RAILWAYS, Government Control of. The government's obligation to maintain an equitable relationship between the public and carriers is a continuing one, although the prob lem has assumed a different form from time to time and is merged to some extent with the problems of the public control of corporations. In enacting the Sherman Anti-trust Law, Con gress had only industrial combinations in view; but the rulings of the Supreme Court have made the law an importantpart of the legisla tion for the regulation of railroads. As a measure for the control of inter-railway rela tions the law is faulty in that it makes practi cally all co-operative action on the part of rival carriers illegal. While the Sherman Act and subsequent legislation have fixed the general scope of the governmental regulation of trans portation, the efficiency of governmental con trol has been determined by the actions of the courts in interpreting the law and in exercising their equity powers.
To understand the fine distinction between government control of railroads and govern ment ownership of railroads, a study or exam ination of the Railroad Control Law will greatly assist. This law, enacted in March 1918, au thorized the President to contract with the com panies for the payment of an annual sum not exceeding a specified maximum, to be deter mined for each road by the average annual rail way operating income during the three years ending 30 June 1917. The government agreed to pay all taxes, State or Federal, assessed dur ing the period of Federal control, except the excess profits tax and the corporate income tax. These latter were to be paid by the company out of the payments made to it by the govern ment. With respect to the cffect of govern ment control on State taxation of the railroads, the act expressly provided that it should not affect °existing laws or powers of the States in relation to taxation.° The President was au thorized to initiate rates, but they were re quired, to be °reasonable and just* and they were subject to review by the Interstate Com merce Commission. The act directed the com mission to consider when reviewing the Presi dent's rates the circumstances caused by war conditions and the need for additional railroad revenues. Federal control was to continue dur ing the war and not exceeding one year and nine months after the ratification of the treaty of peace. Congress authorized the government to take control of street and interurban rail roads necessary for the transportation of ship yard employees.
Among the most important of the needs of the situation is the compulsory Federal incor poration of railroad carriers. So long as Con gross confined itself to restrictive legislation of railroads as common carriers, it was not ma terial whether they were Federal or State corporations, or indeed corporations at all. The working and operation of the physical properties and their relations as carriers to the public were the only matters of concern, and their corporate functions were not substantially affected. If only restrictive and oppressive legislation were intended now, Federal incorporation would not be necessary. But the time seems to have arrived for a comprehensive legislative plan for developing and sustaining necessary railroad transportation, or, in other words, for construc tive legislation. The present system of regula tion now imposes on the Interstate Commerce Commission, executive, judicial and legislative functions of great difficulty and importance, and all plans thus far suggested contemplate enor mous additions to such functions. This com
mission should be relieved of its executive duties, for which such a body is least suited.
It is obvious that executive and administra tive functions cannot be efficiently exercised by boards, commissions or committees. This was demonstrated during the European War. The larger the board or commission, the more cum bersome or difficult becomes the task. Experi ence has demonstrated the necessity for a national government officer to meet emergencies resulting from exceptional congestion in traffic or through blockades of transportation, by quickly mobilizing the transportation resources, and by the arbitrary diversion, if need be, of traffic from lines which cannot handle it to lines which can, and by other instant and heroic methods. It is generally conceded that there should be a Transportation Department of the government with a Cabinet member at its head in order that railroad business might be prop erly represented and have a °friend at court.° In the matter of service, a Cabinet officer by calling in railroad executives and through in formal discussions could bring about changes in train service, schedules and other things de sired by the public, which if taken up with the elaborate formality and procedure inevitable in cases of a commission or similar body would not be accomplished for weeks or months. A single executive representing the government in all these important matters of service could get into instant touch with the railroad execu tives and secure action with respect to these matters of such vital importance to the public very much quicker than would be possible by the slow-moving procedure of any board or com mission. The secretary would not be hemmed about by any judicial conceptions and matters of importance could be promptly brought be fore the Interstate Commerce Commission by formal complaint. The largest single industry in the United States, next to agriculture, and certainly there is none more vital to the very life of the nation, has, it will be seen, no de partment, bureau, agency or officer of any kind or description whose duty it is to look after its interests, to defend it or to say a word for justice in its behalf. The Interstate Commerce Commission was conceived in hostility to it and the Interstate Commerce Act was designed to repress, regulate and punish it. The figures given out by the United States Railroad Ad ministration, giving the results of government control during the European War, show that 5,377,468 soldiers were transported in 14 months on American railroads, 7,173 special trains, car rying 95,246 cars, being operated. The Overman Act, approved 21 March 1918, provided that the Interstate Commerce Commission should as certain and certify to the President the average annual railway operating income to be used by the President in making agreements for com pensation for the use of the transportation sys tems of the country. In case the amount of compensation was not adjusted, claims could be submitted to boards of referees appointed by the commission, and the finding of such boards would be a maximum of compensation which would be paid to the carriers. See RAIL WAYS, GOVERNMENT OWNERSHIP OF.