Part 8 (1/2)
By this time it was clear enough that the only hope of adequate regulation lay with the Federal Government. Congressman Reagan, of Texas, had for years been pus.h.i.+ng a bill to regulate interstate commerce and to prohibit unjust discriminations by common carriers; other measures periodically made their appearance in the Senate; but the Houses had been unable to agree and nothing had been done.
Two facts presently gave great impetus to the movement; in 1886 the United States Supreme Court, reversing its previous decision, decided that no State could fix rates for railroad lines outside its own borders, in other words, that interstate rates were exclusively within the jurisdiction of the Federal authority *; and a Senate committee, under the chairmans.h.i.+p of Shelby B. Cullom, conducted an investigation of railroad conditions which made clear the need of immediate reform.
As a consequence, Congress pa.s.sed the Interstate Commerce Act, which received President Cleveland's signature on February 4, 1887. This measure specifically made illegal rebates, pools, higher charges for short than for long hauls (when the hauls in question were upon the same road); it required railroads to file their tariffs, and it established a commission of five members, who had powers of investigation, including the right to make the companies produce their books. This commission received power to establish systems of accounting and the like, but it had no prerogative to fix rates. Inadequate as this measure seemed to the radical element, it was generally hailed as marking the beginning of an era in the Federal control not only of railroads but of other corporations, and this impression was increased by the high character of the men whom President Cleveland appointed to the first board.
* Wabash, St. Louis and Pacific Railway Company vs. Illinois, 118 U.S. 557.
The Interstate Commerce Commission lasted essentially in this form for nearly twenty years. On the whole it was a failure. Such was the judgment pa.s.sed by Justice Harlan of the United States Supreme Court when he remarked in one of his decisions that the commission was ”a useless body for all practical purposes”; and such, indeed, was the judgment of the commission itself, for in its report of 1898 it declared that the attempt at Federal regulation had failed. The chief reasons for this failure, the commission said, were the continued existence of secret rates and the fact that published tariffs were not observed. *
The managers of the great American railroad systems would not yet admit that the fixing of railroad rates was the concern of any one but themselves, and they still regarded railroad management as essentially a private business. If they could obtain large s.h.i.+pments by granting special rates, even though they had to do it by such underhanded ways as granting rebates, they believed that they were entirely justified in doing so. Thus rebates flourished almost as much as ever, pa.s.ses were still liberally bestowed, and pools were still formed, though they sometimes took the shape of ”gentlemen's agreements.”
* But it should be added that the effectiveness of the commission as an administrative and regulating body was diminished by decisions of the courts, notably the decision of the Supreme Court in the maximum rate case. See 160 U.S. 479.
In 1906, when President Roosevelt became intensely active in the railroad problem, conditions were fairly demoralized. Attempts to enforce the anti-pooling clause had led railroads to purchase competing lines, and when the United States Supreme Court p.r.o.nounced this illegal, the situation became chaotic. The evils of overcapitalization also became an issue of the times. The Interstate Commerce Commission had become almost moribund, and there was a general sentiment that the trouble arose from the fact that the commission had no power to fix rates and that the solution of the railroad problem would come only when such power was vested in it. * The Interstate Commerce Act which became a law on June 29, 1906, was the outcome of one of the greatest battles of President Roosevelt's political life. The act increased the members.h.i.+p of the commission from five to seven members, placed under its jurisdiction not only railroads but pipe lines, express companies, and sleeping-car companies, added to the other familiar restrictions a ”commodities clause,” which prohibited any railroad from transporting a product which it had produced or mined, ”except such articles or commodities as may be necessary and intended for its use in the conduct of its business as a common carrier”--this clause was intended to end the railroad monopoly of the coal mines--and made the failure to observe published tariffs a crime punishable with imprisonment. The amended law did not give the commission the right to fix rates in the first instance but did empower it, on complaint, to investigate charges and on the basis of this investigation to determine just maximum rates, regulations, and practices, though carriers were given the right of appeal to the courts.
* The Elkins Act of 1903 had, it is true, increased the effectiveness of the commission in dealing with discriminations, but it had not solved the problem of securing reasonable rates.
Thus, in essence, the public had obtained the reform which it had been demanding for years. The reorganized commission did not hesitate to exercise its new powers. It soon began actually fixing rates, and from being a half-alive despised inst.i.tution it rapidly developed into one of the most powerful agencies of administration. In the succeeding ten years its powers were still further enlarged by acts of Congress and the privilege of fixing charges practically pa.s.sed out of the hands of the railroads into the control of the Interstate Commerce Commission. The railroads, that is, practically lost the power to regulate their own income. Meanwhile, the progressive movement in American politics had led to the creation of commissions in most of the States, with similar authority over rate making within the States, besides exercising numerous other powers over service and capitalization. Many railroads fell upon evil days and receivers.h.i.+ps again became common. Naturally the railroad managers attributed these calamities to the fact that they were so constantly being regulated; but they probably pushed this claim too far, for the causes of their troubles were more complex.
In 1916, in the heat of a political campaign, the Federal Government took a step which introduced a new principle into railroad management and made the roads practically helpless. The four brotherhoods of railroad operatives were making demands for a so-called eight-hour day, and threatened a general strike that would paralyze all business and industry and throw the whole life of the nation into chaos. Properly to appreciate the consequences of this event, it is necessary to keep in mind the fact that the plea for an ”eight-hour day” was spurious. An eight-hour day cannot be rigidly enforced on railroads; the workmen well knew this, and indeed they did not really demand such working hours.
What they asked for was a full day's pay for eight hours and ”time and a half” pay for all in excess of that amount; that is, they demanded an increase in wages. President Wilson, having failed in his attempt to settle the difficulty by arbitration, compelled a Democratic Congress over which his sway was absolute to pa.s.s a law-sponsored by Chairman Adamson of the House Committee on Interstate Commerce--which granted practically what the unions demanded. In pa.s.sing this law, Congress a.s.serted an entirely new power which no one had ever suspected that it possessed--that of fixing the wages which should be paid by common carriers and possibly by other corporations engaged in interstate commerce. The railroads immediately took the case to the United States Supreme Court, which promptly sustained the law. This decision, unquestionably the most radical in the history of that body, declared virtually that Congress could pa.s.s any law regulating railroads which the public interest demanded.
And thus, after fifty years of almost incessant struggle with the public, was the mighty railroad monster humbled. It had lost power to regulate the two items which represent the existence of a business--its income and its outgo. The Interstate Commerce Commission was now fixing railroad rates, and Congress was fixing the amounts of railroad wages.
It remained for the Great War to precipitate the only logical outcome of this situation--government control. The steadily increasing responsibilities of war soon told heavily upon all lines until, in the latter part of 1917, the whole railroad system of the United States had all but broken down. The unions were pressing demands for wage increases that would have added a billion dollars a year to their annual budgets.