JOSEPH HENRY BEALE, JR., BUSSEY PROFESSOR OF LAW IN HARVARD UNIVERSITY AND BRUCE WYMAN, ASSISTANT PROFESSOR OF LAW IN HARVARD UNIVERSITY. BUON Copyright, 1906, BY JOSEPH HENRY BEALE, JR., AND BRUCE WYMAN. LIMARY OF THE LELAND STANFORD, JR., UNIVERSITY PREFACE. The passage of the Federal Railroad Rate Act of 1906 has both emphasized the present importance and added to the future importance of the law governing the regulation of railroad rates. In all interstate shipments, which comprise so large a proportion of our railroad traffic, and in the local shipments of a very large number of our States, the maximum rates are now regulated by law; either directly by legislature, or (as is usually the case) by the action of a commission under authority conferred by the legislature. It is hardly necessary at this time to call special attention to the practical importance to every member of the community of the charges made by the railroads. To the vast majority these charges are an important part of the cost of their food; it is in the power of the great trunk lines, except where the law can restrain them, by an increase of rates to cause a famine as serious as would be caused by a complete failure of the crops. To a great number of our people, on the other hand,—to the great farmers of the interior, to the ranch men of the plains, to the planters of the South, to the manufacturers of the seaboard, and to the millions of their employes who are dependent upon their prosperity, railroad charges are of greater immediate importance. The railroads, if unrestrained by law, can prosper or can ruin them; they can build up a great and flourishing business, or they can turn an industrious city into a wilderness again. That power such as this should be the subject of legal restraint is inevitable; that the legal qualities and limitations of such restraint should be of the greatest interest to the profession and to the people at large is clear. [iii] From the earliest times some restraint has been exercised over such lines of industry as are of vital interest to the public. The establishment of the King's peace, the protection of the weak against the actual physical violence of the strong, is the fundamental function of government in the modern sense; but of equal importance and of almost equal antiquity is the protection of the common people against the greed and oppression of the powerful. In matters not vital to the life and well-being of mankind the laws of society may be left free to operate, without limitation by the sovereign power; but in all that has to do with. the necessaries of life the protection of the sovereign is extended. He protects equally against physical violence and against oppression that affects the means of living. In modern times the prevalence in commercial life of the principle of laissez faire has led to the formation of great industrial combinations. Great enterprises have taken the place of small ones, and great industries have been localized at the most convenient parts of the country. All this commercial organization has been based upon the development of railroads; which are necessary not only to bring the raw material to the factory and to distribute the finished product, but also to supply with the necessaries of life every inhabitant of the country. The result has been the establishment of great and powerful corporations in whose hands is the railroad carriage of the country. But as these great combinations of capital have grown up under the law, so their legal rights must be subject to the rights of the whole people; great power brings as its consequence the need of control of that power for the good of the whole people. Two ways only can be found to exercise such control. One way, that advocated by the most radical statesmen, is the government ownership and operation of the railroads. The other way, which is in fact the conservative method of dealing with the problem, is the control of the rates and practices of the railroads for the public good. One or the other of these methods must be finally adopted. The conservative method is now on |