The sun. [volume] (New York [N.Y.]) 1833-1916, 1915-02-12


/ thorlty thus declared, the Interstate
Commerce Commission in 1911 pro-
ceeded to upset vast structure of
rates involving what are known as
long and short haul charges In
practice the railroads fixed for a haul
from New York to Reno, New, for ex-
ample, higher rate than from New
York to San Francisco. phe basis for
this practice, which made generally
higher rates to intermediate than to
through points, was actual or poten-
tial ocean competition.
! In seeking to destroy the practice
the Interstate Commerce Commission
as constituted In 1911 did not alto
gether destroy the dlsparites between
intermediate and through rates. What
1t did do was to order changes which
amounted to sweeping reductions In
the whole structure, and 1t prescribed
for the railroads a Encouragement of
charges in accordance with fantas
tic division of the country into nrbi-
trary longitudinal zones. 50 that rates
In one zone were fixed in terms OF
percentages Of rates in another zone.
On an appeal from the railroads the
Commerce Court, now defunct, denied
the power of the Interstate Commerce
Commi to fix blanket rates. but
the Supreme Court in June last year
reversed the Commerce Court. 1t was
held then that the Interstate Com
merce Commission had full control
over rates, even to the extent of mi
tlating changes in them and without
limitation as to the all embracing in
clusIyeness of changes.
While the Supreme Court decision
affirmed the rate reductions which the
Interstate Commerce Commission had
ordered in the Intermountain cases a
good deal Of water had gone over the
dam. The important feature of the
Supreme Court opinion was its nilr-
nation of the commissions complete
control over rates The significance
Of this has been shown in the way in
which the commission is using It's au-
thority to control railroad enterprise
through rates.
In 1911 the old commission adj
mltted that Panama Canal competi.
ton would before long have to be met
by the railroads. Having said as
much II set out to put the railroads
In hopeless position to meet this
competition by decrecing reductions
which must mean large loss on
sort haul business, while long haul
revenues were being cut to keep
freight from moving by water. The
1911 rate reductions were suspended,
hut a bookkeeping test OF them dem
onstrated loss for the railroads. and
after the Supreme Court decision OF
last June the Interstate Commerce
Commission instituted new inquiry.
Technicalities aside, what the com
mission has now done Is to enable
the railroads 10 lower their through
rates to the coast in order to meet
water competition without detri.
mental reduction Of rates to inter
mediate points. which would mean
serious shrinkage of revenues. Speak.
ing more generally, the significance Of
this decision is its further evidence
of the changed attitude Of the Inter
state Commerce Commission
The ruling in the Eastern rate case
was practical expression Of new
ana constructive public policy OF rail.
road regulation. The practical eg-
feet of the new Intermountaln case
ruling Is that II Is Identical with the
Eastern rate case decision. Both al
low or recognize an element of flexi-
billty in the rate structure.
Railroad charges, the commission
seems to say again in almost so many
words, are not to be made rigid in
accordance with some arbitrary the
DRY Of railrOading. They are to he
elastic enough to accommodate the
changing requirements of traffic and
to tit the needs of transportation
system which has not been created
out Of hand on scientific plan, but
is the product OF time and circum-
/ stance and the fortunes of human en-.
deavor.
Another reason is therefore added
to the number which have been offer
ing lately for the recovery. of bust
ness and financial confidence lndls.
( pensable to n restoration of prosper
Gus activity in the United States.