Railroads: Rates and Regulations

After the discouraging reverse in the Alabama Midland decision, which the Commission interpreted to mean that if circumstances and conditions were different at the more distant point, that fact, of itself, removed the case from the inhibition of the Fourth section; certain inferior Federal court opinions somewhat modified this view.[578] The question as to whether the discrimination at bar was or was not justifiable, was permitted to be considered; in addition to inquiring merely whether circumstances and conditions were different at the more distant point. The Commission somewhat reanimated by these decisions, sought to apply this judicial modification of the Alabama Midland reasoning to several then pending complaints as to local discrimination. Both in the Danville[579] and Hampton cases[580] the carriers were ordered to desist from discriminating against the nearer point under this interpretation of the law. But the Supreme Court put an end to it all by condemning this line of reasoning in its last leading decision upon the Fourth section rendered in 1901, finally disposing of the so-called Chattanooga case. This dealt the final death blow to the long and short clause.[581] The complaint in this case arose from the fact that freight rates to Chattanooga, Tennessee, from eastern cities were higher than to Nashville, although the latter was the more distant point. The Commission found that there was no water competition at Nashville compelling the lower rate; but that there was competition of railways and of markets. The Supreme Court reversed the Commission in its final attempt thus to revivify the moribund Fourth section, and fully confirmed its original view as to the meaning of the Alabama Midland decision. If such circumstances and conditions as competition of markets or railways at the two points were dissimilar, carriers might without restraint depart from the long and short haul rule. Thus the Fourth section of the law was to all intents and purposes repealed. Complaint after complaint was perforce set aside by the Commission. For practical purposes this part of the law was rendered absolutely nugatory. The chapter was closed. For twenty years, in face of the litigation above outlined, no order of the Commission respecting local discrimination was enforced. Only with its amendment in 1910, as subsequently described,[582] did the long and short haul clause once more resume its due importance upon the statute books.

One special case may be cited in this general connection, as typical of the arbitrary action of carriers particularly in the South. It was this sort of thing which went far to arouse public opinion and focus attention upon the need for real regulation.[583] The situation appears upon the accompanying map. The planters in a certain southern territory served by the Louisville & Nashville railway had been accustomed to ship out their cotton to the North by various routes. It might go by way of New Orleans, via Pensacola, up the main line along the Mississippi valley, or be hauled eastward to Savannah and other Atlantic ports, and thence go by vessel to New England. Inasmuch as the through rate was the same by all routes, no monetary issue to the planter was involved. But not so to the railway. For by the first routes it secured a long haul; while by the last it not only was limited to short carriage of the goods, but was compelled to accept an even smaller fraction of the joint through rate. In this case the Louisville & Nashville railway—which, by the way, more persistently denied the existence of abuses than any other road in the country—advanced the Savannah cotton rate arbitrarily in 1899 from $2.75 to $3.30 a bale. This effectually dammed up the eastern outlet and jeopardized the interests of the port of Savannah to that degree. Doubtless the Louisville & Nashville was not oblivious to the welfare of that great seaport. It could not afford to be, for Savannah's growth must indirectly accrue to its benefit. It did not love Savannah less; but it loved its own particular seaport, Pensacola, or the long haul via Louisville, more. Maybe it was better that traffic should go out this way—who knew best? The real point to be made is that no competent tribunal or process for impartially determining the question was provided by the now emasculated law.

The work of the Commission during these discouraging years was naturally affected most profoundly by these limitations placed upon its activity by the Federal courts. The number of formal complaints, never large, steadily dwindled year by year. Thirty-nine were filed in 1892; but in 1900 and the following year only nineteen were presented annually.[584] The Commission persisted in its statistical work with marked success. Important independent investigations continued to be made, in pursuance of the only policy remaining open to it, that of publicity. But even the informal complaints, representing mainly the grievances of individual shippers rather than of competing cities or commercial bodies, were few in number, as the following official figures show.

But better times were coming. The return of commercial prosperity brought with it new problems. Old abuses, quiescent during the long industrial depression of 1893-1897, once more made their appearance. New constructive legislation followed, based as before upon the economic needs of the time, as they made themselves manifest; but a great campaign of education, led by the vigorous personality of Theodore Roosevelt, was necessary, as we shall see, to compel Congress to act.