Page images
PDF
EPUB

will be no opportunity to try out the new proposal; the nation as a whole must adopt it or reject it. Those will be trying times, when the foresight of the best of us will differ and the future of this American system will be at stake.

It would be wise for us to weigh well the advantages of that which we have, before exchanging it for that which we have not.

We believe the federal plan, as conceived by our fathers, is better than the new nationalism. We believe the states are a distinct factor in our scheme of government. There is a function for the national government to exercise, and there is a function for the state. This federal plan is a sort of safety valve against political and industrial revolution; and it is the greatest ever devised by the makers of government. New ideas are tried out in a few states before they are adopted in others, or by the nation.

The state government is far closer to the local needs and demands of traffic conditions, than is the national govern

ment.

Practically every important advance step in the regulation of railroads, corporations and the great consolidations of our generation, has originated with the states.

The first legislative acts to regulate the business of our railway companies were passed by a few middle western states. This occurred in the early seventies, many years before the federal government ever took a similar step.

At first these commissions were largely figure heads; but several states provided for commissions with full power to fix maximum rates, during and prior to the year 1887. It was not until nineteen years later, that the federal government gave the Interstate Commerce Commission actual power to fix maximum rates.

It was in the 90's that the Supreme Court stated that the fair value of the properties devoted to the public service should be the basis of all computations relative to reason

able rates; and it was in the 90's that one of the states made a valuation of her railway properties. Since then twenty different states have valued one or more railroads. It has now been more than a decade since the Interstate Commerce Commission first asked Congress for facilities to make a valuation of railway properties in this country. Year after year they petitioned for this, and their efforts were entirely in vain, until March 1, 1913.

Each important step of progress along these lines has been initiated in the states. No one, except the ignorant, or he who is not in his right mind, will claim that we have solved these problems concerning the regulation of railroads. We are only at the threshold of this subject, pioneers along the edges. Now, at this stage, is it wise to cut off that which experience has demonstrated to be the principal source of progress?

There is a natural reason why the states have always acted first, and will continue to do so in the future. It is easier for a small group of men of moderate means, realizing the value and force of a new line of action, to command the attention and consideration of a state. In order to receive the serious consideration of the same thing by a great nation, it takes many years of agitation, and large sums of money; indeed, it is doubtful if a nation scattered across a continent like ours, would ever have taken many of these steps for generations to come, had it not been because they proved practical and effective, when tried in the different states. It is only the rich, the extremely powerful, who are able to start out and persuade the nation along a given line of policy; but if one state adopts it, and it proves to be wise, then another state adopts it, and then another state, and finally it grows until the nation adopts it. That is a natural result of our method or system of government.

These facts are true not only as applied to railroads. We abolished slavery in the various states long before we did in the nation.

We have had efficient temperance legislation in the states long before any substantial steps have been taken by the nation. We had pure food acts in the states long before the nation acted.

As one state after another finds the action of their neighboring commonwealth to be wise and good, they have followed her, and adopted similar provisions. In this way, progress or reform is gradually brought about in the nation, as a whole. The states form a sort of experiment station; and where they have gone wrong, the courts are quick to check them, or there is developed a tremendous public sentiment in the country as a whole, which quietly destroys that which is not wise.

It is no reflection on state commissions that they should have been reversed occasionally; they have been blazing the way. In the matter of the regulation of railroad rates, these carriers can have little to complain about as to the different states. The records show that the Interstate Commerce Commission has been reversed by the courts on railroad questions, more often than all the state commissions put together. Where mistakes have been made, the companies have had ready access to federal courts. So long as this continues, the railroad companies have nothing to fear. Upon the other hand, they have much to hope for, if they can succeed in destroying the state regulation of rates.

In view of the remarkable history of the origin of these movements, it is little wonder that the carriers are extremely solicitous in their efforts to prevent, and to remove, the possibility of further advance steps in the different states.

This novelty in statecraft, this federal government of ours, which combines the strong central government with local self-government, into one whole, has some elements of value and strength never dreamed of, perhaps, by those who worked out the details in the latter years of the eighteenth century. It is precisely this local self-government which

keeps regulation close down to the needs and demands of different localities and different states.

It has been said that the railroad business is so complicated, state business is so closely interlaced with interstate business, and the details of the costs, rates, earnings, values and the physical handling of the traffic, are so interwoven and connected together, that it is an impossibility to make any separation. Therefore it is claimed that this business is of such a national character, that it requires a single national tribunal to regulate it. An extract from a recent report of Special Master W. S. Thorington, sitting in the Central of Georgia and Western Railway of Alabama rate hearings, is in point, on this separation between local and interstate business. He stated:

"The vice of such a claim consists in the assumption of the unity and inseparableness in all cases of the two classes of traffic.

"That such a separation is difficult or not possible with the exactness of mathematical certitude, is very generally admitted, but it would be a startling canon of construction that a state is to be deprived of a right so vital because of difficulties in the way of its exercise when such a principle has never been applied to the individuals seeking to enforce ordinary rights in the courts."

One sentence will contain an answer to claims of this character, that it is difficult to separate the expenses on local and through hauls: Even after you have removed the state lines the problem of reasonable local rates still remains.

The longer the hauls, and the higher the rates, the better it is for the stockholders in railway companies. Upon the other hand, it is to the interest of the public generally to have short hauls as well as long hauls, and to have rates just as low as they can reasonably be placed, providing it does not seriously interfere with the prosperity and growth of the railway business. In order to tell whether local rates are reasonable or not, it will be necessary always to make some division between operating expenses, earnings and values. This will be true whether state governments, or

whether the national government has jurisdiction over these local hauls. The problem of the reasonable local haul, in all its complexity, would still be with us, even if you were able to destroy state regulation.

Occasionally one hears about various examples of freak legislation on the part of some states. These are very rare. The argument that such acts impeach the whole body of state legislation is like saying that one sinner in a church renders the whole church a failure. This argument is actually advanced from time to time; the only thing it proves is the assinine stupidity of the man who makes the argument. There have been a hundred wise and beneficial laws enacted to one that is foolish; and generally the unwise law has been quickly relegated to the realm of oblivion by the courts, or by the solid good sense of public opinion causing its repeal.

Should it ever be proven in any given case that a state has reduced its interior rates with the deliberate purpose of favoring its own industries to the injury of a neighboring state, then it will be ample time for the courts to interfere. There is not a state commissioner in America who supports such a doctrine. The good faith of the state is an important consideration. No one suggested the possibility of such a motive upon the part of Minnesota; and if the court had found convincing evidence of such character in the record of the Minnesota cases, public opinion would have sustained a permanent injunction. That is not what served to alarm the officials of the other states throughout the nation. When such a case arises the courts will act, as was suggested under other circumstances, when it could be shown that a city or state sought to reduce rates for sinister purposes in order to lower values with the object of purchasing the plant.'

The real issue is practical, rather than theoretical in

1 San Diego Land & Town Co. v. Jasper, 189 U. S. 439, 443; Knox

ville Water Co. v. Knoxville, 189 U. S. 434, 439.

« PreviousContinue »