington, Long Island, N. Y.,
September 2^, 1900,
4
[iZoîi. Martin A. Knapp to Joseph Nimmo, Jr.]
Intehstate Commerce Commission,
Washington, D. C., June 12, 1900.
Mr. Joseph Nimmo, Jr.,
1831 F Street,
Washington, D. C.
Dear Sir :
I have your note of yesterday with the printed copy of
your statement before the Senate Committee.
Upon looking it over I am confirmed in the opinion I
expressed yesterday, that most of your argument is ad¬
dressed to questions which are not raised by the Cullom
Bill and would not arise if that bill were enacted. The
citations appearing on pages 20 to 24 of your statement
are undoubtedly correct, but I do not concede that they
justify the inferences you appear to draw from them.
You should bear in mind that the Cullom Bill gives the
Commission no authority whatever to prescribe a rate for
the future, except and until it has found upon investiga¬
tion, on notice and hearing, that the existing rate is un¬
lawful. In other words, the power to name a future rate
is conditioned upon the determination that the past rate is
illegal. The courts have undoubted jurisdiction to review
the proceedings of the Commission so far as those proceed¬
ings relate to the existing or past rate, for that is clearly a
judicial question. Now, if the court finds or holds that
the Commission was mistaken, either in fact or in law or
in both, in holding that the past rate was unlawful, it can
stay or vacate a Commission order because the Commission
had no power to make it. That is to say, if the Commis¬
sion was in error in condemning the past rate its order pre-
Ô
scribing a future rate would necessarily be vacated for want
of authority to make it. On the other hand, if the court
found that the Commission was right in condemning the
past rate, then it ought not to set aside its order fixing a
different rate for the future.
If the law gave the Commission absolute and uncondi¬
tional authority to fix a rate for the future, your argument
that the courts cannot interfere with legislative action would
apply, but where the Commission's authority is conditioned
upon its determination in respect of the past rate, which is
undeniably a judicial question, the court can stay the order
of the Commission if the Commission erroneously decide
that the past rate was unlawful, because in that case, as
stated above, the Commission would not have jurisdiction to
fix the new rate, so that the question presented to the court
under the proposed bill is strictly a judicial question in
every case.*
If you will kindly address yourself to this point, which is
the real and actual question presented, I shall be glad to
hear what you have to say about it.
.Yours, very truly,
MARTIN A. KNAPP,
Chairman.
[Joseph Nimmo, Jr., to Hon. Martin A. ICnapp¡]
Washington, June I4., 1900.
Hon. Martin A. Knapp,
Chairman of Interstate Commerce Commission.
Dear Sir:
Your letter of the 12th instant is received. I am very
much obliged to you for this lucid statement of your posi¬
tion, as it gives me a clearer idea of the course of reasoning
whereby you arrive at the conclusion that the courts would
6
ill any case sustain you or reverse you in the matter of á
rate for the future.
Your reasoning is condemned by the Supreme Court in
passing upon the very question at issue between us. In the
Cincinnati-Chicago Freight Bureau Case (167 U. S., 479)
the Supreme Court said :
" It is one thing to inquire whether the rates which have
been charged and collected are reasonable—that is a judicial
act ; but an entirely different thing to prescribe rates which
shall be charged in the future—that is a legislative act."
Now do you not see that you are attempting to prove that
a judicial act when associated with a legislative act in the
same case is one and the same thing, whereas the Supreme
Court in a particular case has plainly declared that they are
entirely different things ? The settlement of many a con¬
crete case involves the exercise of the legislative, judicial
and executive functions of government, but that does not
merge the three into one. Each function is exercised inde¬
pendently of the others.
The idea that in sustaining the Commission in condemn¬
ing a rate made by a railroad company—a judicial aqt—the
Court would commit itself to the duty of passing upon the
validity of a new rate made by the Commission—a legislative
act—is not, to my mind, in accord with reason or logic.
You state your position very clearly on page 2 of your
letter as follows :
" If the Court found that the Commission was right in
condemning the past rate, then it ought not to set aside its
order fixing a different rate for the future."
That, however, is a mere expression of your individual
opinion upon the whole matter at issue.
The Supreme Court has said that a rate for the future is
a legislative act under our form of government. Quite re¬
cently also the Supreme Court of the United States has de-
?
dared that it will not commit itself to any legislative decis¬
ion nor to any political decision. That practically settles
the case until a new Constitutional doctrine shall prevail.
Therefore, if the Gullom Bill should become law, the courts
would let you alone severely in the exercise of your new
legislative function.
The fact that the Commission would not arbitrarily fix
rates for the future, but would do so reflectively and through
a process which would be styled " due process of law " if
the Commission were a court has nothing to do with the
case. That would not enable you to convert " a legislative
act" into a "judicial act." Presumably all your acts are
done reflectively and upon a careful weighing of testimony.
But it is to the enormous political results of Commission
rate-making and its unnecessary and unwise interference
with the freedom of commerce which causes me so stren¬
uously to oppose your scheme of regulation.
The freedom of commerce means the freedom of competi¬
tive struggle. It was ever thus, and it will continue to be
so until the end of time. Don't precipitate our Govern¬
ment into this struggle, but let it continue to maintain
order and occupy the position of arbiter in contested cases.
It appears to me that the only points on which I am in
accord with the Commission are that it has been faithful
and assiduous in the performance of its official duties and
that its work has been crowned with abundant success.
Thus, to my mind you have demonstrated the sufficiency
and the wisdom of the Interstate Commerce Act, which from
beginning to ending is framed upon the idea of judicial
regulation as opposed to legislative regulation.
I am, sir,
Very respectfully yours,
JOSEPH NIMMO, JR.
8
[-Hon. Martin A. Knapp to Joseph Nimmo, Jr.]
Interstate Commerce Commission,
Washington, June 15,1900.
Mr. Joseph Nimmo, Jr.,
1831 F Street,
Washington, D. C.
Dear Sir :
It is probably not worth while to continue by letter an
argument which started in friendly conversation ; hut I am
unwilling to keep silence if thereby the inference is drawn
that I consider myself worsted.
You seem to me to evade or miss altogether the point of
my observations. You say : " The idea that in sustaining
the Commissionn in condemning a rate made by a railroad
company (a judicial act), the court would thereby commit
itself to the duty of passing upon the validity of a new rate
made by the Commission (a legislative act), is not, to my
mind, in accord with reason or logic."
There is another instance where you beat down a man of
straw put up by yourself. It does not meet my position,
nor is it responsive to anything I said. Your contention
was that the courts would not interfere with a rate fixed by
the Commission when it had power to prescribe future rates
in any case, because the Commission would be exercising a
legislative function over which the courts have no jurisdic¬
tion. Now, that may be granted without touching the real
question which I discussed. What I said was that the au¬
thority of the Commission to name a future rate in any case
is conditioned upon its determination that the past rate is
unlawful. Now, if the Commission wrongly decides that
the past rate is unlawful, the Court can stay or vacate its
order fixing the future rate, not in review of a legislative
act, but because the Commission had no authority under the
tatute to name the future rate in such case. If the Court
holds that the Commission was wrong in condemning the
9
past rate, then the Court stays the order for a future rate as
transcending the authority of the Commission. The Court
does not review the legislative act of the Commi.=sion ; it
simply liolds that the Commission had no power to do the
act, because the condition on which it could act was found
not to exist.
This is the point of my letter which you have not touched
at all.
Yours very truly,
" MARTIN A. KNAPP,
Chairman.
[Josep/r Nimmo, Jr., to Hon. Martin A. Knapp.]^
Huntington, Long Island, N. Y., June 23,1900.
Hon. Martin A. Knapp,
Chairman of Interstate Commerce Commission.
Dear Sir :
Your interesting letter was received jpst as I was pack¬
ing my trunks and boxes preparatory to migrating to my
Long Island home. I want to understand clearly the legal
and constitutional grounds upon which your theory of
regulation is based, and shall give your letter careful con¬
sideration as soon as I can get at it.
Very respectfully yours,
JOSEPH NIMMO, JR.
[^Joseph Nimmo, Jr., to Hon. Martin A. Knapp.']
Washington, D. C., July 7, 1900.
Hon. Martin A. Knapp,
Chairman of Interstate Commerce Commission.
Dear Sir :
After a brief period of relaxation, including a trip to my
Long Island home and returning here, I took up your letter
10
of the 15th ultimo yesterday for the purpose of answering
it reflectively. I hope you will abandon the thought that
I am trying to get the better of you in debate. My pur¬
pose and desire is to clearly understand your position, and
to be illumined by your knowledge of the subject, at the
same time defending my position as best I can.
1. I am glad to be set right as to your position which I
now see I had misunderstood. In a word, you hold that
the Commission must first investigate and pass upon a rate
made by a carrier or carriers, and that this correction must
be approved by a Federal court before you can issue your
legislative order establishing a rate for the future. You
also concede that the courts cannot interfere with the exe¬
cution of your legislative order, following such preliminary
determination of the rate established by the carrier, such
legislative order being beyond the function of the judiciary.
Observing just here that this does not touch the vital ques¬
tions of principle and of policy which separate us, I pro¬
ceed with the discussion.
2. Will you be so kind as to indicate to me in Senate Bill
1439 the provisions which clearly sustain the method of
regulation which you proclaim ? I confess that in read¬
ing the bill this point is not at all clear to me.
Besides I find in the bill and in the hearings ex¬
pressions apparently at variance with what you be¬
lieve to be its import. For example, referring to page
14, lines 4 to 8 of the bill, I find the distinction drawn
between " an ordei* under the provisions of this Act,"
i. e., a judicial order, and an administrative order, i. e., a
legislative order. Then proceeding to amended Section 16,
beginning with line 21, j)age 14, I read about the review of
" an order for the payment " of money—i. e., a judicial order,
and then passing on to the second paragraph, line 23, page
15, I read, " Any carrier may within thirty days from the
11
service of an administrative order upon it begin in the
circuit court of the United States * * * proceedings
for the review of such order, &c., &c." Now this reads to
me like autliority to review an administrative or legislative
order, which you and I agree cannot he done hy the courts.
In a word, sections 15 and 16 as amended in Senate Bill
1439 aj)pear to me to he muddled. You may he able to
show that they arc logical, and that tliey do not involve the
solecism alluded to, hut I fear they would suffer under
judicial determination.
Then I pass on to the testimony, and fail to find any
clear statement of the limitation of judicial powers to judi¬
cial orders, as distinguished from legislative orders. In¬
stead, I am further led into the dark hy what I read. For
example, turning to page 101 of your testimony, at lines
21 and 22 from the bottom, I read : " The Court shall stay
that order unless it is a just, reasonable and lawful order."
Now, from the context, it appears to me that you refer
either to the legislative order prescribing rates for the future
or to the whole proceeding, embracing the rate made by the
carrier and the rate made hy the Commission, either of
which would he in conflict witli the view expressed in your
letters to me of June 12th and June 15th.
Then, at page 122, in reply to the inquiry of the chair¬
man if the rate prescribed hy the Commission goes into
effect at once, Mr. Frouty replied that the Commission pre¬
scribes " the time when that order shall go into efi'ect." He
also stated that this legislative order " takes effect as of the
date prescribed," unless reviewed or set aside bj^ the courts.
This seems to contemplate the reversal of a legislative order
by the courts. But on page 118, lines 8 to 11, Mr. Prouty
stated the true doctrine, as you and I understand it, as fol¬
lows : " The prescribing of a rate is, under the decision of
the Supreme Court, a legislative, not a judicial, function, and
12
for that reason the courts could not, even if Congress so
elected, be invested with that authority."
I do not mention these facts for the purpose of indicating
that either you or Commissioner Prouty has stultified him¬
self, as I know tlie difficulties under which you both labored.
You were both zigzaged over the various provisions of the
bill in a way to break up your line of tliought and to con¬
fuse you, and I certainly give you both credit for being
clear-headed men with a clearly defined plan of regulation
in mind. All I mean to assert in the foregoing is that the
phraseology of the law appears to me to be confusing and
that there was no attempt at the hearing to have the plan
of procedure properly explained.
But all the foregoing relates to procedure and form and
does not touch upon the great questions of principle and of
public policy which the method of regulation proposed by
the Commission clearly involves. I now invite your atten¬
tion to these questions.
It is hardly presumable that you would in any case dis¬
turb a rate made by a carrier without a thorough investiga,
tion of tlie question as to whether it is or is not a just and
reasonable rate. That seems to go without saying. But
let us see just what are the objects which you have in view.
In your Seventh Annual Report you stated them as fol¬
lows ;
(1) To give to each community the rightful benefit of
location.
(2) To keep different commodities on an equal footing, so
that each shall circulate freely and in natural volume.
(3) To prescribe schedule rates which shall he reasonably
just to both shipper and carrier throughout the country.
This seems to constitute what you have styled your
" high ideal." Elsewhere you have spoken of the general
determination of rates throughout the country as " the
13
central idea of regulation and the special field of the Com¬
mission's usefulness." This, to my mind, proposes the
governmental solution of the insolvable problem of
human intercourse in a vast country of varied and enormous
resources. It also means placing under governmental re¬
straint and direction the commercial and industrial inter¬
action and development of a virile race with whom liberty
means above all things else freedom of interaction, involving
all there is of weal or woe in competition and in combina¬
tion or co-operation. This scheme of yours appears to me,
therefore, to be utterly Utopian, and, as I have said in my
statement before the Senate Committee, transcendental. In
a word, you propose to embark at once in a great scheme of
State socialism.
You seem to think that any possible evil from all this is
avoided by the fact which you assume that the courts
would have to agree with you as to the injustice of a rate
made by some carrier before you could take leave of the
courts and set up your schemes of " administrative orders."
The fact that your determinations have the force of prima
facie evidence as to the matters stated by you would carry
you through the courts in almost every case, for no rate
maker in the United States ever claimed infallibility and
you could always obtain an overwhelming amount of evi¬
dence to prove that almost any rate attacked is in some re¬
spect imperfect. So you would have about as clear a field
in practice as if you had autocratic power to cancel au y and
all rates made by carriers and to institute new rates, with
no interference by the courts in regard to rates made by
carriers.
But it is to the political effect of your proposed method of
regulations that I stand aghast ; not on account of any
dangerous proclivity on the part of any member of the Com¬
mission, but from a conviction that you will he overwhelmed
14
by a force of circumstance far beyond your control. The
Commission was once snowed under by appeals of railroad
companies for relief from the long and short haul rules as
erroneously interpreted, and got out of the scrape as speedily
as possible. But what would be the condition of affairs
when shippers in all parts of this vast country would be
encouraged to ask the Commission for more favorable rates
of transportation. I shall not enlarge upon this point here
as it is fully debated in my published statements of various
sorts, and particularly in an article from my pen in The
Forum for September, 1897, copy of which is sent you
to-day.
There is an aspect of the case upon which the Commis¬
sion seems to place great reliance for success in securing the
passage of Senate Bill 1439, and that is the trials and tribu¬
lations of railroad companies and of shippers and producers
in various parts of the country under existing conditions.
That argument has been used chiefly by Commissioner
Clements, a gentleman for whom I entertain only feelings of
good will and of profound respect. The unhappinesses of the
situation are set forth by him on pages 127 to 161 of the
" Hearings." But it fails to convey to my mind any reason
for recourse to the drastic form of regulation to which you
gentlemen are so strongly committed, and I will tell you
why. The freedom of commerce is essentially a freedom of
struggle. It was ever thus and it will be so until the end
of time. It is of the constitution of human nature and
human society. In the historic view of this subject I find,
however, great comfort. Ever since the age of connected
railroad service began, about 1865, this struggle has been
going on, and I see, as the result, wonderfully reduced cost
of transportation, greatly reduced and eliminated discrimi¬
nations, a service vastly improved in efficiency, and a rem¬
nant of causes of complaint utterly insignificant in compar-
15
ison with the " abuses " of thirty-five years ago. In the
year 1873, I first became an official observer of these dis¬
turbances and complaints. Then I was employed to assist
in the preparation of the report of the Senate Committee on
Transportation Routes to the Seaboard. Again from 1875
to 1885 I was an officer of the administrative branch of the
Government charged with the duty of studying the situa¬
tion. The whole trend-of - events, according to my observa¬
tions, has been, in-the direptioii^of progress and tbe im¬
proved condition,of the raiiroad transportation business of
this country is one of the wonders of the age. Then my
mind goes back to the period pi' disassociated railroad trans¬
portation—say from 1848 to 1865. The evolution, as I
have observed it, leads me to declare that the history of
railroad transportation in this country is the grandest vin¬
dication of the faith of the fathers in the conservatism
which inheres in the untrammelled interaction of forces.
These considerations lead me to have abiding faith in
the future efficiency of the judicial method of regulation
and to look with ever-growing distrust and disapprobation
upon the legislative or autocratic method of regulation. I
am strongly impressed with the idea that the Commission
has failed to avail itself of the possibilities of judicial legis¬
lation, and I think you made the mistake of your life when
you said (Senate Document No. 39, 54th Congress, 1st ses¬
sion) that the determination of rates for the future is the
central idea of regulation and the special field of the Com¬
mission's usefulness.
In the hope that you will find it convenient to inform me
as to your construction of S. 1439 relative to the nature
and range of the power of the courts, and regretting the
undue length of this letter, I remain.
Very respectfully yours,
JOSEPH NIMMO, JR.
16
[^Flon. Martin Â. Knapp to Joseph Nimmo, Jr.]
Interstate Commerce Commission,
Washington, July H, 1900.
Mr. Joseph Nimmo, Jr.,
1831 î" Street, N. W.,
Washington, D. C.
Dear Sir : ■ ■ ; :
Yours of the 7th instant. Jias .heen."t\ti-ïttôii;\vith evident
care, but for all that it seems to:mé mërely'a' restatement of
your general views and-.in no .'.speçilié'; sense responsive to
the point I tried to make in niy previoüS'letters.
You protested against giving the Commission legislative
authority to prescribe rates for the future in any case, and
your argument was that such exercise of authority would
be practically final because the courts cannot interfere with
legislative power except to the extent permitted by the
Constitution. I said that, assuming you are correct as to
the general proposition, it has no application to the Cullom
Bill because under that measure the Commission could not
make a future rate without previously determining that
the existing rate was unlawful. The courts have ample
power to review the Commission's condemnation of the ex¬
isting rate, for that in its nature is a judicial action, and if
the courts find that the Commission's condemnation of the
existing rate was erroneous, either in law or fact or both,
the courts could and would stay its order as to the future
rate because the condition upon which alone it has author¬
ity to make the future rate is found not to exist. For ex¬
ample, the rate complained of is a dollar. The Commission
finds that this rate is unlawful under the First Section, and
that not more than ninety cents would be lawful, and so
orders a ninety-cent rate for the future. The carrier de¬
clines to comply and files a bill to restrain the order. Now,
17
if the court finds that the Commission was wrong in hold¬
ing that the dollar rate was unlawful, the court must, of
course, stay the order which directs the substitution of a
ninety-cent rate. This was my reply to your argument
and I cannot see that you have even touched upon the pre¬
cise point in your last letter, any more than you did in the
former one.
I have no time to review the Cullom Bill in respect of
the minor criticisms you make, nor do I think it would be
profitable to do so.
Your letter concludes with the general proposition you
have frequently advanced that to give the Commission au¬
thority in any case, or under any conditions, to say what a
carrier sliall charge in the future is a socialistic and Utopian
proposition. I am far from consenting to any such charac¬
terization. Let me put a concrete case. Every fair minded
man, I think, must admit that there should be a certain re¬
lation between the rates on wheat and on flour which shall
not only be comparatively stable, but which will enable
both wheat and flour to move freely and in accordance with
the general law of supply and demand. If it transpires, as
the fact was two years ago, that the rates on flour are so
much higher than the rates on wheat that flour cannot be
profitably made for any but nearby markets, how would
you deal with the situation ? Shall the railroads, if it seems
to be in their interest to do so, be permitted to go on carry¬
ing wheat at rates so low as compared with rates on flour
that the latter cannot be shipped by the miller without
loss? Yet that was what actually happened two years ago.
Surely that is giving the railroads commercial liberty with
a vengeance.
My view is that industrial and commercial freedom are
absolutely dependent upon the proper adjustment of trans¬
portation charges. Those charges are now sometimes ad-
18
justed in such way as to deprive many persons of their in¬
dustrial and commercial liberty. Now when this occurs,
when investigation upon notice and full hearing shows that
to be the fact, I claim that public authority should be exerted
for the relief of those who are thus hampered and distressed.
This is the point at which our views diverge. You seem to
have a notion that what you call the interaction of com¬
mercial forces will ultimately result in a fair adjustment of
railroad chai'ges without any interference by the State. I
don't think so. I think the railroads should be regarded
as engaged in a public service and not as a commercial
factor which either their managers or those favored by them
can manipulate to their advantage. Your view does not
seem to place the railroad in any different relation to social
order than a farm or a factory. I think the difference at
mce fundamental and of the highest importance. Appar-
-, ntly you would have no more government control over
railroad rates than over the price of potatoes. Those who
make railroad rates like those who raise potatoes should
be free to get what they can, each being left to the
control of " the industrial interaction and development
of a verile race." I don't see that there is any middle
ground, nor do you suggest any. Your whole argument
makes for the absolute independence of the carrier in respect
of charges. Of course, I suppose, you would favor the pre¬
venting of rebates and other secret discriminations between
persons, but you would have the State keep its hands off
from all railroad charges so long as they were applied
equally to all persons. But I cannot see any such distinc¬
tion. Why should not a carrier be as free to discriminate
between persons or places as a. merchant is free to discrimi¬
nate between his customers ? Either one theory or the
other must be adojited. If secret discriminations between
persons are to be prevented, then open discriminations be-
19
tween communities should equally be prevented. And the
State should reserve to itself the right to decide whether the
discriminations between places do exist, and not leave that
question to the caprice or interest of the railroad. To my
thinking, the State must either do this or commercial free¬
dom will, in many instances, be out of the question. When
the rate on flour is eleven cents a hundred pounds higher
than the rate on wheat, as it was two years ago, although
both articles had been carried for many years at practically
the same rate, what commercial freedom had the miller ?
This is the real question, and it is not answered by vague
charges of socialistic legislation. What would you do, or
what would you have public authority do, in such an actual
case as I have cited ?
Yours very truly,
MARTIN A. KNAPP,
C']iairman.
[Jbsflp/i Nimmo, Jr., to Hon. Martin A. Knapp.'\
1831 F Street, N. W.,
Washington, D. C., July 16, 1900.
Hon. Martin A. Knapp,
Chairman of the Interstate Commerce Commission.
Dear Sir :
Your letter of the 14th instant is just received. 1 take
pleasure in replying at once. In my letter of the 7th in¬
stant 1 conceded that 1 had at first mistaken your position,
but then (on the 7th) clearly understood it to be that a rate
made by a carrier must first be condemned by the Com¬
mission as illegal and that this decision must be approved
by the courts, if contested,,.before any further step can be
taken by the Commission. 1 also understand you to hold
that if this decision of the Commission is approved by the
court you can proceed in the exercise of your legislative
20
function under the Cullom Bill to prescribe a rate for the
future ; but that if your condemnation of the rate made by
the carrier is disapproved by the court you can make no
change in the rate. In regard to this I made two state¬
ments, first that I entertained a doubt that this authority
is conferred by the Cullom Bill in the manner you claim,
and second that I disapprove the policy of the method of
regulation which you have in mind. Now as this corre¬
spondence is conduced on my part for the sake of informa¬
tion, I desire to proceed step by step and not to wander
over the whole subject of governmental regulation. So in
the attempt to proceed in logical order I respectfully ask
you to point out to me the particular words or phrases
which establish the procedure which you advocate and
assume to find in the Cullom Bill. This appears to me to
be fundamental and not in the nature of minor criticism.
The difficulties which I met in the attempt to arrive at
the import of the Cullom Bill, from its phraseology and from
statements made by yourself. Commissioner Clements, and
Commissioner Prouty at the hearings were clearly stated in
my letter of the 7th instant and need not be repeated here.
Surely no man is more capable of construing the language
of the bill than yourself.
As all attainments in knowledge must be progressive, and
as I have for years tried to proceed in my investigations
step by step, it appears to me that the information I ask of
you is necessary to progress in the knowledge of the subject
of our correspondence.
I do not think it would be profitable for us at this time
to wander off into the general policy of regulation, unless
our correspondence should in the future lead up to specific
questions involved in such discussion. That would be quite
agreeable, and I doubt not instructive to me in view of your
high attainments as a lawyer and your valuable experience
as a National Railroad Commissioner. But I will merely
21
notice one expression in which you certainly misrepresent
my views. On page 5 you say : " Apparently you would
have no more government control over railroad rates than
over the price of potatoes."
There you are in error. I am and have been avowedly
from the beginning a friend of the scheme of regulation
prescribed in " The Act to Regulate Commerce." I believe
it to be just, reasonable and beneficent. The particular
question between you and me relates to the proposed trans¬
ition from the judicial to the legislative method of regula¬
tion—two radically different governmental processes. The
speoific point to which we have come is fairly expressed in
your own language on page 2 of your letter of the 14th ;
" Now, if the court finds that the Commission was wrong in
holding that the dollar rate was unlawful, the court must
of course stay the order which directs the substitution of a
ninety-cent rate."
My question is, in what words or phrases of the Cullom
Bill is this position sustained ? In the hope that you may
find it convenient to give me an explicit answer to this
question, I am, sir.
Very respectfully yours,
JOSEPH NIMMO, JR.
[Hon. Martin A. Knapp to Joseph Nimmo, Jr.^
Interstate Commerce Commission,
Washington, July 16, 1900.
Mr. Joseph Nimmo, Jr.,
1831 F Street, N. W.,
, Washington, D. C.
Dear Sir:
On page 13 of the Cullom Bill (S. 1489), beginning in
line 12, is this language :
" If, after such hearing, it is determined that any carrier
is in violation of the provisions of this Act, the Commis-
22
sion shall make an order directing such carrier to cease
and desist from such further violation, and shall prescribe
in such order the thing which the carrier is required to do
or not to do for the future to bring itself into conformity
with the provisions of the Act," etc.
The " hearing " here referred to is the hearing by the
Commission of a formal complaint served upon the carrier,
and after due notice and full opportunity to be heard, as
provided in Section 13. Plainly and specifically all the
authority of the Commission to make such an order is con¬
ditioned upon its determination that the charges complained
of are in violation of the Act ; for example, that the
charges are unreasonable within the meaning of the First
Section. In other words, the Commission must find upon
ali the facts presented on both sides that the law is violated
Before it can order anything to be done or not done for the
future. If the Commission is wrong in condemning the
thing complained of, and the court so holds, the Commis¬
sion's order must be set aside because the condition upon
which the Commission had authority to make the order is
found not to exist.
On page 17 of the Cullom Bill, beginning in line 10, you
will find this language :
" If upon such hearing the court shall be of opinion that
the order of the Commission is not a lawful, just, and reason¬
able one, it shall vacate the order," etc.
Now the order of the Commission cannot be lawful, even
if it were just and reasonable, if the Commission had no
authority to make it, and the Commission had no authority
to make it if the Commission was wrong in condemning
the thing complained of.
This seems to me to perfectly sustain the position I take,
and that it applies exactly and obviously to the hypotheti¬
cal case I stated. I said, referring to the supposed case, " if
23
the court finds that the Commission was wrong in holding
that the dollar rate was unlawful, the court must, of course,
stay the order which directs the substitution of a ninety-
cent rate." Certainly it must. There is no question ahout
it. The language is positive and explicit. If the court
finds that the Commission was wrong in holding that the
dollar rate was unlawful, the court must necessarily hold
that the Commission's order substituting the ninety-cent
rate was unlawful, because made without authority, and
therefore would stay it as a matter of course.
Now having made explicit answer to your question, may
not have an explicit answer to mine ?
Yours very truly,
MARTIN A. KNAPP,
Chairman.
[Joseph Nimmo, Jr., to Hon. Martin A. Knapp.']
1831 F Street,
Washington, D. C., July 21, 1900.
Hon. Martin A. Knapp,
Chairman of Interstate Commerce Commission.
Dear Sir :
Please accept my thanks for the information conveyed in
your letter of the 16th instant referring me to provisions of
the Cullom Bill which relate to your views as to the pro¬
visions of that bill. Without pressing this matter further,
I am still in doubt as to whether the courts in construing
amended sections 15 and 16 as drawn would regard the
condemnation of the carrier's rate and the subsequent rate
prescribed by the Commission as alternative propositions or
as related parts of one and the same thing, and, in the latter
case, refuse to consider the entire matter on account of its
legislative character. As you well know, the courts have of
24
late manifested a decided repugnance to being used for the
determination of any legislative or political question.
Then, independently of any restraint upon the Commis¬
sion imposed hy amended sections 15 and 16, there stands
section 3 of the hill, which in the new section 6a, proposes
to confer upon the Commission the power " to prepare and
publish " * * * rules, regulations and conditions for
freight transportation. It appears to me that when you ac¬
quire this power you will have the railroads with " your
hook in their nose and your bridle in their lips," and he
able to steer the internal commerce of this country at your
will and discretion.
I now turn to your request, that having made explicit
un^Yicr to my question, I will give an explicit answer to
yours. I will do so to the best of my ability.
The question propounded in your letter of the 14th in¬
stant relates to the subject of the relative rates on wheat
and on flour in a specific case. The history of this case
and the immediate context of the inquiry clearly indicate
that your question involves the following propositions :
First, that of relative rates on commodities ; second, that of
relative rates between places not on the same line and ex¬
cluded from the scope of regulation by the first section of
the Act to Regulate Commerce ; and, third, relative rates
with respect to different places and sections of the coun¬
try, as involved in the Cincinnati-Chicago Freight Bureau
case. Then an explicit answer to yoxir question, " What
would you do in such an actual case ?" would involve the
question as to whether it would be better to build upon the
judicial method of regulation provided in the Act to Regu¬
late Commerce, in case its provisions do not adequately reach
the wheat and flour case, or to ask Congress to adopt an en¬
tirely new policy of regulation, giving you all the latitude
you want by legislative or autocratic exercise of authority to
25
adjust the rate according to your ideas of commercial right.
The Act to Regulate Commerce extended the principles of
the common law to the regulation of railroad transportation
by the National Government. That statute also in some re¬
spects transcended the scope of the common law, and accord¬
ing to my recollection, it was the general expectation that
the Interstate Commerce Commission would still further en¬
able the legislator to enlarge the scope of the judicial mode
of regulation by the results of its investigations and experi¬
ences in concrete cases ; in other words, to extend the com¬
mon law in the manner in which it had been huilded up
from the beginning.
In view of all this, it must he quite clear to you that your
question " What would you do, or what would you have
public authority to do, in such an actual case ? " involves
not only a very full and careful study of the particular case
from the hearings and other testimony, which the Commis¬
sion has considered, hut also the consideration of the entire
subject of governmental regulation. If I were a lawyer I
should be tempted to answer you as the late Emory Storrs,
a famous Chicago lawyer, answered a certain Chairman of
the Committee on Commerce of the House of Representa¬
tives who propounded to him a question involving the
general subject of governmental regulation. Storrs replied,
" Mr. Chairman, when you propound a question of that
sort to a lawyer, it is a great comfort to him to know the
precise state of facts upon which your inquiry is founded."
Instead of aiding Congress to build up a system of regula¬
tive enactments on the basis of the judicial system of regu¬
lation, the Commission appears to have become deluded with
the idea of autocratic rule and to have bent all its energies
and time to the development of that theory, and to the task
of deluding the commercial bodies of the country into the
same fundamental error.
26
You seem to have been beguiled by the idea of adminis¬
trative efficiency and the idea of the most direct application
of means to ends. That is an alluring thought. Undoubt¬
edly autocratic government possesses the very highest possi¬
bilities of efficiency and the direct application of means to
ends, but the experiences of mankind have proved over and
over again that the infirmities of human nature cause auto¬
cratic government to be incompatible with liberty and the se¬
curity of human rights. We live in a world in which the bet¬
ter is ofttimes the enemy of the good, and I think the rem¬
edy which you prescribe illustrates this adage. Human
law and government are at best a science of limitations and
restraints, and every time we try to overleap its conventional
limitations and to throw off its restraints we do it at the ex¬
pense of human liberty and commercial freedom.
■ I hope you will regard this as a sincere attempt, from my
point of view, to answer your question. A few years ago
you said to me you would be glad if I would outline my
ideas of an eifective law for the regulation of the railroads.
I would be glad to do so now, in remembrance of all the
courtesies I had received at the hands of the Interstate Com¬
merce Commission, and especially its Secretary, during the
last thirteen years, but the weather is hot and I shall be
overwhelmed with work until December next.
Very respectfully yours,
(Signed) JOSEPH NIMMO, JR.