The Key West Citizen

Our Government
How It Operates
By William Bruckart

PROBLEM OF RAILROAD RATES

The Interstate Commerce commission is going to have a tough job on its hands during the next few years. Every one familiar with the problems of the railroads is agreed that the next several years constitute a period of great readjustment, and the companies that own the steam horses are no exception. So, with the railroads clamoring on the one hand for more revenue and reduced operating expenses and the shippers demanding lower rates consonant with new values of commodities and organized labor seeking a return to normal wages, the commission's situation is one not to be envied.

This question of rates is one that is especially worrisome. The statutes under which the commission operates requires that the freight and passenger rates be just and reasonable. That means, of course, that both the shippers and the carriers must be considered, and it takes a good umpire to satisfy the players on both teams.

The commission has a whole bag full of powers to use in its jurisdiction over railroad rates. Its own definition of its authority is complicated beyond Einstein's theory.

"The commission has jurisdiction," it reads, "upon complaint, or in a proceeding instituted upon its own initiative, and after full hearing, to determine and prescribe reasonable rates, regulations and practices, including minimum, and maximum and minimum rates: and also minimum, and maximum and minimum proportional rates to and from ports, and to award reparations to injured shippers. . . . It is authorized to require carriers to establish through routes and joint rates, and it may act summarily in itself establishing through routes when, in its opinion, an emergency exists."

Many more lines could be quoted to show that the commission has power to do the things it thinks best for all of the interests served.

But to get down to cases: a railroad desires to increase a rate which it charges for transporting cornpipes from St. Louis to Denver. The law requires that it must file the new schedule of rates with the commission, and if the commission gains an intimation or has an idea about what ought to be charged for hauling cornpipes over that distance, it can suspend the schedule filed by the railroad. That means it is inoperative. The purpose is to give the commission a chance to look into the reasonableness of the charge.

Congress, however, did not give permission for an indefinite suspension of the rates in question. It prescribed that the suspension could not be for longer than 150 days, which seems quite long enough for any investigation. Yet many investigations are not completed in that time, and the questioned charge becomes operative. As a counter-balance, the law provides that while the rate may become operative, the commission may require the carriers involved to keep a separate account of money received as a result of the increase until a decision is had. If the commission eventually denies the increase, then the carriers have to refund the money representing the increase that it has collected.

It was back in 1910 that congress expanded the commission's power to give it jurisdiction over every phase of rate-making. The Mann-Elkins act laid down a set of rules governing through routes and rates, switch connections, long and short hauls (providing that there shall be no discrimination against the short hauls in favor of the traffic for long distances), general freight classifications and a host of other matters.

Then, in 1917, and again in 1920 when the transportation act was passed, more power was given. Between these two laws, there was very little left which the railroads could call their own.

For example, if the commission considers that conditions warrant it, an order may be issued ensuing one carrier to transfer some of its equipment to another for use. Of course the user pays a rental, but the commission's order can hardly be defeated. It can tell a carrier when it has enough equipment such as locomotives, or it can say its supply of rolling stock is insufficient and it must buy more, and it can and does lay down the rules under which it may sell bonds or other securities with which to obtain funds for financing its requirements.

In addition to all of these, the commission was directed by the transportation act to prepare a plan for consolidation as soon as possible of all railroad properties in the United States into "a limited number of systems." At the same time, the railroads are authorized to accomplish such consolidations notwithstanding the statutes prohibiting formation of "trusts."

The commission has prepared such a plan.

It proposes to have only four major rail systems in the eastern half of the country. But the carriers have not rushed in to sign up. They have found a lot of things they do not like about the program.