Ittttrd States Siatrirt fflourt— 5Jor%rn Statrtrt of Npm fork The State of New York and Charles D. Newton, Personally and as Attorney-General of the State of New York, Plaintiffs , against The United States and Edgar E. Clark, Charles C. McChord, Balthasar H. Meyer, Henry C. Hall, Winthrop M. Daniels, Clyde B. Acheson, Robert E. Wooley, Joseph B. Eastman, Henry J. Ford and Mark W. Potter, Constituting The Interstate Commerce Commission, Defendants. BRIEF OF ATTORNEY-GENERAL OF NEW YORK CHARLES D. NEWTON, Attorney-General of New York Edward G. Griffin and George L. Meade, Deputies Attorney -General, of Counsel VS>X>ec23- C.L. 385. \ United States District Court NORTHERN DISTRICT OF NEW YORK The State of New York and Charles D. Newton, Person- ally and as Attorney-General of the State of New York, Plaintiffs, against The United States and Edgar E. Clark, Charles C. McChord, l Balthasar H. Meyer, Henry C. Hall, Winthrop M. Daniels, Clyde B. Acheson, Robert E. Wooley, Joseph B. Eastman, Henry J. Ford and Mark W. Potter, Constituting The In- terstate Commerce Commission, Defendants . BRIEF OF ATTORNEY-GENERAL OF NEW YORK This is an application for an interlocutory injunction under a special statutory practice for the purpose of reviewing the action of the Inter- state Commerce Commission in No. 11623, Matter of New York fares 59, I C. C. 290. The District Court Jurisdiction Act is found at pages 89-94 of the pamphlet containing the Interstate Com- merce Act and Related Sections. It is taken from the Act of October 22, 1913 (Urgent Deficiency 2 Appropriations Act), and is also printed 38 Stat. L. 219, and in section 998 of tlie United States Compiled Statutes and related sections. Under it the orders of the Interstate Commerce Commission may be reviewed by an application for an interlocutory injunction. The venue is to be laid in the district where resides any of the persons or corporations upon whose petition the order of the Interstate Commerce Com- mission was made. In this case the principal petitioner was the New York Central Railroad which has its principal office in Albany. The or- ders, writs and process of the court run through- out the United States. A statutory court must be convoked to grant the interlocutory relief we pray for. The United States must be made a party defendant and anyone else interested may come in as a party. THE PLAINTIFFS HAVE LEGAL CAPACITY TO SUE. We will anticipate a jurisdictional question at the outset and which now appears to be raised by the answer of the United States. The State of New York may maintain this suit according to the express provisions of the District Court Jurisdiction Act, and because under section 13, subdivision 3 of the Interstate Commerce Act it was made and was a necessary party to the pro- ceeding now attacked. Perhaps this will be countered with citation of Oklahoma v. A. T. & Santa Fe By., 220 U. S. 277, and see also 220 U. S. 290, 220 U. S. 302. There it was held that a state could not invoke the original jurisdiction of the United States 3 Supreme Court to restrain a carrier from charg- ing unreasonable rates or for the purpose of preventing violation of its own laws. We distinguish these cases on these grounds. First, in the case at bar, the United States recog- nized the interest of the State of New York in the proceedings before the Interstate Commerce Commission by making the State a necessary party to such proceedings and by consenting to be sued by any such party. Secondly, the State seeks not only to uphold its statutes, but seeks to prevent an encroachment upon its sovereignty by the affirmative act of officers of the United States. Thirdly, the State shows damage in a proprietary capacity. The Oklahoma cases point out the natural limi- tations upon the original jurisdiction of the Supreme Court. Under the Constitution and sec- tion 233 of the Judicial Code the Supreme Court has original jurisdiction generally where a State is a party. If, as was attempted in the Oklahoma cases, the State could invoke this jurisdiction whenever its laws were violated, every prosecu- tion for a penalty ‘or any other case where a State was a prosecutor could be brought in the Supreme Court. The court quite sensibly left such cases to the State’s own courts or the inferior Federal Courts. Although a State may not generally have such an interest in the maintenance of a rate as to permit it to sue a railroad in the Supreme Court for increasing such rates, the case here is differ- ent. We have pleaded a special damage to the State amounting to ait least $365,000 a year. The 4 pleading of such an interest was not condemned in Dakota v. South Dakota, 250 U. S. 163, at 180. Further no railroad is made a party defendant. The State is given the right to sue by statute and the allegations are against usurpatory acts of offi- cers of the defendant United States. Jurisdiction was taken in the National Prohibition cases under these circumstances. Rhode Island v. Palmer, 253 U. S. 350; New Jersey v. Palmer, 253 U. S. 350. We have also joined the Attorney-General of the State personally and officially. If he is not a good party plaintiff in the case at bar we have the contradiction that he may be enjoined in the cases where the railroads are plaintiffs, but may have no recourse to affirm his own rights in the same tribunal. His right to sue in a representa- tive capacity is confirmed under Equity Buie 38 providing as follows 1 : “ Rule 38. Representatives of Class. When the question is one of common or gen- eral interest to many persons constituting a class so numerous as to make it impracticable to bring them all before the court, one or more may sue or defend for the whole/’ Finally the United States may be sued even by a State, only in the tribunal where it has con- sented to be sued. In this case it is this honor- able court. Under California v. Southern Pacific Co., 157 U. S. 229, 258, and Ames v. Kansas, 111 U. S. 449, 468, inferior Federal Courts may be given concurrent jurisdiction with the Supreme Court where a State is a party. It has been decided that where a tribunal has definitely been given jurisdiction of the subject matter, a State and its Attorney-General are 5 proper persons plaintiff to sue in regard to rail- road rates. American Express Co. v. Caldwell, 244 U. S. 617, at 628. In this case jurisdiction is expressly given to the court not only over the subject matter but over the persons of the State and the United States. The jurisdiction of the Federal Courts may be arbitrarily controlled and extended by statute, except in a few cases where the Constitution expresses it or delimits it. Ex parte McCardle, 7 Wall. 506. In this case a particular statute grants the jurisdiction sought. Abstract principles are not determina- tive in such a situation. The Supreme Court, Appellate Division, Second Department, in the case of People v. Long Island Railroad Company, Etc., on Jan. 28th decided that the power to review the order of the Inter- state Commerce Commission at the behest of a State was exclusive in the Federal Courts. Pre- siding Justice Jenks rendered the oral opinion of the Court as 1 follows' : “ Jenks, P. J., (orally) : “I am ready to announce the decision. Without passing upon the merits of any ques- tion presented, we are of opinion that the jurisdiction was exclusively that of the Fed- eral Courts. Disposing of this appeal upon that point only, we reverse the order which granted the injunction, without costs, and deny the injunction without costs. If the case is relieved of injunction, we grant the application for appeal. You may submit an order with the proposed question. If the Attorney General will serve upon Mr. Keany a copy of the proposed order, Mr. Keany may present his proposed order to me. The motion for a stay will be denied.” 2 6 It certainly must be true that of the various plaintiffs we join here, at least one has a standing in this court. THE COURT IS WITHOUT JURISDICTION TO ENTERTAIN THE BILLS OF THE PLAINTIFF RAILROADS. Section 265 of the Judicial Code provides : 4 4 Section 265. The writ of injunction shall not be granted by any court of the United States to slay proceedings in any court of a state, except in cases where such injunction may be authorized by any law relating to proceedings in bankruptcy. ’ y The Plaintiff Railroads have sought to avoid the operation of this ancient statute by reference to cases construing the exclusive jurisdiction of the national courts in admiralty and maritime causes. We submit that the analogy fails. In New York Central Railroad v. Public Service Commission , etc., Judges Ward, Hough and Cooper, convoked as a statutory court, held that the Supreme Court of New York would not be disturbed in its determination of a pending case where a defense 1 supplied by an act of Congress was set up. There is no difference here. Instead of an act of Congress, the act of an administra- tive body exercising “ delegated powers ” is set up in the pending case in the Supreme Court. THE FACTS. The six Plaintiff Railroad cases and the case under which this brief is entitled are similar in their facts and the application of the law to the extent that the part is included in the whole. The six cases may be regarded as 1 isolating the situa- tion of some of the trunk line railroads, whilst 7 the main case comprehensively presents the situ- ation of these railroad's as well as all the rail- roads of the State. Accordingly in our argument we shall discuss : first , generally the law applicable to the order as a whole; secondly , the inadequacy of the formula of the Interstate Commerce Commission applied to trunk line roads as compared with roads located wholly within the state; third, the special position of a trunk line carrier under a charter contract; fourth, the special position of roads like the Long Island and Staten Island railroads, declared to be interstate by reason of a small interline passenger business. On May 28, 1918, the Director General of Rail- roads, pursuant to unquestioned authority under the war powers, raised the level of all passenger fares in New York State to three cents a mile. Federal control was this year terminated by the Transportation Act. Under section 208-a the war powers over railroads were gener- ally abandoned on March 1, 1920, but in regard to rates the law provided that prior to Sep- tember 1, 1920, the war rates could be lowered by State authority only with the permission of the Interstate 'Commerce Commission. This has been accepted by the Attorney-General as a legitimate extension of the war power through a period of repose. He has argued else- where and his contention has been confirmed by the Court of Appeals, that on September 1, 1920, all the powers of the states over rates were restored and all the powers of the United States over rates derived exclusively from the war powers were on that date either lost or aban- doned. Public Service Commission v. New York 8 Central Railroad , 230 1 N. Y. 149, affirming 193 App. Div. 615, which reversed 112 Misc. 617. On September first, therefore, the posture of affairs was that the railroads generally were en- titled to charge three cents a mile for pas- sengers, their pre-war rate not being less' than the Director General ’s. The rate permitted the New York Central, however, was only two cents. All the railroads 1 , however, intended to better their position by an application to State author- ity for an increase. The Staten Island Company did nothing until the order of the Interstate Commerce Commis- sion came down in November. The Long Island Railroad on June 9, 1920, applied to the Public Service Commission, First District, alleging that a 10 per cent increase in passenger fares was necessary. This proceeding was continued until August 24, 1920, when it was discontinued upon application of the company. The reason for this sudden withdrawal from State jurisdiction was obvious. Several of the trunk line railroads under the leadership of the New York Central Railroad has determined upon the audacious. The New York Central had from September to November prevented the restoration of the two- cent fare on its lines. It may be presumed that it, with others of the trunk line railroads 1 could not, like the Long Island, expect to show a non- compensatory, or unprofitable or confiscatory intrastate passenger rate. An opportunity for an increase of revenue without the necessity for any such showing had presented itself. Quite naturally the trunk line carriers grasped it and 9 it is not surprising that the Long Island Rail- road also, if tardily, followed them in a venture that promised 20 instead of a mere 10 per centum. On July 29, 1920, the Interstate Commerce Commission, in a proceeding known as Ex Parte 74, divided the country into four zones. New York is included in the Eastern group, which is bounded generally by the Atlantic Seaboard, Can- ada, Norfalk, Va., and Chicago. In this zone in- terstate freight rates were increased 40 per centum, passenger and milk and cream rates 20 per centum, and a surcharge of 50 per centum to accrue to the railroads, but not to the Pullman Company, for space in sleeping and parlor cars was allowed. Now began the great adventure. Application wais made to the Public Service Commission, Second District, to increase all rates to the same level as that just allowed for interstate rates. The Public Service Commission denied this application, except as to freight which is iso com- mingled with interstate commerce as to be inseparable, upon the ground that there should be some showing of a need for this increase. The ground work had been laid and the atmos- phere created for what must have been a not unexpected rebuff. Application could now be made to the Interstate Commerce Commission for the same relief and upon the same ground, with some claim that resort to State authority was useless. The Long Island Company, however, could not join in the application to the Second District but could discreetly recover from its tactical error in applying to the First District by with- drawing its pending and undecided application 10 there. Having done so, it made all haste for the strategic objective at Washington. A hearing was held in New York City before the Chief Examiner of the Interstate Commerce Commission. Argument upon the application wtas heard at Washington before all the Commis- sioners October 11th, and the order of the Com- mission was handed down November 13, 1920. The prevailing opinion of the Interstate Com- merce Commission (seeks vaguely and without real definition to find a basis on various founda- tions. We regard the order of the Commission to be simply a revenue measure by which State commerce is made to contribute to the cost of interstate commerce. As such, it seems clear, that even the proponents of the Commission theory would not seek to uphold it. To strengthen this unconstitutional and illegal basis the Com- mission urges that there is discrimination as against interstate commerce by reason of the fixed rates for intrastate commerce. Here the case must finally rest. And so the Commission treated the question in a broad way. It joined the Staten Island in its order although this road had not even peti- tioned it for relief. It joined the Michigan Cen- tral, Pere Marquette and Baltimore & Ohio that do no intrastate business here; it joined the Catskill Mountain and Deer River which have been abandoned and taken up; it joined roads like the Attica & Arcade which run wholly within one County of the State; it joined' electric lines like the Fonda, Johnstown and Gloversville ; with all its generosity it missed some seven roads doing business in the State of far greater impor- tance than many of those joined in the order. Finally it did all these things to nearly all the 11 roads of the State upon the petition of only eleven roads doing business in the State. Most significant of all the Commission refused to touch the commutation fares because of failure of proof. Surely there was lack of courage here for the record on this point certainly exceeds the references to the Dansville & Mount Morris and the Schoharie V alley. The point is that the Commission made a dras- tic order that may be sustained only if it may fairly claim the ultimate in power. The order of the Commission required that these appellants with the other roads joined in the order should raise their State rates on or before December 18, 1920. The order was per- missive prior to that date and so the appellants acting in conjunction with the other beneficiaries decided upon November 29th as the date of initiation. Other Litigation . In order that the Court may understand what has heretofore been judicially determined by tribunals 1 having jurisdiction within New York, we will refer to other cases tried, appealed 1 and pending. Public Service Commission v. New York Central R. R., 230 N. Y. 149, was brought for the purpose of compelling the railroad to comply with the order of the Public Service Com- mission and restore the two-cent fare between Albany and Buffalo after September 1st. The United States District Court for the Northern District denied an injunction preventing the Pub- lic Service Commission from maintaining this action. The Court of Appeals held 1 that the two- 12 cent fare was restored on September 1st bnt that owing to the order of the Interstate Commerce Commission, the case should be remanded to the Special Term for proof of the effect of that order. The case was retried before Mr. Justice Has- brouck at Albany Trial Term on Monday, Janu- ary 3d, and remains undecided. At the same time that this action was started another action against all the other railroads except two, joined in the order of the Interstate Com- merce Commission was begun in Albany county. The order to show cause was returnable before Judge Hasbrouck at Kingston on De- cember 4th. On December 18th the stay was dissolved and an injunction pendente life was denied without opinion as to the trunk line rail- roads and as to some others which did a consid- erable interstate business. The case was 1 held for a reference on the question of how much interstate business the other defendants do. We appealed to the Appellate Division from this order denying a temporary injunction. This appeal has not been perfected. In the meantime seven of the trunk line carriers enjoined us in the Federal courts from further proceedings in Albany county. Six of these orders are return- able here and that of the New York Central in the Southern District. A show cause order was obtained against the Long Island and Staten Island roads and an injunction pendente lite granted by Judge Bene- dict with opinion 113 Misc. 700. This was dis- solved by the Appellate Division as heretofore stated. 13 The States, under the Constitution, have the right to regu- late commerce within their respective borders. Congress has not that right and cannot acquire it except by constitutional amendment. The right to regulate commerce is an attribute of sovereignty. It has its roots, in our juris- prudence, far hack in the common law. Lord Chief Justice Hale (1609-1676) in his “ de Portibus Maris ” (1 Harg. 77) wrote: “ A man, for his own private advantage, may, in a port or town set up a wharf or crane, and may take what rates he and his customers can agree for cranage, wharfage, housellage, pesage ; for he doth no more than is lawful for any man to do, viz., makes the most of his own * # # If the king or subject have a public wharf, unto which all persons that come to that port must come and unlade or lade their goods as for that purpose, because they are the wharfs only licensed by the queen, * * * or because there is no other wharf in that port, as it may fall out where a port is newly erected; in that case there cannot be taken arbitrary and excessive duties for cranage, wharfage, pesage, etc., neither can they be enhanced to an immoderate rate; but the duties must be reasonable and moderate, though settled by the king’s license and charter. For now the wharf and crane and other conveniences are affected with a public interest, and they cease to be juris private only ; as if a man set out a street in new build- ing on his own land, it is now no longer bare private interest but is affected by a public interest. ’ 9 and again (p. 6) : “ No man may set up a common ferry for all passengers, without a prescription, time 4 14 out of mind, or a charter from the king. He may make a ferry for his own use or the use of his family, hut not for the common use of all the king’s subjects passing that way; because it doth in consequent tend to a com- mon charge, and is become a thing of public interest and use, and every man for his pas- sage pays a toll, which is a common charge, and every ferry, ought to be under public regulation, viz., that it give attendance at due times, keep a boat in due order and take but reasonable toll ; for if he fail in these, he is fineable.” It was probably not long after this posthumous treatise saw the light that there was passed (1691) an act which is of peculiar interest both because of the significant reasons given for its passage and because it contains, in its few sen- tences, practically all of the essential elements of our cumbersome statutes delegating to public utility commissions the rate fixing power. This Act (3rd William and Mary Chap. 12 Section XXIV) reads, as follows : “And whereas divers waggoners and other carriers, by combination amongst themselves, have raised the prices of carriage of goods in many places to excessive rates, to the great injury of trade, be it therefore enacted — That the justices of the peace of every county and other place . . . shall have power and authority and are hereby enjoined and required at their next respective quarter or general sessions after Easter day yearly, to assess and rate the prices of all land carriage of goods whatsoever, to be brought into any place or places within their respective limits and jurisdictions, by any common waggoner and carrier, and the rates and assessments so made, to certify to the several majors and 15 other chief officers of each respective market town within the limits and jurisdictions of such justices of the peace, to be hung up in some public place in every such market town, to which all persons may resort for their in- formation ; and no such common waggoner or carrier shall take for carriage of such goods and merchandises above the rate and prices so set upon pain to forfeit for every such offense the sum of five pounds * * * to the use of the party aggrieved. ’ ’ Thus this doctrine of the right of the sovereign to regulate commerce was deeply imbedded in the common law when in 1776 the thirteen colonies became thirteen “ free and independent states.” This right to regulate commerce, passed to the several independent colonies as an incident of their new found sovereignty. As it is expressed in Munn v. Illinois, 94 U. S. 113, 124. “ When the people of the United Colonies separated from Great Britain, they changed the form, but not the substance of their government. They retained for the purposes of government all the powers of the British Parliament and through their State constitu- tions, or other forms of social compact, under- took to give practical effect to such as they deemed necessary for the common good and the security of life and property. ’ ’ It takes only a glance at the history of the Colonies before and during the Confederation to l ealize how thoroughly convinced each colony was of its right to regulate commerce and to what extent the colonies went in such regulation to their mutual distress. (See McMaster: History of the People of the United States, Yol. I, Chap. 16 III, pp. 266, 272 et seq. Schouler : History of the United States, Vol. I, p. 23.) To obviate the difficulties and dissensions that bid fair to make the colonies an easy prey to foreign aggression, (Federalist No. 42) and to provide against the laying of import and export duties against each other, (Federalist No. 7) they voluntarily gave up a small part of this inherent power when they adhered to the federal Consti- tution. The deed of gift was in these words: “ The Congress shall have power # * * to regulate commerce with foreign nations; and among the several States, and with Indian tribes.’ ’ As the necessity for this gift of power to the central government was probably the most cogent factor in bringing about the ratification of the Constitution, so it must necessarily be that the words that express the gift contain the sense of all that it was thought necessary to give and the reservations of power to the States or to the people are peculiarly applicable to every portion of this sovereign power not expressly delegated to the Congress. That this is so is quite evident from the trend of the decisions 1 of our highest court. The Supreme Court has always maintained the rights of the States to regulate their own internal commerce. Chief Justice Marshall laid down the general rule in the leading case of Gibbons v. Ogden , 9 Wheat. 1, 195, where he said: “ The genius and character of the whole government, seems to be, that its action is to be applied to all the external concerns of the nation and to those internal concerns which 17 affect the States generally; but not those which are completely within the particular State, which do not affect other States, and with which it is not necessary to interfere, for the purpose of executing some of the gen- eral powers of the government. The com- pletely internal commerce of a State, then, may be considered as reserved for the State itself.” This same doctrine has been enunciated and approved time and again. Thus, in The Passenger Cases, How. 283, 394, in considering the question as to the power of a State to tax steerage passengers entering from a foreign country: 4 ‘ It is admitted that in regard to the com- mercial, as to other powers, the States cannot be held to have parted with any of the attri- butes of sovereignty which are not plainly vested in the Federal Government and inhibited to the States, either expressly or by necessary implication. ’ ’ Similarly, in one of the Granger cases, the Court stated in terms that might be applied to the Long Island Railroad: “ This road # # * is situated within the limits of a single State. Its business is car- ried on there and its regulation is a matter of domestic concern ” ( Chicago , Burlington & Quincy Railroad v. Iowa, 94 U. S., 155, 163). And about the same time, in speaking of the State’s right to regulate warehouse charges, it said : y Incidentally they may become connected with inter-state commerce, but not necessar- ily so. Their regulation is a thing of domes- 5 18 tic concern, and certainly, until Congress acts in reference to their inter-state relations, the State may exercise all the powers of Govern- ment over them, even though in so doing it may indirectly operate upon commerce out- side its immediate jurisdiction ” (Munn v. Illinois, 94 U. S., 113, 135). Again, the Court said flatly in County of Mobile v. Kimball , 102 U. S. 691, 699: “ The States have as full control over their purely internal commerce as Congress has over commerce among the several States and with foreign nations.” Not long after the States began the institution of regulatory bodies the railroads, impatient of any control, fought with the same vigor that greeted the passage of the Commerce Act in 1887, the constitutionality of the new State statutes. Justice Waite said, in considering this question in Railroad Commission Cases, Stone v. Farmers’ Loan and Trust Co., 116 U. S. 307, 325. 4 ‘ It is now settled in this court, that a state has power to limit the amount of charges by railroad companies for the transportation of persons and property within its own jurisdic- tions unless restrained by some contract in the charter, or unless what is done amounts to a regulation of foreign or interstate com- merce/ ’ Citing Railroad Co. v. Maryland, 21 Wall. 456; Chicago, Burlington & Quincy Rail- road Co. v. Iowa, 94 U. S., 155 ; 19 Peik v. Chicago anti Northwestern Railway Co., 94 U. S. 164; Winona £ St. Peter Railroad Co. v. Blake, 94 U. S, 180; Ruggles v. Illinois, 108 U. S. 526, 531, and again (p. 334) : “ Every person, every corporation, every- thing within the territorial limits of a State is while there, 'subject to the constitutional authority of the State Government. Clearly under this rule, Mississippi may govern this corporation, as it does all domestic corpora- tions in respect to every act and everything within the State which is the lawful subject of State government. It may, beyond all ques- tion, by the settled rule of decision in this court, regulate freights and fares for business done exclusively within the State, and it would seem to a matter of domestic concern to prevent the company from discriminating against persons and places in Mississippi.” See, also: Wabash, St. Louis and Pacific Railway Co. v. Illinois, 118 U. S., 557, 564, 565. Sands v. Manistee River I. Co., 123 U. S. 288. Dow v. Biedleman, 125 U. S. 680'. Chicago, M. £ St. P. R. Co. v. Minne- sota, 134 U. S. 418. Chicago £ Grand Trunk Co. v. Well- man, 143 U. S. 339. Covington £ Cincinnati B. Co. v. Ken- tucky, 154 U. S. 204. St. Louis £ San Francisco Ry. Co. v. Gill, 156 U. S. 649. 20 Texas & P. R. Co. v. I. C. C ., 162 U. S. 197. Smyth v. Ames , 169 U. S. 466. Reid v. Colorado , 187 U. S. 137, 147. Cummings v. Chicago , 188 U. S. 410, 427. Gulf , Colorado and Santa Fe Ry. Co. v. Texas , 204 U. S. 403, 413. Southern Ry. v. U. S., 222 U. S. 20, 26. Chicago Milwaukee and St. Paul Rail- way Co. v. Iowa, 233 U. S. 334, 343. Pennsylvania Railroad Co. v. Mitchell Coal & Coke Co., 238 U. S. 251, 253. Arkadelphia Co. v. St. L. S. N. Ry. Co., 249 U. S. 134, 151, 152. Public Utilities Commission v. Lan- don, 249 U. S. 236, 245. Southern Pacific Co. v. Arizona, 249 U. S. 472, 477. But perhaps the most striking example of this insistence of the Supreme Court upon the mainte- nance of the State’s right of regulation is found in two of the most recent decisions of the Court involving this question: South Covington & Cincinnati St. Ry. Co. v. Kentucky, 252 U. S. 399; Cincinnati, Covington & Erlang er Ry. Co. v. Kentucky, 252 U. S. 408. These cases involved the validity of a State law of Kentucky providing for separate cars on all railroads for the colored race or a separate com- partment for them. The South Covington and Cincinnati Street Railway Company owned and 21 controlled the Cincinnati, Covington and Erlan- ger Railroad. The latter had a franchise from the State of Kentucky and owned about ten miles of track in that State. It owned no cars, however, and its line was operated by the former road. The business was that of running single truck trolley cars between Covington, Kentucky, and Cincinnati, Ohio, at a 5-cent fare. Eighty per cent of the business was interstate, and Justice Day pointed out in his dissenting opinion that the application of the law would be peculiarly embar- rassing. It could not be applied to interstate traffic, concededly, so that colored persons in that traffic, 80 per cent of those who rode, could ride in the “ white ” compartment, while only the small number in intrastate traffic must ride in the “ colored ” compartment. None the less, the Court held that the law was applicable, saying (p. 403) : ‘ ‘ In answer and in resistance to the con- clusion of the court, the railway company contends that it operates a railway between designated termini, one being in Kentucky and the other in Ohio, that the price of a fare may be a single one of 5 cents for the com- plete trip in the same car taken at or termi- nating at the respective termini, and that therefore the car and passenger are neces- sarily interstate. Thus viewed they undoubt- edly are, but there are other considerations. There was a distinct operation in Kentucky. An operation authorized and required by the charters of the companies, and it is that operation the act in question regulates, and does no more, and therefore is not a regula- tion of interstate commerce. This is the effect of the ruling in So. Covington & C. St. Ry Co. 6 22 v. Covington , 235 U. S., 537. The regulation of the act affects interstate business inci- dentally and does not subject it to u/nreason- able demands “ The cited case points out the equal neces- sity under our system of government , to pre- serve the power of the States within their sovereignties as to prevent the power from intrusive exercise within the national sover- eignty, and an interurban railroad company deriving its power from the State, and sub- ject to obligations under the laws of the State, should not be permitted to exercise the powers given by the State, and escape its obligations to the State, under the circum- stances presented by this record, by running its coaches beyond the State lines.” A more thorough and decisive pronouncement in support of State sovereignty was never made by the highest Court. Certainly there can be no doubt, in view of this decision, that the right of the States to regulate their own commerce still stands as firm as in the day of Gibbons v. Ogden (supra). The doctrine of the so-called Shreveport cases has not broadened materially the power of Congress over purely intrastate commerce. Preliminarily, let us examine the essential facts which led to interference with State-made rates in these cases. Minnesota Rate Cases , 230 U. S. 352, involved the 2-cent passenger rate law of Minne- sota and certain freight rates instituted by that State. The burdens complained of on interstate commerce arose from the fact that the border cities of Minnesota had an advantage over the 23 competing cities across the border in North Da- kota and Wisconsin, owing to the fact that passen- gers and freight could be transported between points in Minnesota and the border cities of that State more cheaply than between the same points in Minnesota and the cities of other States which competed with the border cities of Minnesota (p. 383). It was proven that there was a well- defined course of commerce between Minnesota communities and the Minnesota border cities, and between the same communities and cities in other States competing with those border cities (p. 384). It also appeared that, since the intrastate rates had been reduced and as the “ necessary, immediate and direct effect ” thereof (p. 390), there was a falling off in traffic to the cities be- yond the borders of Minnesota, an increase in traffic to those border cities and a practice grow- ing up of buying interstate tickets across the State line and repurchasing at State rates for the journey in Minnesota. Houston and Texas Ry. Co. v. U . S., 234 U. S. 342, known as the Shreveport case, involved the com- peting cities of Shreveport, La., on the one hand and Dallas and Houston, Texas, on the other (p. 346). Freight rates only were involved. There was a through line between Shreveport and Dallas and one between Shreveport and Houston. Shreveport actively competed with Dallas and Houston for the business of the intervening ter- ritory. The discrimination complained of was that the State rates from Houston and Dallas eastward to points in Texas were much less than 24 those from Shreveport westward to the same points. The “ difference was substantial and injuriously affected the commerce of Shreveport ” (p. 346). Adams Express Co. v. Caldwell, 244 U. S. 617, known as the South Dakota case, involved the ex- press rates fixed by the State of South Dakota. These were lower than those in 40 other States and 40 per cent lower than interstate rates. The order of the Commission directing the elimination of the discrimination was made on complaint of the Traffic Bureau of the Sioux City (Iowa) Com- mercial Club, which set up that since the increase in interstate rates it could no longer compete with cities in South Dakota for the business in that State (pp. 619, 620). Illinois Central Railroad v. Public Util- ities Commission, 245 U. S. 493. known as the Illinois case, involved the validity of the Illinois 2-cent passenger statute. Interstate rates had advanced to 2.5 cents (p. 495) and were found reasonable by the Commission at 2.4 cents (p. 496). The complaining city was St. Louis, Missouri, which proved ( Business Men’s League of St. Louis v. Atchison, Topeka & Santa Fe Rail- way Co., 41 I. C. C. 13, 19, 20), that since the in- crease in interstate rates from St. Louis to Chicago and intervening points, that there had been a marked falling off in interstate business from St Louis to such points and a marked in- crease in intrastate business from East St. Louis to those points in Illinois. Keokuk, Iowa, inter- 25 vened, claiming a similar falling off in traffic be- tween it and points in Illinois. It appeared that since the higher interstate rate went into effect, large numbers of people were crossing the State line from St. Louis to East St. Louis, 111., and there repurchasing for points in Illinois ( Busi- ness Men’s League of St. Louis v. A. T. & S. F., etc., supra, p. 19). The 'Commission found dis- crimination in favor of East St. Louis and against St. Louis, as well as in favor of Hamilton and other Illinois cities as against Keokuk, Iowa. It ordered that the discriminations be eliminated so far as they existed on “ reasonably direct lines ” ( Business Men’s League, etc., v. A. T. & S. F., etc., supra, p. 28), between St. Louis and Chicago and between Keokuk and Chicago. This order was held invalid as too indefinite. That all of these cases forcibly reaffirmed the doctrine of the right of the States to regulate their own internal commerce is evident from a study of these decisions. In the Minnesota Rate Cases {supra) it was said (p. 417) : “ When Congress, in the year 1887, enacted the Act to Regulate Commerce (24 Stat., 379. c. 104), it was acquainted with the course of the development of railroad trans- portation and with the exercise by the States of the rate making power. * * * Congress carefully defined the scope of its regulation, and expressly provided that it was not to extend to purely intrastate traffic. In the first section of the Act to Regulate Commerce there was inserted the following proviso : ‘ Provided, however, That the provisions of this Act shall not apply to the transporta- 7 26 tion of passengers or property, or to the receiving, delivering, storage, or handling of property, wholly within one State, and not shipped to or from a foreign country from or to any State or Territory as aforesaid. * When in the year 1906 (Act of June 28, 1906, c. 3591, 34 Stat., 584), Congress amended the act so as to confer upon the federal commission power to prescribe maximum interstate rates, the proviso in section one was re-enacted. Again, in 1910, when the act was extended to embrace tele- graph, telephone and cable companies en- gaged in interstate business, the proviso was once more re-enacted, with an additional clause so as to exclude intrastate messages from the operation of the statute. There was thus excluded from the provi- sions of the act that transportation which was ‘ wholly within one State, ’ with specified qualification where its subject was going to or coming from a foreign country.” And again (p. 420) : “ The question we have now before us, essentially, is whether after the passage of the Interstate Commerce Act, and its amend- ment, the State continued to possess the state-wide authority which it formerly enjoyed to prescribe reasonable rates for its exclusively internal traffic. * * * Having regard to the terms of the Federal statute, the familiar range of state action at the time it was enacted, the continued exercise of state authority in the same manner and the same extent after its enactment, and the decisions of this court recognizing and up- holding this authority, we find no foundation for the proposition that the Act to Regulate Commerce contemplated interference there- with. ’ 9 27 In the Shreveport case ( Houston E. & W. T. Ry. Co. v. U. S., supra) it was said (p. 357) : “ Congress thns defined the scope of its regulation and provided that it was not to extend to purely intrastate traffic. It did not underfake to authorize the Commission to prescribe intrastate rates and thus to estab- lish a unified control by the exercise of rate- making power over both descriptions of traffic. Undoubtedly — in the absence of a finding by the Commission of unjust discrim- ination, intrastate rates were left to be fixed by the carrier and subject to the authority of the States or of the agencies created by the States.” Congress did not attempt to enlarge the scope of the power of the Interstate Commerce Commission over intrastate rates as is shown by the legislative history of the amendments of 1920, The effect of the order of the Interstate Com- merce Commission is 1 to immutably fix every pas- senger rate within the State of New York. The Commission claims this power by inference and interpretation. The power is not expressly granted by the amendments to the statute. If the power is found it must be by judicial construc- tion, rather than in the phrases of common speech. So cryptic is the utterance of Congress that when Senator Cummings and Mr. Esch were soliciting votes to pass their bill in Congress they were able to successfully deny that the bill granted the power exercised and the vigilance of members of Congress was unable to discern the purpose found by the bureaucracy that now magnifies its office and aggrandizes its functions. In 1896 when functionaries with a like lust for power claimed the authority to fix interstate 28 rates by hermeneutics as extravagant as applied here, the Supreme Court rebuked them and remitted them to Congress for a clear and unequivocal expression of power. Mr. Justice Brewer said in Interstate Commerce Commission v. Raihvay Co., 167 U. S. 479 at 494: “ The question debated is whether it vested in the commission the power and duty to fix rates 1 ; and the fact that this is a debat- able question, and has been most strenuously and earnestly debated, is very persuasive that it did not. The grant of such a power is never to be implied. The power itself is 1 vast and comprehensive, so largely affecting the rights of carrier and shipper, as well as indirectly all commercial transactions, the language by which the power is given had been so often used and was so familiar to the legislative mind and is capable of such definite and exact statement, that no just rule of construction would tolerate a grant of such power by mere implication. ” The act should, therefore, not be distorted to sustain the grant of so far reaching a result as the destruction of the State rate making power. Congress did not intend what it did not express. Indeed, Congress carefully maintained the State rate structures. The conclusive proof of this lies in the fact that the Act reenacted (Title IV, Section 400, par. 2) the clause stressed by Justice Hughes in the Minnesota Bate Cases which states distinctly that “ The provisions of this Act — shall not apply: (a) To the transportation of pas- 29 sengers or property or to the receiving, delivering, storage or handling of property wholly within one State, and not shipped to or from a foreign country from or to any place in the United States as aforesaid.” It is significant of the conclusiveness of this clause that the railroads in their briefs before the Interstate Commerce Commission and the Com- mission in its majority report omit all mention of this provision which is so fatal to their conten- tions. Instead they rely upon two other portions of the Act which they say authorizes the conclusion that Congress has granted to the Interstate Commission the power to increase all rates in New York State as discriminatory. These two sections will be considered separately. A. Section 15 -A of the Transportation Act does not give jurisdiction of intrastate rates to the In- terstate Commerce Commission. This section reads in part as follows: “(2) In the exercise of its power to pre- scribe just and reasonable rates the Commis- sion shall initiate, modify, establish or adjust such rates so that carriers as a whole (or as a vjhole in each of such rate groups or terri- tories as the Commission may from time to time designate) will, under honest, efficient and economical management and reasonable expenditures for maintenance of way, struc- tures and equipment, earn an aggregate annual net railway operating income equal, as nearly as may be, to a fair return upon the aggregate value of the railway property of such carriers held for and used in the service of transportation: Provided, That the Commission shall have reasonable lati- 30 tude to modify or adjust any particular rate which it may find to be unjust or unreason- able and to prescribe different rates for different sections of the country. “(3) The Commission shall from time to time determine and make public what percent- age of such aggregate property value consti- tutes a fair return thereon, and such percent- age shall be uniform for all rate groups or territories which may be designated by the Commission. In making such determination it shall give due consideration among other things to the transportation needs of the country and the necessity (under honest, effi- cient and economical management of exist- ing transportation facilities) of enlarging such facilities in order to provide the people of the United States with adequate trans- portation: Provided, That during the two years beginning March 1, 1920, the Commis- sion shall take as such fair return a sum equal to 5% per centum of such aggregate value, but may, in its discretion, add thereto a sum not exceeding one-half of one* per centum of such aggregate value to make pro- vision in whole or in part for improvements, betterments or equipment, which, according to the accounting system prescribed by the Commission, are chargeable to capital account. “ (4) For the purposes of this section, such aggregate value of the property of the carriers shall be determined by the Commis- sion from time to time and as often as may be necessary. The Commission may utilize the results of its investigation under section 19a of this act, in so far as deemed by it available, and shall give due consideration to all the elements of value recognized by the law o£ the land for rate-making purposes, and shall give to the property investment 31 account of the carriers only that considera- tion which under such law it is entitled to in establishing values for rate-making pur- poses. Whenever pursuant to section 19a of this Act the value for the railway property of any carrier held for and used in the serv- ice of transportation has been finally ascer- tained, the value so ascertained shall be deemed by the Commission to be the value thereof for the purpose of determining such aggregate value. “ (5) Inasmuch as it is impossible (without regulation and control in the interest of the commerce of the United States considered as a whole) to establish uniform rates upon com- petitive traffic which will adequately sustain all the carriers which are engaged in such traffic and which are indispensable to the communities to which they render the serv- ice of transportation, without enabling some of such carriers to receive a; net railway operating income substantially and unrea- sonably in excess of a fair return upon the value of their railway property held for and used in the service of transportation, it is hereby declared that any carrier which receives such an income so in excess of a fair return, shall hold such part of the excess, as hereinafter prescribed, as trustee for, and shall pay it to, the United States / 9 Of course, the object of this section is fully re- vealed in this last paragraph (5). That this was its only purpose appears plainly from the words of Congressman Esch on the final presentation of the bill to the House on February 28, 1920. u I shall take up what is known as Section 6. You will find it in section 422 of the pend- ing bill. It provides for a rate of return on the valuation of railroad property either 32 taken as a whole or within a given district or territory. This provision w T as not in the House bill. Against it the House conferees' stood for 5 or 6 weeks and until the com- promise was finally reached. The whole basis for section 6 can be found in the'se words in the bill, on page 91, paragraph 5.” He then quotes paragraph (5) above set out and continues : “ The large problem that has given diffi- culty to the Interstate Commerce Commis- sion and to every regulatory body heretofore has been the fixing of rates on competitive traffic which will not allow one road to earn excessive income while another road on the same rate does not get a sufficient income. No formula has under existing law yet been discovered to meet that situation. You can meet it in two ways — by consolidation of all carriers under one system, where there would not be the problem of the weak and the strong, or under the plan suggested in sec- tion 422.” (' Congressional Record, jVol. 59, p. 3912.) Thus the only object was to solve the perplex- ing problem of uniform rates on competitive traf- fic carried partly by strong and partly by weak roads. There is no intimation that the section in question is intended to overrule the provision above quoted prohibiting interference by the Com- mission with the transportation of passengers “ wholly within one State.” The Commission, however, entirely ignores this provision, bases its interference with purely intrastate rates on an extraordinary interpreta- tion of this section 15-a. 33 The report (Rates, Fares and Charges of N. Y. C. R. R. Co., 59 I. C. C. 290) states (pp. 292-293) in effect that the Commission has fixed certain rate groups and has in “ Increased Rates 1920 99 “ authorized increased rates designed to enable the carriers as a whole 99 to earn the return prescribed by statute. It then states (p. 294) : ‘ 4 Congress has directed that we allow rates that will yield in the aggregate a return of 5% or 6 per cent, upon the value of the rail- way property in each of the groups. There can be no doubt of the power of Congress to devise and provide for carrying into effect a plan for assuring to the nation’s interstate railroads a fair return upon the value of their property; and the full control by Con- gress of this matter is not to be denied on the ground that the carriers 9 aggregate earnings are a commingling of intrastate revenue and interstate revenue * * The same phase of the question is somewhat similarly expressed in one of the more recent of these State rate cases. Intrastate Rates within Illinois, 59 I. C. C. 350, 364. ‘ ‘ In our decision in Increased Rates, 1920, we fixed the increases in rates, fares and charges necessary to comply with the act. It must be remembered that in fixing those increases we were acting within our power ‘ to prescribe just and reasonable rates . 9 The resulting rates therefore become, in effect, what Congress has deemed on the whole necessary to yield the carriers the prescribed return on the value of their property. 9 34 “ It is further urged that in Increased Bates, 1920, we did not find the value of any railroad property in the State of Illinois or elsewhere in the eastern or western groups as designated in that report. We were directed to prescribe rates so that in the aggregate they would yield a certain return, as nearly as may be, ‘ upon the aggregate value of the railway property of such carriers held for and used in the service of transportation. ’ We understand the inter- state commerce act to require us to determine upon a valuation for the total property of the carriers and not for the property that might by some necessarily arbitrary method or formula be assigned to interstate traffic, and that is the course we followed in arriving at the estimated value used, in Increased Rates, 1920. “ In that case, conformably to the act, in the exercise of our power to prescribe just and reasonable rates, we determined the increased fares that were necessary in order that the passenger traffic should contribute its proper proportion to a fair return on the aggregate property value. If, without good reason, the fares within a state are lower than those, authorized and established for interstate application, intrastate passenger traffic will not contribute its just share to the passenger revenues of the carriers, and the carriers may not earn the statutory return without further increases in the trans- portation charges on other traffic, including interstate commerce, thus unjustly discrimi- nating against such commerce.” In other words, the Commission has attempted completely to override the explicit provision against interference with “ the transportation of passengers or property wholly within one State ” 35 by a broad construction of the Congressional mandate to fix rates for “ carriers as a whole.’ ’ Obviously inconsistencies should be reconciled. It is not proper to disregard one section because an- other is inconsistent with it. And what is there extraordinary or unusual about a mandate to consider the entire valuation of all the railroads of the country! Why should such a natural provision suddenly be seized upon to overthrow the Constitutional rights of the States ! For years, under section 19-a of the Interstate Commerce Act the Commission has been at work ascertaining a valuation of the railroads as a whole. Yet that section was never brought out as an excuse for interfering with intrastate rates. Indeed, how can the allocation between prop- erty devoted to interstate and intrastate com- merce be properly made unless the entire property be preliminarily valued! In the Minnesota Rate Cases ( supra at p. 433) with its tedious and ex- haustive analysis of the property devoted to in- terstate traffic Justice Hughes necessarily took as a starting point the entire value of the railroads involved. This must be so in any case involving interstate rates on a railroad carrying both kinds of traffic. It may not be validly argued from such a provision that the power of the Commis- sion over intrastate rates has been extended by a provision to value the railroad properties as a whole. Of course, it is a difficult thing, where some roads are concerned, to make the calculations nec- essary for the allocations of expenses and prop- erty between intrastate and interstate traffic. 36 But mere difficulty in the problem assigned them does not excuse public officers from doing their duty. Nor does it lead to the assumption that Congress meant to do what it had no power to do under the Constitution and what there is no scintilla of evidence in the Act in question that it intended to do. The reasonable construction of the Act as a whole evidently is that the Interstate Commerce Commission shall consider, in carrying out its mandate, the entire property of the railroads, but its power to fix rates is limited , as always , to interstate rates. It is to be assumed that the States must allow rates which will yield a fair rate of return to the carriers upon the property engaged in intrastate commerce. The States may allow eight (8) per cent, they may allow ten ( 10) per cent. They cer- tainly could not allow less than 5% or 6 per cent without running the imminent risk of having their rates declared confiscatory under the 14th amend- ment. If the Interstate Commerce Commission is bound by law to allow a return of 6 per cent upon the property engaged in interstate commerce and if the States are bound by law to allow a similar return upon the carriers ’ property engaged in in- trastate commerce, how can the u carriers as a whole ” fail to receive the return contemplated? Plainly they cannot. The exact intention of Con- gress would be carried out and the Constitutional rights of the States maintained. By the report and order of the Commission, it does not appear in any way that the rates prevail- ing in New York yield less than a 6 per cent re- 37 turn. Indeed, the fact, recited in the report (p. 291) that the railroads applied for increases to the Public Service Commission and that the ap- plication was denied, conclusively negatives any assumption that present rates will yield less than 6 per cent, so far as this proceeding is concerned. It not having been found, either by the Commis- sion, the Legislature or the Courts, that present rates yield less than an adequate return, it must be assumed that they do yield such return. That being the case, the additional revenue of $11,- 000,000 to $12,000,000 which this order is designed to procure for the railroads will really be a tax upon intrastate commerce for the benefit of inter- state. It is a declaration that the defendants here must from its intrastate commerce earn more than a fair return in order to make up for some deficiency of another road in interstate commerce. Indeed, the weakness of relying solely upon this, which may be called the ‘ ‘ financial burden ’ ’ phase of the alleged discrimination, is fully recog- nized by the Commission itself. It constantly leaves this phase and runs to the second phase which will now be considered. This second phase may be designated the Shreveport phase of the alleged discrimination, relying upon Paragraphs 3 and 4 of Section 416 of the Transportation Act. B. The only purpose of Paragraphs 3 and 4 of Section 416 of the Transportation Act was to put into the form of law the decisions of the Supreme Court in the Shreveport Cases . These sections read as follows: “ (3) Whenever in any investigation under the provisions of this Act, or in any 10 38 investigation instituted upon petition of the carrier concerned, which petition is hereby authorized to be filed, there shall be brought in issue any rate, fare, charge, classification, regulation, or practice, made or imposed by authority of any State, or initiated by the President during the period of Federal con- trol the Commission, before proceeding to hear and dispose of such issue, shall cause the State or States interested to be notified of the proceeding. The Commission may confer with the authorities of any State hav- ing regulatory jurisdiction over the class of persons and corporations subject to this Act with respect to the relationship between rate structures and practices of carriers subject to the jurisdiction of such State bodies and of the Commission ; and to that end is author- ized and empowered, under rules to be pre- scribed by it, and which may be modified fom time to time, to hold joint hearings with any such State regulating bodies on any matters wherein the Commission is empow- ered to act and where the rate-making author- ity of a State is or may be affected by the action taken by the Commission. The Com- mission is also authorized to avail itself of the co-operation, services, records, and facili- ties of such State authorities in the enforce- ment of any provision of this Act. “(4) Whenever in any such investigation the Commission , after full hearing, finds that any such rate, or fare, or charge, classifica- tion, regulation, or practice causes any undue or unreasonable advantge, preference, or prejudice as between persons or localities in interstate commerce on the one hand and interstate or foreign commerce on the other hand, or any undue , unreasonable, or unjust discrimination against interstate or foreign commerce, which is hereby forbidden and 39 declared to be unlawful it shall prescribe the rate , fare , or charge, or the maximum or minimum, or maximum and minimum, thereafter to be charged, and the classifica- tion, regulation, or practice thereafter to he observed, in such manner as, in its judgment, will remove such advantage, preference, pre- judice, or discrimination . Such rates, fares, charges , classifications, regulations, and practices, shall be observed while in effect by the carriers parties to such proceeding affected thereby, the law of any State or the decision or order of any State authority to the contrary notwithstanding.” The Senate bill introduced by Senator Cum- mins on December 8, 1919, and the House bill, in- troduced by Congressman Esch, November 11, 1919, as well as the conference measure finally passed, were similar in phraseology and identical in intent. On December 4, 1919, 'Senator Cummins ex- plained his bill to the Senate at length. As to these two sections he said: “ I call attention next to section 43 which presents also a long standing controversy and a most important one, and upon which Senators will have, I am sure, decided opinions. * * * For years there has been a conflict between the jurisdiction of the Federal Government and the jurisdiction of the State Govern- ments with regard to the adjustment of rates. All of you know that the Constitu- tion of the United States* confers* upon Con- gress the authority to regulate commerce among the states and with foreign nations. Obviously this authority is limited to the regulation or control of interstate commerce and matters that are inseparably connected 40 with or incident to interstate commerce . The Supreme Court of the United States has had occasion in at least three separate cases to discuss the subject. Most of you, I am sure, are familiar with what is known as the Shreveport decision 99 (see Congressional Record, Vol. 59, p. 143). He then described in a general way the Shreve- port decision, the Minnesota Rate Cases and the Illinois situation then in litigation. He proceeded to say: “ The committee has attempted simply to express the decisions of the Supreme Court of the United States . We have not atempted to carry the authority of Congress beyond the exact point ruled by the Supreme Court in the cases to which 1 have referred; and the only thing we have done in the matter has been to confer upon the Interstate Commerce Commission the authority to remove the dis- crimination, when established in a proper proceeding before that body — an authority which it does not now have 99 (see Congres- sional Record, Vol. 59, No. 4, p. 143). Similarly, Congressman Esch spoke of the pur- pose of his bill when explaining it to the House on November 11, 1919: “ We also provide for the enactment into law of what is popularly hnown as the decis- ions of the Supreme Court in the Shreveport cases . Where intrastate rates constitute an undue burden, advantage, preference, or prejudice against interstate rates, such rates are declared to be unlawful. We have incor- porated into law the decision of the court . When by reason of the low level of the intra- state rates an undue burden is cast upon the interstate traffic the citizens and the shippers of other states are compelled to pay higher 41 interstate freight rates than they wonld have had to pay had that State enacted or pnt in force and effect proper intrastate rates ” (Vol. 58, Cong. Record, p. 8317). Moreover this is borne out by the testimony of Commissioner Clark before the House Committee. It is quite natural to suppose that when Con- gressman Esch and Senator Cummins were draw- ing their bills they should go for suggestions to Commissioner Clark, the Commissioner who had been longest in office and who was recognized na- tionally as an expert on these matters in the coun- try. It must be remembered that in the Illinois passenger case ( Illinois Central R. R. v. Public Utilities Commission, 245 U. S. 493), the Supreme Court had held in 1918 that an order of the Inter- state Commerce Commission similar to the Shreveport order was too indefinite for enforce- ment. Undoubtedly and quite properly this fact influenced Commissioner Clark in his desire to make more definite and certain the Commission’s power as it had already been announced by the Supreme Court and to facilitate the exercise of that power. When called as first witness before the Com- mittee, he stated: ‘ ‘ I doubt if it is necessary, Mr. Chairman, for me to detail much of the history of this situation as it has developed from the original decisions and reports of the commis- sion in the so-called Shreveport case, and the decision of the Supreme Court sustaining the Commission. The law as it now stands and as it is inter- preted by the commission and by the Supreme Court authorizes the commission to 11 42 require the removal of undue preference or undue prejudice and to correct the differ- ences between the levels of State and inter- state rates, in doing which it must prescribe the reasonable maximum interstate rates, and thus, by a roundabout process, it results that the commission fixes the level of the maxi- mum interstate rates and requires the removal of undue preference and undue prej- udice found to exist under the States rates, which gives the carrier authority to increase , if necessary , or if it so elects , the State rates to the level of the interstate rates as found reasonable 99 (Hearings before Committee of the House on Interstate and Foreign Com- merce, Hearings on H. R. 4378, Vol. I, p. 26). See also his further testimony Hearings before House Committee ( supra ), pages 27, 28, 68-70, 110, 111 . He later summed up his opinion as to whether the powers of the Commission would be enlarged by this provision, when the following colloquy took place between him and Mr. Sanders of Indiana : “ Mr. Sanders of Indiana: Mr. Commis- sioner, I wish you would be kind enough to state for the record the power that was recognized in the commission by the Shreve- port case. Mr. Clark: The power to require the re- moval of undue prejudice against interstate shipment resulting from the application of intrastate traffic of a scale of rates prescribed by the State Commission and the mainte- nance of higher rates on interstate traffic over the same line for corresponding dis- tances and under substantially similar cir- cumstances and conditions. 43 Mr. Sanders of Indiana : Section 13 of this act, which proposes to amend Section 13 of the original act, deals with that question of additional power which Section 13 gives the Interstate Commerce Commission. Mr. Clark: I do not think that it gives us any more power under the law. 1 do not think it expands or contracts the application of the terms of the law or the commission’ s power thereunder , but it does define a rela- tionship and outline a procedure that we hope will operate to minimize the number of instances in which undue prejudice will exist, and to simplify the removal of it where it may be found to exist.” (Hearings before Committee [supra], Vol. I, p. 110). Here then we have the opinions of the three persons best qualified to speak as to the purpose of these sections of the statute. And they are unanimous that there was no intent to broaden the powers of the Commission beyond those it had already been found to have by the Supreme Court decisions in the Shreveport and similar cases. In his opening statement Mr. Clark called at- tention to the words “ except as expressly pro- vided in section 13 thereof,” in the proviso (Report of Hearings on H. R. 4378, page 11) and read the portion of the amendment to paragraph 13 containing the “ undue burden ” provision (Report of Hearings, page 26). On his appear- ance at the close of the hearing he was asked to give an illustration ‘ ‘ of what would be a burden upon interstate commerce as that term is used.” He replied: “An unreasonably and unduly low level of rates within the State which were not at the same time alleged to be or shown to be un- 44 duly preferential of or unduly prejudicial against any particular person or community.’’ (Report of Hearings, page 2964.) This proposed extension of power was strongly opposed by the rate regulating authorities of the several States. The National Association of Railway and Utilities Commissioners, through its General Solicitor, Mr. Elmquist, made the fol- lowing statement concerning the same at the hearing before the House Committee: 44 It is our judgment that the introduction of the words 4 4 undue burden upon interstate or foreign commerce ” introduces a new ele- ment into the rate structure of the Federal act, and it may ultimately give to the Inter- state Commerce Commission authority to de- prive the states of the Union of any power whatever over intrastate commerce. * * * A few years ago the Supreme Court had be- fore it the Illinois Passenger Rate Case. Under the statute of that state, the passen- ger rates were 2 cents per mile. The Inter- state Commerce Commission had approved interstate rates based upon 2 % cents per mile. There was a complaint alleging dis- crimination between the passenger rates to St. Louis and East St. Louis and Keokuk and Hamilton, as well as Chicago. The Interstate Commerce Commission heard that case and made an order, in which it found that the rates, state and interstate, were un- duly discriminatory and resulted in undue prejudice and advantage, and asked the car- riers to remove that discrimination. In that case the commission writing the decision found that the 2-cent rate was a burden upon interstate commerce. So, the Interstate Commerce Commission did say that those rates were a burden upon inter- state commerce. The Supreme Court ig- 45 nored that particular finding, hut held to a finding of the particular discrimination be- tween communities. If the word “ burden ” had been a part of the statute at that time, it may not be far-fetched to assume that the commission would have said that those rates were a burden upon interstate commerce and the court would have said that the commis- sion’s findings were within the law. * * # It is inconceivable to me, gentlemen, that this committee will attempt in an indirect way to take from the states that power which they have reserved unto themselves. I fear that that will be the result of those words in the statute.” (Report of Hearings, page 1622.) The House, however, did not strike out the objectionable words, and the Association filed with the Conference Committee a memorandum, in which the provision was further discussed, in part as follows: “It is provided that whenever the Inter- state Commerce Commission shall investi- gate 1 any rate, fare, charge, classification, regulation, or practice made or imposed by authority of any state * * * the Com- mission shall have authority * * * to make findings and orders * * # to remove # * any undue burden upon interstate or foreign commerce * * # . The law of any state or the decision or order of any state authority to the contrary notwithstanding.’ If this provision shall become law it will operate to deprive the state Commissions of their power to make with final effect any rate , service or other regulatory order . We make this subject the first for discus- sion in this memorandum because we deem it of most vital importance to the state Com- missions and to the people of the states whose interest they represent. 12 46 The question involved is whether Congress desires to preserve the powers of the state Commissions or to destroy them.” (Memorandum of National Association of Ry. and Pub. Utilities Commissioners, page 2 .) The Conference Committee struck out from said paragraph 4 the words “ undue burden ” and wrote in their place “ undue, unreasonable or unjust discrimination,” thereby making the first part of the paragraph nothing more than a re-statement of the effect of 'section 3 of the Act, and leaving untouched the reserved power of the States over rates on traffic within their own borders, other than as such power was before limited by said section 3. This made the words “ except as provided in section 13 thereof,” pro- posed to be put into the proviso in section 1, un- necessary and inappropriate, and the reservation was re-enacted in the words used in the Act when originally passed, as follows: “ Sec. 1. # # # (2) The provisions of this Act * # * shall not apply — (a) To the transportation of passengers or property * * # wholly within one State and not shipped to or from a foreign country from or to any place in the United States. # * # # When Congress did this it had before it the opinions of the Supreme Court interpreting the Act to Eegulate Commerce. It knew that in the Minnesota Rate Cases opinion the court had said that the proviso in section 1 was intended by Con- gress to define the “ scope of its regulation.” And ijt enacted the proviso just as it 'stood in the original Act. 47 It is a rule, too elementary to require the cita- tion of authorities, that when a legislative body re-enacts a statute or part of a statute which has received judicial construction, it adopts the con- struction which has been placed upon it. Accord- ingly, by the re-enactment of this reservation Congress emphasized its intent not to encroach upon the domain of intrastate traffic beyond the extent to which it had originally done so indi- rectly by the prohibition against discrimination in section 3, now re-affirmed in paragraph 4 of section 13. It is impossible to read the Act as it finally passed, in the light of its legislative history, and in the light of the most cardinal rules of construc- tion, and entertain doubt that Congress on this particular point accepted the view of those who spoke for the preservation of State authority, and determined to withhold from the Commis- sion the power for which it asked. By design Congress limited the power of the Commission to the correction of discriminatory situations in- juriously affecting persons and localities'. We do not believe that the eager insistence of carriers will lead this Court to attempt to override the will of Congress by reading into the Act some- thing which Congress deliberately left out. An incident which occurred in the course of the consideration of the bill in Congress is most significant as indicating the definite intention of Congress to restrain the Commission from inva- sion of the State field of regulation. In the Esch Bill, when introduced, in place of the words 11 the Commission shall have authority * * * to make * * * orders * # # to remove any 48 undue or unreasonable advantage, preference or prejudice as between persons or localities in in- trastate commerce on the one band and interstate or foreign commerce on the other hand,” ap- peared the words “ the Commission shall have the authority * # * to make * * * orders * * * to remove any undue preference or prejudice as between persons or localities in State and interstate and foreign commerce'.” Mr. L. B. Boswell made inquiry by letter of Chairman Esch as to whether this language was intended to extend the power of the Interstate Commerce Commission to and over rates apply- ing as between persons or localities wholly intra- state. The letter was referred to Chairman Clark of this Commission, and his reply was made part of the record. He said: “ Mr. Boswell asks for interpretation of the language occurring in lines 18 to 23 on page 21 of the bill and inquires whether it is intended to confer upon the Interstate Com- merce Commission jurisdiction of complaints of undue preference or prejudice as between parties or places within one State. In other words, does it confer upon the commission jurisdiction of complaints of undue prefer- ence or prejudice wholly intrastate? The answer to this is, of course, u no.” The language in question refers only to undue preference or prejudice as between persons or localities in state commerce on the one hand and interstate commerce or foreign commerce on the other hand, and I do not think there is any probability that it will be misunderstood or misconstrued.” While Chairman Clark had expressed the opinion that the language originally carried in 49 the bill could not be construed to extend the power of the Commission to deal with discrimi- nations existing between intrastate rates, Con- gress desired to exercise extreme care on that point, and adopted the concise and explicit words ‘ ‘ between * * * intrastate commerce * * * on the one hand and interstate and foreign com- merce on the other hand, ’ ’ which Chairman Clark had used in his letter to negative any such con- struction. We take it to be established then that nothing contained in paragraph 4 in any way enlarges the power of the Commission beyond what it was before that paragraph was added to the Act, except only with respect to its power and duty to prescribe rates to be observed for the purpose of removing discriminations found. The order of the Interstate Commerce Commission is unlawful and unconstitutional on its face. The rule of construction laid down by the Su- preme Court in the Illinois passenger case, the last of the so-called Shreveport cases, must of course be the guide. There the Court said, 245 U. S. 493 at 510 : “ In construing federal statutes enacted under the power conferred by the commerce clause of the Constitution, the rule is that it should never be held that Congress intends to supercede or suspend the exercise of the reserved powers of State, even where that may be done, unless, and except so far as, its purpose to do so is clearly manifested. Reid v. Colorado, 187 U. S. 137, 148; Cummings v. Chicago , 188 U. S. 410, 430 ; Savage v. Jones , 50 225 U. S. 501 ; Missouri , Kansas & Texas Ry. Co. v. Harris, 234 U. S. 412, 419. This being true of an act of Congress, it is obvious that an order of a subordinate agency, such as the Commission, should not be given precedence over a state rate statute otherwise valid, un- less, and except so far as it conforms to a high standard of certainty/ ’ ( Illinois Cen- tral R. R. v. P. U. C., 245 U. S. 493, 510.) The order then must be strictly construed and we must search its provisions and the report of the Commission upon which it is based, to form an opinion upon its validity. The Commission’s report expressly admits that under these “ Shreveport ” cases, its power does not extend to all of the rates within New York State. It will be remembered that in the Illinois Case {supra), the Commission’s order was de- clared invalid for indefiniteness. The language used by the Supreme Court, is so nearly the exact language of the Commission’s report here, that we respectfully call the Court’s particular atten- tion to it. The Supreme Court says: “ The extent of the discrimination found and of the remedy applied, must be gathered from the report and order of the Commis- sion, for they constitute the only authorita- tive evidence of its action. The reports show that the only discrimination found relates to the passenger traffic between Illinois and two cities outside that State — St. Louis and Keokuk. There is no finding that this traffic extends in appreciable volume to all sections of Illinois. As to some sections its volume may be very large and as to others almost or quite negligible. At best the reports leave the matter uncertain. Obviously this traffic is only a small part of the interstate 51 passenger traffic moving over the railroads in Illinois and yet the finding is merely that there was discrimination against this part. Had the Commission regarded the discrimi- nation as state wide, it is but reasonable to believe that it would have said so in its finding.” ( Illinois Central R. R. v. P. U . C., 245 U. S. 493, 507, 508.) The report in this case says (p. 186, fol. 918) : “ There may be cases in which intrastate rates affect interstate commerce injuriously in ways so manifest as to make them subject to our control. There may be cases in which the connection of intrastate rates with the movement of interstate commerce is so re- mote and unimportant that we may properly disregard it. But in every case which puts in question intrastate rates , the decisive factor is whether or not they affect inter- state commerce injuriously to a considerable extent. If they do they are brought u/nder our jurisdiction and made subject to our con- trol, even although the whole rate structure of a state should be involved.” And as a further evidence that no general state- wide discrimination is found we have this astonishing provison (p. 191, fol. 942 of this Record) : “ Those findings are without prejudice to the right of the authorities of the State of New York or of any other interested party, to apply in the proper manner for a modi- fication of our findings and order as to any fares, charges or rates on the ground that the latter are not related to the interstate fares, charges, or rates in such a yjay as to contravene the provisions of the interstate commerce act ” 52 In other words, 1 1 There may he cases in which the connection of intrastate rates with the move- ment of interstate commerce is so remote and un- important ” that they u do not contravene the provisions of the interstate commerce act.” But regardless of whether there are such or not, the rates in those cases are raised with the others. Then if the Commission has exceeded its power, any interested party may apply to it to have it admit and correct this abuse on its part. In the Illinois Case the order was invalid be- cause it did not state that the discrimination was state wide. In this case it is even more clearly invalid, for though it raises all rates, it expressly states that many of them ‘ ‘ may ’ * not be * ‘ related to interstate fares, charges or rates in such a way as to contravene the provisions of the Interstate Commerce Act.” Plainly, if the Commission has exceeded its power as to one single rate covered by its blanket order, the entire order is invalid. The Courts cannot determine which rates are subject to its jurisdiction and which are not, and amend the order accordingly. If the Commission exceeds by one iota the power granted it, its act is void and of no effect. Certainly it may almost be denominated arrogance for a subordinate tribunal appointed by the Congress brought into being by the State to say, in effect “ Whether or not our power under the Constitution extends to all these rates we will raise them all, and if we have exceeded our power the States can come in and point it out to us.” This is nothing less than suspending the Con- 53 stitution, as to such rates as are not within its power, with leave to the sovereign State of New York to apply to have the Constitution reinstated. If things have come to such a pass, the States of this Union have indeed raised up a Frankenstein monster to destroy them. The dispensing power was advocated by the Stuart kings but is not part of our law. And the reason for this practically admitted abuse of power is thus stated : “ This proceeding presents a practical question which we have endeavored to deal with in a practi- cal way. The needs of these interstate carriers for revenue to enable them to provide adequate transportation service and facilities are im- mediate and, in the interest of the public, can not be permitted to await the consideration in detail of individual fares, charges and rates.’ ’ The law provides and the Constitution requires that the railroads should have the revenue to which they are entitled. But there is no sanction in law or in reason for the proposition that be- cause of the claim of the railroads for additional compensation, the ancient privileges of the great State of New York should be abolished, our con- stitutional privileges denied, and the Constitution itself suspended at the whim of the Interstate Commerce Commission. And why this haste on the part of the Inter- state Commerce Commission to raise all rates? If the railroads, after submitting to the Public Service Commissions, had been validly aggrieved by their denial of increased fares, could they not have sued out a temporary injunction in either the Federal or the State Courts on the ground 14 54 that the rates fixed were uncontitutional ? Could they not have obtained relief in a few days 1 , just as the gas companies of this State have done! We respectfully submit that this was the proper and only constitutional course. But that was not the desire of the railroads. Their desire was and is to overthrow the State authorities. They demanded action by the State authorities similar to that of the Interstate Commission. When the State authorities, acting under their oaths of office, denied their request or demand for increases, they in defiance went to the Interstate Commission. The Interstate Commission has sustained them in their defiance, but in so doing it has far ex- ceeded its constitutional and statutory powers. The Interstate Commerce Commission has unauthorizedly assumed the authority of an appellate tribunal to review the action of State Legislature and regulatory bodies. That the Interstate Commission does without warrant of law so set itself up as an appellate tri- bunal is the inescapable conclusion from an ex- amination of the report in this and the Illinois case. Here the first recital in the report (p. 291) is that the railroads have applied to a Public Ser- vice Commission for relief, that it has been denied and that “ thereafter the principal steam railroads serving the 'State of New York filed with us a petition for relief in accordance with the provisions of Section 13 of the Interstate Commerce Act.” This practically states that this is an appeal from the order of the State authority. The strange nature of the appellate jurisdiction 55 claimed by the Interstate Commission cannot be better summed up than in the words of Commis- sioner Eastman’s able dissenting opinion as fol- lows (pp. 199, 207) : “ In essence, the carriers’ position is that when we authorize an increase in interstate rates under section 15-a of the interstate commerce act a corresponding increase must be made in intrastate rates; otherwise un- just discrimination against interstate com- merce results which it is our duty under section 13 to correct. State Commissions may be asked to authorize the intrastate in- creases, but they need be offered no evidence except the fact of our decision and have no real discretion.” “ The record in the instant case is based upon and conforms to this general theory of our power, and it is the only theory, it seems to me, upon which the decision of the major- ity can in full measure be supported. I am unable to believe that it is sound . 9 ’ It is not sound. If there could be appellate jurisdiction in the Interstate Commission, it assuredly could not be based upon a mere failure of the State authorities to do as to intrastate commerce precisely what the National body has done as to interstate commerce. Yet that is the claim made. It is charged New York has been “ narrow and selfish.” It can no longer regulate its own rates. The following states also have been 4 4 narrow and selfish”: Arkansas, Florida, Illinois, Louisiana, Michigan, Minnesota, Nebraska, North Dakota, Ohio, South Caro- lina, Texas, Wisconsin, Utah and Iowa. As to these fifteen, including New York, petitions 56 similar to the one here involved have been filed with the Interstate Commission. New York Illinois, Wisconsin, Arkansas and Ohio, have already been found guilty and punished. It may be assumed that the other ten will similarly pay the penalty of differing from the National body. These fifteen states contain, according to the Literary Digest of October 23, 1920, 44,114,000 inhabitants or more than 41 per cent of the popu- lation of the United States. Indiana, with 2,930,544 inhabitants has simi- larly offended, as has Nevada, with 77,407 in- habitants. Up to mid-October, we are informed that the railroads had filed no indictment against these two states. They exercise their constitu- tional powers, however, only at the sufferance of the railroads for the decisions in this case and similar cases since assure us that in such cases an indictment is equivalent to a conviction. Perhaps, indeed, even now these two states are on trial with the others. Regulation of Interstate Commerce May Not Provide Revenue from State Commerce. Although States may not burden interstate commerce, there is a reciprocal obligation pre- venting the nation from destroying that which belongs to the States. It may not properly be said that all the power of the United States can- not be exercised without destroying all the power of the States. The two powers are to be exercised harmoniously. 57 Commissioner Ford says at folio 934 that the revenues derived from interstate and State com- merce may be so commingled as to give Congress absolute control over both. There is direct au- thority to the contrary. In the great case of Smyth v. Ames, 169 U. S. 466, argued by James C. Carter and William Jennings Bryan, Mr. Jus- tice Hailan said at page 541: “ The State cannot justify unreasonably low rates for domestic transportation, con- sidered alone, upon the ground that the car- rier is earning large profits on its interstate business, over which, so far as rates are con- cerned, the State has no control. Nor can the carrier justify unreasonably high rates on domestic business upon the ground that it will be able only in that ivay to meet losses on its interstate business. So far as rates of trans- portation are concerned, domestic business should not be made to bear the losses on in- terstate business, nor the latter the losses on domestic business. It is only rates for the transportation of persons and property be- tween points within the State that the State can prescribe ; and when it undertakes to pre- scribe rates not to be exceeded by the carrier, it must do so with reference exclusively to what is just and reasonable, as between the carrier and the public, in respect of domestic business. The argument that a railroad line is an entirety; that its income goes into, and its expenses are provded for, out of a common fund; and that its capitalization is on its entire line^ within and without the State, can have no application where the State is without authority over rates on the entire line, and can only deal with local rates and make such regulations as are necessary to give just compensation on local business.’ ’ 15 58 Yet Commissioner Ford cites the Minnesota Rates Cases as establishing the conti ary when no such language appears in the opinion. His infer- ence is general; it cannot be established by pre- cise reference to any part of the opinion of Judge Hughes. The power to regulate interstate commerce does not permit the collection of revenue in this State for building up agencies of commeice in the west or especially for the purpose of meeting losses incurred in commerce outside of New York where operating conditions are entirely different. The amendment to the Constitution permitting the present income tax made the country one tax district. Under an income tax, money may be raised in New York for national loads in New Mexico and, perhaps, for schools in California. Yet, we deny that money may be raised directly in New York by an increase in rates to meet the expenses of a federal agency outside the State. The Formula of Raising all State Rates to the Level of Interstate Rates is too Rigid to Be Practicable and too Unjust to Have Been Intended by Congress. We have heretofore pleaded and argued that the order of the Interstate Commerce Commis- sion was: 1, not founded on evidence; 2, not authorized by the statute; 3, unconstitutional at all events. In support of the second and third we offer a criticism of the absurd, unequal and unjust result of the Commission’s action as indicating that no such unhappy culmination in the exercise 59 of federal powers was ever intended by Congress or by the people. The rule of law has been that State commerce must not burden interstate commerce. This is very good if limited to its proper held. Yet the Commission has derived from this a formula for fixing all State rates and destroying the entire rate structure of New York. The Commission denies that it has any other formula than “ State rates must be raised to the level of interstate rates.’ ’ It says that to apply any other rule would be exercising a power not granted it. The practical result is that State rates may be advanced, but not lowered. If the State rate is too high it may not be lowered, by the Interstate Commerce Commission, to the level of interstate rates ; if it is just right, but lower than the interstate rate, it must be increased; if it is the same as the interstate rate, but unjust in itself, it may not be touched. As a result the rate from New York to Mount Vernon is the same as the rate from New York to Chicago. The Interstate Commerce Commis- sion denies the power of the State to make it less, it denies its own power under the Constitution to make it less. Density of traffic, peculiarities of operation cannot affect this rate. So it is on the entirely interurban line of the Long Island. The same result is reached for the Fonda, Johns- town and Gloversville, an electric interurban rail- road, no different in character than hundreds of other interurban lines, except that it parallels the New York Central. There can be no relief be- tween Albany and Troy, until traffic on the Mich- igan peninsula improves so as to permit a lower- 60 ing of the whole schedule of rates for the trunk line carriers and the Attica and Arcade simul- taneously. The Commission then attempts to find reasons to uphold this result. As is so often the case where “ progressive principles ” are invoked by - “ forward looking men ” things are to be changed by giving them new names. The railroads already existing are divided into four groups. Our roads fall within the “ Eastern Group / ’ Nothing has changed. The New York Central is still an interstate road. The Attica & Arcade is still a road wholly within Wyoming county. Operating conditions and the competitive situation is still the same on Long Island and about New York city. The Fonda, Johnstown & Gloversville is still a traction com- pany. Yet, by giving the roads all one name, a community of interests an indivisible unity is claimed to be accomplished. We pass from the living facts into metaphysics and mysticism. The power of the .States may be destroyed, because the roads that were once in the States have now by an ipsi dixit been transported into an “ East- ern Group ’ ’ and their situation thereby is claimed to be entirely changed. Still, this is a simple way. It relieves the Com- mission of work, and the power may be broadly exercised to the benefit of the railroads who are now in pressing need of aid, without regard to individual rights. If the action is condemned as hysterical, the Commission suggests that it may later right the wrong. The mortgage is to be foreclosed without any parties defendant and their rights are to be disposed of by orders nunc pro tunc as they may later appear. 61 However, Commissioner Ford perceives that this broad stroke of policy is not enough. He attempts to establish himself upon various grounds. He submits that the power exercised is justified where there is unity of management and operation. The great “ Eastern Group ” idea is too large to fit here. Unity of manage- ment and operation may be a determinative factor for trunk line roads only; jurisdiction over the Attica and Arcade is concededly lost to the Inter- state Commerce Commission under this rule. Yet, even this factor will not stand criticism. If unity of management and operation is decisive, it is left to the railroads by combination with interstate roads to determine whether they themselves will assume state or federal control. The Delaware & Hudson Company could simply operate its sub- sidiary, The United Traction Company under the title, “ The Delaware & Hudson Company ” and the Albany street railroad would fall into the class of the Fonda, Johnstown & Glover sville. Another determinative factor is proffered; the existence of Interline business is declared to be decisive. If this is so, the subway in New York then comes under the jurisdiction of the Inter- state Commerce Commission as soon as it and roads running into New York begin to sell stick- ers permitting the beginning or termination of an interstate journey over it. The remedy provided by the Commission is ex- travagant. On the contrary, let expensive inter- state trains be made extra fare trains. Poor service may not be given at an exorbitant rate in northern New York and on the Ho jack roads throughout the State, in order to provide terminal 16 62 facilities in Cleveland, Ohio. The power to fix rates is the power to control service. Unless a regulating authority may provide revenue to carry out its commands, it is helpless. This tax- ation of the State of New York destroys every hit of its power. The fundamental difficulty with the opinion of Commissioner Ford is that he tries to find rea- sons that have not heen supplied him by the courts. Employing the dull insolence of legal phrase- ology he seeks to establish this crazy quilt prin- ciple by steeple chase reasoning that leaps every obstacle. The National and State powers may be harmo- nized. The courts have pointed out that there is an irrepressible conflict, only where there is “ proved undue discrimination against persons and localities in interstate commerce.’ ’ This is a formula that is exact and may be equally em- ployed. Every word of it has a distinct applica- tion. Commissioner Ford’s opinion on the contrary rides too many horses. Accept his rea- sons and no man may say where we will be taken. Hon. Charles F. Amidon of Fargo, North Dakota, in an address delivered to the American Bar Association in 1907 (Report 1907, page 463), boldly proclaimed the principle, which Commis- sioner Ford avoids. iMr. Jackson E. Reynolds in April, 1908, likewise stated a logical position in his article “ Railway Valuation — is it a Pana- cea ” published in the Columbia Law Review. The Court, we assume, must find reasons, if as we confidently trust it will not, it should be misled into upholding the action reviewed here. If this 63 calamity overtakes us, we recommend your honors to the able, fearless and lawyer-like expositions of their position by these pioneers, Amidon and Reynolds, rather than to the opinion of the Commission for the foundation of your deter- mination. Messrs. Amidon and Reynolds boldly reject the law as we have known it and would probably shock even the constitutionalists like the late President Roosevelt of the school of James Wil- son. Yet they start with a premise and come to a conclusion. Their writings have a logical as well as a rhetorical excellence We submit that a scientific quality is indispensable in the develop- ment of our constitution law. We deny that the finely balanced structure of our government un- der a written constitution will be improved by stop gaps and patch work based upon an hysteri- cal plan to aid one of the great undertakings of the country in a crisis which even now is passing. There remains in our attack upon this out- rageous formula of the Commission and their rea- sons therefor to point out another injustice. The scheme of the Commission may increase the local rates above interstate rates. That is, the rate from Utica to Albany is made 3.6 cents, but the rate from New York to Chicago is made less. Mr. Hunter, assistant to Trunk Line Associa- tion, passenger department, testified that all passenger rates in New York, both state and interstate, below three cents a mile were advanced to that minimum by Order 28 of the Director General. The rates in effect for intrastate pas- 64 senger service in New York at the taking effect of Order 28 were as follows : Rate in Name of carrier. cents per mile New York Central: Adirondack Division 2.5 Buffalo Division 2. Harlem Division 2.5 Hudson Division *2.1 Mohawk Division 2. Ontario Division 2.5 Ottawa Divison 3. Pennsylvania Division 2. Putnam Dvision Varies 1 from 2 to 3. Rochester Division 2. St. Lawrence Division 2.5 Syracuse Division 2. Line West of Buffalo 2.5 New York, Chicago & St. Louis 2.5 Buffalo, Rochester & Pittsburgh 2.5 New York, Ontario & Western 2.5 Delaware & Hudson Co 3. Pennsylvania Railroad: Buffalo & Allegheny Division 2.5 Elmira Division 2. Lehigh Valley, varies from 3 cents per mile short line distance to 2.5 per mile.. Erie. same as Lehigh Valley Delaware, Lackawanna & Western, same as Lehigh Valley. The following questions' by Mr. Paulding and answers by Mr. Hunter reveal the solution of the whole conflict between the arbitrarily fixed war nates for intrastate fares' and the 3.6 cents rates now in force by virtue of Ex Parte 74. Q. Your experience, of course, has made you familiar with the effect of the geograph- * i. e., 2.1 to 1.17. 65 ical situation the state of New York has on the passenger rate structure in the East? A. Yes, sir. Q. What is that effect? A. Well, the effect is that New York and Buffalo, being such important commercial centers, that they practically are a funda- mental key, you might say, to the entire rate fabric of this country. You cannot disturb the rate between New York and Buffalo, or Albany and Buffalo, for instance, in this par- ticular instance and make it three cents a mile against 3.6 cents a mile, without very seriously affecting the entire rate fabric of the country. Q. Will you enlarge that a little bit and show how and in what way, as a practical matter, that statement of yours works out? A. Passengers can take advantage of the lower intrastate fares of the New York Cen- tral from New York and other points to Buffalo, to secure through transportation at less than the interstate fares on combina- tions, by buying tickets to Buffalo and re- purchasing therefrom, as illustrated by the following examples : Through fare New York to Cleveland, which is interstate, $20.52. Combination New York to Buffalo, intrastate, $13.16; Buffalo to Cleveland, interstate, $6.56: total $19.72, or on purchase a saving of 80 cents on every ticket. It was also pointed out that if a Cleveland pas- senger rode in a sleeper to Buffalo on an intra- state ticket he saved the surcharge of $1.25, which added to the 80 cents makes) a total saving of $2.05. It was not claimed that any actual oases of defeat have been discovered; simply that they are likely to occur. The inconvenience involved to the traveller, the few trains whose 17 66 schedules would permit any such smart practice, the loss of ride in Pullman between Buffalo and Cleveland, and the notorious fact that the traveller by Pullman car on an interstate journey must order his accommodations weeks rather than days in advance, make the whole matter of ‘ 4 beating ’ ’ the interstate fare speculative, as Mr. Hunter admitted on cross-examination. But to return to the main text, which is the necessity (so the carriers claim) that every way fare in New York must be 3.6 cents a mile, not because of New York conditions, but because of interstate conditions:* because interstate fares are n'ow 3.6 cents a mile. Examiner La Roe asked these questions and Mr. Hunter answered them as appears 1 : Q. I do not understand that you directly answered Mr. Paulding’s inquiry, which is one I am considerably interested in, and that is the extent to which, if any, the lower rates between Buffalo and Albany affect the through passenger rates between the East and the West. Will it, in your judgment, require a reduction in the interstate fares below their present level, or will it merely facilitate the defeat of the interstate fares through repurchase? A. Well, Mr. Examiner, in that regard, in addition to the possible manipulation of the rates on the part of passengers, as I have before said, a situation of this kind is very serious, in that there are other arteries of travel that are affected by it. For example, between New York and Chicago, as I ex- plained before. Buffalo is a very important gateway. The New York Central operates * “ Geographical Situation,” according to Mr. Paulding. 67 via this gateway. These opportunities for repurchase are there. Now, there are other lines operating via various other gateways, through Pittsburgh, Salamanca, Wheeling, through Parkersburg; and the lines on their own bottoms, under existing conditions, and competition being an element in the conduct of the properties, you can see that sooner or later there is going to be an agitation on the part of those lines which are adversely affected, to bring about some parity of con- ditions that exist under a normal basis of making interstate rates : that is one of the things involved in this whole situation. By Mr. Paulding: Q. Now, Mr, Hunter, going to the New York-Buff alo situation, what is the intrastate rate between New York and Buffalo? A. The intrastate rate between New York and Buffalo is $13.16 over the New York Central. Q. And take the other lines between New York and Buffalo, what is the rate under present interstate rates over those lines? A. $14.27. Q. All of those rates being larger ? A. They are. Q. Assume, if you will, that the New York State rates continue in effect, three cents a mile, what will be the ultimate effect on the other rates between New York and Buffalo? A. Well, judging by past experience, I should say that they might not endure for any great length of time. Q. Would they have to meet the New York State rate? A. They would, sir. Q. Decrease interstate rates to that ex- tent? A. I think it [they] would, inevitably. 68 After giving several illustrations of the differ- ence in rates', state and interstate, due to the dif- ference between 3.6 cents and 3 cents multiplied by the number of miles involved, Mr. Hunter was asked by Mr. Paulding and answered as f ollows : Q. In other words, the Albany-Buffalo rate is the key to the eastern rate situation? A. Albany-Buffalo is the key to the New England situation, and the New York-Buff alo is the key to the balance of the country. Q. And if the rates remain as they are in- terstate [intrastate] will that inevitably affect the [intrastate] interstate rate as a matter of competition? A. Yes. Q. Will it bring it down or leave it alone? A. Bring it down. Q. To the level of the state rate? A. To the level, at least, of the combina- tion and the state rate, I should say. On cross-examination Mr. Hunter testified that there were eight (8) competitive routes between New York and Chicago, viz., New York Central; West Shore; New York, Ontario & Western ; Erie ; Lackawanna; Lehigh Valley; Pennsylvania; and Baltimore & Ohio. Q. (By Mr. Hale) : Now the New York Central goes up north as far as Albany, then west to Buffalo and around Lake Erie by the Lake Shore and Michigan Central, and the most southern route is the Baltimore & Ohio? A. Yes. Q. Does that go through Washington? A. Yes. Q. The Pennsylvania is the short line of all? A. Yes, sir. 69 Q. And the through rate of all these [eight] railroads is found by multiplying the mileage of the Pennsylvania by 3.6? A. Substantially so, Judge, but I would like to get this clear upon the record, just how the rate is made today. Q. Very well. A. The short line from New York to Chi- cago is via the Pennsylvania Railroad, dis- tance 906 and a fraction miles. It makes three cents a mile, as established by the Rail- road Administration $27.22. To that, under the authority of the Interstate Commerce Commission in Ex Parte 74, 20 per cent was added, so that that has the effect of estab- lishing the present interstate rate between New York and Chicago of $32.67. Q. Well, that really if you divide $32.67 by the number of miles you get the quotient of 3.6? A. Substantially, I should say. I have not tried it. Q. Well, that is the basis? A. That is the basis. Q. If there is any difference, it is one of fractional and not of consequential amount? A. Yes. Q. That makes the rate, therefore, 3.6, less than that on every competing line? A. Yes, sir. Q. Which is the longest road, Baltimore & Ohio or New York Central? A. I could not say offhand. The New York Central is not the longest line. I should imagine perhaps the Baltimore & Ohio. Q. Have you any idea what the Baltimore & Ohio gets per mile on that same rate ? A. No, I have not precisely, but we could figure it out. Q. It is a question of computation, is it not? 18 70 A. A question of computation; yes, sir. Q. In other words, there is only one car- rier between here and Chicago that is going to receive net 3.6 per mile? A. Yes. Q. And yet yon propose to make — I say you propose — I assume you identify your- self with the New York Central and these other petitioners here. You propose to make every local passenger in the state of New York pay a greater rate for his ride from one point to another than you receive on the through route on any of these others except the Pennsylvania? In other words, that the rate fixed by the Pennsylvania by reason of competitive! conditions between New York and Chicago is to determine every local rate in the state of New York, and determine it at a higher figure than between New York and Chicago ? A. Well, Judge, of course, I could not sub- scribe to that proposition. Q. You think that I am arguing the case? A. Because it is competitive. Q. Is not that the fact, beneath it all, that only one carrier, — that the whole busi- ness is determined by competitive condi- tions, so far as the New York-Chicago rates are concerned; that you cannot allow any one road to charge or make the others charge the same rate precisely ; if they did, one road would get all the traffic — is that the idea — the short road? A. Well, the Eailroad Administration, I might say, prior to Federal control, the rates between New York and Chicago were not alike by all lines. They were alike by the New York Central and the Pennsylvania, and the other lines were known as differential lines and a like rate obtained. The Railroad 71 Administration decided that the rate should be alike by all lines. In other words, that the basic rate of three cents per mile should be the establishing* factor in making the rate. They, therefore, established like rates on all lines between New York and Chicago, made on the short mileage on the Pennsylvania. Now, in approaching the equalization of fares, the long prevailing custom and prac- tice that had been in effect throughout the country was taken into consideration. In other words, the fares between New York and Chicago, being great commercial centers, it was felt that they should be 'alike in order to accommodate the enormous travel between those two points, by giving the passengers the maximum train facilities between those two points ; and that was true of a great many other commercial centers, like between New York and Pittsburgh, New York and Wash- ington, and New York and St. Louis'. En- tirely aside from the competitive conditions, as you are trying to represent as between the carriers themselves, my own view is that while the carriers were naturally concerned as between themselves, from a competitive standpoint, it is not one-sided, in that the traveling public were benefited to the extent that the carriers have not taken the full ad- vantage of the 3.6, cents per mile, so that the passengers on the long haul got the advan- tage of the common rates and with the maxi- mum train service. Q. I understand you are making [asking] here for a rate of 3.6 cents per mile on all local tickets between any two points, between stations on the New York Central, including Albany and Buffalo? A. Yes, sir. Q. The real foundation for your asking for that is the fact that the rate from Chicago to 72 New York is determined by the mileage of the Pennsylvania? A. No, sir, absolutely not. Q. Why should the rate between Schenec- tady and Utica, for illustration, or Utica and Syracuse, or any other two stations ten miles apart, depend remotely on a fare which must be fixed by competitive conditions existing between Chicago and New York, by reason of these various routes? A. Judge, we are not attempting to rest our case on the New York-Chicago situation. As I understand it, we are simply trying to explain the facts in the case — what the re- sult would be if the rate fabric in the state of New York stands where it is today. Q. I suppose there are no two roads' to Buffalo — that is the Lehigh, the Lacka- wanna, the Erie and the New York Central all have different mileages? A. Yes. Q. That rate is determined by the road with the least mileage? A. The Lackawanna Railroad. Q. So you take a passenger who rides over your road from Albany to Buffalo — you take a less rate per mile than the Lacka- wanna receives? A. That is true, but again I say, if there is any disadvantage in that, it is against the carrier and not the public. Q. There is no exception in your prayer for relief, or what you desire to accomplish by this proceeding or any similar proceed- ing, — no exception in favor of local fares at any less than 3.6? A. No, sir. So here is the position of the New York Central and other carriers in this caise. All local rates whatsoever in the state of New York must equal 73 the rate per mile of the (shortest railroad between New York and Chicago, and the shortest railroad between New York and Buffalo — although seven of the eight competitors of the Pennsylvania (in- cluding the New York Central) for New York- Chicago passengers must take less per mile, and although four of the five competitors 1 of the Lacka- wanna (including the New York Central) for New York-Buff alo passengers must take less per mile. To understand the full import of the carriers’ position is, we respectfully urge, to reject it, both as matter of justice and as matter of law. Interstate Commerce Act , § 13 (4) The Minnesota Rate Cases, 230 U. S. 352 412 Shreveport Rate Cases, 234 U. S. 342 American Express Co . v. Caldwell, 244 U. S. 417 Illinois Central R. R. Co . v. Public Service Commission, 245 U. S. 493 In none of these cases were any more of the state rates invalidated than those which the court held to be in direct conflict with lawfully estab- lished interstate rates. And § 13 (4) of the amended Interstate Commerce Act goes no further. The New York Central is Doing Business Under a Charter Contract. Only by an Abandonment of its Charter and Federal Incorporation May it Avoid the Two Cent Fare. The railroads of New York grew up, beginning in 1826, contemporaneously with the development of the immense traffic upon the Erie canal after its original completion in 1823. Some of the con- 19 74 stituent companies making up the New York Cen- tral within New York were at first f ranchised only for passenger traffic, and then generally the others were permitted to carry freight in winter only, upon payment of the canal tolls to the State. Later they were permitted to furnish what amounted to an express service by carrying freight all the year round upon paying the canal tolls to the State when competing with the State ’s project. See Revised Statutes, 3d Edition, Vol. I, page 219, where many of these acts are collected or referred to; also L. 1851, ch. 497, repealing the tolls, Whitford’s Canal History and infra. The State further made a direct loan of $3,00 | 0 i ,0 l 00 l to one of the roads and $600,000 in loans to several other roads, insuring their completion and opera- tion within their limited local field. (Whitford Canal History, vol. 1, page 234). The competi- tion of the canal, therefore, was from earliest times the basis of rate-making in New York, as has been judicially recognized. Mr. Justice Hughes says in The Minnesota Rate Cases , 230 U. S. 352, 413 : “ More potent than these provisions (early state legislation) in the actual effect upon railroads’ tariffs, was the state canal. It is a matter of common knowledge that the traffic on the trunk lines from the Atlantic sea board to the west was developed in com- petition with Erie Canal, built, maintained and regulated by the State of New York to promote its commerce.” The canal was an agency of interstate commerce long before the local lines now making up the New York Central were consolidated, and before 75 Congress by the Act of June 15, 1866 (U. S. iStat. at Large, eh. CXXIV) had given the roads their first recognized interstate status by permitting connection with roads of other states. The situa- tion differed from the great transcontinental rail- roads constructed primarily for purposes of inter- state commerce under Federal charters or author- ity and through territories which have since be- come states. The point is that in the beginning the State of New York had, and exercised ex- clusive jurisdiction over the New York Central. Federal interest in the roads developed after the State had laid the foundation for certain agree- ments and regulations which have never been a direct burden upon interstate commerce and which have not yet been shown to be indirect bur- dens, which Congress by legislation might now prohibit. Historically, we are not dealing with a State regulation exercised only by virtue of Con- gressional acquiescence. We are dealing with exclusive powers of the State reserved to it and under which it was fully competent to deal with the whole subject matter, unless' it is shown in a proper proceeding before the Interstate Com- merce Commission as elsewhere authorized by the Transportation Act that the State has begun to trespass into the Federal field, or, on the other hand, that national authority has' come to compre- hend these functions of the State. When these contracts were made by the State with the railroads we have the paradox of the State regulating purely local carriage to stifle and then to equalize competition with an inter- state agency, the canal. Certainly there was no poverty of authority in the State at this period 76 where, by its own act, it suppressed localism in favor of nationalism. Federal authority cannot complain because the State found it good policy to burden local commerce in favour of interstate commerce. Accordingly the State began to make the regu- lations described in favor of the canals 1 and then by contracts assured the railroads 1 of a compara- tively high rate of return to insure their practica- bility in the very narrow local field occupied by them. The New York Central Railroad Company was formed from the following roads, the rate of fare being fixed as indicated. 1. The Mohawk and Hudson Railroad Company was incorporated under L. 1826, oh. 253, a private act, as the first steam railroad in this State. There was no restriction in regard to the rate of fare for passengers . This statute was amended by Laws 1828, ch. 122; 1832, eh. 79; 1834, ch. 20'; 1834, ch. 39; 1837, Ch. 383; 1838, ch. 224; 1847, ch. 91. By the last the name was changed to The Albany and Schenectady Railroad Company. None of the other amendments dealt with fares. The original charter was also 'amended by L. 1851, Ch. 20. These laws remain unrepealed. Another railroad to be operated otherwise than by locomotives was provided for under L. 1867, ch. 459, with the name Albany & Schenectady R. R. Co. 2. The iSchenectady & Troy Railroad Co. was organized under L. 1836, dh. 427, a private act which fixed the passenger fare at 6 cents a mile . The statute was amended by Laws 1839, ch. 31; 1840, eh. 299; 1843, chs. 134, 135; 1847, chs. 270, 77 272, 405 ; 1850', ch. 224. These laws did not change the fare and remain nnrepealed. 3. The Utica and Schenectady Railroad Com- pany was organized under L. 1833, ch. 294, a pri- vate act, and the fare was restricted thereby at 4 cents a mile . The law was amended by Laws 1837, As. 12, 363; 1838, dh. 282; 1844, ch. 335 ; 1845, eh. 342; 1847, chs. 270, 272, 405. These laws did not affect the fare and remain nnrepealed, except as L. 1844, ch. 335, may be regarded as a constructive repealing act. 4. The Syracuse & Utica Railroad Company was organized under L. 1836, ch. 292, a special act, and the fare was restricted to 4 cents. The stat- ute was amended by Laws 1 of 1841, oh. 24; 1844, ch. 335; 1845, oh. 343; 1847, As. 270, 272, 405. These laws remain unrepealed and the fare was not changed. 5. The Rochester & Syracuse Railroad Com- pany was the result of a consolidation of the Auburn & Rochester and Auburn & Syracuse. The Auburn & Rochester was organized under L. 1836, A. 349, a private act. The fare was fixed at 3 cent. It was found impossible to procure stock to be taken with this restriction and iso it was authorized to charge 4 cents (Assembly Docu- ments for 1849, No. 166). This was done by L. 1837, ch. 11. The original act was also amended by Laws 1838, ch. 290; 1840, As. 195, 208; 1841, A. 184; 1844, eh. 335; 1846, ch. 179; 1847, As. 93, 270, 272, 405. The fare was not changed and these laws remain unrepealed. The Auburn & Syracuse was organized under L. 1834, ch. 228, a private act. Fare was restricted to 4 cents. 20 78 The fare was 1 raised to 5 cents far three years by Law 1839, ch. 257. The act was also amended by Laws 1837, ch. 158; 1838, chs. 57, 293 ; 1844, ch. 335; 1847; chs. 131, 270, 272, 405. The rate of fare at 4 cents was restored in 1842 by limitation of the Act of 1839 and sections 12 and 16 of the original act were expressly repealed respectively, by Laws 1886, ch. 592; 1838, ch. 57. Otherwise the statutes remain unrepealed. These two roads were consolidated by a private act, Laws 1850, ch. 239, on Aug. 1, 1850, under the name of Rochester & Syracuse Railroad Company. No mention of fares was made in the consolidation act or in the certificate of incorporation. The consolidation act was never amended and remains unrepealed. 6. The Buffalo and Rochester Railroad Com- pany was formed on December 7, 1850, by con- solidation of the Tonawanda Railroad and the Attica and Buffalo. The Toniawand’a Railroad was organized under Laws 1832, eh. 241, a private act. No fare was fixed in this act, but by section 15 the railroad could determine its 1 own tolls. The statute was amended by Laws 1844, ch. 17, re- stricting the fare to four cents and by Laws 1846, ch. 292, which fixed certain freight rates. Other amendments were 1 : Laws 1840, chs. 116, 200 ; 1844, chs. 17, 50, 335; 1846, ch. 292'; 1847, chs. 270, 272, 405. The Attica and Buffalo was 1 formed under Laws 1836, ch, 242, a private act, restricting the fare to 3 cents. Section 13, immaterial here, was repealed by Laws 1886, ch. 598. The statute was amended by Laws 1843, ch. 169; 1838, ch. 283; 1842, ch. 80; 1843, eh. 169; 1844, ch. 335; 1847, chs. 29, 270, 272, 405 ; 1849, oh. 113. These stat- utes remain unrepealed and the fare was un- 79 changed. The railroads were consolidated as the Buffalo and Rochester Railroad Company on De- cember 7, 1850, under Laws of 1850, chapter 236. The railroads under 'sections 2-3 of this act were given the powers and privileges generally granted railroads under Laws 1850, eh. 140 1 , permitting a 3- cent fare. 7. The Rochester, Lockport and Niagara Falls Railroad Company had its origin in the Lockport and Niagara Falls. This was f ormed under Laws 1834, eh. 177, a private act, which fixed fares at 4 cents. The statute was amended by Laws 1847, eh. 408; 1842, eh. 36 ; 1837, ch. 99'; 1841, eh. 122; 1849, ch. 259; 1850, ch. 105. Under Laws 1850, ch. Ill, the road was incorporated with additions as the Rochester, Lockport and Niagara Falls Railroad Company. See also Laws 1851, oh. 228. 8. The Buffalo & Lockport Railroad Company was originally incorporated on April 29, 1852, under the general act Laws 1850, oh. 140, permit- ting the roads by section 28, subd. 9, to charge 3 cents a mile for a passenger and his baggage. 9. The Mohawk Valley Railroad Company was likewise so incorporated on December 29, 1852. 10. The Syracuse and Utica Direct was likewise so incorporated on January 26, 1853. The Constitution of 1848 had provided for in- corporation by general act and so the later rail- roads had incorporated under the general law providing 3 cents. Yet it is to be noted that the general law in section 49 of Laws of 1850', eh. 140, contained a “ very cautious 1 provision 99 permit- ting railroads under special charters' to charge a greater sum where the charter so prescribed and protecting the contract. Johnson v. H. R. R. R. Co., 49 N. Y. 455, at 459 and 463. 80 It was later held that these charter fares were mot changed by any later general legislation ex- pressing the rate-making power, except where a consolidation privilege expressly provided for a lower fare as a condition of offer and acceptance. Parker v. Elmira , etc., By., 165 N. Y. 274. In the meantime the irrevocable nature of these agreements with the State had long been urged by the railroads bef ore their contentions had been specifically recognized by the saving clauses for (charter fares in the Railroad Law of 1850 and in Laws 1848, ch. 140, § 46. Remonstrances were filed by the several rail- roads on the line from Albany to Attica, Wyom- ing county, and by the Auburn, Syracuse and Tonawanda Railroad companies against petitions to the Legislature for reduction of fares. (As- sembly Documents, No. 194, Vol. 5, 1845.) The railroads claimed in part : “ In most of these charters, or proposi- tions, on the part of the Legislature, to those who choose to accept them, and hazard their property in the undertaking, there is a pro- vision, that those who make the roads upon the terms of the proposition, may receive four cents per mile for the transportation of a passenger and his baggage. That after the road had been ten years in use, the State, (that is the people) may take it from its owners, on paying them the whole cost of construction of the road, with all moneys expended for permanent fixtures, with in- terest on such sums, at the rate of ten per cent per annum, together with all moneys expended for repairs or otherwise, deducting the tolls received. These laws or charters are on the part of the people of the State, 81 a naked offer of these advantages to those who will, ivith their capital, build these roads for the benefit of the people, upon the guar- anty contained in them. We admit that there is a right reserved to alter, modify or repeal the act, but we do most respectfully but earnestly insist that this reserved power will not allow the Legislature to destroy the guar- anty upon which the investment was made, and the work accomplished. If the com- panies shall abuse their privilege or violate any provision of law, then we admit that the power of alteration, or repeal, may be exercised.” These remonstrances were signed by the presi- dents of the Mohawk and Hudson, Utica & Sche- nectady, Syracuse and Utica, Auburn & Roch- ester, The Tonawanda, and the treasurer of the Auburn and Syracuse, the New York Central's predecessors in title. The report of the Assembly Committee on Rail- roads (Assembly Doc. No. 224, Yol. 6, for 1845) accepts the argument that a contract existed. The committee says in part: “ The charters created by the Legislature may be considered as offers or inducements held out to individuals by the State, inviting them upon the terms which they contain, to invest their money in the construction of works deemed to be of public utility and im- portance. These inducements are the right to receive tolls, either unlimited or restricted ; the right of managing their own affairs, within reasonable bounds, and a definite period for the continuance of such rights. The subscription of stock in such corpora- tions and the construction of work contem- 21 82 plated by the charter, is the acceptance of the stockholders of the proffer made by the State in the grant of the charter. This proffer and acceptance constitute a contract between the stockholders and the State, which all will ad- mit should be observed in good faith by the sovereign contractor. If this was all that vested in the given case, it would make a contract that might find security in judicial protection, and the State would not retain its power to violate it by subsequent legislation. But there is another feature in our legislation in this State which enters into, and makes part of all the char- ters, and may materially affect, in a more legal aspect, the contract contained in the grant and acceptance of such charters. By a general law the Legislature reserves to iaseJf the right of altering or repealing any corporate charter, and this reservation, for greater caution, is also inserted separately in each. This being one of the terms of the con- tract, must be taken into account in giving it a legal construction. This provision is incorporated specifically in all the railroad charters granted by the Legislature of this State. There are, however, other provisions in them which, as to some features, may tend to qualify this general reservation, even in giving them legal construction. If there was nothing but the general reservation, the Leg- islature would doubtless have the strict legal right to reduce the rates of fare on railroads, or to deprive these corporations wholly of the privilege of charging fare, or any other advantage given by the charter, however op- pressive or unjust such deprivation might be, because the power was given by the letter of the contract; as to the right to deprive in- come from the railroads there is a peculiar provision in all the charters. The Legisla- ture appear to have thought proper to grant 83 privileges proportionate to the risk; but still it might happen that the privilege granted would give too great a profit to the successful adventures. It was necessary to retain some power over corporations, in the aspect of a possible result, by some provision which would prevent them from becoming too pow- erful or wealthy. To reach this case, the Legislature have in- serted a provision in each of the charters, authorizing the State to take from the stock- holders the entire road, upon payment to them of all the money invested therein, with interest thereon, at rates varying from ten to fourteen per cent, deducting the income thereof, received by the stockholders. This has been by some deemed as in effect saying to stockholders, that they might realize as much income as they could under the provi- sions of the charter, as a compensation for the risk, but if it exceed ten or fourteen per cent, the State will take it into their own pos- session; and that as to this feature of the grant, the reservation is all the control the Legislature will exercise. It may be very plausibly urged that, as by these provisions the Legislature have adopt- ed one mode to guard against the excess of income, that the mode thus adopted is exclu- sive of all other modes, and that the only remedy which they had retained for an excess of income, is the appropriation of the road, upon payment, according to the stipu- lation, and that they could not resort to a modification of the charter merely for the purpose of limiting income. The committee do not feel called upon to give a mere tech- nical legal construction to the contracts con- tained in these charters, as modified by these pm visions/ ’ 84 The report of the Assembly Committee on Rail- roads (Assembly Doc. No. 166 for 1849, Vol. 3) states that the railroads always insisted these early charters constituted contracts' under the Dartmouth College Doctrine, despite the reserved power always expressed in the statutes and later incorporated in the Constitution. It said in part : “ These railroads have uniformly insisted, that although there was a provision in each of the charters, that the Legislature might alter or repeal it, yet as to fare they could only change it by taking the road under the above provision/ * The Assembly Committee on Railroads (Assem- bly Doc. No. 51 for 1846) later assumed that the reserved power to ‘ ‘ alter or repeal ’ ’ contained in the charters was sufficient to authorize a change. Again in Assembly Doc. No. 88 for 1851, the same committee said in part : ‘ ‘ Some of the corporations whose charters contain specific provisions with regard to fare, while contending that they are not legally bound by this provision of the general law, nevertheless express a willingness to submit to and comply with its requirements. Were this otherwise, it would be in the power of the State to compel submission, by buying them out on the terms reserved in their re- spective charters, as there can be but little doubt the State would find other companies ready to purchase on the same terms.” In all this contemporaneous construction of these early charters it should be noted that even the most extreme servant of the public interest never claimed that the fares could be fixed under 85 the common law regulatory powers 1 over common carriers. In other words, that part of the police power known as the “ ratemaking power ” com- prehended as part of the common law was never invoked. If the rates could be reduced it was) said that this could be done only by the reserva- tion in the contract, put there to avoid the inevi- table consequences of the Dartmouth College case as against the State. The railroads' consistently denied that fares could be changed even under the reserved power, regarding the fares as an integral part of the property in their franchise. Agitation for reduced fares continued, how- ever. The railroads consented to a reduction in fares in return for a decided advantage. A pri- vate Charter was offered the ten roads whose charters and fares are listed above, permitting them to consolidate. Despite the Constitution of 1848, providing for general laws, a private law was necessary to do this very special thing. This is Laws 1853, oh. 76. There is nothing mandatory requiring the railroads to accept it. The ten railroads which are expressly named therein “ or any two or more of them are hereby au- thorized at any time to consolidate such compa- nies into a single corporation in the manner fol- lowing.^ Then followed the conditions, the seventh being : “ When any two or more of the railroad companies named in this act are so consoli- dated, said consolidated company shall carry way passengers on their road at a rate not to exceed, two cents per mile.” 'Since the roads so named ran, generally speak- ing, from Albany to Buffalo, two cents has been, 22 86 until the war, the fare on this route, now part of the New York Central. This is the first agreement as to the fares in controversy in the case at bar. The railroads: ac- cepted the offer on July 7, 1855, by filing a con- solidation agreement in the Secretary of State’s office. The fare was incorporated in the certifi- cate by reference generally to the act. The name, New York Central Railroad Company, was adopted. The Hudson River Railroad Company was in- corporated under a private act, Laws 1846, ch. 216, and permitted to charge 2 y 2 cents (§ 17). Later, however, the general rate fixed at 3 cents under the first general railroad laws of 1848 and 1850 was held to apply to it and it was allowed to charge 3 cents. Johnson v. Hudson River R. R., 49 N. Y. (1872) 455. The general rates as dis- tinguished from the charter fares have, however, never been held to apply to the part of the line first known as the New York Central Railroad Company. When the Central and the Hudson companies were consolidated under Laws 1869, ch. 971, the New York Central Railroad was held to its bargain, although the Hudson River R. R. Co. was left un trammeled by other than the general rate-making power. The law provided in sec- tion 3: “ Section 3. Upon the making and per- fecting such agreement and act of consolida- tion as hereinbefore provided, and filing the same or a copy thereof in the office of the Secretary of State as aforesaid, the said corporations, parties thereto, shall be deemed and taken to be one corporation by the name provided in said agreement and act, but such 87 act of consolidation shall not release such new corporation from any of the restrictions, disabilities or duties of the several corpora- tions so consolidated; but nothing in this act contained shall allow any rate of fare for way passengers, greater than two cents per mile to be charged or taken over the track or tracks of that railroad now known as the New York Central Railroad Company; and the rate of fare for way passengers over the track or tracks now operated by the said New York Central Railroad Company shall continue to be tivo cents per mile and no more wherever it is now restricted to that rate of fare; but nothing herein contained shall apply to street railroads The jealousy with Which the Legislature guarded this valuable concession by the railroads is further shown by the fact that when the rate- making power waisi fully established after the creation of the original State Railroad Commis- sion, the 2-cent fare was expressly excluded from rate-making by an exception contained in section 37 of the Railroad Law of 18'90 and now contained in § 57 of the present Railroad Law as f ollows : u This chapter shall not be construed to allow any rate of fare for way passengers greater than two cents per mile to be charged or taken over the track or tracks of the rail- road known as the New York Central Rail- road Company, and the rate of fare for way passengers over the track or tracks of such company shall continue to be two cents per mile and no more, whenever it is restricted to ’ that rate of fare, nor shall any consoli- dated railroad corporation charge a higher rate of fare per passenger per mile upon any part or portion of the consolidated line than 88 was allowed by law to be charged by each existing corporation thereon previous to such consolidation.” (Derived from Laws 1890, ch. 565, § 37.) The Public Service Commission now claims that power has been delegated to it to waive the State’s right to the two cent fare and that the Commission has the positive duty to increase the fare if it is insufficient. doing back to the period of the Civil War, we find that the railroad in a period of economic stress almost equal to the present, cried out against its bargain for a two cent fare. No ju- dicial power was invoked to set aside the fare upon the ground that it was merely a noncompen- satory rate. Instead the railroad applied to the other party to the contract to increase the fare by a special law waiving the State’s right to the sum “ nomi- nated in the bond.” Governor Fenton vetoed the bill passed by both houses and said in part (Gov- ernor’s Messages, April 28, 1865, Vol. 5, p. 659) : “ When the law to consolidate the several railroads connecting the cities of Albany and Buffalo was projected, its passage was urged because it would largely facilitate the transit of passengers and freight between the west and the commercial metropolis. The argu- ment in favor of the measure was confined almost exclusively to the supposed advan- tages which would accrue to the public, and to the people of the State, from the reduced cost necessarily resulting from unity of man- agement. An examination of the various acts shows that the legislation of the State has been 89 greatly influenced by the considerations which were urged in favor of the act of con- solidation. The charters of some of the roads first authorized, contained provisions which re- strained them from carrying freight of any kind. The alleged necessity of protecting the State revenues by preventing competition with the Erie Canal, was the published justification of these restrictions. A few years of experience, however, clearly demon- strated the error of this position. It came to be understood that a decrease of the revenues of the State canals might be the less of two evils, and that enhanced values of real estate could be more safely relied upon as a re- source from which the expenses of the gov- ernment should be derived, than the uncertain and limited receipts resulting from the impo- sition of tolls upon commercial articles in transit between the consumer and the pro- ducer. In accordance with the teachings of ex- perience, and in response to the demands of the people, the Legislature has, from time to time, removed the restrictions which virtually gave the Erie canal a monopoly of the busi- ness of transmitting merchandise and prod- uce. By the provisions of chapter 335 of the Laws of 1844, the Utica and Schenectady rail- road company was authorized to transport 6 goods, chattels and other property that may be offered for transportation, during the sus- pension of canal navigation only/ and ‘ shall pay to the Commissioners of the Canal Fund, the same tolls per mile, on all the goods, chat- tels and other property so transmitted as would have been paid on them had they been transported on the Erie Canal. ’ The same act which thus removed the prohibition to carry 23 90 freight, provided that the railroads west from the terminus of the Utica and Schenectady railroad should have the privilege of carry- ing local freight, without being subjected to the payment of tolls. By the provisions of chapter 270, Laws of 1847, the 4 Utica and Schenectady railroad company, are author- ized to take and transport upon their railway all goods, chattels and other property that may be offered for transportation,’ and by the same act, the same privileges were given to the connecting roads — thus yielding the right to carry freight throughout the entire year, upon the condition that such freight should pay to the State the same tolls to which they would have been subjected had they been transported on the canal. By the provisions of chapter 497 of the Laws of 1851, the Legislature provided that 1 It shall not be necessary for any railroad company in this State to pay any sums of money into the treasury of this State, on ac- count of the transportation of property on any railroad on and after the 1st day of December, in the year 1851, thus finally re- moving all restrictions upon internal com- merce, and in obedience to the demand of trade permitted this withdrawal from the revenues of the canals that the people might enjoy the benefits of cheap intercommunica- tion. The process by which this result was attained, was gradual but sure, and shows plainly that those who, from time to time, gave these measures their official sanction, were actuated by a sincere and enlightened determination to secure to the people all the advantages possible to be derived from cheap and rapid transit. The Legislature of 1853, following the established precedents, and apparently 91 prompted by the same motives which had marked the actions of their predecessors, re- moved the obstacle which stood in the way of a full realization of the benefits to be derived from the policy previously declared. By con- solidating the several corporations, it secured the advantage of centralized direction. In consideration of this final and advantageous concession, the Legislature of 1853, only ex- acted that 4 when two or more of the rail- road companies named in this act are so con- solidated, said consolidated company shall carry way passengers on their road at a rate not to exceed two cents per mile. ’ In making this restriction, the Legislature adhered to the policy of the State as previously ex- pressed and secured the same by positive enactment — while it removed every form of restriction which could enhance the cost of transportation, it protected the rights of the public, by limiting the price which should be exacted. By the provisions of the act herewith re- turned, it is sought to reverse the legislation of 1853 ; to change the policy which seems to have been developed by previous legislation and to impose a higher rate of fare upon the people who may find it necessary to pass over this line of the Central Company. AC- w TV* *7v* w *n* w *7v* Should the enhanced prices complained of continue to prevail and the managers be thereby forced to forego the declaration of a dividend, the stockholders would not then be called to endure a burden more oppressive than has been sustained by many corpora- tions which have not had relief extended to them by legislative enactment. But it is im- probable that such enhanced values should long prevail. The rebellion has been sub- stantially crushed; order is being rapidly re- 92 stored, and in a short time the country will be again blessed with peace. With its return it is safe to assume that there will be an in- crease in the number of laborers and a de- crease in the cost of material. The west will continue to be the great producing country of the world. Emigration will continue to people its hills and valleys. Our commerce will again cover every sea. A large propor- tion of this commmerce and the thousands that will come from Europe, must or will pass over this great central route, and this corporation more than any other, must share in the prosperity to which our country is des- tined. Let us patiently await the fulfillment of that destiny, in the confident trust, that in a short time, the) prosperity of the com- pany will be secured without further burdens upon the traveling public. If experience shall not prove the embarrassments under which it is said to labor, to be but of a tem- porary character; and if the proposed re- forms in its future management shall not secure to capital an ample recompense, I shall then be most willing to co-operate with the Legislature in affording such relief as may be wise and necessary.” The bill was not passed over his) veto. At the session of 1867 he again vetoed a bill to raise the fare to 2% cents,, giving substantially the same reasons. This bill was not passed over the veto. (Governor’s Messages, April 11, 1867, Vol. 5, pages 802-809. ) And so it has* remained until the present. Neither party to the contract has ever admitted or contended that the two cent fare was based 1 on the rate-making power. After a fare was fixed in the charters no lower fare was ever imposed. The 93 two cent fare came into effect by consent of the appellant and agreement with the State. Through all the difficulties of hard times and increasing prices that from time to time marked the period of 1855-1917, no attempt has ever been made to attack the agreement as noncompensatory, nor has the agreement been modified by general or private law, administrative bodies exercising delegated powers or until this case, by judicial decree. The fare was only changed temporarily under the undoubted power of the Federal Gov- ernment during the war. From the foregoing we think we have estab- lished that the two cent fare is part of the con- sideration of a charter contract. It has always been iso interpreted by the parties to it. This consolidation charter is a contract under the modern authority of Cleveland v. Cleveland City Ry. Co., 194 U. S. 517. There street rail- ways were consolidated under a statute substan- tially the same as sec. 7 of L. 1853, eh. 76. The Ohio statute provided : “ Such street railroad companies may con- solidate on the terms and conditions appli- cable to consolidation of railroad companies; provided, however, no increase of fare shall he allowed on any street railroad route hy reason of such consolidation.” (Margin, page 534.) This was a restriction on the railway company, similar to the maximum of two cents agreed to by the appellant here. When the city of Cleveland, under a claim of right conferred by the reserved power, attempted 24 94 to reduce the existing fare of five cents a ride to four cents, the Supreme Court held that there was an impairment of a contract. The case here is no different except that the iState now claims its part of the contract. That these charters will he upheld at the in- stance of the government making them has re- cently been decided in a case where war time conditions were alleged to be working confiscation. In Columbus Ry. <& Power Co. v., Columbus , 249 U. S. 399, the railway company sought to be re- lieved in equity from a similar charter contract ; this time the 1 complaint was that the maximum fare was not sufficient to meet the expenses caused by the war, rather than 'that the munic- ipality had sought to break the bargain. The Court discusses fully the effect of the rule “Act of God or the public enemy ” in such cases and denies the railway any relief. It says: ‘ ‘ It certainly was not intended to question the principle frequently declared in the de- cisions of this court that if a party charge himself with an obligation possible to be per- formed he must abide by it, unless perform- ance is rendered impossible by the act of God, the law or the other party. ’ ’ (Page 412.) More recently Mr. Justice Holmes in Brooks- Scanlon Co. v. R. R. Comm., 251 U. S. 396, staid by way of dictum : “ It is true that if a railroad continues to exercise the power conferred upon it by char- ter from a State, the State may require it to fulfill an obligation imposed by its charter, even though the fulfillment in that particular may cause a loss.” (Page 399.) 95 Somewhat more specifically the Supreme Court mys in Grand Rapids <& Indiana Ry. Co. v. Osborn, 193 U. S. 7, 29-30: “ That a railroad corporation may con- tract with a municipality or with a State to operate a railway at agreed rates of fare is unquestionable. And where the provisions of an accepted statute respecting rates to be charged for transportation are plain and un- ambiguous, and do not contravene public policy or positive rules of law, it is clear that a railroad company cannot avail of privi- leges which have been produced upon stipulated conditions and repudiate perform- ance of the latter at will. Whether if a con- dition in a statute is couched in ambiguous language and is susceptible of two construc- tions, as it is claimed in the case before us in respect to the basis upon which the gross receipts per mile of operated road were to be calculated, a construction should be adopted which will not render the condition repugnant to the Constitution of the United States, we need not determine. The statute in question, in its entirety, has been con- strued by the Supreme Court of Michigan and held valid, and its decision as to the proper interpretation of the language of the act in respect to the mode of ascertaining the gross receipts per mile does not render the statute repugnant to the Constitution of the United States, within the ruling recently made by his court in Wisconsin & Michigan Railway Company v. Powers, 191 U. S. 379.” See 'also Matter of Quimby v. Public Service Commission, 223 N. Y. 24; Norfolk, etc., R. Co. v. Pendleton, 156 U. S. 667 ; also Lawyers Reports Annotated 1915 C, page 261, where other cases 1 are collected. 96 Much of the authority cited in support of our position at this point may he applied in another way where we later urge that the power of a State to create a corporation may not be destroyed by Congress. Yet, treating the question now strictly as one of property, it is worth while to determine whether Congress 1 should be charged with having impaired this charter contract and whether Con- gress has power to do so. The purpose of Congress to violate this con- tract should not be implied or derived. So amaz- ing a charge! should be sustained by the most direct and unmistakable language in the Federal Statutes. Passing from purpose and intention to power, we submit that Congress may not forever destroy the rights of the State in a contract, under an unlimited and interminable exercise of its war powers. There are dicta to the general effect that Con- gress may impair the obligationls of Contracts, because at the time of the adoption of the Con- stitution only the States were specially restrained and Congress was not. “ Sinking Fund Cases, (1878), 99 U. S. 718. See also Mitchell v. Clark, (1884), 110 U. S. 643; Legal Tender Cases, (1870), 12 Wall U. S. 529 ; Evans-Snider-Buel Co. V. McFadden, (C. C. A. 1900) 105 Fed. Rep, 297; Michigan Cent. R. R. Co. v. Slack, (1876) 22 Int. Rev. Rec. 337, 17 Fed. Cas. No. 9, 527a, affirmed Michigan Cent. R. Co. v. Slack, (1879) 100 U. S. 595; Evans v. Eaton, (1816), Pet. (C. C.) 322, 8 Fed. Cas. No. 4,559; Bloomer v. Stolley, (1850) 5 McLean (U. S.) 97 158, 3 Fed. Cas. No. 1,559; Hardeman v. Downer, (1869) 39 Ga. 425; Jones v. Harker, (1867) 37 Ga. 503; Black v. Lusk (1873) 69 111. 70." On the other hand the contrary has just as strongly been said. Hepburn v. Griswold , 8 Wall. 603, 623. Sinking Fund Cases, 99 U. S. 700', 718-719. St. Anthony Falls Water Power Co. v. St. Paul Water Commissioners , 168 U. S. 372. Legal Tender Cases, 2 Wall. 457 at 581. Loan Association v. Topeka, 20 Wall. 655 at 663-664. Fletcher v. Peck , 6 Cranch 87. Madison had denounced such laws as “ con- trary to the first principles of the social compact and every principle of sound legislation," Plant- ers Bank v. Sharp, 6 How. 301, 319. One reason why the states had been specially restricted in Article 10 was because of outrages upon aliens and because the impairment of agreements' with the British Government had endangered inter- national relations, Elliott, Vol. 5, pp. 127, 171, 207, 546. The convention had rejected Mr. Gerry resolution made on September 14th, to put a like prohibition on Congress. Yet this does not necessarily mean that author- ity had been delegated to the Nation to commit an act malum in se and that National honor re- strained only local greed. 25 98 If the prohibition on Congress' does 1 not rest upon first principles, the 5th amendment with the expanded interpretation of “ due process ” is now a (sufficient restraint. This the Court will recall provides 1 in part : “ * * * * nor shall any person * * * be deprived of life, liberty or property with- out due process of law; nor shall private property be taken for public use without just compensation.” Our property in this contract may not be pri- vate, but it is property of a person protected from taking within the meaning of due process. It is not unusual that where the limited meaning of one clause of the Constitution does not give protec- tion, the general provisions of another may be re- sorted to. See Schollenberger v. Pennsylvania, 171 U. S. 1, where the sale of oleomargarine was protected under the commerce clause, although in the earlier case of Poivell v. Pennsylvania, 127 U. S. 678, the other provisions were found insufficient to give protection against absolute regulation. The protection of the Federal Bill of Rights has been held repeatedly to apply to Congress and that its provisions are not part of the privileges and immunities of citizens guaranteed as against the states in the 14th Amendment. Maxwell v. Dow, 176 U. S. 581; Twining v. New Jersey, 211 U. S. 78. The states were restricted as to taking property particularly then, only by Article 10, until the 14th Amendment was adopted. Since that time the meaning of due process in that amendment had received the widest application. It was finally decided that under due process 1 , 99 provided for in the 14th Amendment, property could not be taken by a State without compensa- tion. Missouri Co . v. Nebraska , 164 U. S. 403, 417 ; Chicago Co. v. Chicago , 166 U. S. 226, 241. It was held that under due process' in the 5th and 14th Amendments neither the States' nor the United States could interfere with the liberty of contract. Adair v. United States, 208 U. S. 161; Lochner v. New York, 198 U. S. 45; Coppage v. Kansas, 236 U. S. 1. If due process protects' the liberty to make a contract, it must protect it when it is made. Due process in the 5th and 14th Amendments has come to mean the same thing. United States v. Armstrong , 265 Fed. 683, 690, and now protects all property against both the states and the United States. See particularly the dissenting opinion in Wight v. Davidson, 181 U. S. 371, at 387. The State is a person under the analogy of the decisions that a private or municipal corporation is a person. The charter contract was made upon behalf of all the people and all the citizens of the State. Their interest represented by the State is entitled to the protection of the Constitution. The court will perhaps take judicial notice of the fact that the state pays out money each year for the railroad fares' of its officers' and employees, thus giving the State a real property interest in the charter fare, as was 1 recognized in regard to tele- phones used by a State in Dakota Central Tele- phone Co. v. State of South Dakota, 250 U. S. 163 at 180. In one of the first great contract cases, Fletcher v. Peck, 6 Cranch 87, it was 1 held that the contract 100 clause applies to the states themselves and for- bids the impairment of their own contracts, as well as those of other persons 1 , whether executory or executed. It seems there is a reciprocal obli- gation under any proper conception of property. What the State may not do itself it ought not to be made to suffer. Certainly the State ’& interest in this contract is as great as the city ’s in the Quimby case supra. Where learned justices have, as we submit, with lack of vision as to the development of due pro- cess, said that Congress could violate contracts, this was nowhere necessary to the decision of the case. In all such cases Congress was exercising some primary or regulatory power complete in itself and to the operation of which all contracts must submit, even under the laws of a State. Even though the State’s right in this charter is not based upon property, its right should be recognized in its power. Aside from any property interest the State may have in this charter, the power of the State to regulate rates springs 1 generally from its police power ever common carriers 1 , whether corporate creatures or not, “ Inherently the power of a State to fix rates to be charged for intrastate car- riage or transmission is in its 1 nature but deriva- tive, since it arises from and depends 1 upon the duty of those engaged in intrastate commerce ito charge only reasonable rates for the services by them rendered and the authority of the 1 State to exact a compliance with that duty.” Dakota Cent. Tel. Co. v. South Dakota , 250 U. S 1 . 163, 187. It has been said that this police power is exclu- sive to the states, rather than concurrent with the 101 Federal Grovernment. Cooke , Commerce Clause , section 55. The earlier notion that the reserved power over corporations expanded this power and permitted the imposition of unprofitable rates has been abandoned. Lake Shore , etc., R. R. Co. v. Smith, 173 U. S. 685. Yet in addition to- this power of the State to simply regulate, is the greater power to create or to refuse to create corporations under such terms and conditions as it may see fit. Although a cor- poration, after its creation, under the Federal Constitution is entitled to engage in interstate commerce, before its creation the State may im- pose conditions precedent, which if imposed as conditions subsequent might be violative of vari- ous provisions of the State or Federal Constitu- tions, as was the case in Municipal Gas Co. v. Public Service Commission, 225 N Y. 93. So in Railroad Company v. Maryland, 21 Wall. 456, the State was permitted to require as a condi- tion of a charter grant, that the railroad should pay a bonus on its earnings from interstate as well ais state business' to the State of Maryland. See also Horn Silver Co. v. New York , 143 U. S. 305, 313; Raritan Co. v. Delaware Canal Co., 18 N. J. E. 546. The State may, therefore, generally impose any condition in return for the grant of a chanter. This authority of the State is like the u frag- ment of legislative power ” granted the munici- palities under Quimby v. Public Service Commis- sion, 223 N. Y. 244. The company cannot com- plain, because it is always free to renounce, 1 Osborne v. Florida, 164 U. S. 650; Pullman Com- pany v. Kansas, 216 U. S. 54. Congress has never 26 102 attempted to control tliis power and the authority in Congress was expressly denied in The North- ern Securities Cases , 193 U. S'. 197. The police power cannot be bargained away and when a State fixes a f are by a condition pre- cedent in a charter or by a contract, it is there- fore not exercising the police power, subject to its r ecogniz ed limitation s . Although it may be impracticable for the appel- lant to abandon its corporate character and oper- ate as a copartner ship or otherwise, it is- theoreti- cally possible. On the other hand, if the burdens of its charter here are too great, it can seek incor- poration as an interstate carrier under an act of Congress. The power of Congress 1 to grant such a charter seems unquestionable. California v. Central Pacific R. R. Co., 127 U. S. 1. Then it might become subject only to New York’s police power. Reagan v. The Mercantile Trust Co., 154 U. S. 413. For the present the benefits of the charter cannot be left to the appellant and its burdens 1 removed by Congress throughout the 1 life of the charter, under an assumption that there the railroads business has expanded. Paige v. Sche- nectady Ry., 178 N. Y. 102, 114. The power of the State to create corporations which may thereafter engage in interstate commerce is as fundamental as the power of the State to regulate foreign cor- porations doing business 1 here. The power of the State to create this appellant as a corporation was; reserved to it under the 10th Amendment. The Federal Government may not say, pursuant to an unlimited exercise of the war powers, what the status of the company shall be after the emergency shall pass. This would in a 103 sense be an exercise of the power of eminent do- main. Monongahela Co. v. United States , 148 U. S. 313, depending upon whether the State’s right in the contract is considered one of property or one of power. This Court Has Jurisdiction to Review the Facts on which the Report, Findings and Order were Made and to Set Aside the Report, Findings and Order of the Interstate Commerce Commission Marked Paper Five. The plaintiffs contend that said’ report, findings and order referred to as Paper Five, is 1 null and Void for the following reasons : First. — It was made without constitutional authority. Second. — The Commission acted arbitrarily, unjustly and unreasonably fixing rates contrary to evidence and without substantial evidence to support its report, findings and order. Third. — Said report, findings' and order were based upon a mistake of law. Fourth. — The Commission acted beyond its statutory powers. The facts which sustain the foregoing conten- tions are discussed in other parts of this brief. The plaintiffs having sustained the foregoing contentions this Court has jurisdiction to review and set aside said report, finding® and order and plaintiffs’ contentions as 1 to the jurisdiction of this Court to review the facts are amply sus- tained by the following decisions': In the case of Interstate Commerce Commission v. Union Pacific Railroad and others , 222 U. S;.‘ 104 541, Mr. Justice Lamar, delivering the opinion of the Court, says at page 546 : “ These appeals raise the single question as to whether in making the 45^ rate the Commission acted within or beyond its power. As the statute makes its finding prima facie correct ( Cincinnati , etc., By, v. Interstate Commerce Commission, 206 U. S. 142, 154) it will be more convenient to con- sider the case from the standpoint of the carriers who first insist that the order was void because made without evidence or find- ing that the 50^ rate was unreasonable. “ There has been no attempt to make an exhaustive statement of the principle in- volved but in cases thus far decided it has been settled that the orders of the commis- sion are final unless (1) beyond the power which it could constitutionally exercise; or (2) beyond its statutory power; or (3) based upon a mistake of law. But questions of fact may be involved in the determination of ques- tions of law so that an order regular on its face may be set aside if it appears that (4) the rate is so low as to be confiscatory and in violation of the constitutional prohi- bition against taking property without due process of law; or (5) if the commission acted so arbitrarily and unjustly as to fix rates contrary to evidence or without evi- dence to support it; or (6) if the authority therein involved has been exercised in such an unreasonable manner as to cause it to be within the elementary rule that the substance and not the shadow determines the validity of the exercise of the power. * * * 4 4 The findings of the commission are made by law prima facie true and this Court has ascribed to them the strength due to the judg- ments of a tribunal appointed by law and in- 105 formed by experience. 111. Cent. v. I. C. C., 206 U. S. 441. Its conclusion of course is subject to review but when supported by evi- dence is accepted as final but that its de- cision involving as it does so many and such vast public interests can be supported by a mere scintilla of proof — but the Courts will not examine the facts other than to deter- mine whether there was substantial evidence to sustain the order, “ We proceed then to a consideration of the carriers ’ contention that the order was void because made without any testimony that the 50^ rate of 1907 to St. Paul was unreasonable.” In another case, Proctor eft Gamble Company v. United States of America, Interstate Commerce Commission and others, reported in 225 U. S. 282, Mr. 'Chief Justice White wrote the opinion, and after discussing at length the jurisdiction of the Commerce Court, he says, at page 293, referring to section 20 or 23 of the Act to Regulate Com- merce, which sections are concerned with the per- formance of certain duties upon carriers by the Act to Regulate Commerce, as follows : “ The words of this second subdivision are: ‘ Second. Cases brought to enjoin, set aside, annul or suspend in whole or in part any order of the Interstate Commerce Com- mission. ’ “ Giving to these words their natural sig- nificance we think it follows that they con- fer jurisdiction only to entertain complaints as to affirmative orders of the commission, that is, they give the Court the right to take cognizance when properly made of com- 27 106 plaints concerning* the legality of orders ren- dered by the commission and confer power to relieve parties in whole or in part from the duty of obedience to orders which are found to be illegal.” Still another casie which supports the conten- tion of the plaintiffs is that of Manufacturers Ry. Co, v. United States , found in 246 U. S. 457, a case in which the question of the findings of the Interstate Commerce Commission concern- ing the reasonableness or unreasonablenes's of rates 1 was considered and also the question of dis- crimination. Mr. Justice Pitney in writing the opinion siays at page 481 : “ Whether a performance or advantage or discrimination is undue or unreasonable or unjust is one of those questions of fact that have been confided by Congress to the judg- ment and discretion of the Commission (Interstate Commerce Commission v. Ala- bama Midland Ry, Co., 168 U. S. 144, 170), and upon which its decisions, made the basis of administrative orders operating in futuro, are not to be disturbed by the courts except upon a showing that they are upsupported by evidence, were made without a hearing, ex- ceed constitutional limits, or for some other reason amount to an abuse of power. This 1 results from the provisions of Sections 15 and 16 of the Commerce Act as amended in 1906 and 1910 (34 Stat. 589-591, c. 3591; 36 Stat. 551-554, c. 309), expounded in familiar decisions. Interstate Commerce Commission v. Ill . Cent. R. R . Co., 215 U. S. 452, 469-470; Interstate Commerce Commission v. Union Pacific Railroad Co., 222 U. S. 541, 547 ; Proc- tor & Gamble Co. v. United States, 225 U. S. 282, 297-298; Interstate Commerce Commis- 107 sion v. Louisville & Nashville R. R . Co., 227 U. S. 88, 91,” To the same effect and a more recent decision is a case argued at the October term, and decided November 8, 1920. This will be found in United States Supreme Court, Advance Opinions 1 , 1920-21, issued December 1, 1920, under the title Seaboard Air Line Ry. v. United States. This was an appeal from the District Court of the United States for the Eastern District of Vir- ginia, to review a decree dismissing the petition in a suit to enjoin the enforcement of an order of the Interstate Commerce Commission, regulating the absorption of switching charges. Mr. Justice Day delivered the opinion of the Court, and on page 16 of the Advance Sheets says : “ Moreover the determination of questions of fact is by law imposed upon the commis- sion, a body created by statute for the con- sideration of this and like matters. The findings of fact by the commission upon such questions can be disturbed by judicial dercee only in cases where their action is arbitrary or transcends the legitimate bounds of their authority.” Then follows a long list of cases supporting this contention: Counsel for plaintiffs desires to beg the in- dulgence of the Court and cite for its information a quotation from the opinion of Chief Justice White, delivered in the case of the Interstate Commerce Commission v. III. Cent. R. R., 215 U. S. 452, 470. In its opinion the Court was con- sidering the question of the right of the Court to 108 review an order of the Interstate Commerce Com- mission, and on that subject Chief Justice White “ The statute endowing the Commission with large administrative functions, and gen- erally giving effect to its orders concerning complaints before it without exacting that they be previously submitted to judicial au- thority for sanction, it becomes necessary, to determine the extent of the powers which courts may exert on the subject. ‘ ‘ Beyond controversy, in determining whether an order of the Commission shall be suspended or set aside, we must consider, a , all relevant questions of constitutional power or right; b, all pertinent questions as to whether the administrative order is within the scope of the delegated authority under which it purports to have been made; and, c, a proposition which we state inde- pendently, although in its essence it may be contained in the previous one, viz., whether, even although the order be in form within the delegated power, nevertheless it must be treated as not embraced therein, because the exertion of authority which is questioned has been manifested in such an unreasonable manner as to cause it, in truth, to be within the elementary rule that the substance, and not the shadow, determines the validity of the exercicse of the power. Postal Telegraph Cable Company v. Adams , 155 U. S. 688, 698.” Therefore, it will be seen that this Court does have jurisdiction to review the orders and de- cisions of the Interstate Commerce Commission and the f acts on which it bases its 1 findings 1 , orders and reports. 109 The Special Situation of The Long Island and Staten Island Railroads and Other Roads Situated Entirely Within the State. As to the Long Island Railroad and other roads of the same class the application of the principles above outlined naturally falls into two categories. First, there is the question of the alleged dis- crimination between interstate and intrastate rates on the railroad itself, i. e., whether, by rea- son of the fact that purchasers of interline tickets good over the lines now have to pay 3.6 cents per mile instead of 3 cents per mile, there arises such a discrimination that the Federal authorities are justified in interfering. Second, there is the question of the alleged dis- crimination between the intrastate rates on the lines as compared with similar rates on similar traffic interstate to the common point, Manhattan Island, from points in New Jersey and Con- necticut. These questions must be considered separately. A. There is no discrimination between inter- state and intrastate traffic on the railroads which would justify the interference of the Interstate Commerce Commission . In the first place, they DO NO INTERSTATE PASSENGER BUSINESS in any practical sense of the term. As is indicated by any authoritative map of New York City, Queens borough is served by three railroads and several systems of trolley lines. The three railroads are the Long Island Rail- road, the Brooklyn Rapid Transit Railroad and the Interborough Rapid Transit Railroad. 28 110 The Long Island runs on a private right of way in the main, while the other two roads run mainly over or under public highways. The principal business of all three roads in New York City is the carrying of passengers to and from work and pleasure in the heart of New York. They all three compete directly for the commut- ing and local business of the territory served. None of them carry any passengers outside of New York Btate. The Interborough Railroad has stations at the terminals of the following interstate railroads: The Hudson and Manhattan Company, the Penn- sylvania Railroad, the New York Central Rail- road, the New York, New Haven and Hartford Railroad, and the New York, Westchester and Boston Railroad, The Long Island Railroad has one of its terminals in Pennsylvania Station and connects there and at three other points — Flat- bush Avenue, Woodside and Hunterspoint Ave- nue — with the Interborough Rapid Transit Com- pany, while the Brooklyn Rapid Transit Railroad connects twice with the lines of the Hudson and Manhattan Companies and at numerous points with the lines of the Interborough Rapid Transit Company, which, in turn, connects with interstate railroads at the points above mentioned. No doubt many passengers on all three rail- roads, particularly the Interborough, transfer at these connecting points to interstate carriers, but the amount of such traffic is not ascertainable and is at any rate only incidental to the main business of these roads, which is intrastate commuting business from the suburban sections of New York City to the heart of the city. It is not directly Ill claimed that this sort of traffic constitutes the supposed interstate business of the Long Island. The Long Island Railroad, by arrangement with other railroads, claims to stand ready to sell inter- line tickets, but the sale of such tickets has been negligible except during the war period when troop movements were heavy between camps on Long Island and other points throughout the country, was and is negligible. The only statement by the railroad in regard to the amount of its interstate business is found in the affidavit of Peter H. Woodward that “ about twenty per cent of the gross revenue of The Long Island Railroad Company is derived from interstate transportation.” No figures are given as to the amount or pro- portion of interstate freight or passenger traffic separately. As Justice Benedict states in his opinion “ The company could have furnished them but it has not done so. ’ ’ This by itself is almost sufficient proof of the negligible character of the interstate passenger traffic which alone is in question here as it was in Illinois Central R. R. v. P. U . C., 245 U. S. 493. In corroboration of these figures we have the testimony of the witness Adikes, who has lived in Jamaica since 1855, and been interested in transit problems in Queens since 1880. He said (p. 142) : “ Q. In your own residence on Long Island, and your large acquaintance there, have you ever known of any person buying an interstate ticket on the Long Island Rail- road to a point outside of the State? A. I do not know of anybody. Q. Would you say from your knowledge of the habits of the people in Queens County, 112 that it is or is not a custom for any large proportion of those inhabitants to buy inter- state tickets on Long Island, for journeys outside of the State? A. Well, I travel considerably myself and my family too, and I have never heard of them, or I have never heard of tickets being sold, or a custom made of tickets being sold at the Long Island depot for stations beyond the State of New York.” When a man who has lived in Queens 65 years and has been a considerable traveller, never even heard that the Long Island sells such tickets, there is not much reasonable possibility that a change in their cost would affect the sale of them. So that it may be said finally and conclusively that the interline business on the Long Island is negligible even without any deduction for that part of the interline business that does not go outside of New York State. The total elimination of such a negligible amount of interstate business would not warrant the interference of the Interstate Commerce Com- mission. It is well settled that discrimination must be substantial and material to warrant Fed- eral interference and the appropriate proof of substantial discrimination is loss of business thereby. This was the very reason underlying the re- versal of the Commission’s order in the Illinois case ( Illinois C. R. Co. v. P. U. C 245 U. S. 493), the Court saying (p. 507) : a There is no finding that this traffic extends in appreciable volume to all sections of Illinois. As to some sections its volume may be very large and as to others almost 113 or quite negligible . At best the reports (of the Commission) leave the matter uncer- tain. ’ ’ The very words ‘ 4 undue ’ ’ and ‘ ‘ unreason- able ” import this essential factor. This is em- phasized in Interstate C. C. v. Baltimore & 0. R . R., 145 U. S. 263. Also in the Second Employer's Liability cases, 223 U. S. 1, the Court, in analyzing and defining the power of the Federal Government under the commerce clause, said (p. 47) : u This power * * * extends incident- ally to every instrument and agent by which such commerce is carried on, may be exerted to its utmost extent over every part of such commerce and is subject to no limitations save such as are prescribed in the Constitu- tion. But of course it does not extend to any matter or thing which does not have a real or substantial relation to some part of such commerce And the recent cases of the C ovington-Cincin- nati Street Railway {supra) emphasize the same, saying as to the very severe statute in that case (p. 469) : “ The regulation of the act affects inter- state business only incidentally and does not subject it to unreasonable demands.” Under these decisions the normal volume of in- terline business on the Long Island is negligible and would not warrant any action by the Com- 29 114 mission. Moreover, there is in this case no scin- tilla of evidence that even the smallest portion of this negligible so-called interstate business has been adversely affected in the least. The inter- state rates were increased on August 26, 1920. The railroad’s affidavits in this case were sub- mitted on December 11, 1920. Certainly if, in the three and a half months which elapsed while the higher interstate rates were in effect, there was any diminution in the sale of interstate tickets on the Long Island, it would have so stated in its opposition to this injunction. But not one word do we find in regard to it. Yet such proof is absolutely necessary as a pre- liminary to the order of the Commission. There must be proof that there is a diminution of traffic and, as was said in Minnesota Rate cases {supra, p. 390), the loss must be shown to have been the “ necessary, immediate and direct effect ” of the change of rates. Such proof was present in every case prior to the present where the power of the Commission was successfully invoked. For instance, in the Illinois case, when it was before this Commission, Business Men f s League of St. Louis v. Atchison , T. & S. F. By. Co., 41 L C. C. 13, 19, the facts were stated in the report as follows : “ The fare between St. Louis and Chicago before July 1, 1907, was $7.50. From that date to December 1, 1914, $5.80, and it is now $7.50. The fare between East St. Louis and Chicago has been $5.62 for about 9 115 years, so that whereas there existed a differ- ence in fare as between the two cities of 18 cents, that difference is now $1.88. As a consequence of this disparity in fares, large numbers of passengers from St. Louis to Illinois points purchase tickets from St. Louis to East St. Louis for 25 cents, there they buy tickets from East St. Louis to their destinations in Illinois at the fares whose maximum is fixed at 2 cents a mile by the Illinois Legislature.’ ’ The Commission went on to give figures of the large increase in the sale of bridge tickets between St. Louis and East St. Louis and the large de- crease in the sale of interstate tickets between St. Louis and points in Illinois, that appeared in com- paring sales for the period just before and just after the increase in interstate rates. Indeed, in one of the most recent of the cases following the decision herein, Wisconsin Passenger Fares, 59 ICC. 391, the Commission itself notes in its report certain facts which justified its action as to intrastate rates in that state, saying (p. 394) : “As tending to show undue preference of or prejudice to localities, and that the through interstate fares are being defeated, respondents introduced an exhibit from which it appears that during the period August 1 to 14, 1920, inclusive, 1,367 tickets were sold from Marinette, Wis., to 12 sta- tions in Wisconsin on The Chicago & North Western, while during the same period in September 2,021 tickets were sold, an increase of 47.7 per cent. During the same 116 periods 479 and 357 tickets, respectively, were sold from Menominee, Mich., to the same stations, a decrease of 25.4 per cent. Marinette and Menominee are on opposite sides of the Menominee River. From Hur- ley, Wis., to 10 stations in Wisconsin on the Chicago & North Western, 713 tickets were sold during the period August 1 to 14, 1920, inclusive, and 964 during the corresponding period in September, an increase of 35.2 per cent. From Ironwood, Mich., a point directly opposite Hurley, to the same sta- tions, 953 tickets were sold during the August period and 601 during the September period a decrease of 36.9 per cent. During the period August 1 to 21, 1920, inclusive, the tickets sold and cash fares collected between Ashland, Wis., and Duluth, Minn., and between Ashland and Superior, Wis., were 1,624 and 842 respectively. During the same period in September the figures were 1,280 and 1,152 respectively. “ A direct result of the practice of buy- ing passenger tickets again at or near state lines, thereby defeating the through inter- state fares, is to convert, so far as the reve- nues of the carriers are concerned, interstate commerce into intrastate commerce. It also results, where there are two or more routes between two given points, in passengers using the route which has the longest mile- age within the state carrying the lower intra- state fare. For example, a passenger from Milwaukee to St. Paul on the Chicago & North Western can purchase an intrastate ticket to Hudson, Wis., for $9.14 and an interstate ticket from Hudson to St. Paul for 70 cents, a total of $9.84. The passenger on the Chicago, Milwaukee & St. Paul, who desires to pursue a like practice will pur-- chase an intrastate ticket to La Crosse, Wis., 117 for $5.91 and an interstate ticket from La Crosse to St. Paul for $4.77, a total of $10.68, or 84 cents higher than the combination via the Chicago & North Western. The through interstate fare from Milwaukee to St. Paul, via both routes is $11.67. ” This is consonant with the proof always con- sidered necessary to justify such interference. In the Long Island case not only is there no proof such as this but everything points to the conclusion that no proof could be adduced that would show substantial discrimination. As to the Staten Island Company the case is even worse. The only allegation as to the amount of its interstate traffic is as follows : “ That analysis of the accounts of the defendant Staten Island shows that of said defendants* total transportation revenue, about fifty per cent thereof is derived from interstate commerce and the balance from intrastate commerce. ’ * There is no allegation as to the amount of in- terstate passenger business nor is there any alle- gation that there has been any diminution of such business by reason of the increase of rates. It also appears that the Staten Island did not join in the petition to the Interstate Commerce Commission which resulted in the order relied on and that no proof whatever was offered in regard to its operations in the hearings which preceded the order. The railroads cannot claim that every pas- senger who leaves New York State after traveling 30 118 on their lines is an interstate passenger while on their lines . In Gulf C . & S. F. Ry. Co. v. Texas, 204 TJ. S. 403, certain corn had been shipped from Hudson, So. Dakota, to Texarkana, Texas. There it re- mained five days, passing into the ownership of a resident of that city. He then shipped it in the same cars to Goldthwaite, Texas. The Court de- cided that in the journey from Texarkana to Goldthwaite, Texas, it was in intrastate, not inter- state commerce. In the course of the opinion the Court said (p. 413) : “ In this respect there is no difference between an interstate passenger and an inter- state transportation. If Hardin, for instance, had purchased at Hudson, a ticket for inter- state carriage to Texarkana, intending all the while after he reached Texarkana to go on to Goldthwaite, he would not be entitled on his arrival at Texarkana to a new ticket from Texarkana to Goldthwaite at the pro- portionate fraction of the rate prescribed for carriage from Hudson to Goldthwaite. The one contract of the railroad companies hav- ing been finished, he must make a new con- tract for his carriage to Goldthwaite and that would be subject to the law of the State within whch that carriage was to be made.’’ This case was distinguished at some length in Ohio R. R. Comm. v. Worthington, 225 U. S. 101, which was a case involving coal shipped to ships in Huron, Ohio, on which ships, as the Court said (p. 108), it was “ necessarily 99 shipped to points outside the State. 119 It was further distinguished in the similar freight cases of Texas and N. 0. R . R. Co. v. Sabine Tram . Co., 227 U. S, Ill; Louisiana R. R. Comm. v. Texas & P. Ry., 229 U. S. 336. But it has never been overruled and is cited with approval by Justice Hughes in Chicago M. & St. P. Ry. v. Iowa , 233 U. S. 334, as well as by Justice Vandeventer in Pa. R R. Co. v. Mitchell Coal & Coke Co., 238 U. S. 251. The distinction in all cases seems to be that the mere fact that there are two tickets or bills of lading, one interstate and one intrastate, does not conclude the inquiry. It does not prove the com- merce to be intrastate. A fortiori, it does not prove it to be interstate. The only rule is that the decision must rest upon the facts of the case in question. Thus in Pacific Co. v. Arizona, 249 U. S. 236, a travelling show was held to be in intrastate com- merce, though it was the intention of its manager to continue on to another 'State and he had written for transportation which he had not received when the question arose. In Public Utilities Commission v. Landon, 249 U. S. 236, natural gas sold by local companies was held to be subject to State regulation though it 120 came from without the State. The Court said (p. 245) : “ Interstate commerce is a practical con- ception and what falls within it must he determined upon consideration of established facts and known commercial methods.” Similarly in Arkadelphia Co. v. St. Louis S. W. By. Co. (supra), it was held that rough wood brought intrastate to be milled with the intention of shipping 95 per cent, of it out of the state was not in interstate commerce until it left the mill. The question depends, of course, upon when the subject actually enters upon its interstate jour- ney. It is said in Illinois C. R. Co. v. Fuentes, etc., 236 U. S, 67: “ When freight actually starts in the course of transportation from one state to another it becomes a part of interstate com- merce. 9 9 That is the question brought up by the possible claim of the railroad company that all passengers who intend to go outside the state are in inter- state commerce, even though riding on a local ticket good only in New York. But this is obvi- ously unsound, for if it be true, then the Inter- borough Rapid Transit Railroad and the Brook- lyn Rapid Transit Railroad are many times as great carriers of interstate passengers as are de- fendants. For of the Long Island passengers who intend to go out of the State, only the limited number who come into Pennsylvania Station from the East and go out of the Pennsylvania to the West, can avoid using the rapid transit 121 lines on part of their journey. The rapid transit railroads, on the other hand, connect with all rail- roads except the Central Railroad of New Jersey, and the West Shore, either directly or by con- nection with the Hudson and Manhattan lines. It can hardly be seriously contended that those who ride on the subway to their trunk line term- inal for a journey without the State, are in inter- state commerce as soon as they enter the subway. Yet the allowance of such a contention would involve just this. The distinction seems to lie in the construction to be given to the words 4 4 when ’ 9 a person “ actually starts in the course of transportation from one state to another ” ( Illinois C. R. Co. v. Fuentes, 23 6 U. S. 67). Sentimentally speaking, he “ actually starts ” when he kisses his loved ones good-bye and leaves his house either on foot or to enter some sort of conveyance. This, however, cannot be the meaning intended. No one could consider that Congress had the right to regulate taxicabs in Jamaica, Long Island, because some people take them from their home to the station or the subway, when about to start on an inter- state journey. Similarly, a trolley car would not be considered an interstate carrier, though used for the same purpose. The real test seems to be, when in the ordinary course of human reasoning the person involved considers himself actually and irrevocably started on his journey. This to the suburbanite is only when he enters the train at a trunk line terminal in New York or New Jersey. For instance, suppose a man residing in Flush- 31 122 in g, New York, desires to leave at midnight from the Grand Central Terminal. He may get there by any one of four ways. If there is a convenient train he may go by the Long Island to Woodside, or Pennsylvania Station, and from there by sub- way. This will cost him from 15 to 33 cents, de- pending on what kind of ticket he uses — commu- tation, 50-trip or one-way. He may take two city buses to the subway at Corona and go from there direct to Grand Central, at a cost of 15 cents. He may take a trolley to the same subway and arrive at Grand Central, at a cost of 10 cents, or he may take a trolley to 59th Street and 2d Avenue, New York, and walk to Grand Central at a cost of 5 cents. Of which means he will avail himself to get to Grand Central, depends upon his parsimony and the time at his disposal. But in any case all are put in the same category. All are methods to get to the place, where in a real business sense, he will start on his interstate journey. The reasoning which moved the Supreme Court in Coe v. Errol, 116 U. S. 517, to hold taxable by a state certain logs which, while intended for ship- ment without the State, had only been brought to the shipping point, is particularly apposite. The Court said (p. 528) : “ It is true, it was said in the case of The Daniel Ball, 10 Wall 557, 565: ‘Whenever a commodity has begun to move as an article of ‘ trade from one State to another com- merce in that commodity between the States has commenced. ’ But this movement does not begin until the articles have been shipped or started for transportation from one State to the other. The carrying of them in carts or other vehicles, or even floating them, to 123 the depot of that journey is all preliminary work, performed for the purpose of putting the property in a state of preparation and readiness for transportation. Until actually launched on its way to another State or com- mitted to a common carrier for transporta- tion to such State, its destination is not fixed or certain. It may be sold or otherwise dis- posed of within the State, and never put in course of transportation out of the State. Carrying it from the farm or the forest, to the depot, is only an interior movement of the property, entirely within the State for the purpose, it is true, but only for the pur- pose, of putting it in the course of exporta- tion; it is no part of the exportation itself. Until shipped or started on its final journey out of the State its exportation is a matter altogether in fieri and not at all a fixed and certain thing.’ ’ The case is even stronger here. For in the case of logs intended for shipment we can tell just which they are. But who can look into the minds of the millions of commuters on the Long Island, Staten Island, the Interborough or the B. R. T. and tell how many are going to board another train after leaving the one they are in to continue their journey peihaps to Jersey City? It is obvi- ously impossible to tell who they are, how many they are or what kind of tickets they ride on. It follows, therefore, that the only possible way to make every one in New York who desires to go without the State pay the interstate rate of 3.6 cents per mile would be to abolish all local tickets, all 50-trip tickets, all commutation tickets and raise the fare on the subways to 3.6 cents per mile. There was no ground for action by Commission 124 in respect to local rates on the defendant rail- roads as compared with similar rates on the New Jersey roads , for the discrimination , instead of being in favor of Long Island, is actually in favor of New Jersey. Commutation rates, including 50-trip rates, were excluded by the Interstate Commerce Com- mission because, as it says in its report : “ The record discloses facts in the pres- ence of which we can not presume that the existing structure is just and reasonable in its established relationships and that it should be adopted as the basis upon which a general advance should be authorized. ,, The meaning of this somewhat cryptie utter- ance is that, as was conceded by counsel for the railroads, the commutation and 50-trip rates on the Long Island Railroad are today higher than similar rates for similar distances than are the rates in New Jersey in spite of the 20 per cent, increase granted in those rates. As to the one way and round trip rates the situation is well summed up by the testimony of the witness Adikes, as follows : Q. Have you been interested in transit problems and civic problems in the Borough of Queens for a great many years? A. I have. Q. For how long? A. Since 1880. Q. And you have made a study of the con- ditions as they affect the people of Queens? A. I have. Q. During that time? A. To a certain extent. Q. You are a member of what civic organ- izations? A. I am a member of the Queens 125 Chamber of Commerce, and Chairman of their transit committee; also Jamaica Board of Trade and chairman of their transit com- mittee. Q. Did you make a study to some extent of the comparative rates between places on Long Island and places in New Jersey, prior to this 20 per cent increase granted on August 26th? A. I did, in Jersey and points in Queensboro. Q. Did you find that there were discrim- inations in favor of some portions of New Jersey, as against Long Island — some por- tions of Long Island? A. I did, from 40 to 100 per cent. Q. Where are the low rates in New Jersey? A. From Manhattan to Newark and to the towns adjacent to Newark. Q. That is, Newark is the central point which is a focus of numerous trolley lines? A. Yes, sir. Q. Since the increase was granted to the New Jersey Roads, have you had occasion to compare the rates charged by the Penn- sylvania over its own lines, or over the lines of the Hudson & Manhattan Railroad Com- pany and the rates charged by the Long Island Railroad to points like Hunters Point Avenue and Woodside, where it joins the city rapid transit system? A. I have. Q. Is there still a discrimination in favor of New Jersey? A. There is still a discrim- ination of 20 to 80 per cent in favor of New Jersey.’ ’ He also testified that he had been active as a civic worker in the movement which resulted in the passage of Chapter 688 of the Laws of 1920, which aimed to do away with the discriminations against the Borough of Queens and that since 32 126 August 26, 1920, as chairman of the Transit Com- mittees of the Queensborough Chamber of Com- merce and of the Jamaica Board of Trade he had filed a complaint with the Public Service Commission asking the enforcement of that law. This testimony was not contradicted and stands unchallenged. So that instead of there being a discrimination in favor of Long Island against New Jersey, the discrimination is actually the other way. Instead of New Jersey “ persons or localities 99 complaining that their rates are higher than those on Long Island we find the entire Borough of Queens as represented by two responsible commercial organizations complaining bitterly to the Legislature, to the Public Service Commission, to the Interstate Commerce Commis- sion, and now to the courts that New Jersey has lower rates to New York than have the people on Long Island. The Interstate Commerce Commission, there- fore instead of taking such action as “in its judgment will remove 99 the discrimination, has actually, in the face of uncontradicted evidence, attempted to increase the existing discrimina- tion against intrastate traffic from points on Long Island to Manhattan. Surely a more absurd abuse of the power to “ foster and protect ” interstate commerce could hardly be imagined. As to the defendant Staten Island Rapid Tran- sit Company the case is perhaps even more ab- surd. As has been pointed out above, this rail- road was not a party to the proceeding, before the Interstate Commission, it did not apply for an increase and absolutely no evidence was pre- 127 sented before the Commission or in this proceed- ing which would indicate that its rates are lower than the extremely low rates prevailing in the Metropolitan District between points in New Jersey and Manhattan Island. Justice Brandeis, in the South Dakota case, American Express Co. v. Caldwell (244 U. S. 617), said (p. 624) : “ Proceedings to remove unjust discrimi- nation are aimed directly only at the relation of rates/’ In every Shreveport case, so-called, the State rates, and the interstate rates had their respec- tive well-defined levels, the State level being con- siderably higher than the interstate. Moreover, it is conceded in this case that this is the issue here, and complainant’s witness Hunter testified. “ Q. There is no exception in your prayer for relief, or what you desire to accomplish by this proceeding or any similar proceeding — no exception in favor of local fares at any less than 3.6 ? A. No, sir. “ Q. Without any regard to what local con- ditions may be? A. No; we think, Judge, that the rate fabric of the country, both in- trastate and interstate, ought; to be* on a uniform basis, in order to eliminate all dis- criminations as between persons and locali- ties. You cannot do it otherwise. There is no reason in the world why the people of the State of New York should be in a preferred class against those who live in the State of Pennsylvania.” And again: “A. In other words, this is a revenue pro- ducing measure. It does not run, as I under- 128 stand it, to the question of maximum rates or minimum rates or anything else. “ Q. Regardless of the justice of the pres- ent rates, you want the 20 per cent increase? A. Yes, that is the idea. I do not understand that question is in issue at all. At least that has been my understanding.’’ That is the question at issue here, whether the level of intrastate rates is lower than the level of interstate rates and there is obviously no basis laid for the decision of that issue. On the Long Island Railroad itself the so-called interstate rates are imaginary and ephemeral to such a degree that any level they might have is purely academic. Local rates on the Long Island certainly have no level, even in any one class of rates. As between the Long Island local rates and the New Jersey local rates, there can be no compari- son of levels, for there is no level in either case. In a broad sense perhaps it may be said that the Commission in Ex Parte 74, 58 I. C. 220, fixed upon the reasonableness of the local rates between New Jersey and New York. But in no real sense is this the fact. What the Commission actually did was to take such facts as were avail- able, though they were not satisfactory to the Commission (pp. 228, 230) either as to value or earnings, and to fix the percentage of increase proper for all the railroads combined in the East- ern Group. There is no indication in the opinion in that case, and it is not believable that the Com- mission actually determined in that case that all 129 of the local New Jersey rates, ranging as they do from 1 y 2 cents to 5 cents per mile, were found to be reasonable. Until this is done, of course, there is no basis for finding discrimination. And if this is held to have been done, certainly there would be no ground for alleging undue and unreasonable dis- crimination unless the level of the Long Island rates were lower than the lowest rates found rea- sonable for any considerable number of interstate travellers. As such lowest rates are considerably under 2 cents per mile, there was certainly no ground for interference here. We have seen that in each of the Shreveport cases, so-called, there was either as an original complainant or an intervenor, some community complaining of loss of valuable commerce by rea- son of the changed relationship of rates. This element of these cases was emphasized by Commissioner Clark in his testimony before the House Committee: u This situation has been more or less troublesome. We have had a good many complaints of undue preference of State ship- pers and undue prejudice against interstate shippers. The Shreveport case was orig- inally brought by order of the Legislature of the State of Louisiana on account of undue prejudice believed to exist against the ship- pers of Louisiana and undue preference of shippers in Texas under rates prescribed by the Texas Commission. Singularly enough, it was not very long until we had a complaint from Natchez, Miss., against the Louisiana rates prescribed by the Louisiana Commis- sion. W e have had several complaints from parties in Missouri against the Illinois rates 33 130 and we have had complaints from parties in Illinois against the Missouri rates. We have had the same situation presented in New Eng- land and from various parts of the country. It comes from all sections of the country and it results from a difference in point of view of commissions in different States, although they may he adjoining ” (Vol. I, House Com- mittee Proceedings, pp. 26, 27). He then goes on to speak of the many rival border cities from whom such complaints have or are apt to arise, such as : East St. Louis, Illinois and St. Louis, Missouri Omaha, Nebraska Kansas City, Kansas Bock Island, Illinois Bristol, Tennessee Texarkana, Texas and Council Bluffs, Iowa and Kansas City, Missouri and Davenport, Iowa and Bristol, Virginia and Texarkana, Arkansas. There always has been an aggregation of human beings to complain except in this case. Here we have the New York Central complaining of what? Witness Vosburgh stated (pp. 104, 105) : “ I know that there has been considerable falling off in the traffic heretofore handled by the lines other than the New York Cen- tral, and it is my opinion that if this differ- ence in fares should continue, with a differ- ence of $2.25 in favor of the New York Cen- tral for a passenger in a sleeping car between New York and Buffalo, it will have the effect of diverting practically all of the business of the other lines to the New York Central.” Can the court imagine Commodore Vanderbilt complaining that conditions were such that the 131 New York Central would probably get all of the business between New York and Albany at 3 cents per mile? But of what did the Long Island complain? Nothing so far as can be ascertained except that the war is over and there are no troops to carry. It is true that it has a right to complain techni- cally (Sec. 13, par. 3, Transportation Act), but so had every citizen. No one, however, has a stand- ing as a complainant unless he has something of which to complain. It may be a matter of regret to it that it can ’t raise its rates instanter, but that does not give it the right to complain without actual proof of damage by reason of discrimina- tion. The conclusion inevitably is that, though this complaint was made in the form of law on the ground of discrimination, it was not really based on discrimination, and that the real basis of the application is the desire to get an increase of rates without proving before the proper State authori- ties the reasonableness of the application. In fact the reason behind this is actually to overthrow the irksome State authority and nothing else. Justice Hughes said in the Minnesota Rate cases ( supra ), at page 402: “ Where the subject is peculiarly one of local concern, and from its nature belongs to the class with which the state appropri- ately deals in making reasonable provision for local needs, it cannot be regarded as left to the unrestrained will of individuals be- cause Congress has not acted, although it may have such a relation to interstate com- merce as to be within the reach of the Fedr- eral power.” 132 How much more is this the case where there is no proof that the rates in question 4 i have such a relation to interstate commerce as to he within the reach of Federal power ” f The case of purely local rates within the limits of a single city is eminently and evidently such a matter. Moreover, as we have seen in this case, Congress had neither the power to act nor has it acted. New York is a city by itself, the largest in the world, and with the most acute problems of con- gestion and transportation. Its unique character is specifically recognized in the constitution of the New York regulatory bodies. The Public Service Commissions Law recog- nizes this fact in establishing (Section 3) two public service districts, the First District con- sisting of New York City alone and the Second District comprising the rest of the State. A Public Service Commission is provided for each district and each commission is a separate and independent body with full powers of regula- tion in the territory confided to it (Section 4). This First District Public Service Commission also had confided to it the preparation of plans for the construction, in conjunction with (the) city authorities, of those subways and rapid transit railroads which are so unique in the history of municipal engineering and transportation as, in and of themselves, to put New York entirely in a class by itself. The fact that the City of New York has under- taken this tremendous engineering and govern- mental problem has a very direct bearing on the transportation problem in the Borough of Queens. 133 Witness Adikes pointed out that the city’s rapid transit railroads parallel in some oases the Long Island tracks, and, in one case in particular, that the Long Island Railroad is successfully com- peting with the city-owned lines, though charging a higher fare. He testified: “ Q. Now, from Jamaica to Flathush Avenue, the Long Island has a local service? A. Has a local service. “ Q Do you now whether that was oper- ated in competition with the service on the Brooklyn Rapid Transit lines? A. It was operated in the middle eighties to compete with the Brooklyn Rapid Transit lines. “ Q. The fare was reduced for that pur- pose? A. Yes, sir. “ Q. The fare today is 11 cents from Jamaica to Flathush Avenue? A. Yes, sir. ‘ ‘ Q. A distance of a little over nine miles ? A. Yes. “ Q. The fare on the city rapid transit lines from Jamaica to Brooklyn is 5 cents? A. Yes. “ Q. The difference in fare does not keep the. Long Island Railroad from filling its local trains, does it? A. No, their trains are loaded. In fact, they are overloaded on that division, which is a fact, and which would be relieved by them running the same service over their Long Island division to Long Island City or to Woodside.” He further testified (p. 145), that he had been endeavoring as a civic worker to have the Long Is- land Railroad establish a similar local service at a low fare to Woodside and Hunterspoint Avenue, where, as at Flatbush Avenue, Brooklyn, the Long Island has a junction with the city rapid transit 34 134 lines, and that Mr. Peters, president of the Long Island Railroad, had promised in 1909 to estab- lish such a service, but had never done so. This gives an insight into the peculiar and unique conditions which face the Long Island Railroad, and the absolute impossibility of estab- lishing the fares on that road on the basis of those fixed for any other territory. The people of Queens, of course, believe that if competition with the city rapid transit lines is voluntarily estab- lished by the Long Island Railroad one one line and proves profitable, it should be forced to estab- lish it on other similar lines where similar condi- tions exist. This competition of the city rapid transit lines is so direct and affects so vitally the transporta- tion situation in Queens, that it far outweighs any prejudice or advantage which might exist in favor of Queens and against New Jersey. If any parts of the Greater City of New York actually enjoy rates which are discriminatory against New Jer- sey, it is those parts in which the people are enabled to ride on the city rapid transit lines for a 5-cent fare to and from their work. If New Jersey localities have a complaint against any New York communities, it is against those, not against those struggling communities in Queens who have to depend upon the Long Island Rail- road and to pay its almost prohibitive fares. It may even be said that in the interest of the railroad itself, it would be a fatal mistake to fix firmly the precedent that rates on the Long Island Railroad must be the same as those on commuting railroads in New Jersey. As time goes on, no doubt the City of New York will build 135 further rapid transit lines, until the entire Borough of Queens is covered with a net-work of city-owned lines carrying passengers at an ex- tremely low fare. To say to the Long Island Bail- road that it can never compete with those city- owned lines might very conceivably he the equiva- lent of telling them that they could no longer do business in their most populous territory. But whatever the effect upon the Long Island Bailroad, the people of Queens would suffer by any such pronouncement. If the Long Island Bailroad is not enabled or forced to meet the competition of the city-owned lines, as it can do, it would mean that for the peo- ple of Queens, the Long Island Bailroad would be- come a luxury instead of a convenience and would be maintained not for the benefit of the people at large, but for those few fortunate individuals who are able to pay exorbitant rates for added con- venience. It has not yet been contended formally that the establishment of the city-owned rapid transit lines is a discrimination against interstate traffic from New Jersey, which would warrant action by the Federal Government. Yet, we have seen that if there is an undue discrimination against New Jersey on the part of any section of New York City, it is owing to these transit lines. They, however, fall under the doctrine stated by Justice Hughes in Minnesota Bate cases, 230 U. S. 352, 416, as follows : 4 4 The doctrine was thus fully established that the State could not prescribe interstate rates but could for reasonable intrastate rates throughout its territory. The exten- 136 sion of railroad facilities has been accom- panied at every step by the assertion of this authority gn the part of the states and its invariable recognition by this court. It has never been doubted that the State could if it saw fit, build its own highways, canals and railroads (R. R . Co. v. Maryland , 21 Wall, 456, 470, 471). It could build railroads traversing the entire State and thus join its border cities and commercial centers by new highways of internal intercourse to be always available upon reasonable terms. Such pro- vision for local traffic might indeed alter relative advantages in competition, and, by virtue of economic forces, those engaged in interstate trade and transportation might find it necessary to make readjustments ex- tending from market to market through a wide system of influence; but such action of the State would not for that reason be re- garded as creating a direct restraint upon interstate commerce and as thus transcend- ing the state power / 9 The establishment of those roads was a provis- ion of local foresight and the product of local tax- ation. That they should be removed, because New ^Jersey has not had similar foresight, is inconceiv- able, Yet, they might just as well be removed as to increase the fares upon them to a mileage rate equivalent to that charged on New Jersey com- muting railroads, some of which, like the Pennsyl- vania and the Hudson and Manhattan, give pre- cisely similar service. The need of competition on the part of the Long Island Railroad with these lines is so evi- dent as to need ixo further argument, particularly at this time when the problems of congestion and housing are so acute and when it is so necessary 137 that everything should he done to spread the population of New York City over its outlying and vacant sections. Thus the problem of rates on the Long Island Railroad within the City of New York is “ pecu- liarly a local problem, ’ ’ such as was compre- hended in the statement of Justice Hughes in the Minnesota Rate cases {supra), which I have quoted above, and the essence of the Long .Island application in this case is to the effect that the Transportation Act has given to the Interstate Commerce Commission jurisdiction over this purely local matter. To take such problems out of the hands of New York itself, would be the negation of popular local government, the acme of governmental centraliza- tion, the apotheosis of bureaucracy and the aboli- tion of the last vestige of state rights. It has been loosely said that the sections of the Transporta- tion Act under which this complaint is brought were aimed at the elimination of the State regula- tory bodies. We respectfully submit that if those sections permit the regulation of local rates in the City of New York by the authorities at Wash- ington not only have the State regulatory bodies been shorn of their power but every State Statute, every State Constitution and the very theory and fabric of our Federal Gevernment under 1 , our revered Constitution have all fallen in one mighty calamity. It appears from the testimony that Chapter 868 of the Laws of 1920, State of New York, was enacted for the purpose of eliminating discrimina- tions in rates on the Long Island Railroad against 35 138 the citizens of Queens as compared with the citi- zens of New Jersey. It further appears that since the 20 per cent, in- crease given the New Jersey roads by this Com- mission, a complaint has been filed with the Public Service Commission, First District, praying for the enforcement of that act. It was said in Stone v. Farmers Loan & Trust Co . ( supra ), at page 334, that: “ it would seem to be a matter of domestic concern to prevent the company from dis- criminating against persons and places in the State . 99 Under the law, railroads are entitled to a fair and adequate return upon the value of their property in the public service, and since the Long Island Railroad claims it is not getting such a return, it should prove its case before the proper tribunal, the Public Service Commissions of this State, and get that to which it is entitled. The Interstate Commerce Commission Cannot Be Vested with Authority Sufficient to Equitably Fix Rates on Long Island. As appears in the evidence local fares on the Long Island from Jamaica to Flatbush avenue, nine miles, are 11 cents or at a rate of 1.1 cents per mile. Most rates on the Long Island, however, are 3 cents per mile. At Flatbush avenue, the Long Island connects with the city Rapid Transit lines. Recently the Woodside and Hunterspoint avenue stations of the Long Island have been connected with the city system. The uncontradicted testimony is that the trains carrying passengers at 1 cent per mile between Jamaica and Flatbush avenue are crowded and 139 that this is the most profitable division of the Long Island. The endeavor on the part of the civic workers of Queens to have the same rates and service established to Woodside as to Flatbush avenue •is not unreasonable and would undoubtedly be successful before the State regulatory authori- ties for as the Supreme Court says in the recent tease of Skinner & Eddy Corporation v. U. S., 249 NJ. S. 557, “ low rates, because voluntarily estab- lished by the carriers ” (as these rates were) f* may be accepted by the Commission as evidence that other rates, actual or proposal, for compara- ble service are unreasonable high.” ! But if rates ai;e to be fixed unalterably by the (Interstate Commerce /Commission, who will eradi- cate such discriminations within a single State? (Certainly the State cannot and neither can the Interstate Commission, for discriminations purely intrastate are not its affair. The Interlocutory Relief Prayed for Should Be Granted Herein, hut the Bills of Complaint of the Plaintiff Railroads Should Be Dismissed for Want of Equity. ■ Dated February 16, 1921. CHARLES D. NEWTON, Attorney -General. Edward G. Griffin, George L. Meade, f Deputies Attorney -General.