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GENEºttisBARY, \\
UNIV. OF MICH. ºn ET
MAR 1 1906 lºod
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FIFTY-IN INTEL CON GRESS, FIERST SESSION.
Government Regulation of Interstate Carriers.
º
SPEECH \, º
OF º º
!
- HON. CHARLES E. TOWNSEND,
o F M I C H I G A Nº.
IN THE HOUSE OF REPRESENTATIVES,
Tuesday, January 30, 1906.
The House being in the Committee of the Whole House on the state
of the Union and having under consideration the bill (H. R. 12987) to
amend an act entitled “An act to regulate commerce,” approved Feb-
ruary 4, 1887, and all acts amendatory thereof, and to enlarge the
powers of the Interstate Commission— -
Mr. TOWNSEND Said :
Mr. CHAIRMAN : For the second time the Interstate Commerce
Committee of the House of Representatives presents a bill to the
Congress and the country intended to amend the present inter-
state-commerce law, in response to a demand from the people
for a larger and more satisfactory regulation of interstate car-
riers by the Government. The bill passed by the House in the
Fifty-eighth Congress sought to do two things—first, to invest
the Interstate Commerge Commission with the power to fix a
reasonable and just rate or regulation, after complaint and hear-
ing, in place of one found to be unjust and unreasonable; in fact,
to confer by law the power which the Commission actually ex-
=ereſsed for the first years of its existence, and until the Supreme
Court declared such power had not been conferred by the law of
1887, and, second, to speed the orders of the Commission to a
final determination. It was a simple bill, and its friends did not
claim that it remedied all existing evils, but they did claim that
it would bring great relief to the people, and that it was wise at
that time to take one step and from that vantage ground view
the situation before taking another. The advocates of that
measure knew, or felt they knew, that the requirements of the
people would never be less, and that delay would simply increase
the demand for more radical railroad legislation.
In an argument to the House on that bill it was stated that
“next year the people would demand more than this year,” and
the carriers were advised not to oppose the measure, for delay
was but “storing up wrath against a day of judgment.” This
remark was printed and circulated throughout the country by
some organization formed, presumably, at the instigation and
expense of the carriers or favored shippers, with the statement
that business interests had been threatened and that disaster
was liable to follow. The bill passed the House almost unani-
mously and was presented to the Senate, whose committee took
it in charge and proceeded to have hearings upon it. The Presi-
dent remained firm in his advocacy of the principles of the
measure and suggested that he would call the Fifty-ninth Con-
gress in extra session in case the Senate failed to pass a rea-
sonable bill on the subject, but it continued its hearings until
the Fifty-eighth Congress expired and then on into the Summer.
A year has passed since the prophecy was uttered, and yet
business has not been disturbed; railroading has extended its
operations, increased its mileage, and improved its facilities
and equipments in "an almost unprecedented manner, thus fur-
nishing conclusive answer to the carriers’ own arguments.
To-day we offer a new bill, and I present it to you now, as I did
the one of last year, with the statement that it is probably the
least the people will accept. It confers wider powers than its
predecessor, for the reason that the demand is for a greater
exercise of the Government’s control over public carriers. It
may not remedy every defect in existing laws to which every
complainant has called the Commission’s attention, but it is
believed that it will be sufficient to cure every defect against
which any considerable objection is made.
The committee, or at least a majority of it, believes that this
bill is not only within the constitutional powers of Congress, but
that it is clearly an expression of the duty of Congress to the
American people.
Our Government was organized to subserve the general wel-
fare, and no act of any branch of it can be justified on any
other theory. Men may differ as to whether any particular
measure will serve the best interests of the people, but there
can be no difference of opinion among patriots upon any act 01:
condition which, under the sanction or sufferance of law, has
but one result, viz, that of serving private or special interests,
whether those interests are great or small.
When the fathers established the Government of the United
States and adopted the Constitution as its bill of rights they
wisely delegated to Congress control over all commerce among
the States. At that time there were but thirteen Colonies from
which States could be made, and they occupied the little terri-
tory east of the Alleghenies and in New England. Commerce
then was limited, but the means for transportation were SO
crude that its movements were more difficult than those of to-
day. As a legal basis of procedure in the exercise of govern-
ment the common law was adopted, and that law treated Com-
mon carriers as public servants and subject to governmental
control, and provided that all rates and regulations charged or
imposed by them should be just and reasonable.
From the time when man produced more than he consumed
and desired other than what he produced, Garriers became im-
portant. Settlements were made in the New World on the sea-
shores and on the banks of rivers where transportation by
water was possible, but each man at first was his own carrier,
and he exchanged his for his neighbor's products. With thrift
and enterprise a surplus greater than the needs of immediate
neighborhood exchanges was created, and the common-carrier
became a necessity. At first the Government, recognizing the
need, entered into the business of carrying products for the bene-
fit of the people; highways were built, boat lines established,
and canals dug. These were operated either without charge to
the people or by imposing a charge upon the user of the means
of transportation. In the early forties the railroad was born,
and regions remote from navigable waters were opened up to
settlement. Some wild dreamer of the Revolutionary times
may have had a vision of the twentieth-century commerce, but
such vision was never expressed, and certainly it never entered
into the mind of the statesmen of early days what wonderful
things were to come to pass. Then wants were simple and
desire was modest. The luxuries of yesterday have become
necessities of to-day. Inventive genius has revolutionized past
ideals and ancient methods; ignorance, superstition, and re-
ligious fanaticism and bigotry, which once blocked the way of
progress and blinded the eyes of genius, have been ruthlessly
crushed to death beneath advancing civilization, which has
strengthened with contest and grown wise and audacious with
experience, until to-day nothing is sacred but eternal right and
nothing impossible to him who wills. [Applause.]
Under such conditions the most progressive Government in
the world is required at this time to deal justly and fairly
with the transportation problem, justly and fairly to the peo-
ple and to the carriers—to the people, because the Govern-
ment exists for them ; to the carriers, because, being necessary
for the general welfare, they are included in it and an injury
to them would be an injury to the people.
This question has been confusing to the public in many
respects, due, I believe, to the false notion in the minds of cer-
tain railroad representatives and their sympathizers that the
interests of the railroads could be best subserved by threats of
disaster and persistent misrepresentations.
What is it that the people have asked, and what is the pro-
posed legislation? The relation of the railroads to the public
is generally known. The carrier is chartered to perform certain
public service. The Federal Government gives it the right to
do business among the States and Territories and with foreign
nations, under the express provision that it shall not discrimi-
nate in its charges and service between individuals, between
6493 l 43972.
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2
CONGRESSIONAL RECORD.
products, or between places, and that all its charges and regu-
lations shall be just and reasonable. That is now the statutory
law. It has always been the common law, and no one, I appre-
hend, will be bold enough to assert that it is not a good law.
When the country was new the Government encouraged rail-
road building by giving, in certain instances, vast areas of the
public domain, by loans of public moneys, and by other means.
States gave similar State aid and individuals contributed of
their private funds. The people, through their representatives,
recognized the fact that the pioneer railroad builder should be
encouraged and that his charges must be necessarily high.
When large charges were necessary the Government did not
exercise to a great extent its power of regulation. When popu-
lation was scattered and business Small strict regulation was not
so imperative. When carrier actually competed with carrier
for traffic the shipper did not suffer so much, but when the
country became settled and business increased to vast propor-
tions; when individuals, trusts, and combinations grew to such
power that the railroads were in a measure at their mercy;
when in looking for business the traffic manager was actuated by
the sole desire of obtaining every cent the traffic would stand
and would prefer, and therefore favor, 1 shipper who could
give 100 cars of freight rather than 100 shippers who could
provide only 1 car each ; when carriers combined to eliminate
competition and manipulate schedules in ways past all finding
out; when at a time when business commissioned every car of
every carrier; when railroad facilities had become so improved
that a dollar’s worth of labor or coal would earn more money
for the railroads than ever before [applause] ; when traffic
sought the railroad instead of being solicited ; when under such
conditions hundreds of articles of commerce were subjected to
an advance in freight rates; when these public servants were
demanding tolls from the people to pay dividends on fictitious
capital representing nothing but graft; when the railroads were
assuming to say how the country was to be developed, what men
should prosper, and who should fail, which cities should grow
and which should not, then the people affected by such condi-
tions—and Who Were not?—insisted that the Servant should not
be the master and that the Congress should pass a law to en-
force their rights under the contract between the carriers and
the public ; the right to impartial treatment and to just and
Teasonable rates and regulations, for “it is so nominated in the
bond.” [Applause.]
-- In respOTSe to this demand the Dr
eSeTIt bill.
and presented to Congress. Personally I have, since my ad-
vent into the House of Representatives, been profoundly sensible
of the need of railroad-regulating legislation. I have advo-
tº cated it when its friends here were few. I have contended for
it when it was less popular than it is to-day. I am its loyal
friend—now when it is a popular measure in the House, where
nearly everyone is anxious to be recorded at least as its friend,
and I trust that I have done my full duty in the efforts which
have been put forth to bring to realization the desires of the
people.
The bill attempts to place under the supervision of the Com-
mission every form of interstate and foreign commerce, all in-
strumentalities of commerce and transportation. The measure
which passed the House last session was believed to cover all
the facilities of transportation, but inasmuch as some gentlemen
contended that it did not, we have endeavored in the present
bill to use such language as Will take the matter out of the
realm of doubt. To that end We have declared that Cars, Ve-
hicles, and instrumentalities of shipment or carriage, irrespec-
tive of ownership or of any contract, express or implied, and all
services in connection with traffic, such as elevation, ventila-
tion, refrigeration, or icing shall be considered as being furn-
ished by the carrier, and therefore under the supervision of the
Interstate Commerce Commission. We have also stipulated
that terminal, icing, and other similar charges shall be pub-
lished as separate items, so that the shipper may understand
just what he is paying for each particular service, and then
we have said that all such charges shall be just and reasonable,
that any other is unlawful.
Some of the most serious complaints have been those against
these special services. Private car companies have been or-
ganized to do the people's work; the railroads have loaned their
tracks to these companies, and while they have presented the
charge to the shipper these private companies have really
imposed them, and it is claimed that they were outside the
jurisdiction of the Interstate Commerce Commission. It is
not necessary for me to detail to the House or the country
the gross injustice which has been done the people through
these instrumentalities. We believe the bill effects a complete
remedy for these evils. Hereafter any car hauled for an
6493
sufficient notice of a change to prepare to meet it.
interstate carrier and any charge imposed upon a shipper,
whether by a carrier or any direct or indirect agent of the
Carrier, must be just and reasonable, and in case it is not the
Commission has power to make it so.
Mr. UNDERWOOD. Will the gentleman allow me to ask a
question?
Mr. TOWNSEND. I Will.
Mr. UNDERWOOD. I would like to know, the gentleman
being a member of the committee, whether he can state to us
he feels assured that the terms of this bill, if carried out, will
control private cars?
Mr. TOWNSEND. I have no doubt about that at all. I will
repeat to the gentleman, I had no doubt that the last bill con-
veyed control of these agencies upon the Commission. The
question has never been squarely before the court under the pres-
ent law. I have always maintained that the power which gives
the Commission control over interstate carriers gives it control
over every agency of those carriers and over every car hauled
by the carrier, whether owned by it or not; but this bill ex-
pressly names private cars. If the gentleman from Alabama has
read the bill, he has found that the subject has been placed in
this bill for the purpose of removing all doubt on the matter.
The same argument applies to elevator and terminal charges.
We believe it will no longer be possible for a great manufac-
turing corporation to build a spur or siding up to its factory and
then use it as a basis for obtaining rebates prejudicial to its
competitor. The bill also aims to prevent the custom so com-
mon and so detrimental to honest competitive business followed
by many large shippers, viz, of notifying the carrier that such
shippers are on a certain date to have a large amount of traffic
for shipment and at the same time demanding that the published
rate shall be reduced on that date, so as to give them the ad-
vantage over other shippers. -
This evil is known as the “midnight-rate ’’ evil, and is one
of the most effective means of violating the law against re-
bates known in the commercial World. We have attempted to
cure this by enlarging the time in which a rate can be changed.
If the bill is enacted into law, any change made in the schedule
of rates hereafter must be published at least thirty days. I
had hoped that it might be at least sixty days, but the majority
of the committee did not agree with me on this subject, and it
has been made thirty. It is thought this will give all shippers
Wo Woro not
QCifull Of the fact th Gümstances might arise undel'
which it would be desirable that a rate should be lowered in less
time than thirty days, so we have provided that upon proper
showing of the necessities of the case the Commission may in
special cases allow a change under a shorter notice than thirty
days.
Mr. SHERLEY.
a question ?
The CHAIRMAN. Does the gentleman yield?
Mr. TOWNSEND. I do.
Mr. SHERLEY. Would not the same remedy have been
obtained by simply requiring thirty days' notice as to the
raising of the rate after it has been reduced? That is, you put
a restriction that may handicap the railroads of the country
unjustly in not enabling them to make a reduction except upon
thirty days' notice. -
Mr. TOWNSEND. I will answer the gentleman that the
bill itself, as I have already stated, provides all the remedy
that is needed in such cases, because that Condition could not
arise except in an extraordinary case, and under such a case
the bill provides that the Commission may upon proper show-
ing in special cases reduce the rate or allow the railroad to
reduce it in a shorter time than thirty days. -
Mr. SHERLEY. In that case they have to first show cause,
but could not the remedy you seek be obtained if they were
permitted upon three days' notice to reduce a rate, but could
not raise it again except on thirty days' notice?
Mr. TOWNSEND. Possibly it might. I think, however,
there may be some question about that. The object of this,
first, is to produce a stability of rates and to do away with that
form of rebates which gives to the favored shipper an advan-
tage which his competitors can not possibly have. As far
as I am concerned, I would have been glad to have had the time
extended to sixty or ninety days rather than thirty days. It
would have suited me better. -
Mr. SHERLEY. Will the gentleman explain to the commit-
tee how it will be possible for One shipper to have an advantage
over another by a sudden reduction of a rate if that rate could
not again be changed in thirty days?
Mr. TOWNSEND. What advantage would there be in your
plan? - ... "
Tº ſº. Tº
Will the gentleman yield at that point for



CONGRESSIONAL RECORD. 3
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| Mr. SHERLEY. It preserves to the railroad the one, thing
that has made them more progressive than any other railroads
the world over, namely, the ability to meet changing conditions
in the commercial world by a change in rates, when demanded,
quickly. -
Mr. TOWNSEND. In response to the gentleman I will say
that the records will show that those stable rates, where ad-
vantages were not sought to be conferred upon some particular
individual, have remained for years and years. It is only for
the purpose of granting an advantage to a competitor that the
carriers reduced rates in that short time. -
Mr. HENRY of Texas. Will it interfere with the gentleman
if I ask a question? -
The CHAIRMAN. Does the gentleman from Michigan [Mr.
Towns BIND| yield to the gentleman from Texas [Mr. HENRY | ?
Mr. TOWNSEND. Certainly.
Mr. HENRY of Texas. The gentleman has stated that the
“midnight tariffs" can be prevented now by extending the time
from three and ten days to thirty days' notice and publication.
Now, if that thirty days' clause is violated by the common car-
rier, what specific penalty is provided in the act for a violation
of the kind, and how is the penalty to be enforced?
Mr. TOWNSEND. The penalty provided in this bill is in
case of a violation of an order. For instance, if an order of the
Commission is made in the first place it is $5,000 for each viola-
tion, and each day of the continuance of that subjects the road
to an extra penalty of $5,000. It is also subject to the law we
have now for enforcing orders—the right to compel by man-
damus or other summary writs the observance of this rate, and
the road would have no right under the law to carry any freight
º indulge in traffic unless it had complied with the provisions of
the bill.
Mr. HENRY of Texas. And then, under the present law,
there would only be a fine and there would be no imprisonment
of any official who violated that provision of the statute?
Mr. TOWNSEND. The law makes no provision for penalties
of imprisonment except in cases of making false reports or in
violating the publication feature of the bill, which I will refer
to later. - - * * - -
The main feature of the bill, the One about which the greatest
controversy has been had, and the one, I believe, which lies at
the foundation of the whole matter, is that which gives the Com-
mission power, upon complaint and after full hearing, to sub-
stitute a reasonable maximum rate in place of one found to be
unjust or unreasonable. To me this is a most righteous pro-
vision. Under the law, as I have stated, no interstate carrier
has any right to impose anything but a just and reasonable rate,
and under that same law any other is unlawful. Heretofore the
Commission has had power to declare a rate unjust and unrea-
sonable and to order its discontinuance; but it had no power,
under the decision of the Supreme Court, to substitute a just
rate in its place. This has resulted in making the law absolutely
nugatory, so far as positive, relief to the people is concerned.
For myself, I have never been able to understand the Wisdom
of the argument which claims that a commission might be com-
petent to determine what is unjust and unreasonable, but in-
competent to advise what is just and reasonable, for I can not
understand how any individual or any commission can know
what is unjust until what is just is known. A thing is un-
reasonable because it is not reasonable. We say a thing is
wrong because we know what is right, and the very proof and
reasoning necessary to establish the unjust and the unreason-
able has of necessity first determined what is just and reason-
able. - -
All who have followed the arguments of the opposition during
the agitation of this great question must be profoundly im-
pressed with their inconsistency. First it was claimed, and so
published to the country, that the Commission was to be empow-
ered with authority to make all rates de novo, and that carriers
were to be denied the right to fix their own rates. Full discus-
sion and investigation have shown the fallacy of these state-
ments; it is only the unjust and unreasonable rate that is to be
affected, and full hearing must be had before that can be done.
Mr. SHERLEY. I do not wish to interrupt the gentleman if
he does not desire to be interrupted, but I want to ask him a
question. Does not this bill give to the Commission the power
that they contended they had under the maximum-rate case?
Mr. TOWNSEND. I think it does. -
Mr. SHERLEY. Would not their action in the maximum-
rate case, if it had been upheld, have changed hundreds and
hundreds of rates ? s
Mr. TOWNSEND. Possibly. It is also known that ten or
twelve railroad men can and do get together and arbitrarily,
overnight, as it were, change hundreds and hundreds of rates,
and the remedial power of the Commission should be as large
as the evil to be remedied. [Applause.]
6493
course, the preferential or differential proposition.
ive, but does not your bill Confer upon them the power?
Mr. SHERLEY. I am not discussing the wisdom but the ac-
curacy of the gentleman’s statement, that this bill does not give
to the Commission the power to change rates.
Mr. TOWNSEND. It can not take the initiative. It still
leaves to the carriers the right to take the initiative and make
just rates, and this bill does not attempt to divest them of that
power. Nor is such power conferred upon the Commission.
Mr. LITTLEFIELD. While the gentleman is on this point
in the bill, I would like to make this inquiry: Whether the gen-
tleman's understanding of the bill as it reads confers upon the
Interstate Commerce Commission the power to eliminate or
correct or affect what is known as the preferential or differ-
ential rate—that is, the differential between the long haul and
the relatively short haul.
Mr. TOWNSEND. I am sorry to say that it does not. I
stand practically alone with one or two other gentlemen of the
committee on this matter. I had hoped that we might give the
Commission powers to ſix the differential. Others may under-
stand that the bill confers such power, but I think no Such power
is conferred by the measure. -
Mr. LITTLEFIELD. May I add this? I have an apprehen-
sion that it does produce practically that result indirectly. If
I understand it correctly, you have a differential or preferen-
tial consisting in a long haul as compared with a short haul,
giving upon the long haul a very much less rate of freight pro-
portionately than the short haul, and thus giving a preferential
in favor of the locality situated at the end of the long haul.
Am I Correct in my apprehension or statement of the case?
Mr. TOWNSEND. Undoubtedly the Commission would have
the right to adjust it if the long rate or the short rate is unjust.
Mr. LITTLEFIELD. I submit this: If it is true that the
preferential or differential, as I understand it, involves this long
haul and the short haul, with the purpose of giving a much
lower rate upon the long haul than is given on the short haul—
for instance, the fruit growers of California can get their fruit
to the eastern seaboard only through a low preferential long-
haul rate, which is very much less than the short-haul rate to
near points in California. Now, I submit this inquiry. I want
to get the gentleman's idea of what this bill will really do. I
suppose that in order to correct that it could be done in two
ways—by increasing the rate of the long haul, so as to level it
in comparison with the short haul, or lower the short haul to
the rate of the long haul, so as to bring it to a level With the
long haul, imposing what the bill calls “the IHarimumr-to-be-
charged '' upon the short haul, so as to level it in that way with
the long haul. Is not that possible under this bill? Now, does
not this bill authorize the Commission to fix a maximum rate
upon the short haul, and thus eliminate in that way the differ-
ential, and indirectly accomplish what they might otherwise be
authorized to do directly?
Mr. TOWNSEND. I do not think it does. The Commission,
in the first place, has no power to raise the rate, so that is elimi-
nated. -
Mr. LITTLEFIELD. Yes; that feature of it
Mr. TOWNSEND. Now, it has no right to reduce a rate
unless that rate in itself is unjust and unreasonable.
Mr. LITTLEFIELD. Yes; but that is the whole question
before the Commission.
Mr. TOWNSEND. If it is unjust and unreasonable it should
be reduced, but it does not have anything to do with the relation
of rates.
Mr. LITTLEFIELD. But my point is, does not this bill
indirectly confer upon the Interstate Commerce Commission
the power to control or eliminate the preferential or differential?
Of course the assumption is that they would act properly, and
would not change any condition unless there was an undue or
unjust rate, but do they not get the power?
Mr. TOWNSEND. They do not unless, in the case you as-
sume, one of the rates is too high in itself. If there is simply
a difference in rates, and the higher rate is reasonable and the
lower rate is unreasonable because it is too little, the Commis-
Sion can give no remedy in that case. -
Mr. LITTLEFIELD. May I ask the gentleman this question?
Of course, I simply want to get this for my information and
that of the committee, and I hope the gentleman appreciates
that I do not wish to disturb his Speech. Under section 3 of the
interstate-commerce law as it now stands, as I understand it,
they have authority to take charge of the question of what is
called “the preferential or differential.” That is to say, section
3 provides that it is unlawful for a common carrier to give any
undue or unreasonable preference to any locality. That is, of
- NOW, as
the law stands they have no power to make their orders effect-
They
have the power, under section 3, to investigate that precise
situation, but they have no power to make their orders effective.
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4.
CONGRESSIONAL RECORD.
I should like to ask the gentleman whether under the language
in this bill, where it is provided that the Commission shall in-
quire whether the rates are unduly preferential or prejudicial,
or otherwise in violation of any of the provisions of this act,
that power is given them under this bill? Section 3 is a part
of the act. They have not that power now, but do you not give
them that power in this bill, indirectly, through the operation
of the maximum rate?
Mr. TOWNSENE). I do not think We do. I do not under-
stand it that way at all. I understand simply that the Com-
mission has power to fix a just and reasonable and fairly re-
munerative rate where complaint has been made in place of one
that is found to be otherwise, and that it will never go to the
question of the relation of the rates. The Commission ought
to have the power to correct an unjust and unreasonable rate,
and the committee has sought to give it that power.
Mr. LITTLEFIELD. Yes; but does your bill limit it so that
the Commission does not have power to take into consideration
the relation of rates ?
Mr. TOWNSEND. I am afraid it does.
Mr. LITTLEFIELD. One of the Commission advised me
otherwise, in his judgment, the other day when I was talking
With him. - -
Mr. BARTLETT. May I ask the gentleman this question
with reference to the long and short haul clause in the act
of 1887 ? This bill does not alter the act of 1887 one particle
by what it contains upon that point, does it?
Mr. TOWNSEND, I do not think it does.
Mr. BARTILETT. And so far as the relation of rates is con-
cerned, the committee declined to have anything to say upon
that subject in this bill.
Mr. TOWNSEND. The gentleman from Georgia is right on
that subject, as usual.
Mr. GAINES of Tennessee. Suppose the Commission has set
a maximum rate, Say, of $1, and after that the railroad makes
the rate 90 cents. What power has the Commission, and if so,
where is the language in this bill that gives the Commission the
right to change that 90-cent rate?
Mr. TOWNSEND. They have the right to change it under
section 4 of the bill, which provides as follows:
The Commission shall be authorized to suspend or modify its orders
upon such notice and in such manner as it shall deem proper, and the
orders of the Commission shall take effect at the end of thirty days
- | a1 Lei Ilot Ice litel'eCI LO C: ets oil -
such orders shall have been suspended or modified by the Commission
or suspended or set aside by the order or decree of a court of compe-
! tent jurisdiction.
º Mr. GAINES of Tennessee. The point I am making is that
the 90-cent rate is not the rate fixed by the Commission, but it
is the act of the railroad. That is the very thing I want my
friend to discuss. I know he can do it very well.
Mr. TOWNSEND. The 90-cent rate was undoubtedly fixed
by the carrier as a result of the Commission’s order and
any such result would be subject to change or modification as
the foregoing section of the bill provides.
Mr. McCLEARY of Minnesota. That might require a new
proceeding.
Mr. TOWNSEND. A new proceeding might have to be insti-
tuted, as in the first instance. It stands to reason that the Com-
mission would not fix upon a dollar as a maximum rate if 90
cents was the reasonable maximum rate. If conditions changed,
so that 90 cents was an unreasonable rate, then the Commission
could modify its order or possibly new proceedings might be
instituted. The bill itself limits the Commission’s orders fixing
rates to three years.
Mr. GAINES of Tennessee. Has not the Commission lost its
power to refix when it has fixed the maximum rate? The power
you give is the power of a rehearing.
Mr. TOWNSEND. If the gentleman's suggestion that the 90-
cent rate is not a part of the Commission’s order and therefore
not subject to provision before quoted, then it is a new rate and
subject to complaint under the bill.
Mr. GAINES of Tennessee. The bill says “that after a de-
cision, order, or requirement has been made by the Commission
in any proceeding, any party thereto may at any time make
application for rehearing of the same.” In other words, an
outside party can not get a rehearing, though oppressed ; and
if the party to the proceeding dies, the whole case goes out
of existence. The Commission can rehear this decision, but the
90 cents is not its order, and yet this requirement is in its
decision. -
Mr. TOWNSEND. That, under the gentleman’s theory, is a
new rate, and complaint can be made under the changed condi-
tions de novo.
Mr. GAINES of Tennessee. No ; it is the rate made under-
neath the maximum rate which you permit for making the
maximum rate, and yet that has become oppressive.
6493
Mr. TOWNSEND.
that condition.
Mr. MANN.
time? - -
Mr. TOWNSEND. That is what I say to the gentleman from
Tennessee. Now I believe, Mr. Chairman, in justice to others
who wish to speak, that I should proceed, although I do not
want to be understood as saying that I will not answer any
questions; but I would like, in as orderly a manner as possi-
ble, to present my views of the bill, and then when I am
through if there are any questions that gentlemen wish to ask
me I should be pleased to answer them.
Mr. SHERLEY rose.
Mr. TOWNSEND. Does the gentleman from Kentucky wish
to ask a question?
Mr. SHERLEY. Yes; if the gentleman will permit; one
question in connection with the question asked by the gentle-
man from Maine [Mr. LITTLEFIELDI. I would like to have the
gentleman explain, because the words of section 15 seem to be
in conflict with the statement in the report.
Mr. TOWNSEND. Does the gentleman mean the language
as amended?
Mr. SHERLEY. Yes; that section as amended states that
where the Commission finds the rates to be unduly preferential
or prejudicial it may fix a reasonable rate. Now, I would ask
whether that does not give to the Commission power over dif-
ferentials. How does the gentleman explain that plain lan-
guage?
Mr. TOWNSEND. That is the language of the original law
and has not been changed. -
Mr. SHERLEY. If the Commission has the power on Com-
plaint to change rates that are discriminatory, will the gentle-
man tell the House that the Commission has not power OVGr
differentialsº - -
Mr. TOWNSEND. The best authority I can obtain says
that they have not. I will say to the gentleman that I was con-
tending for the power over differentials, and the committee de-
cided against it almost unanimously—only two or three of us
in favor of it. -
Mr. SHERLEY. And the committee considers that that lan-
guage does not give this power?
Mr. TOWNSEND. It does.
I think there is no apprehension from
You give power to file a new complaint at any
Now, Mr. Chairman, I desire to
proceed, if I may, and answer some of the arguments, and per-
inaps in doing so I can answer Some of the questions which natº
urally would arise on this subject. -
This power to fix a contested rate is not a new principle, nor
is the exercise of the power without precedent. For years many
of the States in the Union have had commissions created by leg-
islative authority of the States and invested with full power
not only to adjust and establish rates about which complaint
has been made, but in some instances to fix entire schedules for
the carriers. The Interstate Commerce Commission during the
first years of its existence assumed it had power to fix maxi-
mum rates in contested cases, and it exercised that power, and
with most of its orders the carriers complied, and not until the
decision of the Supreme Court in the maximum-rate case dji
it discontinue the exercise of that power, and during all of that
time the railroads were uninjured and the business of the coun-
try undisturbed. It was also claimed by the opposition that
Congress had no authority to confer upon the Commission the
power to declare a reasonable rate in place Of One found other-
wise, for the reason that it was a delegation of legislative
power, and this claim has been made notwithstanding the fact
that the Supreme Court of the United States has held, Where the
question was squarely before it, that the legislature of a State—
and therefore that the Congress of the United States—had power
to appoint an administrative board and confer upon it full
authority to fix rates as proposed in this bill.
The Stone case, in 116 United States, settled this question
beyond a doubt. In that case it appeared that the legislature
of Mississippi had created a commission to regulate and super-
vise railroad rates. It was taken to the Supreme Court of the
State of Mississippi, and the constitutionality of the law Was
brought directly in question. The carriers contended that the
law was unconstitutional for the reason that it conferred both
legislative and judicial power upon the commission ; that court
héid that such was not the case. An appeal was taken to the
United States Supreme Court under the same condition,
and it upheld the supreme court of Mississippi and said “that
the function of the commission appointed to fix railroad rates
was not legislative, but administrative.” In the Reagan case,
from Texas, the Supreme Court of the United States held the
same thing. The reasoning in these decisions is this : The
legislature having passed a law declaring that all rates must
be just and reasonable, it has authority to create a board to
execute that law, otherwise the legislature would be absolutely




CONGRESSIONAL RECORD.
5
futile to regulate rates effectively in the State or among the
States. This principle is recognized in the acts of municipal
bodies everywhere. The commission for the District of Co-
lumbia fixes street-car fares, hack charges, gas and water rates,
and nearly every city in the Union does the same thing. It
should not be forgotten that the authority of the Commission
is subject to review by the court as to its lawful exercise.
Mr. HENRY of Texas. Mr. Chairman, will the gentleman
yield to an interruption?
The CHAIRMAN. Does the gentleman yield?
Mr. TOWNSEND. Certainly.
Mr. HENRY of Texas. The gentleman stated that in the
Mississippi case and in the Texas case the commissions had
powers similar to the powers conferred in this bill. Now, in
this bill you confer the power of establishing a maximum rate.
In the Mississippi case and in the Texas case a Commission was
created and was given power to fix and establish the whole
body of rates, to initiate them and establish all rates, and in
both instances the Supreme Court of the United States sus-
tained the constitutionality of the act.
Mr. TOWNSEND. Mr. Chairman, the gentleman is right.
'The statutes in question give the same and greater powers than
those carried by the pending measure.
But this is not the only constitutional objection which has
been urged against the exercise of this power. It was insisted,
more formerly than now, that if a commission fix upon a Con-
tested rate from any interior point to a seaport, that such a C-
tion would be a violation of the so-called nonpreference Clause
of the Constitution, which provides that the ports of one State
shall not be preferred to those of another. This provision of
the Constitution was adopted at a time when interstate colm-
merce, as we see it now, was unknown. The railroad had not
then been born, and the fathers were imposing a restriction
upon Congress against a preference as to exports and imports,
but the same men who wrote that provision of the Constitu-
tion also inserted the one providing that Congress should regu-
late commerce among the States and with foreign nations, and
few constitutional lawyers ever claimed that if while exercis-
ing the constitutional power of regulating commerce as afore-
said an incidental benefit or injury should come to any port
such exercise would be unconstitutional, and in all the years of
our country’s history during which the National Legislature
who make these statements denounce as agitators and dema-
gogues the advocates of rate legislation he understands the real
nature of the opposition. But what shall we say of the argument?
How are the widows and orphans to be injured? We are told that
there are vast Sums of money held by insurance companies be-
longing to the widows and orphans; that these companies invest
their surplus in railroad securities, and that legislation is going
to injure these securities, hence the widows and orphans must
suffer, for a reduction of rates, and therefore of railroad earn-
ings, makes a dividend on stock impossible. This should be
discussed in connection with the other argument that railroad
employees are to suffer for the reason that the railroad earn-
ings are to fall off, and therefore the loss must be borne by the
employees, whose wages will be reduced. Taking the two to-
gether, we have this: Railroad earnings will be reduced, the
expenses of the road keeping up the stock must stand the loss,
hence the Widows must Suffer. -
Again, earnings are to be reduced, dividends must be kept
up; therefore wages must be reduced. A double-barreled ar-
gument—one used to kill stockholders, another to destroy the
laborer. But What are the facts in the matter? During all
the period in which rate legislation has been exercised by the
States, these direful predictions have not been realized. When
the Interstate Commerce Commission exercised the power,
securities remained undisturbed and labor was happy. The
history of railroading during the last year is interesting read-
ing in connection with this subject. When the Esch-Townsend
bill passed the last Congress almost unanimously, one holding
the views of these calamity prophets would naturally believe
that some disturbance would occur in the railroad world, and
especially when it was known that the President of the United
States was back of the measure and was insisting that it
should become a law and had said on several occasions that in
case it failed to pass the Senate an extraordinary session of
Congress would be called, and in view of the Cuban reciprocity
experience, under somewhat similar circumstances, it was more
than probable that the President would be successful. I know
it was claimed then that the railroads knew that the Senate
would defeat the measure, but I submit that the widows and
orphans and other holders of securities could not have known
this, and had they believed that disaster was imminent securi-
ties would have been disturbed. But events show that instead
-
has been erecting light-houses along our coasts and improving of railroad stocks declining they continued to rise in value-
rivers and harbors whereon are situated cities, it has not been
claimed that such acts were unconstitutional, although it was
recognized that every city in front of which a light-house was
erected, every city whose harbor was improved was to that
extent benefited and, in a manner, preferred over other cities
not receiving such advantages.
But, furthermore, this question was squarely raised in the
Wheeling and Belmont bridge case. That was a case where the
Government had allowed the construction of a bridge across
the Ohio River, and it was authorized to be constructed so low
that large vessels which had been engaged in commerce with
Pittsburg were unable to pass under, and thus Pittsburg had no
trouble in showing that she had been injured, but the court
held that Congress had not violated the Constitution in exercis-
ing power of regulating commerce by the construction of the
bridge, as it had exercised a conceded power, and the injury to
Pittsburg was incidental and not a violation of the fundamental
law of the land. - -
Mr. ALEXANDER. Mr. Chairman, will the gentleman yield?
The CHAIRMAN. Does the gentleman from Michigan yield
to the gentleman from New York?
Mr. TOWNSEND. I do.
Mr. ALEXANDER. Does the gentleman remember the date
of the building of that bridge?
Mr. TOWNSEND. I do not. I think that case has been up
twice. - -
Mr. ALEXANDER. No rights were reserved by the United
States in its construction that it should be removed if it should
ever get in the way of commerce? - -
M1. TOWNSEND. I do not know that. It Was not raised
in the case. I do not know anything about that.
Mr. GAINES of West Virginia. Mr. Chairman, if the gen-
tleman from Michigan will permit, I will say that that is
correct in that Case. -
Mr. ALEXANDER. That there were no reservations?
Mr. GAINES of West Virginia. There were no reservations.
I am familiar with that Case.
MP. TOWNSEND. But I shall assume that these constitu-
tional objections have been answered and that Congress has
power to enact this provision of the bill. The opponents of regu-
lation have also urged that the enactment of this provision would
result in an injury to the widows and orphans of the country and
to railroad employees, and when one realizes that the gentlemen
6493
Furthermore, railroad managers throughout the United States
proceeded to build 7,200 miles of new railroad, and up to June,
1905, they had placed orders for more than $200,000,000 worth
of new railroad equipment.
No one familiar with the circumstances believes that any
harm would be done the railroads, and few honest, intelligent
men advocated it. The plan was, first, to prevent private re-
bates—that is, granting advantages to one man which another
does not enjoy ; second, to prevent extortionate charges. It is
simply begging the question to say that the establishment of just
rates will injure the railroads. One of the most serious wrongs
at present is the custom which the roads have of reducing rates
to certain individuals and places below what would be a fair
rate, or one that would produce a dividend, and then imposing
an unjust and unreasonable charge upon other individuals and
places to offset the apparent loss. The country demands that
all the people shall be treated alike, and that only just and
Leasonable rates shall be imposed. If that is done, the carrier
will not necessarily be injured or its revenues reduced; the
burden will be equally distributed. Frequently the establish-
ment of a just rate, even if it is lower than the one theretofore
existing, produces more revenue. This, I believe, was clearly
demonstrated in what is known as the “Michigan Central char-
ter case.” In the charter obtained by that company from the
State of Michigan the road was allowed to charge 3 cents per
mile for passenger traffic, but the charter provided that if at
any time the State legislature saw fit to reduce the rate and thus
annul the charter it could do so, but that the company should
have the right to go into Court if it conceived itself to have
been injured, and establish by a jury just what loss it had
sustained and the State was to reimburse it for the same.
A few years ago the legislature exercised its power and re-
pealed the charter, compelling the road to reduce its passenger
fare to 2 cents a mile. The carrier brought suit, alleging dam-
ages to the extent of $6,000,000. An investigation of the case
disclosed that immediately after the reduction of the fare the
passenger receipts increased enormously, so that it is doubtful
now if the roads would go back to the 3-cent fare if they had
the opportunity, and this has all been done in spite of the fact
that the Michigan Central road has been paralleled throughout
almost its entire length through the State of Michigan by elec-
tric roads, which have done a tremendous freight and passenger
business. We should also understand, that while in some cases
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6 CONGRESSIONAL RECORD."
railroad labor has had its wage increased during the last few
years, the carrier's ability to earn has also been increased by
the substitution of the mogul engines for the old ones, of the
large cars for the smaller ones, by the reduction of grades and
the straightening of tracks. Railroad operations have been
materially economized.
There is absolutely no danger to labor, and I conclude, if the
gentleman who used these arguments had not so repeatedly
declared that they were honest, patriotic, and high-minded citi-
zens, the charge of demagogue and agitator would react upon
them.
There is still another phase of this question which should not
be overlooked. Originally railroad securities were not eagerly
sought as investments; to-day such investments are most at-
tractive, and the disposition of promoters and managers has been
to increase the capital out of proportion to the real assets of the
companies, and now when gentlemen are asking that dividends
shall be maintained they do not simply mean dividends on bona
fide capital, but upon inflated capital, and I submit it is a proper
question for Congress or its duly authorized Commission, when
determining the question of just and reasonable rates, to inquire
into the capitalization of these carriers. I know it is claimed
that these stocks have been issued in many instances and placed
in innocent hands and that if anything were done—and I do not
consider that it will be—to injure the value of these stocks such
bona fide holders would suffer. I simply answer this argument
by saying that we legislate for the whole people. It is our duty
to so regulate interstate and foreign commerce as to deal justly
with all of our people, and if it should be demonstrated that
some few holders of fictitious capital should fail to get an ex-
orbitant return on their holdings the law should in justice be
enacted, for we have no business to “rob Peter to pay Paul.”
[Applause..] It has further been argued that there is no proof
that rates are too high, and gentlemen take pleasure in compar-
ing the American railroad rate with that of Germany and other
European countries. -
Mr. TOWNE rose. -
The CHAIRMAN. Does the gentleman from Michigan yield
to the gentleman from New York?
Mr. TOWNSEND. Certainly.
Mr. TOWNE. I recently read a statement made by the presi-
dent of the Northern Pacific Railroad, wherein he stated that
the *Yºlº freight-haul charge for a ton per hundred miles
is 75 cents in the United States, and that the corresponding
charge is $2.35 in England. Can the gentleman explain why
this difference exists, if it does exist, and does he admit the
inference which the statement made by the president of the
road seem to carry with it. If not, why not? -
Mr. TOWNSEND. If the gentleman will be patient, I will
each that matter immediately, I was about to enter upon its
liscussion. * - -
Gentlemen attempt to establish the fact that rates are not too
high by making a comparison between the charges of a few
years ago and those of to-day, showing that what they call the
“average ton-mile rate” has gradually been reduced and is lower
than the average ton-mile rate in other countries. Again, I be-
lieve the argument unfair. They do not tell the whole truth
and explain just what they mean by the average ton-mile rate.
It is obtained in this way: All of the freight in the United
States hauled during a given period, including high and low
grade freight, is determined. The amount paid for hauling that
freight is also found and the total number of miles it is hauled.
From this, by division, is found how much it cost on the average
to haul a ton of freight one mile. Freight is divided into various
classes, such as first, second, third, fourth, fifth, sixth, A, B, C,
D, E, etc. In class 1, high-grade articles, paying a high rate
of freight, such as silks and hats, are placed. In the sixth grade
or a lower grade, for instance, is coal, which pays a low rate of
freight. You can readily understand if you were to increase
the amount of freight in the sixth class, while the amount in the
first class remains the same, the average ton-mile rate would
be reduced. It might be materially reduced while the specific
rate on silk and coal had remained the same. On the other
hand, if the first class was increased out of proportion to the
fifth class the average ton-mile rate would be increased and still
the specific rates remain the same.
Now, what has happened in this country is that the low-grade
freights have increased materially, while the higher grades
have not increased in the same proportion, and at the same time
it is known that since 1900, und 2r conditions of prosperity which
do not warrant such action, Ynore than 600 articles have been
changed from a lower classification to a higher, thereby impos-
ing a higher freight rate upon those articles, and yet the in-
crease in the lower-grade freight has been so enormous that
the average ton rate has not increased in proportion to the
actual increase in rates. The people have obtained no benefit
6493
:
-
from this; in fact, they have been in consequence severely taxed
to satisfy the greed of a public servant. - -
But what shall we say of the comparison between German and
American rates? Germany, as you may know, is interlined with
rivers and canals over which business naturally of the low grade
travels, so that it never sees a railroad; therefore it does not
enter into the problem of average mile-ton rate. Furthermore,
in many of the European countries the delivery charge is added
to the freight rate, and besides all this, it is absolutely unjust
and unfair to the people to state the problem without informing
them that a long haul in a European country would seldom ex-
ceed 200 miles, while the average haul in the United States
would undoubtedly be a thousand miles or more.
Mr. SHERLEY. I simply want to suggest to the gentleman
that the short haul in Germany was due to the fact that the
commission would not fix through rates, and so the roads were
not able to make any through rates for shippers, and the people
had to improve the waterways because of the extortionate
charges of the railroads.
Mr. TOWNSEND. It is a condition and not a theory about
which I speak.
Mr. LITTLEFIELD. May I make an inquiry? I infer from
what the gentleman states in relation to the German conditions
that statistics are in existence which would on analysis show
the conditions which you have just stated. I am free to say
that it is a very interesting statement. I can quite understand
the lowest rate of freight that goes by canal as distinguished
from the higher rate by rail, and I would like to inquire if the
gentleman has had any analysis of the figures showing the re-
Sult? I suppose that you have. .
Mr. TOWNSEND. I have not made any such analysis. I
speak from statements made by gentlemen in whose knowledge
and integrity I have confidence. -
Mr. LITTLEFIELD. I did not know but what the gentleman
had it on hand and could give us the benefit of it.
Mr. TOWNSEND. I have not. - -
Mr. LITTLEFIELD. I can see where the suggestions you
make would account for the distinction of rates.
Mr. TOWNSEND. My contention is that the rate in the
United States should be the lowest in the world. Our traffic
is the greatest, our hauls the longest, our facilities the best.
But I am convinced that if we were to compare the American
rate with the European rate under similar circumstances and
conditions, eliminating all elements which are not common, we
would find no cause for pride in the result. Then think of the
fairness of the proposition to compare our rates with those of
Russia. A great per cent of its mileage is through a desert
where traffic is scarcely known and business necessarily un-
profitable. But, gentlemen, we are dealing with the question
as presented in the American Republic, and the people have de-
manded that Congress shall exercise its constitutional power
to regulate interstate carriers in accordance with the law, and
we shall have difficulty in explaining to our constituents, who
are awake to this situation, if we fail to do our full duty in
the premises. - --
If this bill shall become a law additional duties will be im-
posed upon the Interstate Commerce Commission, and it is
thought the part of wisdom to increase the number, salary, and
term of office of its members. I believe, however, that when
this law is once established the Commission will have less work
to do even than it has at present, for the reason that the róads
will realize the justice of the law and fix their own rates and
remedy defects, but I have no hesitancy in saying that this is
a great power that we are conferring upon a commission, and
only men of the highest character and ability should be placed
upon it. Ten thousand dollars a year salary is not inadequate
for the services of such men, and by increasing the term We
give the men a tenure of office which will enable them to be:
come experts in a measure upon the questions submitted to them.
Furthermore, it will fix it so no one President during a single
term can change all of the members. There will always be six
men on the Commission who have had experience with the prob-
lems presented. - - - -
The bill also provides for the widest publicity of railroad af-
fairs. This, I believe, is one of the most potent influences for
good. The carrier being a public servant, its methods should be
subject to scrutiny; therefore We provide the method by which
its accounts shall be kept. We provide for publicity of the Con-
tracts and agreements, written or otherwise. We provide that
Government experts shall have the right, not simply the per-
mission, to inspect all railroad accounts and business methods
at all times, and we impose heavy penalties for violation of
any provisions of the law. False reports or a refusal to make
fuji disclosure subjects the carrier and its agents not only to a
heavy fine, but imprisonment. We also provide in the bill for
the speedy determination of matters submitted to the Commis-
CONGRESSIONAL RECORD.
7
sion. After an order has been made that order shall go into
effect within thirty days from the time the same has been
served upon the affected carrier. If at any time during the
thirty days the carrier is dissatisfied with the order, he can in-
stitute proceedings in the district court of the United States
wherein the complaint was made, and thereupon it becomes the
duty of the Attorney-General to serve notice on that court that
the case is of great public importance, entitling it to considera-
tion by the expedition court. Such notice is served upon three
circuit judges of that district, if there are three : if not, upon
two circuit judges, and those two shall select a district judge
from the district, and the three shall proceed at once to the de-
termination of the lawfulness of the Commission’s order.
This, I believe, has the following advantages over the old
law : It permits three judges to pass upon a question instead
of one, and their judgment will have more weight than would
the opinion of a single judge and more cases will end with a
decision of the expedition court. In case, however, either party
objects to the decision of that court an appeal can be taken to
the Supreme Court of the United States, which under the law is
obliged to consider it in preference to any other case pend-
ing before it, except criminal cases. The expedition court will
simply pass upon the lawfulness of the order, and under the
decision of the Supreme Court that means whether such order
is confiscatory or whether it imposes a rate which does not
yield a fair return upon the carrier's investment. In decid-
ing interstate-commerce cases the Supreme Court has passed
through several stages of opinions. *
Originally it held that there was no relief from the Com-
mission's order except by an appeal to the voters. Later it
decided, and I believe wisely, that even the legislature could
not impose a rate which was confiscatory, and still later, in the
Nebraska case, it suggested that a rate which was not fairly
remunerative to the carrier was unlawful.
It seems to me that a Commission of seven men familiar with
railroad matters, knowing all of the complexities which enter
into rate making, are better able to determine what is a fairly
remunerative rate than any court which only occasionally
passes upon the subject, and I would prefer to leave it with the
Commission. But I bow always in proper submission to the de-
Crees of the Supreme Court, and when it announces a decision I
yield it obedience until at least it has had time to study public
opinion sufficiently to reverse itself. -
—Mr. LITTLEFIELD-Will it distº-the-geºman-tº-Tºrtre+r-
if I make an inquiry right here?
M1. TOWNSEND. No.
Mr. LITTLEFIELD. Do I understand the gentleman's posi-
tion to be, as a matter of law, that the Supreme Court could in-
terfere by injunction to restrain the carrying into effect of an op-
der of the Commission whenever they were of the opinion that
the rate was unreasonably low, or is it based upon the confisca-
tory proposition?
Mr. TOWNSEND. My judgment until I had read the Ne-
braska case was that it would simply be on the confiscatory prop-
Osition.
Mr. LITTLEFIELD. The Nebraska case to which the gentle-
man refers is the case of Smythe v. Ames?
M1. TOWNSEND. YeS.
Mr. LITTLEFIELD. If it will not take too much of the gen-
tleman's time, I will read the third proposition established by
the court in that case, and I am free to say that I am not quite
certain just exactly what the court means.
Mr. TOWNSEND. I think the syllabus will give us all we
Want on that point.
Mr. LITTLEFIELD. I am reading from the opinion, which,
of course, is a little more authoritative than the syllabus.
In yiew of the adjudications, these principles must be regarded as
Settled :
Third—
After reciting two that do not concern this discussion—
While rates for the transportation of persons and property within the
limits of a State are primarily for its determination, the question
whether they are so unreasonably low as to deprive the carrier of its
property without such compensation as the Constitution secures, and
therefore without due process of law, can not be so conclusively de-
termined by the legislature of the State or by regulations adopted
under its authority that the matter may not become the subject of
judicial inquiry.
I will say that the gentleman from Michigan very kindly
called my attention to this case yesterday, and this is the only
principle that I find laid down in the case under which the
court would interfere, namely, if the rates established by the
Commission are so unreasonably low as to deprive the carrier
of its property without such compensation as the Constitution
secures. I may have read the case hurriedly, and the gentle-
man from Michigan may have something more specific in his
mind.
6493
Mr. HINSHAW. The rate referred to there Would be con-
fiscatory.
Mr. LITTLEFIELD.
derstand it.
Mr. TOWNSEND. Undoubtedly the court must have haſl
that in its mind, but it has enlarged its decisions, as I stated,
from the beginning.
Mr. LITTLEFIELD. Since this Gase?
Mr. TOWNSEND. Since the first Case.
Mr. LITTLEFIELD. This is the Nebraska Gase that I am
reading from. So that, if I understand the gentleman correctly,
the rates must be practically confiscatory before the court would
be authorized to interfere.
Mr. TOWNSEND. The court undoubtedly is trying to stretch
the doctrine of Confiscation to Gover “reasonable return.” It is
easy to imagine a relation between the two. The court can be
trusted to include in the word “lawful " all that ought to be
included. I have no doubt the Nebraska case will be used as
a precedent in support of the doctrine that unless the returns
are sufficiently reasonable the carrier must go out of business,
therefore the rate imposed will be considered confiscatory. But
if the gentleman from Maine will pardon me, I will proceed
With my remarks.
Mr. LITTLEFIELD. Certainly.
Mr. TOWNSEND. I do not wish to occupy any more of the
attention of the committee except to conclude.
For myself, I am satisfied that the proposed legislation will
not harm honest Carriers engaged in lawful business; all others
will be and should be in imminent danger. I readily admit that
there is an honest difference of opinion as to the policy of the
measure. Some believe that the carriers will solve the prob-
lem if let alone, but it seems to Ime that such have not taken
sufficient time to read and understand the history of railroad-
ing during the last few years. Gradually, but Surely, rates
have been raised, and during a period when there was no pos-
sible excuse for such a course except the desire to satisfy
greed. Business has increased, and the net results of Opera-
tion have shown that expenses have not increased in propor-
tion to the enlargement of traffic. Railroad consolidation has
been so complete that a few men, about six, control the great
bulk of the railroads, and more and more the people are being
placed at the mercy of these great corporations. Complaints
have come up to Coºrºss from all over the country against
SºgºOWITE ATTTSO. Tower of great consolidations of capi-
tal, and it is not sufficient to say, as some have said, that the
complainants are demagogues and agitators, for already Mem-
bers have discovered among the number their most patriotic
and intelligent constituents.
From the millions of farms between the oceans, whereon the
bone and sinew of the Republic produce its true and substan-
tial wealth ; from the million factories which transform be.
neath the magic hand of enterprise and genius those farm prod-
ucts into myriad forms of beauty and usefulness; from the
millions of tradesmen who disseminate the output of factory
and loom among the people; from the professions which min-
ister to the wants of others; from forest and mine comes up
the demand that the servant Shall not be above the master.
This question is not and ought not to be a political one; but
as a partisan I could hail with delight the disposition of my
party to take it up, for it is everlastingly right, and the people,
having recognized it as such, will not be much longer put off.
They demand real, positive remedial legislation, and ill will
fare the legislator Who offers a serpent instead of a fish.
I have not been entirely pleased with the character dis-
played and means employed by Some of the opposition to so-
called “rate legislation.” To me it has seemed that a sys-
tematic effort has been made to discredit the Administration
in various matters in Order to distract attention from this
great question, and I have no doubt that delay will be caused
wherever possible in the Vain hope that something will happen
yet to prevent final action. As one of the younger and most
humble Republicans in the House, let me admonish my party
associates in both Houses that this question will not down, nor
will it much longer brook delay. The people have spoken, and
every day to us their command is more imperative. The day of
grace may be passed, and the unpardonable sin of trifling with
duty may not be condoned even by deathbed repentance.
Do some say that this legislation is born of a prejudice
against corporations, and with such an ancestor must be an
instrument of oppression and wrong? I think not. The great
mass of the people are fair and honest and acknowledge that
the railroad honestly managed under the law is a great neces-
sary blessing. They know it was chartered to serve them, and
desiring its Service, they will not knowingly weaken it or lessen
its ability to serve.
Well, practically confiscatory, as I un-
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great corporations there is no doubt, but there is a great excuse
for it. As a rule, these organizations have resisted every effort
to regulate and control them even when it was known that such
regulations would be beneficial ; lobbies, rich and powerful,
have been maintained at the capitals of State and nation, and
many seemingly unwarranted interferences with the people's
rights have been experienced. They have entered the domain of
politics, and in many instances seemed to have dictated the
nomination and election of legislators. They have assumed
that they were too strong to obey and the people too weak to
enforce the law. [Applause.]
Mr. Chairman, I owe an apology to the House for the time I
have occupied in opening the discussion on the pending bill, but
my excuse is that it deals with one of the greatest questions
which has ever come before Congress. It is not simply a ques-
tion in which carriers and shippers are interested. It reaches
out and embraces every producer and every consumer in the
United States. Aye, it involves the hopes and ambitions of
men who, under equal and fair opportunities, will contribute to
our country’s material prosperity and add no little to its honor
and glory, for in this day of business enterprise, into every part
of which freight charges enter, success or failure depends fre-
quently upon whether rates are impartial, fair, and reasonable,
or otherwise. Such a question demands honest, intelligent, and
6493
O
CoNGRESSIONAL RECORD.
That the people have become suspicious of some of these -
patriotic attention. To it I have devoted much thought, yet I
feel that I am all too incompetent to express the deep feeling I
have of the importance of the proposition to regulate interstate
carriers effectively and speedily. -
Temporizing will bring nothing but disaster. Already we
hear the rumbling of discontent, and socialism Smiles in satis-
faction with every delay. Regulation of a public servant is not
a departure from the principles of popular government; but dis-
regard of a righteous law and indifference to legal restrictions
imposed to protect the people's rights are more than socialism—
they are anarchy—and were I a railroad agent instead of a peo-
ple's Representative I would hail the proposed legislation as a sal-
vation to my master from the fate which an indignant people is
sure to visit upon the corporations who, believing that they are
above and beyond the law, seek to become a law unto them-
Selves. -
Let the bill pass, and let the railroads heed its provisions,
and, instead of retarding its execution, aid in its operation, and
then, instead of being the objects of suspicion and hatred, they
will be recognized as the instruments of progress and prosperity.
Rate legislation will enter into history, and its entry will not be
marked by any business disturbance, but rather it will indicate
the beginning of an era of better feeling between the railroads
and the people—an era of equal rights and opportunities under
a just and impartial law. [Prolonged applause.] -