amendment was, it did not change the fundamentals of the situation. The carrier still retains the right to make its rates, the Commission having power only to set them. aside under the conditions named in the Act.85 As to the constitutionality of the Act as amended, there would seem to be no doubt, as it has repeatedly held that such power-even in the more extreme form of establishing rates and making schedules may be given over to a commission by the legislature. At all events the only question which has been seriously litigated under the Act is the extent to which limitations are imposed upon the Commission. The process provided by the Act in accordance with the principles under discussion is the measure of the authority of the Commission. The Commission cannot take action affecting the charges of a carrier except upon the basis of a hearing and a finding upon the evidence that the rate being charged is unreasonable.86 § 1035. No disturbance of reasonable rates. The power of the Commission to alter rates depends altogether upon the fact of their unreasonableness, and in the absence of evidence to that effect the Commission has no authority. All this may not have been so plain in regard to this amendment at the outset as it has become subsequently in the light of the decisions interpreting it. But by the time that the case of Interstate Commerce Commission v. Stickney 87 was decided it had become clear enough that a carrier under section 15 as amended was entitled to a finding by the Commission that the particular charge complained of was unreason 85 Likewise the Commission has authority to order a railroad to so adjust its rates as to prevent discrimination against a shipper without prescribing the new rates to be applied, or specifying how the charges should be equalized. See New York Central & H. R. R. Co. v. Interstate Commerce Commission, 168 Fed. 131. 86 It should be noted that the Commission has no power under the Act to fix minimum rates for the protection of a competitor; its jurisdiction is confined to fixing maximum rates for the carriers involved in the proceedings before it. See Norfolk & W. R. R., 195 Fed. 953. 87 215 U. S. 98, 30 Sup. Ct. 66. able before a change could be required. Moreover, as that case held, a charge for a service which did not give the carrier more than a fair profit for performing it, was not unreasonable. For the Commission to attempt to fix a new rate at the out of pocket cost in place of the existing rate, which included a profit upon the service performed, was therefore altogether beyond the statutory limitations upon the power of the Commission. Probably, however, this would not be an invasion of constitutional rights, since the profits of the company taken as a whole apparently remained sufficient.88 Not until such a finding has been made has the Commission, as the Act reads, any jurisdiction to take any further action. 1036. Basis of reasonable rates. The duty of the Commission is not that of a lawmaker laying down such rules of public policy as it may think will promote the common weal. Its function is to see whether the rates which the carrier is charging are in accordance with the requirements of law laid down in the Act, and if they are not to make them so. As was insisted in Interstate Commerce Commission v. Chicago, Rock Island and Pacific Railway,89 this determination is for the Commission in first instance, the power of the courts being confined to discovering whether the action of the Commission is within the scope of the delegated authority under which it purports to have been made. The question in that particular case was a close one, as the Commission had obviously certain policies of ratemaking in mind in dealing with basing points which inevitably involve the respective position of trade centers. The carriers complained to the courts that, by the artificial apportionments made, the Commission was laying an arbitrary hand upon the traffic of the country. But the 89 218 U. S. 88, 30 Sup. Ct. 651. 88 See Minneapolis & St. L. Ry. v. Minnesota, 186 U. S. 257, 22 Sup. Ct. 901. Supreme Court decided that there was enough in the record to satisfy it that the rates set aside were unreasonable, and that the rates put in their place were proper. The court was divided, however; and it was obvious that further discussion of the whole matter would soon be required. It is all very well to say, as the majority did, that commissions must have a broad outlook; but the question is by what rules are they to act if we are to have a government of laws, not of men.90 § 1037. Jurisdictional limitations upon rate revision. It was not until the case of the Southern Pacific Company v. Interstate Commerce Commission,91 that the significance of these provisos in the Act became apparent, whereby the foundations of the jurisdiction of the Commission were specified. The Commission, as it appeared in that case, had come to the rescue of the lumber industry of the Willamette valley, which was threatened by advances in rates which had been put into effect shortly before. At all events, it had after due proceedings fixed lower rates for the future in place of the old rates, apparently upon the ground that it would be a wise policy to keep open the markets which had thus been closed. The earlier rates undoubtedly had thus created markets upon which the shippers had come to rely; but, as the Supreme Court pointed out, all these arguments ignored the provisions of the Act. In the absence of a finding that the advanced rates which carriers had put in effect were unreasonable, it was clearly laid down that the Commission had no jurisdiction to go further; and this was not made out by showing that public interests would be promoted by lower rates. Such arguments might sometimes 90 It should be said that the basing of rates upon what is economically desirable has never been the test of the federal courts in reviewing the orders of the Interstate Commerce Commission in relation to rates. 91 219 U. S. 433, 31 Sup. Ct. 288. avail carriers in explaining differentials; but they could not justify commissions in ordering changes.92 § 1038. Working within legal bounds. With the famous case of Interstate Commerce Commission v. Atchison, Topeka & Santa Fe Railway 93 at last brought to a termination by the late affirmation of the Supreme Court we are now in a position to see just what the scope of the power of the Commission is under the Act. This matter of the Lemon rates from the Pacific coast has been going back and forth between the Commission and the courts for some time. First, the Commission reduced the rates for reasons in last analysis more economic than legal; and this order the Commerce Court set aside, as the existing rate had not been sufficiently shown to be unreasonable in the sense of the law. Then the Commission took further testimony, making at least a showing sufficient to justify it in declaring the existing rates unreasonable, and substituted new rates; and the federal court then held in effect that whatever motive might be behind this action there was reason enough apparent in the record for the course it had pursued. All this means that the Commission must work within legal bounds when it sets out to revise rates; and that any carrier which is charging no more than reasonable rates profitable in themselves need not fear disturbance by the Commission upon some theory or other of adjustment of rates.94 $1039. How the Commission now views its function. The Commission had never felt altogether free from the 92 The general principle which the majority of courts are now laying down as the guide for all concerned seems to be that what is a reasonable rate depends upon the significance of that phrase at common law. Southern Indiana R. R. v. Railroad Commission, 172 Ind. 113, 87 N. E. 966. 93 231 U. S. 736, 34 Sup. Ct. 316. 94 The federal courts have always insisted that the Commission shall keep itself to the basis of the conditions affecting the movement of traffic as the standard established by the laws for the reasonableness of rates. Interstate Commerce Commission v. Delaware, L. & W. Ry., 64 Fed. 723. limitations of the Act. It had said before these decisions of the courts were handed down that its function as an administrative body was to regulate interstate rates only to the extent that jurisdiction had been confided to it by the Congress in accordance with the Constitution.1 And in another opinion of this period it had said that the duty of the Commission as an administrative body was to establish reasonable rates without attempting to foster one interest at the expense of another. The Commission has been insistent that it does not sit to give opinions on abstract questions.3 So as a matter of policy it will not construe the Act before any violation thereof is charged; nor will it express an opinion upon facts not brought before it by a petition within its jurisdiction. And for these reasons it has held that it will not make orders until a violation of Act is charged.5 The Commission also appreciates that it does not lie within the scope of its functions to dictate as to the policies upon which carriers shall act in framing a system of rates. And it will not consider that it has any concern with the intent lying behind an advance in rates, so long as the rates established are reasonable in themselves." 6 Topic B. Reparation for Past Misconduct $1040. Reasonableness of the established rate. Rates duly established in accordance with the requirements of the Act to Regulate Commerce are binding upon 2 Cobb v. N. P. Ry., 20 I. C. C. 100. 3 Pennsylvania Co. v. Louisville, N. A. & C. R. R., 2 Int. Com. Rep. 603. 'Re Order of Railway Conductors, 1 Int. Com. Rep. 18, 1 I. C. C. 8; Re Theatrical Rates, 1 Int. Com. Rep. 18; Re Inmates of Nat. Homes, 1 Int. Com. Rep. 73; Boston & A. R. R. v. Boston & L. R. R., 1 Int. Com. Rep. 571; Re Iowa Barb Steel Wire Co., 1 Int. Com. Rep. 605; Re United States Commission of Fish and Fisheries, 1 Int. Com. Rep. 606. 5 Re Order of Railway Conductors, Traders & Travelers Union v. Phila. & Reading R. R., 1 Int. Com. Rep. 18. • Port Arthur B. of J. v. A. & S. Ry., 27 I. C. C. 388. 7 Re Advances in Barley, 24 I. C. C. 664. |