quasi-public business, subject to public regulation through legislation, as the ferryboat and inn had been regarded for centuries by the Common Law; and under their impulse several States fixed freight rates by law. In 1871 Illinois took the wise method of appointing a State Railway Commission to fix rates and prevent discriminations. This example was soon followed throughout the West and Southwest, and much other restrictive legislation was adopted. The railways, and the Eastern bondholders whose money had largely built them, railed at all such legislation, not merely as unwise but as wicked and confiscatory. The railway, they held, was a private business; and legislatures had no more right to fix its rates than to fix the price at which a store should sell shoes. In 1877, however, in a famous decision (Munn vs. Illinois) the Supreme Court declared that such institutions as railways and warehouses existed subject to the power of the body politic to regulate them for the public good. American law took a great step forward in this decision. And it came about because the disorderly, debtor, relatively ignorant West, under the pressure of its needs, had seen further than the cultured, wealthy, comfortable East. 783. Much of the Granger legislation was unreasonable. The legislators were largely untrained, ignorant men; and they worked in the dark anyway because the railways refused to make public any information about the business. Sometimes, too, the legislation was infused with a bitter desire for retaliation. On the other hand, the Companies fought the most proper regulation by despicable methods. They bulldozed timid business interests by ceasing railway extension, or threatening to cease it; and when a law had been enacted they commonly kept it ineffective by getting repeated delays in the courts from judges whom, in many cases, they had influenced by political support or by free passes and other disgraceful favors. Most of the Granger laws were finally repealed. Railway commissions, however, are now found in almost every State, with authority at least to investigate charges and give publicity to facts about the railroad business. Grangers were the first workingman's party outside the cities. The whole movement is admirably treated, briefly, in Paxson's New Nation, 66–72; and some of the paragraphs in that treatment are summarized here. § 786] PASSES AND REBATES 653 784. Next came attempts at National control. From the first, one argument against the Granger State laws had been that only Congress had the right to regulate interstate commerce and nearly all railway business came under this head. In 1886 the Supreme Court took this ground in a sweeping decision, declaring that a State could not regulate the carriage of goods billed to another State even for that part of the journey within its own borders. This put an end to effective regulation of railroads by the States, but it did not affect the previous decision that the public had the right through some agency to control these "common carriers." The only remaining agency was Congress. So far that body had refused to act; but now (1887) it passed the Interstate Commerce Act, forbidding pooling, secret rates, and all kinds of discriminations. The law also created a Commission to investigate complaints and punish offenses by the roads. 785. This Interstate Commerce Act promised a better day. The roads, however, persistently evaded or disobeyed the law, and its main intent was soon nullified by decisions of the courts. Congress meant to make the Commission the final authority as to facts, leaving to the Federal courts only a power to review the decisions, on appeals, as to their reasonableness, the facts being taken as the Commission had determined them. The courts, however, determined to permit the introduction of new evidence on such appeals. This meant a new trial in every case, and destroyed the character of the Commission. The Commission was hampered, too, by other decisions of the courts as by one which set aside its authority to compel the companies to produce their books. As the veteran Justice Harlan declared indignantly, in a dissenting opinion, the Commission was "shorn by judicial interpretation of authority to do anything of effective character." In 1898 the Commission itself formally declared its position "intolerable." 786. In Roosevelt's administration the Hepburn Act (1906) sought to revive the authority of the Commission, empowering it even to fix "just and reasonable rates," subject to review by the Federal courts. The law also forbade roads (1) to grant free passes, (2) give "rebates" (partial repayments), or (3) carry their own produce. a. Lavish grants of passes, good for a year, and renewed each New Year, extending sometimes to free travel across the continent and back, had been one of the most common means THE BIGGEST ELECTRIC LOCOMOTIVE. The railroads have kept pace with other industries in material development. The electric locomotive here pictured is one of forty-two that haul passengers and freight over the great Continental Divide, in Montana. It weighs 282 tons, and can haul 3200 tons (six and a half million pounds) up a one per cent grade at 16 miles an hour; or, geared for higher speed, it can pull a passenger train of 800 tons on a level at a mile a minute. of indirect bribery of legislators, congressmen, and newspapers. Sometimes a judge traveled on such a pass to the court where he tried cases in which the railroad was a party. Apart from 1 In 1910 all such appeals were referred to a new Commerce Court created especially to deal with them. Radicals looked askance at this new court, whose members were all appointed at once for life by the conservative President Taft, and the feeling was soon justified. The Commerce Court hampered and harassed the great Interstate Commerce Commission, and in 1913 it was abolished. (Cf. § 447, note.) Shortly before, Justice Archbold, one of its members, had been removed for graft, by impeachment. Cf. § 450. § 786] PASSES AND REBATES 655 the corrupting influence of the practice, too, the public had of course to pay for the passes in higher rates. In this matter Congressional prohibition was preceded by similar prohibition in many of the States; and this reform is now firmly established. b. Rebates had long been one of the chief methods of evading the Interstate Commerce law against discriminations. Certain favored shippers, no longer given better rates than their neighbors directly, were still given secret rebates in coin, or, still less directly, were allowed to falsify their billing of freight, so as to come under a lower legal rate, or were paid unreasonable allowances for storing or handling freight themselves, or for the rent of private cars furnished by the customers. The receivers of the Baltimore and Ohio Road in 1898 testified that more than half the freight of the country was still carried on discriminating rates. Says Professor Davis R. Dewey (National Problems, 103): "The ingenuity of officials in breaking the spirit of the law knew no limit and is a discouraging commentary on the dishonesty which had penetrated to the heart of business enterprise"; and one of the great railroad presidents mourned, in 1907, that good faith had "departed from the railroad world." When company and shipper agree in trying to deceive the authorities in such a matter, proof is exceedingly difficult; and it is too much to suppose that the more stringent provisions of the Hepburn Act have wholly done away with this demoralizing practice. c. Certain Pennsylvania Roads owned the most important coal mines in the country, and paid themselves what they pleased, out of one pocket into another, for carrying coal to market, so excusing themselves for a higher price to the consumer. The last prohibition referred to above (3) attempted to stop this practice. So far, the attempt is fruitless. The United States Steel Corporation mines iron in northern Minnesota. In deference to the Hepburn Act the Corporation is not also a railroad corporation; but the same group of capitalists under another name own railroads (on the "community of interest" method) which carry the ore to market at extravagant rates. 787. This struggle with the railroads has gone on now for two generations. Much time was lost because, for long, many people hoped that rates could be kept down if only free competition could be maintained between rival roads. But when pooling was forbidden (§ 784), the roads sought refuge in secret "rate agreements " among themselves; and when the Supreme Court in 1897 held such an "agreement” a "conspiracy in restraint of trade" (and, as such, forbidden by the Sherman Anti-trust Act of 1890), they merely consolidated ownership more rapidly than had ever before been dreamed possible (§ 728). In 1904 the Supreme Court made a futile effort to stop this movement by declaring the consolidation of parallel lines illegal (Northern Securities Case) under the same Anti-trust Act.. But, once more, combination to avoid competition was merely driven to another disguise. The groups of capitalists no longer consolidated the stock of different companies into one, with one board of directors; but they exchanged among themselves the stock of the different companies which they controlled, and memberships in the different governing boards, and so maintained a community of ownership and management. This consolidation for profits still failed to secure efficient unity of administration; and when America entered the World War, the government seized control (guaranteeing large dividends to the owners). After the war, Congress restored private control, but with provision for greater unity of management, to avoid some of the old waste. The law, however, virtually guaranteed profits upon a very hurried and very high valuation; and accordingly the roads have been allowed to raise rates enormously - which not only adds tremendously to the cost of living for all, but also threatens seriously to decrease the volume of railroad business. The railroad problem is still to be solved. II. "BIG BUSINESS" 788. The people have the task also of learning to control other kinds of monopolies besides railroads. Ownership of a water power or of a mine is a natural monopoly. More and more the feeling grows that society should own such monopolies. Another slightly different sort of monopoly is represented by certain kinds of business, like railroads or city lighting, where competition is either altogether impossible, or where at least it would be excessively silly and wasteful. Sometimes, in such cases, the government grants an exclusive franchise to some company, and so creates a legal monopoly. In any case, these forms of business are usually classed with the "natural monopolies," since they are monopolistic"in the nature of the case." They derive their existence, how |