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INTERSTATE COMMERCE COMMISSION. ITS HISTORY, ACTIVITIES, AND

ORGANIZATION

CHAPTER I

HISTORY

The Interstate Commerce Commission, an independent establishment of the national government, is an administrative body with quasi-legislative and judicial powers, whose general function is the administration and enforcement of the provisions of the act to regulate commerce, more generally known as the "Interstate Commerce Act," of February 4, 1887 (24 Stat. L., 379) as amended and supplemented by subsequent legislation.1

The commission is in general directed by the various statutes to aid the President in the liquidation of matters growing out of war-time control of the carriers; to establish and maintain just and reasonable transportation facilities, rates, classifications, regulations, and practices; to supervise the issuance of securities or the assumption of financial obligations by the carriers; to provide for the safety of employees, passengers, and property; and to function as a correlating agency between the competitive factors in the transportation industry.

The history of the Interstate Commerce Commission is closely connected with the railroad history of the country and the general question of governmental control of public utilities. In this monograph, discussion of these phases of the subject is limited to that minimum without which an account of the commission

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Among the most significant acts amending or supplementing the original law are the following: Act of March 2, 1889 (25 Stat. L., 855), act of February 19, 1903 (32 Stat. L., 847), act of June 29, 1906 (34 Stat. L., 584), act of June 18, 1910 (36 Stat. L., 539), act of Aug. 24, 1912 (37 Stat. L., 566), acts of May 29 and Aug. 9, 1917 (40 Stat. L., 101 and 270), and the act of February 28, 1920 (41 Stat. L., 456).

would be unintelligible, since much material is already available in specialized studies made by competent students in these related fields of inquiry."

The Period of Restrictive National Regulation. In the early days of railroad development in the United States public attention was directed toward construction rather than operation. Once the excellence and advantages of the transportation facilities afforded by the railroads became obvious, the general desire was to provide the maximum mileage in the briefest interval of time. It was, therefore, deemed essential to encourage the railroad promoter, who was viewed as a public benefactor.

Under an imperative popular demand general laws were enacted in many states enabling projectors of roads to organize at pleasure and to select their own lines. After the construction was completed the directors were also permitted to operate practically as they saw fit, and with almost the same freedom as in ordinary private business. The builders of a new road assumed great risks, and when their venture proved successful, having conferred a very great benefit on the public, they were properly entitled to charge, if they saw fit to do so, such rates as would net them a handsome return.

This liberal attitude was no doubt responsible for most of the evils which subsequently compelled governmental regulation. A considerable portion of the public money invested in railroads was lost; there was discrimination, open and concealed, in behalf of favored shippers and localities through special rates, rebates, drawbacks, underbilling, and reduced classification; rates were changed at pleasure and without public notification; corporate shares were frequently manipulated for the advantage of managers and to the detriment of the owners; free transportation was granted to persons outside the railroad service in a manner that led to charges of favoritism. These and other evils led, shortly before 1870, to

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It has been necessary to limit also the treatment of such matters as the " safety" work of the commission, its accounting and statistical work, its handling of the railroad valuation problem, etc., each of which has become a broad field of study.

'Drinker, Treatise on the interstate commerce act, vol. 1, p. 54. also Taussig, Principles of economics, vol. ii, pp. 393-394.

See

a strong public demand for regulation of the railroads by state and national authority."

The states preceded the national government in the field of railroad regulation. Most of the earliest experiments in state supervisory commissions were aimed primarily at reducing the number of accidents. Such commissions were established in New Hampshire in 1844, in Connecticut in 1853, in Vermont in 1855, and in Maine in 1858. A Rhode Island commission, however, established as early as in 1839, was created with a broader purpose, being required to report "the state, condition, and proceedings of the several railroad companies, so far as the public interest may require the same." But the first significant step in state control was the creation of the Massachusetts Railroad Commission in 1869, the model of the so-called "weak" or supervisory-advisory type of commissions. The chief powers of this body were as follows:'

The general supervision and examination of all railroads in the commonwealth with reference to the security and accommodation of the public and the compliance of the corporations with the provisions of their charters and the laws of the commonwealth.

Investigation of complaints against railroads made by town or city authorities and, under certain conditions, of complaints made by voters as to the condition and operation of any railroad, any part of whose location was within the limits of such city or town.

To serve notice upon railroad corporations of their failure to comply with the terms of their charters or the laws of the commonwealth; to serve notice of repairs upon the road, changes in rates, additions to rolling stock, etc., deemed necessary by the commissioners to promote the public "security, convenience, and accommodation."

Investigation of accidents resulting in personal injury or loss of life.

For enforcement of the commission's decisions, recourse was had only to public opinion. Many of the Eastern states followed the lead of Massachusetts, establishing supervisory rather than regulatory bodies, and depending almost solely upon publicity and public opinion to rectify evils. The Western and Southern states

Interstate Commerce Commission, Annual Report, 1887, p. 4, et seq. "Acts and Resolves passed by the General Court of Massachusetts, 1869, PP. 99-103.

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