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Commission decided to suspend action looking to the enforcement of this conclusion until the Congress had opportunity to consider and act upon this subject. We have therefore proposed that the sixth section be so modified as to plainly include this species of traffic, but that the Commission be given power to suspend and modify the requirement in this respect whenever that may seem necessary in the public interest.
COMMISSION'S AUTHORITY OVER RATES.
The proposed amendment of the fifteenth section presents the question which is now the chief subject of controversy. This is the delegation of authority to the Commission to substitute, after full hearing, the rate or practice to be observed in the future, in place of the rate or practice found by the Commission to be unreasonable or unjustly discriminatory. It is designed to confer this authority in unmistakable terms and in conformity with the decisions of the Supreme Court and the opinion of the Attorney-General furnished to the Senate committee respecting the power of the courts and the constitutionality of such legislation. As above stated, we deem it unnecessary to discuss this question in the present report further than to reaffirm the views heretofore expressed.
In the proposed amendment of the fifteenth and twentieth sections certain other powers are conferred upon the Commission, to which reference will now be made.
THROUGH ROUTES AND JOINT RATES.
A considerable part of the interstate traffic transported by rail passes in transit over the lines of two or more independent roads. This traffic is generally handled by the connecting lines under some arrangement for the transaction of through business and usually upon a joint rate—that is to say, the carriers which transport the freight or carry the passenger agree upon a rate which shall be charged from the point of origin to destination, and also agree on the proportions in which this rate shall be divided among themselves.
Section 3 of the act to regulate commerce attempts to secure this interchange of traffic by connecting railways and to prevent unjust discrimination by any carrier between its different connections. It has been held, however, both by the courts and by the Commission, that this part of the third section is not enforceable, because no means are provided for determining the conditions upon which traffic shall be interchanged and the proportions of the through rate which shall be received by the several carriers. It follows that connecting carriers are now under no legal obligation to establish through routes or joint rates and may at their pleasure withdraw from such arrangements when they have been actually entered into.
It is evident also that if the Commission were to pronounce a joint rate unreasonable and order a reduction of that rate and the carriers parties to the rate should thereupon either cancel all joint arrangements or, as they might, cancel their joint rates upon the commodity in question, the Commission might be practically powerless to enforce the reduced rate. When it is considered that a large part of the most important rates of this country are joint rates, it will be seen that the railways have it in their discretion by this means to largely defeat the purpose of the law, and that in order to prevent this the Commission should have authority to order railways to continue through routes and joint rates which are in effect and to prescribe the divisions which the several carriers shall receive in the distribution of those rates in case they fail to agree among themselves. This is a power which would seldom, if ever, be exercised; but its existence is necessary to prevent the occasion for its exercise.
It should also be noted that discriminations against individuals and against particular species of traffic can be effected by the refusal of a carrier to establish a joint rate; and cases are now pending before the Commission involving discriminations of this character. The hearing of these cases has not yet been concluded, but if the allegations should be sustained it would seem that the effective way to correct the wrong would be by compelling the carrier to make a joint rate upon the traffic in question.
TERMINAL ROADS, ELEVATOR CHARGES, AND PRIVATE CARS.
There is an important class of cases, in which the owner of the property performs a part of the transportation service, where the carrier, by paying such owner an extravagant sum for the service rendered, thereby prefers him to other shippers of like property. This may happen in any case where the shipper is the owner of any of the facilities of transportation or performs any part of the transfer service. Such preference may take the form of an excessive division to a terminal road owned by the shipper; the payment of an excessive elevator charge to the owner of the grain; the payment of an excessive mileage upon the private car which conveys the property of the owner of the car. Our investigations leave no room for doubt that all these methods are at the present time more or less resorted to for the purpose or with the effect of preferring one shipper to another.
It has been suggested that the Congress should prohibit railways from employing any agency or using any facility in the transportation of property which is furnished by the owner of the property. We should hesitate to recommend at this time so drastic a measure as that. Assuming that such a law would be a constitutional exercise of authority, it would seriously interfere with property rights which have grown up under the present system. Moreover, there are many instances in which the service can be rendered or the facility furnished more advantageously both to shipper and railway and without injury to the public if provided by the shipper himself.
We do think, however, that the Commission should be empowered .in a case of this kind to determine whether the allowance to the property owner is a just and reasonable compensation for the service rendered and to fix a limit which shall not be exceeded in the payment inade therefor. Such a remedy would not be altogether adequate, and any remedy is extremely difficult of application, but nothing better appears to be available.
EXAMINATION OF BOOKS OF ACCOUNT.
An efficient means of discovering illegal practices would be found, as we believe, in authority to prescribe the form in which books of account shall be kept by railways, with the right on the part of the Commission to examine such books at any and all times through expert accountants. This recommendation has been urged upon the attention of the Congress in previous reports, and we earnestly renew it at this time. Probably no one thing would go further than this toward the detection and punishment of rebates and kindred wrongdoing.
We have also called attention to the fact that certain carriers now refuse to make the statistical returns required by the Commission. For example, railways are required, among other things, to indicate what permanent improvements have been charged to operating expenses. Without an answer to this question it is impossible to determine to what extent gross earnings have been used in improving the property and the actual cost of operation proper. Admitting the right of a railroad company to use its money as it sees fit, it is certainly proper that the Government should know what use is made of it, for the purpose of determining whether the rates and charges imposed are legitimate. Certain important railways decline to furnish this information at all, and others furnish it in a very imperfect and unsatisfactory manner.
We have also recently required carriers to furnish statistics showing the rate per ton-mile actually received for the movement of certain kinds of carload traffic, but this requirement has not been generally complied with. At a conference with railway officials when the advisability of requiring these returns was under consideration, it appeared that the carriers objected, partly upon the ground of expense in keeping the necessary statistics, but also for the reason that if the public knew the rates actually received for the transportation of these commodities it would have a tendency to create discontent with the rates. We are satisfied that the expense would not be an undue burden and that the information would be of distinct value.
The Supreme Court of the United States has held that the Federal courts have no power to compel the making of these returns by mandamus, and the act itself imposes no penalty of consequence for failure to make the returns. We have provided in the proposed bill a suitable penalty for unreasonable failure to make these returns, and that the Federal courts have statutory authority to act by mandamus.
The other amendments proposed in the bill referred to require only a few words of explanation. The sixteenth section, which relates to the enforcement of the Commission's orders and their judicial review, is remodeled in the manner and for the purpose which will readily appear upon examination. The intended effect of this provision would be to compel a carrier to comply with an order of the Commission or resort to the courts for its suspension and annulment on the ground that it was unlawful.
A new section is here added, to be known as section 16a, which expressly authorizes the Commission to review and modify its own decisions. It may be that this right now exists by implication, but it ought not to be open to doubt or question.
The last paragraph in this proposed new section limits the duration of an order of the Commission by providing that an order which has been complied with for the period of a year shall not thereafter be in force as against the carrier so complying therewith. The effect of this provision would be to give the carrier freedom, upon the expiration of the time named, to exercise its own initiative as to the matters affected by the order. The reasons for such a limitation have been heretofore stated and need not now be repeated.
It will thus be seen that the substantial amendments proposed are few in number and easily understood, the remaining changes being merely such as are needful to harmonize other parts of the act with the main amendments. The length of the bill is chiefly caused by the fact that whenever a section of the present law is amended in any respect, however unimportant, the entire section as it would read is set forth in full.
In brief, the proposed measure amends certain sections of the act to regulate commerce and is confined to such recommendations as are deemed necessary to effect its intended purpose, and thereby furnish adequate protection against excessive and discriminating charges. Other subjects of regulation heretofore considered, such as uniform classification, ticket scalping, free passes, and the like, are not overlooked or regarded as unimportant, but they are altogether subordinate to the essential matters embraced in the bill submitted and need not be further discussed in this report.
REBATES AND THE ELKINS LAW.
In our annual report for 1903 we endeavored to explain the changes in the regulating statute effected by the Elkins law, so called, which was approved in the previous February, and made some favorable comments upon its operation. A similar opinion was expressed in the report made a year ago. Further experience, however, compels us to modify in some degree the hopeful expectations then entertained. Not only have various devices for evading the law been brought into use, but the actual payment of rebates as such has been here and there resumed. Instances of this kind have been established by convincing proof, on which prosecutions have been commenced and are now pending. More frequently the unjust preference is brought about by methods which may escape the penalties of the law, but which plainly operate to defeat its purpose. This does not imply any want of satisfaction with the act of 1903, which we regard as a most admirable measure, nor any belief that there is a general return to former practices, for the fact is undoubtedly otherwise; but it does mean that this type of evil has by no means disappeared and that it is liable to increase unless effectively restrained.
The subject of reports of railway accidents deserves attention, and the existing laws in that regard should be amended. Under section 20 of the original act the Commission is authorized to require annual reports from carriers subject to its provisions which shall contain “specific answers to all questions upon which the Commission may need information.” Acting upon this general authority, the Commission has called for yearly reports of all classes of accidents, although that particular matter is not included in the items mentioned in a subsequent part of the section, and this information has usually been furnished in the annual reports, though not always in a satisfactory manner.
The act of March 3, 1901, commonly known as the “ accident-report