was broadened and strengthened by the decisions of the Supreme Court in the oil and tobacco cases in 191 1 and by the Clayton Act of 1913- In the adjustment of labour disputes between employers and employees engaged in interstate commerce the U.S. Govern- ment plays a constantly larger role.
Railway Regulation. The Interstate Commerce Commission was given authority by the Hepburn Act of 1906 to establish reasonable maximum railway rates on interstate traffic, but could act only on complaints. By the Mann-Elkins Act of 1910, the Commission was authorized to establish reasonable rates after hearings initiated on its own motion. By this law the Interstate Commerce Act was made to apply also to telegraph and telephone companies. The most important addition to the powers of the Commission by the Act of 1910 was the authority to suspend proposed increases in rates. Rates filed by the carriers were to become effective in 30 days, but the Commission might suspend the increase for 120 days, and, if neces- sary, for an additional period of not exceeding six months. Another important provision of the Mann-Elkins Act gave renewed vitality to the fourth section, or the long and short haul clause, of the Inter- state Commerce Act. Previously a carrier might decide whether this clause applied to any particular route, and, as the law had been interpreted by the courts, the fourth section had practically become a dead letter. By the Mann-Elkins Act no carrier may charge more for the shorter intermediate haul than for a longer haul until he has applied to the Commission and permission has been granted because of special circumstances.
The Panama Canal Act, passed in 1912, contains some important items extending Federal power over interstate commerce. It had long been thought by the public that it was the policy of the railways to secure control of competing carriers by water and force them out of existence. In response to this feeling, Congress, by the Panama Canal Act of 1912, provided that it should be unlawful for any railway company or common carrier, subject to the Interstate Commerce Act, to secure control by stock ownership or otherwise of any common carrier by water operating through the Panama Canal or elsewhere, provided the carrier by water and the railway company did or might compete with each other. The Commission was charged with the duty of deciding the questions of fact as to competition. The drastic nature of the law was somewhat modified by the provision that, if the Commission was of opinion that the public interests would be served and competition would not be prevented or reduced by the continued control by the rail- way company of a competing carrier by water the Commission might extend the period of control. In enforcing this provision, the Commission has compelled the trunk-line railways to sell the passen- ger and freight lines which they had efficiently operated upon the Great Lakes. The railways have been permitted to continue to operate steamships coastwise between New England ports. The prohibition of the use of the Panama Canal by vessels owned by a competing railway is absolute. The Panama Canal Act also gave the Commission authority, as regards interstate traffic, to require rail carriers to make physical connexion with the docks of steamship companies and to establish through routes and maximum joint rates. Rail carriers, moreover, that have entered into through arrangements with a carrier by water, operating from a port of the United States to a foreign country, must enter into like arrangements with any or all other lines of steam- ships operating from the same port. The purpose of this pro- vision was to insure shippers from interior points the benefits of competition by through routes to foreign destinations.
Prior to 1915, it was the practice of railway companies by con- tracts in bills of lading to fix a maximum value for different ar- ticles, and in case of loss or damage the owner could collect only to the amount of the maximum value so fixed. By the Cummins Amendment (1915) to the Interstate Commerce Act carriers were made liable for the actual value of commodities. Subsequently the carriers were, however, permitted to establish a scale of rates vary- ing with different values, provided the Commission approved.
As a result of the steady rise in cost of living after 1910, and of the more effective organization of railway employees, a series of de- mands was made by railway labour for increased wages. The de- mands were only partially satisfied by arbitration proceedings, and finally in 1916 the employees of the railways of the country threat- ened a nation-wide strike on Sept. I unless the demand for increased wages and for an eight -hour day was granted. The railway com- panies were unable to grant the demand and the men refused to arbitrate, although the President of the United States sought settle- ment by arbitration. The urgency of the situation caused the Presi- dent to recommend and Congress to enact a law establishing the eight-hour day beginning Jan. I 1917, and providing that the wages then in force should not be reduced for a period of nine months. In March 1917 this law was upheld by the U.S. Supreme Court.
On March I 1913 Congress directed the Interstate Commerce Commission to undertake the valuation of railways to enable the Commission -to regulate interstate carriers more intelligently and effectively. It is expected that the Commission will complete this work in 1923.
The most important legislation affecting the carriers enacted
since the passage of the original Interstate Commerce Law of 1887 is the Transportation Act of 1920, which returned the railways to their owners March I (at the end of the 26 months of Government operation), provided for a more comprehensive regulation of carriers by the Commission, and established new principles to be followed in the regulation of rates, revenues and capital expenditures of the carriers. An active propaganda for the purchase of the railways by the Government was carried on during 1919 by the leaders of the railway brotherhoods and unions. The agitation received also the support of socialists and other advocates of the extension of Govern- ment functions. The movement, however, did not meet with pop- ular approval, and Congress by a large majority decided in favour of the continuance of private ownership and the return to corporate operation of the railways.
In the Transportation Act of 1920 a new principle of rate-making was incorporated. The Commission, as previously, is the final authority as to rates. But in the future the Commission was to adjust rates with a view to enabling carriers, as a whole, to earn 5j % on the aggregate value of their property devoted to the public service. The Commission might also authorize the carriers to earn one-half of I % per annum additional, the amount thus earned to be devoted to improvements without capitalizing the amount thus invested. Individual carriers whose net operating revenues exceed 6% were to devote one-half of the excess to building up a company reserve fund until the amount reaches 5 %, and are to turn the other half of the excess over to the Government to go into a fund from which it might make advances to the carriers.
The regulation of railway securities by the Commission is author- ized by the Transportation Act of 1920, which so amends the laws against combinations as to permit railway companies to consolidate with the Commission's approval. Consolidation or grouping of the railways into a limited number of systems of approximately equal strength is recognized to be an ultimate necessity, and there was some sentiment in favour of making consolidation compulsory by law. That principle, however, was not incorporated in the Act.
One of the most important features of the Transportation Act of 1920 is that providing for the adjustment of disputes as to wages and working conditions of employees. The Act makes it the duty of employers and employees to endeavor by negotiation to settle their differences. If negotiation fails, disputes as to working conditions may be referred to boards of adjustment composed of an equal number of representatives of the employer and employees. These boards may be either local, district or national. The law also provides for the appointment by the President of a Railroad Labour Board made up of nine men, three representing the public, three the railway employees and three the railway companies. Such a Board was appointed by the President in the spring of 1920, and it became active in considering many questions involving wages and working conditions.
Intra-state 'Rates. The power of the Federal Government over intra-state rates has been extended by important decisions of the Supreme Court and by the Transportation Act of 1920. In the Minnesota Rate Case (Simpson et al. vs. Shepard, 230 U.S. 352), decided in 1913, the Supreme Court upheld the action of the state of Minnesota establishing railway rates within the state, although the facts showed thai these intra-state rates affected the rates on interstate traffic and the revenues of the carriers engaged both in interstate and intra-state traffic. Justice Hughes, speaking for the Court, declared that the " state of Minnesota did not transcend the limits of its authority in prescribing the rates here involved, assum- ing them to be reasonable." But Justice Hughes was careful to point out that " if the situation has become such, by reason of the interblending of the inter- and intra-state operations of interstate carriers, that adequate regulation of their interstate rates cannot be maintained without imposing requirements with respect to their intra-state rates which substantially affect the former, it is for Con- gress to determine, within the limits of its constitutional authority over interstate commerce and its instruments, the measure of the regulation it should supply." In 1914 the Supreme Court was called on to consider the validity of the order of the Interstate Commerce Commission in its Shrevepqrt decision. The business interests of Shreveport, La., had complained to the Commission that rates with- in the state of Texas, which had been fixed by the State Commission of Texas, were so much lower than the interstate rates that it was not possible for the merchants of Shreveport to do business in north- western Texas. The Commission decided that the wide difference between the interstate and intra-state rates constituted an un- reasonable discrimination, and the carriers were ordered to correct this, which they did by raising the intra-state to the level of the interstate charges. When the case reached the Supreme Court, the Commission's order was upheld (234 U.S. 342). The principle established by this decision was embodied in the Transportation Act of 1920. The statute provided that when the Interstate Commerce Commission finds that any intra-state rate constitutes an unjust discrimination against interstate or foreign commerce, the Com- mission may prescribe the maximum or minimum intra-state rate thereafter to be charged. The limitation by the Federal Government of the power of the states over railway charges within their respec- tive territories was not accepted by the states without contest. A test case was pending in the Supreme Court in 1921.
