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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
1 Newlands Hearings, p. 923. 2 Rept. Railroad Securities Commission, p. 8.
which has been set forth in a number of cases it is not probable that the legal obstacle will be insurmountable. It will doubtless become increasingly clear to the courts that state regulation of intrastate commerce is impossible without at the same time affecting materially interstate commerce. According to testimony before the Newlands Committee about 85 per cent of all traffic is interstate.1
The political difficulty in the way of the adoption of federal regulation of railway service is concerned with centralized versus local control. It will be contended that a centralized control cannot be sufficiently familiar with local conditions to be effective and efficient. There is much to be said for this objection. The United States Railroad Administration began with a Director General of Railroads. Gradually this administration has decentralized. Regions have been established, and these in turn have been further subdivided. It has apparently been realized that first hand information is important in conducting a railroad successfully. The predominance of the divisional type of organization found on American railroads is further evidence of the value of knowledge of local conditions. If there is to be control of railway service, first hand information concerning operating conditions would appear to be indispensable. How then can the disadvantage of state regulation be eliminated and yet retain the advantages which come from intimate association with actual conditions. Possibly this could be done by some plan which would permit the states to coöperate with the Interstate Commerce Commission but which would make the orders of the federal commission paramount. A better plan and one which has the support of an increasing number of students of transportation, would be to divide the country into a number of regions, something
1 Hearings, p. 78, testimony of A. P. Thom.
after the plan of the federal reserve banking system. These regions should in size and shape conform to traffic conditions. Such regions would, therefore, ignore state lines. It would then be logical to establish commissions for these regions. State commissions would not necessarily be discontinued but could give their time to public utilities within the state; possibly they could be of value in an advisory capacity to regional commissions. It may be contended that such a proposed decentralization of regulation indicates clearly that the present decentralized plan should not be disturbed. But the present plan of arbitrary state lines, in no sense coincides with traffic needs, and regulation of railway service by the various states seriously interferes with interstate traffic. The proposed plan would be sufficiently elastic to take advantage of the knowledge of local conditions and at the same time it would be possible to work out more equitable rules and regulations affecting railway service, among railroads themselves, and between railroads and shippers.
If we assume that as a result of our experience during the war, government ownership should be adopted in the United States or that some form of government operation be continued, much of the conflict between the states and the federal government and between the states themselves would presumably be eliminated; but there would nevertheless be need of more control of railway service. It must not be forgotten that government ownership is not an aim. It is a means. Standards of service, therefore, and the machinery for carrying them out are as necessary under one system as under another, altho it is probably true that the absence of any necessity on the part of separate railroads to earn dividends might make enforcement of some of the regulations of railway service easier. If the railroads were owned
by the government or operated by it as at present it would make little difference if Great Northern cars were used to haul ice from Maine to Boston, so far as the Great Northern itself would be concerned; but there would remain the inequalities of service between the shippers of the Northwest and those of New England.
A little consideration will show, too, that government ownership or government operation would not change the situation as it affects different classes of shippers within the same state. Reference is made here especially to the one-way and two-way shippers. What this means in actual practice may be shown by a concrete case which came before the Ohio Public Utilities Commission during its two-weeks hearings on coal shortage in February, 1917.1 A Mr. Mobley, agent for the Baltimore and Ohio Railroad at Cincinnati, was asked to testify how many cars had been ordered by a long list of industrial concerns and what proportion of those ordered had been assigned to them. To take a typical case he replied that for the month of January, 1917, a certain steel and iron company ordered 89 cars and was furnished with 372. When asked to explain why more cars were supplied than were actually ordered, he pointed out that "furnished" in his records meant the number of loaded cars sent out by that mill over his line; that the discrepancy was due to the fact that that concern received large inbound shipments daily and that they were therefore able to provide themselves with most of the empties they needed and hence they did not need to ask the railroad for many in addition. The same result is seen in many of our agricultural states where there are many important grain shipping points that get very few cars in under load yet these are the very places that need large numbers of cars for outbound grain shipments. Other places in these states more populous and more
1 These hearings were not printed.