facilities by another carrier as there is in compelling one utility to permit the use of its poles, conduits, or other facilities by another utility. In both cases the public receives consideration as an important third party to the contract. The theory in the decision of the Supreme Court in the St. Louis terminal case (1912) ought to be more generally applied.1

In the regulation of railway service the Esch-Pomerene law, which became effective May 29, 1917, is but a beginning in the right direction. This legislation gives the Interstate Commerce Commission control over" car service" which term is defined by the law to include "the movement, distribution, exchange, interchange, and return" of cars used in the transportation of property by any carrier subject to the provisions of this act.2 It is not easy to appreciate why such a law was not passed some years earlier. System control of what must be inter-system equipment was too long tolerated. When the American Railway Association worked out car service rules in 1900 much emphasis was placed upon ownership as the proper criterion for the return of equipment. The same theory is found in the order of

1 224 U. S. 383.

2 Statutes of the U. S., 65th Congress, 1st Session, 1917, chap. 23, pp. 101-102. * See a review by the writer of the Special Report of the Interstate Commerce Commission for 1917 in American Economic Review, March, 1918.

• The rules were presented to the Association by its Car Service Committee in April with the suggestion that the expression of the Association or of members thereof be given and that the rules with suggestions be referred back to the committee for reconstruction and recommendation to the Association in its October meeting. Rule 3 as originally presented by the committee had provided that a car should not be delivered to a second railroad without consent of owner. The Association voted that "without consent of owner" be eliminated. The committee, however, did not take this as binding upon them, and reported the rule in October "with consent of owner" inserted. Discussion at some length followed concerning the recognition which should be given to ownership of a car and the extent to which the needs of traffic and the reduction of empty car mileage ought at times to control in the exchange and interchange of equipment. By a very close vote the Association decided that the interests of the car owner should be considered first. (See Proceedings, vol. iii, pp. 161 et seq. and 251 et seq. The rules as adopted October 24, 1900 are found in Proceedings, vol. iii, pp. 279-280.) In the October meeting in 1901 amendment was made to rule 3, to permit one railroad to deliver a foreign car either loaded or empty to another railroad for switching service but that its use was to be confined to switching service and its return made either to

needed is a thorogoing control of railway service. This is necessary whether the railroads are restored to private operation, continued under some plan of government operation, or taken over by the government through government ownership.

If the railroads are to be restored to private operation our government regulation ought not compel the carriers to compete. Most students of transportation are agreed that there would be a distinct advantage in the repeal of our legislation which prevents pooling and combination among carriers, provided there be adequate supervision and control of such combinations. Those who argue for the railroads have contended that the repeal of such legislation would have made government operation of railroads unnecessary; that the breakdown was one of government regulation rather than of railroad administration. If this be granted, it implies more than railroads will desire to accept. The character of railway service from about 1900 to the present time indicates that something more than mere permission to carriers to pool and form combinations is necessary. The repeal of the federal legislation referred to would not be sufficient. A railroad like any other business interest will combine with others when it is to its advantage to do so, but when a carrier occupies a strategic position in the use of terminal or other facilities, it is not probable that it will offer to share this monopoly advantage with other carriers. It may be to the interest of the public, therefore, not only to permit but to compel certain combinations among carriers in rendering service. There is as much logic in compelling one carrier to permit the use of its

1 See editorials in Railway Age; also Regulation of Railways by S. O. Dunn (Appleton, 1918) reviewed by the writer in Journal of Political Economy, October, 1918.

See a statement by Senator Cummins, Hearings, S. 636, May 3, 1917, p. 26; see also article by Professor Van Metre, New Republic, February 2, 1918, pp. 17-20.

facilities by another carrier as there is in compelling one utility to permit the use of its poles, conduits, or other facilities by another utility. In both cases the public receives consideration as an important third party to the contract. The theory in the decision of the Supreme Court in the St. Louis terminal case (1912) ought to be more generally applied.1

car

In the regulation of railway service the Esch-Pomerene law, which became effective May 29, 1917, is but a beginning in the right direction. This legislation gives the Interstate Commerce Commission control over service" which term is defined by the law to include "the movement, distribution, exchange, interchange, and return" of cars used in the transportation of property by any carrier subject to the provisions of this act.2 It is not easy to appreciate why such a law was not passed some years earlier. System control of what must be inter-system equipment was too long tolerated. When the American Railway Association worked out car service rules in 1900 much emphasis was placed upon ownership as the proper criterion for the return of equipment. The same theory is found in the order of

1 224 U. S. 383.

2 Statutes of the U. S., 65th Congress, 1st Session, 1917, chap. 23, pp. 101-102. See a review by the writer of the Special Report of the Interstate Commerce Commission for 1917 in American Economic Review, March, 1918.

The rules were presented to the Association by its Car Service Committee in April with the suggestion that the expression of the Association or of members thereof be given and that the rules with suggestions be referred back to the committee for reconstruction and recommendation to the Association in its October meeting. Rule 3 as originally presented by the committee had provided that a car should not be delivered to a second railroad without consent of owner. The Association voted that" without consent of owner" be eliminated. The committee, however, did not take this as binding upon them, and reported the rule in October" with consent of owner" inserted. Discussion at some length followed concerning the recognition which should be given to ownership of a car and the extent to which the needs of traffic and the reduction of empty car mileage ought at times to control in the exchange and interchange of equipment. By a very close vote the Association decided that the interests of the car owner should be considered first. (See Proceedings, vol. iii, pp. 161 et seq. and 251 et seq. The rules as adopted October 24, 1900 are found in Proceedings, vol. iii, pp. 279-280.) In the October meeting in 1901 amendment was made to rule 3, to permit one railroad to deliver a foreign car either loaded or empty to another railroad for switching service but that its use was to be confined to switching service and its return made either to

the Interstate Commerce Commission of January, 1917.1 But the theory is not a sound one. Its application means much unnecessary switching, delay to shippers in securing equipment, and an undue amount of empty car mileage. It is often difficult to get cars out of congested terminals, even disregarding ownership. In the winter of 1917 the Pennsylvania Railroad Company in some instances used a crane to lift cars bodily from one track to another rather than switch them through miles of congested yards. When the Railroads' War Board was created, this body modified the plan of returning cars to owners; and for some classes of equipment they simply based the number each road was to receive upon the number it owned. The United States Railroad Administration has gone further in the same direction. The economies in pooling railway equipment are clear and if the railways are relinquished to private operation after the war a plan ought to be worked out which will continue the pooling of equipment and compel each carrier to furnish its fair proportion of the total supply. The formation of separate corporations which would own all equipment and lease it to the railroads would doubtless make a satisfactory organization through which government control could be made effective. Under some such plan railroads which have not provided themselves with sufficient equipment could be held to a strict accountability.

But there is also the question of car service as it applies between railroads and shippers. This the EschPomerene law does not cover except in an indirect

the home road or the delivering road. A new section (No. 15) was added to define switching service. Again amendment was offered to permit loading a car in the opposite direction of the home road. Much warm discussion followed and it was urged that this would open the door to the use of foreign cars in local service, especially in a state like Connecticut which allowed 96 hours free time. The Association refused to adopt the amendment by a vote of 18 to 28. (Proceedings, vol. iii, p. 410 et seq.) 1 42 I. C. C. R. 657.

Testimony of Commissioner Hall, Esch Hearings, p. 17.

manner. As has been indicated there is a wide variety of practice on the part of railways in their transactions with shippers, depending sometimes upon competition between carriers, sometimes upon state legislation. When, for example, increased demurrage has been applied by one carrier, or by the carriers in one state, altho it has produced desirable results in releasing equipment more promptly, it has been difficult to maintain the advanced scale because of the lower demurrage charges of other carriers, or because of a lower scale enforced in a bordering state. This has meant unfair distribution of equipment between shippers and between states. Julius Kruttschnitt has pointed out that the average detention of equipment for a given period by consignees in Oregon was about 50 per cent greater than in California where demurrage charges were much higher. It would appear therefore, that the Esch-Pomerene law will be ineffective, even within the narrow scope of car service which it is designed to cover, as long as the separate states have laws and commission rulings which are wholly independent of and inconsistent with orders which federal authorities may care to make. The commerce of this country has become so complex that intrastate regulations cannot be enforced without great detriment to the shipping public generally; and to quote the Hadley Commission "It is a matter of direct concern to the federal government that the facilities for handling commerce between the states should not be impaired." 2

Two obstacles will be encountered in attempting to take power over railway service from the states and give it to the federal government. One of these difficulties is legal, the other is political. Those opposed to an extension of federal control will contend that the federal government has no right to exercise control over intrastate commerce, but in view of the Shreveport doctrine

Newlands Hearings, p. 923. 2 Rept. Railroad Securities Commission, p. 8.