Open main menu
This page has been proofread, but needs to be validated.

In 1890 was passed the Sherman Anti-Trust Act, making illegal every contract and combination in restraint of trade or commerce among the several states or with foreign nations. In 1893 a Safety Appliance Act, the administration of which was put into the hands of the Interstate Commerce Commission, promoted the safety of employees and travellers, and required the roads engaged in interstate commerce to equip their cars and locomotives with automatic couplers and brakes. In 1895 was prohibited the interstate carriage of condemned carcasses of animals, and of lottery tickets (see above reference to the interpretation of the Lottery Act), in 1897 of obscene literature, and in 1900 of game killed in violation of state laws. In 1901 carriers engaged in interstate commerce were required to make full reports of all accidents to the Interstate Commerce Commission. In 1902 was prohibited the interstate carriage of dairy products falsely labelled or branded as to the state or territory in which produced, and in 1903 the Secretary of Agriculture was empowered to establish rules concerning importation and transportation of live stock. In 1903 the Bureau of Corporations was established with power to investigate the conduct of corporations engaged in interstate and foreign commerce, excepting common carriers subject to the Interstate Commerce Act. In 1903 the Interstate Commerce Act was amended by the Elkins Act, making much more difficult the granting of rebates. In 1905 the President was authorized to grant medals of honour to persons who by their daring save life or prevent accident on railways. In 1906 the Interstate Commerce Act was amended in important particulars (specified below). In 1906 were passed pure food laws, greatly enlarging the duties of the Department of Agriculture in reference to inspection of foods prepared for Interstate commerce.

The Interstate Commerce Act.—The period of positive action by Congress in the regulating of interstate commerce practically begins, therefore, with the enactment of the Interstate Commerce Act of February 1887, the outcome of fully seventeen years of agitation and discussion. The law was modelled in large part upon English acts. It applied to common carriers wholly by railway, and partly by railway and partly by water when both are used under a common arrangement for continuous shipment; forbade unjust discrimination and undue and unreasonable preference; made it unlawful to charge more for a shorter than for a longer distance over the same line in the same direction, the shorter being included within the longer distance (though a carrier might be freed by the Commission from the working of this provision); and forbade pooling and division of earnings. The administration of the law was entrusted to a Commission of five members, appointed by the President. From this act much was expected, but eighteen years of its operation gave as net results little more than a greater uniformity of railway accounting and much better understanding by the public of the nature of the railway problem. Discrimination and secret rebates continued. The anti-pooling clause (pretty generally recognized by the well-informed to be a mistake) prevented open but not secret agreements between carriers, and probably hastened the movement toward consolidation. The long and short haul clause was made meaningless by the judicial interpretation that any competition, even that of other carriers subject to the act, justified the railway in charging more for a shorter than for a longer haul. The effectiveness of the Commission was destroyed by the judicial decision that it had no power to fix rates for the future. Until 1897, the Commission, when it adjudged a rate unreasonable, usually declared what rate was reasonable, and directed the carrier to reduce the rate by a given date to the designated maximum. Of 135 orders made in decisions rendered in the first ten years of the Commission, 68 prescribed a maximum rate for the future. In 1897 it was finally decided in the Cincinnati Freight Bureau Case (167 U.S. 479) that Congress had not conferred upon the Commission the power to prescribe any rate for the future. The court said that Congress might fix the rate itself or authorize a sub-tribunal to do so, but that Congress had not yet given that authority.

The need of further legislation had been felt from the beginning by many, and after 1903 the agitation became very active. The position taken by President Roosevelt in his message to Congress in 1904 made the amendment of the Interstate Commerce Act the principal political issue before Congress in the sessions of 1905 and of 1906. After the most remarkable senatorial debates heard at Washington in years, followed with close interest by the country, a number of amendments became law on the 29th of June 1906. The act was strengthened to a degree hardly expected by the most earnest advocates of revision. A number of minor changes made in the light of experience were: increasing the number of commissioners to seven and their pay to $10,000; facilitating procedure and the taking of evidence; requiring thirty days notice of a change of rates; requiring appeal from the Commission's decision to be taken within thirty days; empowering the Commission to establish joint rates and to order switches to be built. The following are generally thought to be still more important changes: (1) Including within the application of the act pipe lines (particularly for oil), express and sleeping car companies, and all the facilities and services in connexion with goods transported; (2) giving publicity to railway business by empowering the Commission to prescribe all forms of accounts and to examine the books at all times, and by forbidding any other accounts or memoranda to be kept by the companies; and (3) empowering the Commission to prescribe reasonable maximum rates to take effect within not less than thirty days and to continue not over two years unless set aside by the courts.

The Anti-Trust Act of 1890.—The growth of large corporations with some degree of monopoly power, the so-called trusts, had called forth in a number of the states anti-trust laws before 1890. When it became evident that the states were not succeeding in dealing with the problem, public sentiment found expression in the Sherman Anti-Trust Act, approved on the 2nd of July 1890. This act declared illegal and criminal, punishable by fine or imprisonment or both, every contract in restraint of trade or commerce among the several states or with foreign nations. The statute thus changed the common law wherein such contracts were merely unenforceable but not criminal. This act was at first construed by the Supreme Court as applying to any contract in restraint of interstate commerce, whether reasonable or unreasonable (Trans-Missouri Freight Association, 166 U.S. 331), but later, in 1905 (Stock Yards case, 25 Supreme Court Reporter 276) it was held that the act did not apply to agreements for the better conduct of business which incidentally affected interstate commerce.[1] The act has been interpreted to apply to transportation (Freight Association case, 166 U.S. 290, and Northern Securities case), with results felt even by some of the advocates of railway regulation to be unfortunate. It applies to unlawful combinations of manufacturers to divide the territory and regulate the prices (Addyston Pipe Trust Case, 175 U.S. 211). In the Sugar Trust case (1895 U.S. v. Knight Co. 156 U.S.) it was declared that the statute did not apply to a manufacturing company which had acquired nearly complete control of the manufacture of refined sugar by means of the purchase of stock of other refining companies.

The Attorney-General submitted to the Senate, in June 1906, a statement of the results of all suits instituted by the Department of Justice under the anti-trust law, the Interstate Commerce Act and the Elkins Act, in the period from 1887 to June 1906 inclusive. Thirty-six suits were still pending; of the 250 which had been disposed of in some manner 186 ended in dismissal, non-prosecution or acquittal, and 64 were successful in securing in whole or in large part the object of the suit (in 30 cases conviction, in 34 cases the granting of a petition or an injunction, &c.). In addition to these results of federal efforts to regulate industry must be counted the cases in which carriers complied

  1. In the Northern Securities case, Justice Brewer, who had concurred in the opinion in the Trans-Missouri Freight Association case, took occasion to say that while he still believed the former case had been correctly decided, he thought that the reasons given for the judgment were in some respects faulty, and that the ruling should have been that the contracts there considered were unreasonable restraints and as such were forbidden by the act.