lic welfare of this country than has the Interstate Commerce Commission.

The railroad mileage of the country is over 250,000, and represents a property investment of at least twenty billion dollars; add to it all other common carrier facilities over which it has jurisdiction, and the amount of the investment is greatly increased. The annual net railway operating income for the past several years has been somewhat over $900,000,000.

The movement of traffic in this country has reached a point where it is preponderatingly a struggle for existence between competing groups of producers or shippers and their consumers. The area of manufactures and mines is expanding farther and farther into the country, involving longer and longer hauls, and making for keener competition in the same destination markets. Cotton mills have sprung up in the south; steel mills are being built in the west competing with those in the east; where a few years ago the south depended mainly on two crops, tobacco and cotton, they now have a score; citrus fruit in Florida competes keenly with that from the Pacific Coast; ports have been improved and expanded; new coal fields and timber resources have been tapped; and with extremely favorably rates and differentials granted to shippers for the longer hauls, they are in many cases threatening the very life of the older communities where these industries were first developed. It is the transportation problems such as these that the Commission must adjudicate. The railroads in much of the present-day rate litigation before the Commission are frequently mere bystanders, hoping that in some way things will turn out all right in the end-and frequently taking the frank position that it is a rate fight between producers or shippers.

The Courts and Congress are in practical unanimity with respect to the tendency to centralize federal regulation of our railroads. When the carriers tested the validity of the recapture clause the Supreme Court of the United

9

'Section 15a, paragraphs 5-12 inclusive, of the Act.

NOTE The recapture clause referred to requires that any carrier receiving in any year a net railway operating income in excess of 6 per centum of the value of the railway property shall pay one-half of such excess income to the Commission for enumerated purposes. This is specifically covered in paragraph 6, Section 15a.

States in upholding the constitutionality of the statute, said:

The new act seeks affirmatively to build up a system of railways prepared to handle promptly all the interstate traffic of the country. It aims to give the owners of the railways an opportunity to earn enough to maintain their properties and equipment in such a state of efficiency that they can carry well this burden. To achieve this great purpose, it puts the railroad systems of the country more completely than ever under the fostering guardianship of the (Interstate Commerce) Commission, which is to supervise their issue of securities, their car supply and distribution, their joint use of terminals, their construction of new lines, their abandonment of old lines, and by fixing adequate rates for interstate commerce, and in case of indiscrimination, for intrastate commerce, to secure a fair return upon the properties of the carriers engaged.10

It is quite generally recognized today that railroad regulation has come to stay. The underlying theory and principle is probably not only right and wise, but undoubtedly works to the best interests of the railroads themselves. But the present acts is faulty, and is inadequate despite its staggering extensiveness; it may well be likened to the Mother Goose fable about the old woman who lived in a shoe. The act is certainly too extensive in scope to permit the present Commission to give prompt and adequate consideration to, and sound and thorough examination into the problems submitted to it, which their importance demands. It is a humanly impossible task, although there is no doubt that the Commissioners are honestly and conscientiously endeavoring to do justice to their arduous duties.

In its regulatory duties the Commission must at the same time be prosecutor, judge and jury, combining, legislative, executive, and judiciary functions. It is usually referred to as a quasi-judicial body. But as if that were not enough, further amendments to the act lay upon the Commission

"Dayton-Goose Creek Ry. Co. v. United States, 263 U. S. 456, 478.

the duty of being bankers and brokers as well. They must appraise railroad property, collect money, loan money, fix values, practically negotiate for the sale and purchase of railroads, supervise the issuance of securities, consolidate railroads into systems, still preserving existing competition, and must be the judge of whether or not new railroads should be built. It almost savors of the ridiculous that Congress should presume it to be within the realm of human achievement for eleven men to be possessed of so much expert technical knowledge, intelligence, and ability, and at the same time be possessed of a sufficiently judicial nature to pass upon a terribly involved and almost constantly shifting rate structure.

The last Annual Report of the Interstate Commerce Commission to Congress 11 contains the following, which gives some indication of the enormity of their task respecting rates:

The formal complaints filed numbered 1,343, of which 1,076 were original complaints and 267 subnumbers, an increase of 183 compared with the previous period. We decided 1,063 and 253 have been dismissed by stipulation or on complainants' request, making a total of 1,116 disposed of, as compared with 1,188 during the previous period.

We conducted 1,479 hearings and took approximately 226,234 pages of testimony, as compared with 1,883 hearings and 248,383 pages of testimony during the preceding period.

But this does not mention the thousands of pages of printed briefs submitted by attorneys in these proceedings, nor the days spent listening to oral arguments of what Whittier refers to as "weary lawyers with endless tongues." The same report states that there were 6,876 informal complaints filed with the Commission in that year. Report was made on two Senate Resolutions during 1924. The Commission instituted investigations on their own motion and made report thereon in 14 cases.

"38th Annual Report, 1924.

Only formal cases are printed and published. No conception therefore, can be had of the vast amount of additional work which was accomplished. Reference is made to the appendix hereto which outlines the duties and functions of the Commission. The formal reports are now being reported in the 101st volume; 44 of these have been issued since February, 1920. Nine of the 44 thus far published in bound volumes are finance dockets. Each volume contains about 750 printed pages, exclusive of indices.

THE RATE SITUATION

An adequate presentation of the rate structure deserves separate consideration, and will be only briefly discussed herein.

The Supreme Court of the United States comments on the rate making powers thus: 12

The function of rate making is purely legislative in character, and this is true whether it is exercised directly by the Legislature itself or by some subordinate or administrative body to whom the power of fixing rates in detail has been delegated.

The Supreme Court has also conceded that there is a flexible limit of judgment which belongs to the power to fix rates.13

The making of railway rates can hardly be said to have been reduced to a science; rather, it is a crudely developed system, extended at times slowly, at times suddenly, according to the demands of industry and agriculture as the country has developed. It is added to and taken away from as the economic situation requires. There are many wellsounding phrases used in discussions of bases for rate making, such as "what the traffic will bear," "value of the service," "ton-mile earnings," "car-mile earnings,” “value of the commodity," etc. Sometimes it is one or two of these elements which is given the most weight, sometimes it is all of them, in the exercise of that 'flexible limit of

"City of Knoxville v. Knoxville Water Co., 212 U. S. 1.

12

North Carolina Corp. Com., 206 U. S. 1, 26.

13

Hoch-Smith Resolution, S. J. Res. 107.

judgment' recognized by the Supreme Court as proper. It is too early yet to say whether or when there will be any fundamental change in the matter of making rate adjustments. But out of what seemed at first the most innocent of Congressional resolutions1 there has emerged from the Commission the most comprehensive order of general investigation into the rate structure ever undertaken by that body. This joint resolution of Congress and the order of the Commission goes to all common carriers subject to the interstate commerce act; which means, in addition to railroads, that pipe-line companies, telegraph, telephone, and cable companies, express companies, and sleeping-car companies, have been made respondents in this proceeding.

The following is an outline of the scope of the investigation as outlined in the Commission's order of investigation dated March 12, 1925:

(a) Determine to what extent and in what manner, rates, fares, charges and classifications, also regulations and practices relating thereto, of such common carriers, may be unjust, unreasonable, unjustly discriminatory, unduly preferential, or otherwise in violation of any provision of law.

(b) Determine to what extent and in what manner such rates cause undue or unreasonable advantage, preference, or prejudice as between persons or localities in intrastate commerce on the one hand, and interstate or foreign commerce on the other.

(c) Make such changes, adjustments and redistribution of rates as may be found necessary, and determine upon what classes and kinds of commodities or classes of traffic compensating increases or other changes in rates may be authorized in order to offset or partially offset such other reductions or changes in rates on other classes or kinds of traffic, giving due regard, among other factors to

(1) The conditions which prevail in the several industries of the country, in so far as it is legally possible to do so, to the end that commodities may freely move;

1 I. C. C. No. 17000, Rate Structure Investigation.