§ 5. The Interstate Commerce Act. We now come to the third era of railroad policy, that of a weak and ineffective control by a federal agency. Public hostility to private rail road management was greatest in the regions where the most rapid building of roads occurred from 1866 to 1873. One center of grievances was in the "Granger states" of Illinois, Wisconsin, Kansas, Nebraska, Iowa, and Minnesota; another center was in the oil regions of Ohio and Pennsylvania. The eastern states were not without their troubles, for the report of the Hepburn Committee of the New York legislature in 1879 showed that discrimination between shippers prevailed to an almost incredible degree in every portion of New York state. When the courts, in 1886, decided that the greater portion of the railroad rates could not be treated by state commissions, national control was loudly demanded. Scores of bills were presented to Congress between 1870 and 1886, and, despite much opposition, the act creating the Interstate Commerce Commission was passed in 1887.
The act laid down some general rules: that rates should be just and reasonable ; that railroads should not pool, or agree to divide, their earnings to avoid competition ; that they should under similar conditions, and unless expressly excused, fix rates in accordance with the long- and short-haul principle (to charge no more for a shorter distance than for a longer one on the same line and in the same direction, the shorter being included within the longer). The act pro vided for a commission of five men, to be appointed by the President, which might require uniform accounts from the railroads and which should enforce the provisions of the act. The commission in its earlier years gave promise of effective ness, but its powers, as narrowly interpreted by the courts, proved inadequate to its assigned task. Court decisions paralyzed its activity, and the railroads in many cases re fused to obey its orders. Competent authorities declared in 1901, after fourteen years of the Commission's operation, that discrimination never had been worse, and a series of exposures of abuses strengthened the popular demand for stricter legis lation. Weak federal regulation had been valuable as a means
of educating public opinion, but had failed as a means of remedying railroad evils.
§ 6. The commission's powers strengthened. The latest era, that of strong federal regulation, preluded by the pas sage of the Elkins Act in 1903, aimed at discrimination and rebates, began definitely with the Hepburn Act of 1906. The Commission was increased to seven members, its authority was extended to include express, sleeping-car, and other agencies of transportation, and it was given the power to fix maximum rates, not to be suspended by the courts without a hearing. It became thus unquestionably a commission of the "strong type." It began to exercise its new powers with vigor, and the carriers reluctantly accepted its authority, as an evil less than that of "forty-nine masters." Responsive to a calmer but insistent popular demand, further amendments were made by the Mann-Elkins Act of 1910, which strength ended the long- and short-haul clause, and gave to the Com mission, among other new powers, that of suspending new rates proposed by carriers. A special Commerce Court of five judges was created with exclusive jurisdiction in certain classes of railroad cases, but this was abolished after a short trial.
Now began by the Commission an exercise of effective power. Complaints and prosecutions constantly brought to light many graver violations and many hidden abuses and minor violations of the act. Though an ideal condition might never be attained, the evils of favoritism by public carriers seemed in the way to be ended. The Commission, having absolute control over rates, kept them down. Accord ing to public opinion, this was the Commission's chief duty.
Fig. 2, Chapter 29.—Decline of railroad rates, relative to prices and railway wages, 1905-1920.