REPORT OF THE INTERSTATE COMMERCE COMMISSION. WASHINGTON, D. C., January 17, 1902. To the Senate and House of Representatives: The Interstate Commerce Commission has the honor to submit its Fifteenth Annual Report, as follows: The routine and miscellaneous work of the Commission during the last year has been of the same general character as that described in previous reports. Some features of this work are referred to in the following pages, but more detailed mention appears to be unnecessary. The matters of special importance which have been considered in formal proceedings are outlined under appropriate headings, and due place is given to decisions of the Federal courts in cases arising under the act to regulate commerce or involving questions of kindred interest. To these are added statistical abstracts, an account of the operation of the safety appliance law, and such further information as will indicate the range of administrative duties performed by the Commission. The twenty-first section of the act imposes the specific obligation of recommending to the Congress such additional legislation "as the Commission may deem necessary." Referring to this obligation, in the annual report submitted two years ago, the Commission said: In previous communications to the Congress, especially those of more recent date, attention has been called to the vital respects in which the act to regulate commerce has proved defective and inadequate. Some of its provisions were early seen to be imperfect, while others were so uncertain or ambiguous as to give rise to protracted litigation, resulting finally in authoritative construction by the Supreme Court of the United States. The Commission has taken much pains to explain the various questions that have thus been decided and the effect of these adjudications in defeating the purposes of the act. To state that the law in its present condition can not be enforced is only to repeat what has already been said. Until further and important legislation is enacted the best efforts at regulation must be feeble and disappointing. This subject was fully discussed in our last annual report, and we are unable to add anything to the presentation then made. In that and previous reports we have not only set forth in general terms the necessity for amending the law, but have formulated and proposed the specific amendments which appear to us positively essential. With the renewal of these recommendations no duty of the Commission in this regard remains undischarged. In the annual report of last year the following was said: With reference to further legislation the Commission has little to suggest and nothing new to propose. The subject has been fully discussed in previous reports to the Congress, and recommendations both general and specific have been repeatedly made. The reasons for urging these amendments have been carefully explained, and repetition of the argument at this time can hardly be expected. While the attitude of the Commission has been misunderstood by some and misrepresented by others, the views heretofore officially expressed are believed to be justified alike by experience and reflection. They are confirmed by later and current observation. Knowledge of present conditions and tendencies increases rather than lessens the necessity for legislative action upon the lines already indicated, and in such other directions as will furnish an adequate and workable statute for the regulation of commerce among the several States. These statements apply with added force to the present situation. In repeating the views thus expressed, and referring again to what has been so often and so fully set forth, the Commission believes that its duty in respect of recommendations is most suitably performed. More instructive than any argument are the results of an investigation just made at Chicago into the movement of packing-house products, a more detailed account of which hereafter appears. The facts developed upon that investigation, and upon a previous investigation into the movement of grain and grain products, which is also referred to later, are of such a character that no thoughtful person can contemplate them with indifference. That the leading traffic officials of many of the principal railway lines, men occupying high positions and charged with the most important duties, should deliberately violate the statute law of the land, and in some cases agree with each other to do so; that it should be thought by them necessary to destroy vouchers and to so manipulate bookkeeping as to obliterate evidence of the transactions; that hundreds of thousands of dollars should be paid in unlawful rebates to a few great packing houses; that the business of railroad transportation, the most important but one in the country to-day, paying the highest salaries and holding out to young men the greatest inducements, should to such an extent be conducted in open disregard of law, must be surprising and offensive to all right-minded persons. Equally startling at least is the fact that the owners of these packing houses, men whose names are known throughout the commercial world, should seemingly be eager to augment their gains with the enormous amounts of these rebates which they receive in plain defiance of a Federal statute. These facts carry their own comment, and nothing said by us can add to their significance. We are not unmindful of the palliating circumstances under which railway traffic officials act. These have been fully set forth in previous reports, and the Commission has stated in that connection what in its opinion is the proper remedy. We certainly believe that existing laws should be so amended that railway managers who desire to observe them can do so without risk of sacrificing their property. But we also believe that the application of this remedy is fraught with certain dangers, and that it should not be applied unless the public is fully protected against those consequences. We are also impressed that the public as well as the railways, and even more than the railways, requires at the present time adequate protection; that in view of these great combinations which have been formed and are now forming, by which railway competition, which upon the present theory of this law is greatly relied upon to secure just and reasonable rates and facilities, will be largely eliminated, some method should be provided by which the Government can exercise in fact that control over railway rates and operations which courts without number have asserted that it possesses and which many persons suppose that it now exerts. All this has been said in previous reports, and nothing could be added by repetition of it here. The Commission believes to-day, as it has in the past, that this whole law should be revised upon some correct theory and some workable basis. It is possible, however, that the same causes which have prevented serious consideration of this subject in the past may continue to operate in the future. In that event, in view of the gross violations of the statute herein referred to, we would suggest that if it is not possible to amend this law in its more essential features it ought at least to be possible to deal with those coercive features of the act which are intended to prevent practices of this character. If these practices are right and necessary they ought not to be unlawful; if wrong, they should be stopped. The necessary amendments in this respect have also been pointed out in previous reports, but may properly be referred to in this connection. It was undoubtedly the intent of the tenth section of the act to impose a penalty upon the corporation itself. Under its peculiar phraseology it has, however, been judicially determined that the corporation is not liable. The agent alone can be punished. Now, the object of rate cutting is to get business and make money. The corporation, if any one, profits by the illegal act. The corporation is the real offender, and ought certainly to pay the penalty as well as its officer. It is anomalous and unjust that the representative or employee only should be liable to prosecution, while the real offender, the corporation, which is the principal and beneficiary in the transaction, is not subject to punishment. If every illegal act of that character subjected the carrier to a substantial forfeiture, so that the money result of the transaction was likely to be the other way, the inducement to commit such offenses would be greatly diminished. The act requires carriers to publish interstate rates and adhere to such published tariffs. But the tenth section, as construed by the courts, does not punish, otherwise than by a possibly nominal fine, a departure from the published tariff, unless there is actual discrimination between shippers. To convict for unjust discrimination it is necessary to show not merely that the railway company paid a rebate to a particular shipper, but it must also be shown that it did not pay the same rebate to some other shipper with respect to the same kind of traffic moving at the same time under similar conditions. As a practical matter this is almost always impossible. For this reason prosecutions otherwise sustainable can rarely be successful; and this is particularly the case where there is an extensive demoralization of rates, and consequently the greatest need for the application of criminal remedies. Departure from the published rate is the thing which can be shown and the thing which should be visited with fitting punishment. The criminal provisions of the law should be further and generally amended with the view of removing their ambiguities and giving to those provisions the strength and enforcibility which come from definiteness of statement. The twentieth section should be amended so as to open the books of the carriers to the inspection of the Commission or its agents. Such publicity would be of the greatest service in exposing and punishing illegal practices of this kind, and it is difficult to see any good reason why this ought not to be permitted, provided proper restrictions are put upon the use to be made of knowledge thus obtained. These amendments would not afford any satisfactory system for the regulation of interstate railways, but they probably would stop such gross infractions of law as now frequently occur. We wish to still further suggest that if the powers of this Commission are not to be generally enlarged some method should at least be devised by which such orders as it can make may be enforced within a reasonable time. RATES ON PACKING-HOUSE PRODUCTS. In the spring of 1901 the Commission began an investigation into the movement of packing-house products from Western destinations, especially Kansas City, to the Atlantic seaboard, and a hearing was then had at Kansas City. The witnesses examined were, for the most part, subordinate traffic officials, and, while the testimony showed some specific departures from the published rate and indicated a general demoralization of rates, it was not sufficiently definite to warrant a conclusion. This investigation was resumed in Chicago on January 7, 1902. The witnesses examined at this time were the leading traffic officials |