Vol. LXVIII No. 4010. 
NEW YORK, SEPTEMBER 4, 1909. 
WEEKLY, $1.00 PER YEAR. 
THE INTERSTATE COMMERCE COMMISSION 
Its History and Powers. 
The railroad history of the United States begins 80 
years ago. From 1830 to 1 ST 0 , the railroads were 
given free rights of way, money and no regulation, 
the belief being held that competition would regulate. 
During the second half of our railroad history, the 
people have been trying to regain control. The “in¬ 
fant industry” grew to be a “giant,” yet beyond ade¬ 
quate control. Shortly before 1870 there arose a pub¬ 
lic demand for a more effective regulation of railway 
transportation. The main cause of the demand was 
the growing prevalence of gross discriminations in 
rates and fares. Unrestrained competition led to 
such abuses that the people, both of the Eastern and 
Western States, passed more stringent laws to regu¬ 
late the relations of the railways with each other and 
with the public. Public opinion in the Western States 
underwent a complete change during the five years’ 
succeeding 1867. The fierce competition of recently 
formed through lines connecting western cities with 
Chicago, and of the 
trunk lines joining Chi¬ 
cago with the Atlantic 
seaboard, led to per¬ 
sonal discrimination and 
to a great reduction in 
through competitive 
rates, rates at local non¬ 
competitive points being 
left unchanged or 
changed but slightly. 
The result was excessive 
discrimination between 
places. The farmers and 
the people of the small¬ 
er towns, who had aided 
the railway corporations 
liberally in constructing 
the roads, were paying 
high rates, while the 
shippers in the large ci¬ 
ties were favored with 
low rates. At the same 
time eastern capitalists 
were constructing new 
lines of roads in the 
Aest with great rapid¬ 
ity. These railroad cor¬ 
porations, composed 
largely of non-resident 
men, seemed to be prospering greatly. Prices 
meanwhile were falling from the high level 
which they had been given by the inflation of 
the currency during the Civil War. Falling prices 
for agricultural products, due to the contraction of 
the currency and to the great increase in the area 
devoted to farming, were bringing down the farmer’s 
profits and making him discontented. The farmers 
and townsmen of the Western States saw no reason 
why the companies should not give local points as 
low rates as had been accorded to the large cities. 
The railroads must be making money on their com¬ 
petitive business and ought to lower their local rates 
to the level of competitive charges. They believed that 
railroad corporations were public carriers, performing 
a public service, charges for which could be regulat¬ 
ed by public authority. The companies, however, at 
first ignored the public and then defied them. The 
public accepted the gage of battle, the railroads were 
defeated, and the so-called “Granger laws” and 
Granger decisions” were the result. The enforce¬ 
ment of the “Granger laws” was vigorously 
opposed by the railroad companies, who main¬ 
tained that their business was a private one, and 
that the State had no power to fix the rates which 
they should charge for their services. The railroads 
claimed, moreover, that the States which had granted 
a charter to a company giving it power to make rea¬ 
sonable charges for its services could not prescribe 
the rates to be charged by the company without the 
violation of a contract. It had been decided by the 
U. S. Supreme Court, in the famous Dartmouth Col¬ 
lege case, that in granting a charter a State entered 
into a contract relation. The courts, however, did 
not uphold the contention of the railway companies, 
and in 1877 the Supreme Court of the United States, 
in the noted Granger cases, declared valid the State 
legislation fixing railroad charges. 
The Supreme Court gave the States, in 1877, 
greater authority over railroads than they now pos¬ 
sess. The Granger laws fixed rates on all traffic by 
rail within the State. Though commodities might 
be shipped beyond the State or enter the State from 
outside, and thus become interstate commerce,- the 
railroads must carry the goods while within the State 
at -such rates as the State had fixed. The language 
SALTING THE SHEEP; EWES WITH APRIL LAMBS.— Fig. 447. 
of the court apparently gave the States power to reg¬ 
ulate not only intrastate but also interstate traffic un¬ 
til Congress should’ decide to exercise the power 
over interstate commerce conferred upon it by the 
Constitution. 1 he States -so interpreted their pow¬ 
ers until 1886, when the court in the Wabash case 
reviewed its language and decided that the States had 
no right to regulate interstate commerce, but must 
confine themselves to intrastate traffic. This Wa¬ 
bash decision greatly limited the authority of the 
States over railroads, and was one of the influences 
that led Congress to pass the existing Interstate 
Commerce Act. These “Granger” States are Illinois, 
Iowa, \\ isconsin, and Minnesota. The demand for 
Federal action was made by the eastern as well as 
the western and southern sections of the country as 
soon as the fact was clearly ascertained that the au¬ 
thority of each State over railway charges was lim¬ 
ited strictly to the traffic that did not pass the boun¬ 
daries of the State. It took two years for the House 
and Senate to agree, and then, February 4, 1887, they 
compromised on the law which, with few changes, 
is the one now in force. The Interstate commerce 
law as it now stands contains 24 -sections, and applies 
to such passenger and freight traffic carried by rail¬ 
road or by railroad and water, as crosses a State 
boundary in transit. It does not apply to intrastate 
business or to interstate traffic carried by an all¬ 
water route, and includes express traffic. The first 
section prohibits unreasonable or extortionate 
charges, section 2 declares unlawful all unjust per¬ 
sonal discriminations, and section 3 forbids unreas¬ 
onable discriminations between localities and dif¬ 
ferent kinds of traffic. These three sections contain 
the essential principles of the statute, and were taken 
with few minor changes, from the English Act of 
1854. Extortionate charges for transportation had 
long been illegal at common law. 
The Interstate Commission when first organized, 
was composed of five commissioners with a salary 
of $7,."500 per year. In 1906, the number was in¬ 
creased to seven commissioners, with terms of seven 
years and a salary of $ 10,000 per year. They are 
appointed by the President by and with the advice 
and consent of the Senate, and not more than four 
of them can belong to one political party. The com¬ 
mission is an executive 
body with judicial pow¬ 
ers also. As an execu¬ 
tive body, its duty is to 
carry out the provisions 
of the Interstate com¬ 
merce law. As a quasi¬ 
judicial body it sits as 
a court, summons the 
parties, complainants 
and defendants, hears 
both sides, makes decis¬ 
ions, issues “orders,” etc. 
The executive work of 
the commission is divid¬ 
ed into departments^ one 
for each commissioner. 
One has charge of tar¬ 
iffs, one of statistics and 
accounts, one of prose¬ 
cutions, one of safety 
appliances, one of 
claims, one of law, and 
one of correspondence. 
Total number of em¬ 
ployees of the commis¬ 
sion is about 500 at 
present; total annual 
expense of the commis¬ 
sion is about $800,000. 
A complete file of all tariffs of rates and fares of all 
railroads, express companies, and oil pipe lines is on 
file with the commission and is kept up to date for 
reference. Annual reports are printed and are free 
to anyone interested. 
The most important work of the commission is in 
connection with rates and fares. When first organ¬ 
ized, the commissioners supposed they had power to 
make rates, and for 10 years exercised that function. 
The railroads then carried the question to the Su¬ 
preme Court, and that body declared against the com¬ 
mission. The power to make rates has never been 
given since that decision. Only the power to “regu¬ 
late,” “adjust,” and “equalize” is the law as it stands 
to-day. Perhaps that is best, for if the commission 
had more power, perhaps the railroad influence would 
be able to indicate the personnel of the commission, 
and nullify its work. As it is, with a strong com¬ 
mission under limited powers, there is an increasing 
effectiveness in the adjustment of rate that tends con¬ 
stantly toward adequate control. The strongest and 
final rate-making body is the Supreme Court, hence 
the carriers are willing that the commission should 
have its present power, and they co-operate quite 
