complete efficacy of the prohibitive portions of the law. It relates1 that early in the year the Commission became convinced that fraudulent underbilling of freight "was being somewhat extensively practiced," and that during the year there had been a succession of rate-wars2 which had been accompanied by "violations of the Act" in the form of "secret rate-cutting."

Three months after the report containing the foregoing had been published the amendment establishing the imprisonment penalty and extending all penalties to the recipients of rebates became effective. In its next report3 the Commission announced* that the time had arrived for "more aggressive steps" in the enforcement of the law, but suggested that evidence of rebates was, in the nature of things, exceedingly difficult to obtain:

violations of a more private character, such as rebates or discriminations in rates for freight or passengers, or underbilling or false billing of traffic, cannot exist without complicity between the shippers and the carriers. These are never open or public, but secret. The interest of both parties to the transaction requires concealment, as well to escape the penalties of the law as for other reasons. Proof of such cases is obviously difficult to obtain. Instances occur in which the inference is strong that some feature of the law has been violated or evaded, but inferences to warrant convictions must be drawn from facts and circumstances proved, and when both parties to such transactions are interested in keeping them secret, or liable to similar punishment, the necessary evidence of the facts tending to show culpability of a carrier, or of some officer or agent, is not easily procured.”—Third Annual (1889) Report, p. 107.

1 Page 10.

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2 Pages 18-24.

5 Yet in its previous report the Commission had recommended the change which made shippers liable and created the difficulty in question, saying, "There are provisions in the Act as it now stands which would render the carrier, its officers or agents, punishable if by false billing, false classification, false weighing, or false report of weight, or by any other device or means whatsoever, they shall give undue or unreasonable preferences or advantages. The Commission believes that the penal provisions against wrongs of this nature should embrace also the owner of the property or any party acting for the owner or consignor of property who shall be a party to any such unlawful conduct, and it urges the passage of the provisions on the subject contained in the pending bill." Second Annual (1888) Report, p. 69.

The Fourth Annual Report of the Commission bears date as of November 29, 1890, and indicates a considerable laxity of regard for the provisions against the various forms of rebates. A large portion of this report was devoted to the discussion of illegal concessions from the published tariffs, the Commission saying:

"The Act to regulate commerce is perhaps most often disregarded in the giving of rebates or the granting of special rates for the transportation of property of large shippers.”—p. 7.

In another place in this report the Commission quoted, apparently as expressing what it regarded as an accurate portrayal of events, an alleged interview, which it stated had not been disclaimed, with an unnamed "railroad manager." The quoted statement follows:

"The situation in the West is so bad that it could hardly be worse. Rates are absolutely demoralized, and neither the shippers, the passengers, the railways, or the public in general make anything by this state of affairs. The profit is all secured by the middleman, the go-between. Take passenger rates, for instance. They are very low; but who get the benefit of the reduction? Why, no one but the scalpers, who have nothing at stake, everything to win and nothing to lose. In freight matters the case is just the same. Certain shippers are allowed heavy rebates, while others are made to pay full rates. Some of these shippers are constantly afraid of being hauled up before the Interstate Commerce Commission, but they need have no fear from that direction. The management of rates is dishonest on all sides, and there is not a road in the country that can be accused of living up to the rules of the Interstate Commerce law. Of course when some poor devil comes along and wants a pass to save him from starvation, he has several clauses from the Interstate act read to him. But when a rich shipper wants a pass, why, he gets it at once."-p. 25.

Commenting on the foregoing, the Commission said, in part :

"Statements like that of the railroad manager, given above, have found justification in the sudden diversion of business from one road to another, in the frequency with which products are sold in the market for less than cost, including published rates

of transportation, and in such other circumstances attending the traffic as lead to the conclusion that less than legal rates are collected from many favored shippers. Like declarations as to unjust discriminations, giving of rebates and unlawful preferences have been reiterated in the press as well as in published statements of numerous railroad officials.

"Since the presentation of our last annual report, officers, managers, and responsible representatives of the roads, or some of them, have often declared that the established and published rates were not maintained, that some favored shippers paid less while others paid full rates, and that the roads which obeyed the law frequently did so to their serious injury and with the loss of business and earnings.'

The Commission's reports for 18911 and 18922 discuss rebates quite as though they constituted a well recognized, although reprehensible, incident of the business of interstate railway transportation which would remain inevitable at least until the enactment of further legislation. Similarly the report for 1893 said:

"That the public tariff charges are frequently departed from in particular localities, that rebates are paid, and that other prohibitions of the statute are disregarded is believed by many to be true.

The legal proof of these violations may not be obtainable, yet the fact of their occurrence is a moral certainty.”—Seventh Annual Report, p. 8.

At this time, however, the Commission did not care for further authority to deal with the subject, which it plainly regarded as somewhat incompatible with the more lofty conception of its responsibilities and prerogatives as the beneficent creator of industrial equality, the mighty protector of economic peace and the wise and impartial dispenser of commercial justice. It therefore protested against being charged with new

It was in this report that the Commission expressed its view of the work of regulation in these justly celebrated sentences: "To give each community the rightful benefits of location, to keep different commodities on an equal footing, so that each shall circulate freely and in natural volume, and to prescribe rates which shall be reasonably just to both shipper and carrier, is a task of vast magnitude and importance. In the performance of that task lies the great and permanent work of public regulation.”—p. 10.

burdens connected with the mere execution of plain provisions of statutory law, the discovery of infractions of such provisions or the punishment of offenders, saying, in part:

"The offense is made penal by the terms of the statute; its discovery and punishment belong to the administration of the criminal law. No amendment of this statute, therefore, is necessary or suitable with the view of giving greater power to the Commission in enforcing its penal provisions. If immunity is secured from these demoralizing offenses, if the notorious and intolerable practices which the present law condemns are effectually dealt with, it will be through greater vigilance and more vigorous effort on the part of those who are charged with the duty of executing the criminal laws, aided, it may be, by enactments which tend to diminish the inducements to such transgressions."-p. 8.

The years 1894 and 1895 seem to have passed without any outbreaks of rate-cutting sufficient to seem to the Commission to demand special attention in its annual reports. During both of them the law of February 11, 1893, was in existence, although its legality was questioned and, as already noted, a witness who declined to accept it was discharged by Judge Grosscup2 on the ground that it was unconstitutional. In 18963 the Supreme Court sustained this law and its decision was hailed in the Commission's report for that year with the anticipations of the complete eradication of the pernicious practices which have already been quoted. Nevertheless the very next report records the almost complete failure of these hopes. The Commission was forced to report that:

"We are constrained to believe that one of the worst features in the present situation arises from a departure from the published rate in favor of particular shippers.

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"We have no doubt that at the present time very large quantities of competitive traffic are carried at other than published rates.

1 For additional evidence that the Commission did not desire to undertake the detection and punishment of rebating see the testimony of Mr. Walker D. Hines before the Committee on Interstate Commerce of the United States Senate. Hearings before the Committee on Interstate Commerce, United States Senate, pursuant to Senate Resolution No. 288, Fifty-eighth Congress, Third Session, Vol. II, p. 1172-1180. 4Ante, p. 131.

2 Ante, p. 128.

3 Ante, p. 130.

"The effect of this rate-cutting is most unfortunate. Incidentally it prefers the large to the small shipper. Rebates can not be given to-day as they were before the passage of this act, nor as they were before the Brown decision even. Various devices are resorted to. Only a few can know of the transaction. The whole matter must be covered up and kept secret, with the result that the large shipper, the trust, the monopoly, is able to secure the concession, while the small shipper is obliged to pay the published rates, and this concession, while at the present time small as a rule in individual instances, is often very large in the aggregate.”—Eleventh Annual (1897) Report, pp. 46, 47, 48.

For 1898 the report was more specific, covering a large number of special instances of demoralization including rates on flour, turpentine and coal. The situation in general was strongly summarized as follows:

"Meanwhile the situation has become intolerable, both from the standpoint of the public and the carriers. Tariffs are disregarded, discriminations constantly occur, the price at which transportation can be obtained is fluctuating and uncertain. Railroad managers are distrustful of each other and shippers all the while in doubt as to the rates secured by their competitors. The volume of traffic is so unusual as to frequently exceed the capacity of equipment, yet the contest for tonnage seems never relaxed. Enormous sums are spent in purchasing business and secret rates accorded far below the standard of published charges. The general public gets little benefit from these reductions, for concessions are mainly confined to the heavier shippers."-Twelfth Annual (1898) Report, pp. 5-6.

The melancholy chapter of violations of a statute which seems to most citizens to be but the enactment of a rule of elementary justice is here interrupted by what is properly regarded as the brightest incident in the history of the Commission. Under compulsion of the conditions recorded in the foregoing extract and the wise leadership of its able and far-seeing chairman, the Commission refused "to accept the situation as unavoidable" and to content itself "with reporting to Congress. . . that the requirements of the Act respecting the observance of published tariffs were not enforceable," as it acknowledged it had