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THE IMPORTANCE
OF A THonough
CONGRESSIONAL INVESTIGATION
OF THE RELATIONS OF
Railroad Transportation
TO
THE PUBLIC INTEREST.S.
(From “THE TRAILWAY AGE” of January 31, 1902.)
By Joseph NIM Mo, J.R.,
Statistician and Economist.
fl-IBRARY OF CONGRESS CARD A16-4
WASHINGTON, D. C. :
THE RUFUs H. DARBY PRINTING Co.,
I902.
i
3
The Relations of Railroad Transportation to
the Public Interests.
By Joseph NIMMO, JR.
At the present time the public mind is stirred by intense
and varied questioning in regard to the relations of the
railroads to the public interests. The subjects of denun-
ciation and of debate embrace questions, involving the
fundamental principles of our form of government, consti-
tutional and legal questions, questions of public policy,
economic and commercial questions, and questions touch-
ing the history and the theory and practice of railroad
transportation, in so far as relates to the public interests.
Some of these inquiries relate to issues growing out of
changed conditions, and are properly matters of govern-
mental concernment, while others have their origin solely
in the imagination of the evangels of discontent, who find
abundant field for the exercise of their speculations in the
general incertitude which prevails in regard to the real
status of affairs. These and other considerations suggest
the importance of a thorough and impartial congressional
investigation of the many-sided and complex question as
to the relations of the railroads to the public interests.
i\\s
It is certain that the duty of instituting such inquiries
cannot be assigned to any administrative body. It cannot
be delegated to the Interstate Commerce Commission, since
the investigations and the acts of that body are, in the lan-
guage of Mr. Justice Shiras, “confined to the obvious pur-
poses and directions of the statute” which define its
sº function. This the Commission clearly apprehends. In
i
-->
;
2
its fourteenth annual report, submitted December 24th,
I900, the Commission said :
“With respect to many of these combinations the Com-
mission has and can have no official knowledge. * * *
The Commission is given authority “to enquire into the
management of the business of all common carriers subject
to the provisions of this act, and to keep itself informed as
to the manner and method in which the same is conducted,’
but this has never been construed by it to refer to the mere
financial operations of railways engaged in interstate traffic.”
Clearly such inquiries, involving as they do questions of
public policy of the highest political moment, must be con-
sidered by Congress and its committees. . .
It is a somewhat astonishing fact that there has been but
one such investigation as that here recommended since the
advent of railroad transportation in this country, namely,
the investigation of 1886. Since that time important
changes have taken place in controlling economic and
commercial conditions.
We may profit very much in regard to this important
subject from the example of Great Britain. The British
Parliament began the investigation of the peculiar com-
mercial, economic and political aspects of tramways in the
year 18OI—a little more than one hundred years ago.
Since the advent of steam railroads, about the year 1830,
there have been many parliamentary investigations in
Great Britain concerning the relations of the railroads to
the public interests. The most notable of these are the
investigations of 1840, I844, 1846, 1852, 1865, 1872, 1881,
1888 and 1893–94. The printed report of the Commission
of 1872 is a quarto volume of I, 189 pages, nearly as large
as a Webster's Dictionary. The report of 1893–'94 is also a
quarto volume of nearly 700 pages. In these various re-
ports all the more important commercial, economic and
political conditions governing the railroad transportation
c. * * * *
3
question in Great Britain have been investigated and re-
ported upon. Theories and notions about railroad man-
agement and regulations have also been reported upon—.
Some of them quite as visionary and as absurd as those
which now command public attention in this country.
As the result of these elaborate parliamentary inquiries,
abuses of various sorts have been abated, mistaken ideas in
regard to the management and regulation of the railroads of
Great Britain have been corrected, sensible remedial expedi-
ents have been adopted, many questions at issue have been
amicably settled, and public discontent has been allayed.
Thus, British statesmen, following the historic example of
their illustrious predecessors, have from time to time, in the
language of Mr. Gladstone, “submitted themselves to the
lessons of experience and to the lessons of the hour.”
How different has been the course pursued toward the
railroads of this country by our National Government.
With an area (exclusive of Alaska and Our insular posses-
sions) twenty-five times that of the United Kingdom of
Great Britain and Ireland, and with a railroad mileage of
192,161 miles as against 22,000 miles in Great Britain, as
before stated, we have had only one congressional investi-
gation of the railroad question, namely, the Senate inquiry
of 1886, which resulted in the Interstate Commerce Act of
February 4, 1887°. That investigation related to the cure
of certain causes of complaint. What is now needed is an
inquiry relating to the organization of our vast American
Railroad System, its relationships to the social, commercial
and industrial interests of the country, the benefits which
it has conferred, the evils which have incidentally arisen
in the course of its development, and the proper course to
be pursued in the attempt to cure those evils. This ap-
* The Windom Senate Committee Report of 1873 was essentially the
result of an inquiry in regard to the construction or improvement of
certain water routes. :
4.
pears to be the supreme duty of the hour. It is a duty
which cannot be evaded if legislation in regard to the most
important material interests of this country is to be based
upon the certain lessons of experience, and not upon the
uncertain leadings of public clamor.
If the eminently wise and wholesome example set by
Great Britain is to be followed the proposed inquiry will
involve many hundred and even thousands of inquiries.
Without any attempt to formulate a definite scheme of
investigation, I submit, off-hand, some of the topical features
of such a congressional investigation.
I. The American Railroad System being the product of
an evolution, what are the more important evolved laws of
its being in so far as relates to present causes of complaint 2
2. Is the Railroad System of the United States so con-
stituted in law and in commercial and economic conditions
as to justify and render necessary regulations and agree-
ments in the nature of self-government?
3. What are the logical sequences of the Act of June 15
1866, commonly known as “The Charter of the American
Railroad System ’’ in so far as relates to railroad combi-
nations and railroad regulations P
4. To what extent have the organic features of the
American Railroad System been recognized and formally
legalized by the government of the United States and by
the different States ?
5. To what extent and in what manner should the rail-
roads be allowed to make regulations controlling their own
interaction, with the object in view of maintaining the
orderly conduct of the American Railroad System P
6. Are rate agreements a necessary and beneficent feature
of the physical and traffic unity of the American Railroad
System 2
7. In what manner and to what extent are the require-
ments of the Interstate Commerce Law based upon expe-
5
dients adopted by the railroads for the purposes of self.
government?
8. Has the physical and traffic unity of the railroads of
the United States been productive of public benefits, and if
So, in what manner can such benefits be preserved and ren-
dered more productive of good?
9. Has the physical and traffic unity of the railroads of
the United States been productive of evils, and if so in
what manner can those evils be abated P
IO. To what extent, have the agreements in the nature of
Self-government entered into between railroad companies
proved to be conservative of the interests of transportation
of trade and of the public interests generally P
II. In what manner and to what extent have restraints
upon the freedom of competition proved to be protective of
the interests of transportation, of commerce and of industry,
and in what manner and to what extent have such restraints
proved to be detrimental to the interests of transportation,
of commerce and industry P - -
I2. To what extent and in what manner has the limita-
tion of competition by combination been productive of good
in railroad transportation and to what extent and in what
manner has the limitation of competition by combination
been productive of evil in railroad transportation ?
13. Has the fact that the railroad is a free highway of
commerce to all shippers but not to all carriers given rise
to any dangerous monopolistic tendencies 2
I4. To what extent, and in what particulars has the
mediatorial and judicial method of regulation embodied in
the “Interstate Commerce Act' been effective and bene-
ficial P
15. What additional legislation in the line of govern-
mental regulation expressed in the Interstate Commerce
Act is desirable in order to increase the efficiency of that
mode of regulation ?
6
I6. What has been the result in the States of this country
and in other countries of granting to governmetal commis-
sions or other agencies the power to prescribe rates for the
future?
17. In what respects, having regard to commercial, econo-
mic and political considerations, can the consolidation of
competing or tributary lines of railroad be regarded as op-
posed to sound views of public policy 2
I8. Are there any substantial reasons in present or in
past experiences for assuming that the “community of in-
terests” method of regulating railroad traffic will prove to
be detrimental to the public interests in the matter of rates
or of facilities afforded to the commerce and industry of the
country; and if so, what are those reasons? -
I9. Does the “community of interest” method of regu-
lating railroad traffic present any feature of monopoly not
inherent in the physical peculiarities of the railroad as a
highway of commerce, or in the physical unity of the
American Railroad System 2. -
2O. Is it possible to confer upon the Interstate Commerce
Commission the legislative power to prescribe rates, and
the “rules, regulations and conditions for freight transpor-
tation ” and at the same time to hold snch authority sub-
ject to judicial limitations 2
21. Would the endowment of the Interstate Commerce
Commission with full judicial and legislative authority over
interstate transportation confer upon the Commission auto-
cratic power incompatible with the principles of American
Government 2 -
22. What would be the commercial and political effects
of a law which would throw upon the National Govern-
ment the responsibility of determining the course of the
commercial and industrial development of this country, as
the result of granting to a Bureau of the Government the
power to determine both absolute and relative rates of
7
transportation, throughout this country, and the “rules,
regulations and conditions for freight transportation ?”
23. Should the determination of the Interstate Com-
merce Commission have judicial power or influence beyond
the existing provisions of law that its “findings of fact shall
be prima facie evidence of the matters therein stated?”
24. In what manner can the Act to Regulate Commerce
be amended, so as to give greater effectiveness to the orders
of the Commission directing carriers to cease and desist
from any unlawful action ? ... -
25. In what manner and to what extent does rate cutting
effect the commercial and industrial interest of this country?
26. What expedients and what guarantees for the main-
tenance of published rates are practicable and proper ?
27. To what extent are rate wars the result of com-
mercial interaction, and to what extent are they the result
of reprehensible practices which should be prohibited by
statutory enactment? - - . .
28. How do the rates for railroad transportation in the
United States compare with the rates for transportation
charged in other countries 2
29. How do the facilities for railroad transportation in
the United States compare with the facilities for railroad
transportation in other countries?
30. How do the rates for railroad transportation and the
facilities for railroad transportation in this country compare
with the rates and facilities for railroad transportation
in this country twenty, thirty and forty years ago?
3I. Is it true, as indicated by official data, that exorbitant
rates are practically obsolete in this country
32. Is it true, as indicated by official data, that unjust
discriminations in this country have been reduced to com-
paratively insignificant proportions?
8
33. How do advances in wages and in the prices of ma-
terials compare with changes in rates for transportation
during the last five years?
34. Is the margin between railroad receipts and expendi-
tures in this country widening or narrowing, and to what
extent 2
35. Have the facilities for collecting, forwarding and de-
livering freights exhibited an improvement commensurate
with the increase of traffic during the last five years?
36. What have been the general results of railroad trans-
portation in the United States in so far as relates to the
development of the agricultural, mining and industrial in-
terests of the country, the increase of population and the
general welfare? -
This schedule of inquiries is not assumed to be in the na-
ture of a systematic investigation of the railroad transpor-
tation, question in this country. It is believed, however, that
the proposed inquiries at least roughly formulate the gen-
eral scope and nature of questions which are now the sub-
ject of public debate and which would therefore naturally
constitute the basis of any satisfactory legislative inquiry.
The British investigations have been quite as broad, and
have gone even more into detail than is indicated by the
foregoing schedule. .
While the question as to the relations of the railroads to
the publie interests is a large and complex One, yet it is
believed that under present circumstances the investigation
here outlined would not involve any serious difficulty.
Some of the reasons for this belief may be mentioned:
Pirst. The Bureau of Statistics of the Treasury Depart-
ment and the Interstate Commerce Commission now furnish
a large amount of statistical and other data in regard to the
general subject.
Second. The most important aspect of the case relates to
the reasonableness of rates and the efficiency of railroad
9 ---
transportation. The Chairman of the Interstate Commerce
Commission stated, three years ago, that the question as to
extortionate rates is practically obsolete. There is also
other abundant proof upon this point. The tendency of
railroad freight charges in this country has been steadily
downward during the last thirty years both with respect to
particular sections of the country and the entire country.
The average charge per ton per mile for the United States
fell from II* cents in 1870 to ºths of a cent in 1900.
The railroad mileage of the country increased from 52,922
miles in 1870 to nearly 200,000 miles in 1902. Besides,
as the result of mechanical improvements and advanced
administration, the efficiency of the railroads has been
enormously increased. Furthermore, the charges for rail-
road transportation in the United States are much less than
in any other country. . -
Third. The feature of railroad transportation in this
country next in importance with respect to the relations of
the railroads to the public interests relates to discrimina-
tions. This cause of complaint has steadily declined and
has practically been eliminated. In reply to a Senate
Resolution introduced by Senator Elkins, of West Vir-
ginia, on April 16, 1900, the Interstate Commerce Com-
mission reported that of the millions of freight transactions
in the United States, only 18 complaints a year on the
average for ten years, had come to a hearing before the
Commission, of which only 3% a year had been appealed
to the courts. -
Fourth. The fourth reason adduced in proof of the state-
ment that an investigation such as that here recommended
would not involve any insuperable difficulty, consists in the
fact that the present complaints against railroad administra-
tion relate mainly to the abuse of rate-cutting. This least
important of the three causes of complaint here referred to
involves remedies in the nature of improved methods of
IO
detecting and punishing such offenses. It is essentially a
question of administration and of procedure.
Nevertheless, the public discontent and incertitude in re-
gard to every important aspect of the railroad question
and the dangers attending any attempt, at the present
time, to devise remedial legislation upon the subject in the
absence of a clear understanding of it from every material
point of view, unerringly point to the necessity for Con-
gressional investigation. pº
The proposed inquiry is in the highest sense political.
It presents a task for practical statesmanship. In order to
have influence in the direction of wise legislation it must
be entrusted to legislators who in their representative polit-
ical character will consider the subject with minds illumi-
nated by the sense of official responsibility. Besides, the
progress of the investigation, would tend, through its pub-
licity, to correct many popular misconceptions in regard
to the real merits of the case.
There is at the present time a disposition to induce Con-
gress to adopt the cherished expedients of visionnaires and
of men who seem to be unable to get beyond the purview
of special remedies. The subject demands a broader and
more authoritative treatment. The old Roman adage, “make
haste slowly,” is the dictate of prudence concerning all at-
tempts to conform governmental practices to the mutations
of time, and never has it pointed more unerringly to the
path of wisdom than in regard to the subject to which
this statement relates.
WASHINGTON, D. C.,
. . . . Aeóruary 5, 1902.
N . B.—This article contains certain emendations and additions to the
article as it appeared in The Railway Age of January 31, 1902.
JOSEPH NIMMO, JR,
Statistician arm d E. corn Ormist,
H U NT IN GTO N, 1831 F STREET N. W.,
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