A National Transportation Department

By Henry J. Fletcher

THE government of the United States has hitherto shrunk from assuming some of the most important parts of the duty imposed on it by the Constitution in regard to interstate commerce. That duty cannot be adequately performed without taking cognizance of the relations of the transportation companies to at least three different subdivisions of the community : those which they sustain towards their own shareholders, their own employees, and the general body of the people who use the railways and waterways in trade and travel. The first of these relations concerns the ownership of eleven billions (par value) of stock and bonds of railway companies alone, and a trackage of over 175,000 miles; of which between a fourth and a fifth part have been plunged into insolvency as a result of unregulated construction and mismanagement coincident with a period of severe general depression. The second involves the efficiency and happiness of nearly one million railway employees and the welfare of their families, and, as recent history sharply reminds us, affects the steady flow of commerce through all its channels; it penetrates almost to the core of the greatest problem with which society is now struggling,—the question of the rights of labor. Most of the legislation on the subject of railway control has been directed toward the third of these divisions, — the railway as a common carrier, — because it directly concerns the greatest number of people and the widest diversity of interests.

The comprehensive and intelligent adjustment of the relations between the great agencies of commerce and the rest of the public can never be effected until each of these divisions is examined in detail, and the responsibility of the government in respect to each is recognized and assumed. Each one, when frankly confronted, seems as portentous as the entire problem of which it is but a part, and it is no wonder that the duty of grappling with them in turn has been evaded and postponed, while daily growing more and more formidable. The time seems to have come when it cannot be put off much longer. The railway system has apparently reached a climax in its development. The old-fashioned idea of competition as a regulator of tariffs seems about to be laid aside, at least so far as combination is capable of securing that result, and the alternative is before the people of substituting in its place a well-ordered and equitable scheme of national control, or a concentrated, pool-bound monopoly, regulated only by self-interest. A law abrogating the old prohibition of pooling will lead to the final steps in the grand process of crystallization, which will speedily transform the railways into a single, compact whole, able to meet with united front any threatened attack, whether it be from dissatisfied labor or an alarmed government. The consequences of having permitted this unification to go so far, with so little attempt to bring it within the control of the only government capable of grappling with it, will soon be apparent.

Not until 1886 did the national Congress set itself seriously to the task of considering its duty, under the Constitution, towards the great subject of interstate commerce. The task had been put off from time to time, because it was too vast, too difficult, too delicate, — because Congress optimistically hoped that somehow it would right itself ; it was let alone in part because every avenue of legislation was blocked by a powerful and corrupt lobby. When at last it had become a problem of overshadowing importance, it was taken up timidly, not as a whole, but piecemeal, and a law was evolved which purported to concern itself only with one branch of the subject, and that not the most important nor the most urgent, which contented itself with an effort to correct discrimination in rates, to prevent pooling, to collect information, and to secure publicity. Congress distinctly disavowed any intention to deal with the rights of shareholders and bondholders, except incidentally, and did not at all enter upon the questions of the mutual rights and duties of employers and employees. Legislators felt that any attempt at national interference with an agency so vast, powerful, infinitely complex, and bound up so intimately with every interest of the community would be unavailing unless it were at once minute and sweeping, comprehensively gathering within the jurisdiction of the United States government the whole transportation business of the country ; and they shrank from so long a step toward centralization and state socialism. They therefore contented themselves with passing a law creating a tribunal which it did not venture to dignify with the name or functions of a court. This law and tribunal, thus mild and tentative, the courts of the country have, by a long course of narrow construction, rendered still more ineffectual for good or evil. The commission, entrusted with vague supervisory power over some five hundred railway companies, big and little, intolerant of control and in a state of intermittent war, may spend $225,000 a year in trying to make its influence felt; while a fluctuation of a twentieth of a cent per ton per mile in the average annual freight rate means, according to a recent authority, an annual gain or loss of $800,000 to the Chicago. Milwaukee & St. Paul, $900000 to the Northwestern, $1,385,000 to the New York Central, $2,190,000 to the Pennsylvania division of the Pennsylvania Railroad. Congress has laid upon the commission responsibilities of vast extent, without any clear and positive definition either of its powers or duties, and without placing in its hands any machinery at all commensurate with the work to be performed. Yet even the timorous and halting legislation known as the interstate commerce law professes to deal with one phase only of the railroad problem.

There is at present, so far as the general government is concerned, an utter failure to take care that justice be done as between the companies and their employees, and to prevent the outbreak of disastrous strikes, whereby the public is always the chief sufferer, be the wrong where it may. A law was enacted in 1888 authorizing the appointment by the President of a commission, of which the commissioner of labor is to be a member, to investigate and make report as to the conditions and causes of controversies ; but the commission is not invested with any power, and its function seems to be chiefly the gathering of trustworthy data as an aid to the formation of an intelligent public opinion. A committee of the Senate, if it chanced to be in session at the time of any great strike, could accomplish exactly the same results. No matter how forcibly the strike commission may point out the cause of the trouble or locate the responsibility, the law does not attempt to afford any remedy. The rights of shareholders are equally unprotected by any general law designed to guard them against those acts of maladministration which have been the chief factor in the present demoralization of railroad property. It is not very plain that the general power of Congress over the subject is sufficiently extensive to make the interference of the government in this direction altogether effective. Probably, for the present, the owners of railway stocks and bonds will have to depend on the state legislatures and on the general equity powers of the courts for such slight protection as these can give. It is hard to see how the laws of Congress can prevent the reckless building of useless lines, or the watering of stocks in companies organized under state laws; but the losses caused by rate wars may certainly be stopped whenever the government undertakes, wisely and vigorously, to control the whole matter of rates. And it cannot be long before the plundered and exasperated holders of railway securities will be found demanding such a comprehensive measure of national control as will give their property average stability. This class, by nature conservative, will be driven by self-interest to seek the protection of government, and will not be deterred from so doing by fear of state socialism. The railroads have been their own worst enemy. On June 30, 1894, 156 railways were in the hands of receivers, with an operated mileage of nearly 39,000 miles, almost equal to the entire railway systems of Great Britain and Ireland and France; the total capitalization of those insolvent companies being one fourth of the entire railway capital of the country. That this result was not caused chiefly by the panic of 1893 and the subsequent depression of business is shown by the fact that only 18 roads out of the entire 156 had paid any dividend to their stockholders from 1880 to the present time, or since their organization if later than 1880 ; their entire earnings in prosperous times being scarcely adequate to pay the interest on their indebtedness and other fixed charges. Railway securities can never become a kind of property in which ordinary people can safely invest their savings until some adequate central power undertakes to disarm the belligerents, and stamp out wars and boycotts among the competing corporations, and, by introducing fair play between employers and employees, render strikes as rare as in the postal service.

But, urgent as are the reasons for strong federal protection of holders of railway securities, and for a strengthening of the interstate commerce law in its present sphere of jurisdiction, there is the most imperative need for defining and enforcing the duties of railroad companies and their employees toward each other. These duties are now but dimly understood, and there is no tribunal in existence to which both sides in these colossal contests can resort with mutual confidence. We shall never know how near we came, last summer, to a social revolution, but we do know that the controversy was settled, not in accordance with any principles of law, but by mere force ; and we also know that we cannot always go on silencing the arguments of great masses of discontented workingmen in this manner. If it is to continue to be a question merely of inflicting mutual injury, the battle will ultimately he on the side of numbers. It may be admitted that there was no real grievance of their own complained of by the strikers, and no real question at issue of which any court could have taken notice, no matter how it might have been constituted, or under what law ; it may not Be denied that the only duty of the government, under present law. was to put down violence ; yet the trouble broke out because there was known to be no judicial power higher than the railroads to which labor might appeal, and in the absence of laws or courts the strikers claimed the right to make demands and enforce them by all means in their power, — a proceeding to which the railroads had long been accustomed. It is true there were appeals to the courts in several instances, and conflicting decisions were made, in which judges attempted to apply to the changed conditions obsolescent doctrines of the common law through the use of subtle refinements and far-fetched analogies. Some of them, whether technically correct or not, are regarded by plain people as judge-made law, novel, revolutionary, and one-sided. In some cases these decisions seem to have been cunningly contrived to tie the hands of labor, while leaving capital as free as before, and rules of the most sweeping character have been enunciated which could never stand for a moment before a popular vote. “ Government by injunction,” as administered by some bold judges, is a kind of government in which the people have but little voice ; and, so far as the teachings of recent history go, it is apt to be arbitrary, and likely to still further embroil the conflict which is already quite acute enough. The result is doubt and uncertainty. What the law is nobody knows; when dissatisfaction arises, each side stands its ground, and, there being no tribunal and no fixed rules determining the matter, each resorts to violence. To cut down arbitrarily the wages of a large body of men, without giving them any chance to be heard, is, no less than a boycott, equivalent to a declaration of war. The situation is somewhat similar to that of nations which resort to war for the settlement of disputes because there is no power able to give them law. What is needed is such an intelligent code of laws governing the railways and their employees, and such judicial and executive officers to expound and enforce them, that strikes will rarely occur.

It is perhaps best that no such treatment of the subject as a whole has been hitherto undertaken by the government, for it is only in the crucible of experience that the principles which must lie at the bottom of such legislation are discovered and tested. It may be yet too soon to attempt it. Every new struggle. while seeming to disclose weak spots in our framework, helps to make clear the real nature of the problems which we must try to solve. It may be that the very chaos of the law at the present day has left the ground free for the growth of ideas and social organisms which are necessary to our healthful development, and which a system of rigid discipline and supervision, such as that in France, would have injuriously repressed. On the other hand, events will not stand still. If our future march be not along the lines of law and justice, its direction will be determined by the blind passions of the mob, by personal greed, by violence and cunning. It is a question how far we dare leave the potential anarchy that lies sleeping in a general managers’ association, and the anarchy that tramps our city streets in rags, to settle between themselves the welfare of the rest of the community. The black-list and the torch are alike unsatisfactory arguments, and do not bring the disputants any nearer a good understanding. In the fierce, ungoverned conflict of these elemental forces of society there may some day be found a common ground of mutual interest, or the parties may wear themselves out by mutual destructiveness ; but society has a right to protect itself, even if it shall require the reexamination and restatement of rights and duties. The conservatism of self-interest and of ignorance cannot be permitted to stand in the way of great upward social movements, or the readjustment of the principles upon which social development is to go on. Whenever the government of the United States shall feel ready to assume its duty with regard to the labor side of interstate commerce, it will be confronted with questions which have for many years been slowly rising into view, and which must ultimately find solution. Here are some of them : —

In view of the inevitable violence and obstruction of traffic incident to all railway strikes, is such a strike lawful under any circumstances, or is it to be regarded as a criminal conspiracy?

May the government interfere in the fixing of wages to be paid by interstate railways, as well as in the fixing of rates ? In other words, may the government require companies engaged in a guasi-public service to pay reasonable wages, as well as charge reasonable tolls ?

Do the men engaged in such service owe a duty to the public, which they may not lay down whenever they please, if such desertion would cripple public functions and inflict injury upon innocent persons ; and if they do, may its performance be compelled ?

May federal judges issue manifestoes prohibiting acts which amount to crimes, and upon their orders being disobeyed punish the offender without a jury trial ?

These are live questions, and their answers suggest startling departures from commonly accepted law and orthodox political economy. They are variously answered now, according to individual prejudices and interests. Each of them, as well as others that might be formulated, contains the seeds of social disorder, and they ought to be discussed in the national forum, and some attempt made to settle them.

The importance and difficulty of the subject will one day suggest the devotion to it of an entire department of the government. It is already too great to be left to a mere bureau. Either by gradual enlargement and extension of the functions of the interstate commerce commission, or by a single act of creation, a department of transportation must eventually come into existence. It will most likely, in accordance with Anglo-Saxon traditions, be the product of evolution, as the progress of events shows the necessity of bringing the various branches of the subject, one by one, within the domain of law. The department of agriculture, the post-office, the army, the navy, even the state department, will be less important than that of transportation when fully developed; it will demand the widest special and general knowledge, and the man who shall stand at its head will be but a little lower than the President. So much power must necessarily be concentrated here that it is questionable whether the department should be managed by one man or by a commission. It should be entirely non-political, its members holding office during good behavior, and all subordinates, as a matter of course, placed strictly under civil service rules. This great department should consist of two divisions, administrative and judicial. One of the chief elements of weakness in the present commission is its anomalous dual character. As prosecutor, it cites people to appear before it as a tribunal. It renders its decision in the form of a report, and upon this as a basis it brings suits as a plaintiff in the federal courts. It initiates proceedings without waiting for anybody to make complaint, and in so doing must to some extent prejudge cases. Its organization confounds the essential distinction imbedded in the American system, whereby all functions of government are classified as legislative, executive, and judicial. It collects evidence to be used in criminal prosecutions in the district courts against certain offenders, and as arbitrator takes cognizance of the civil aspects of the same offenses. Such a commingling of diverse functions is fatal to efficiency. They must be separated and differentiated, and to each branch of the department must be committed the duties logically belonging to it. The administrative side might be something like the present commission, whose duties are rather more executive than judicial, the latter being vague at the best, and largely shorn away by successive decisions of the courts. The gentlemen who now compose the commission are undoubtedly accomplishing all that is possible under the present law, and only need to have adequate means placed in their hands by an enlargement and extension of the existing law to meet exigencies now at hand.

It is certain that the passage of the law permitting pooling (which has already been accomplished in the House, and seems imminent in the Senate) will mark a radical departure from all the past history and traditions of this country. Competition has seemed to be the root of all evil in railway management, from the point of view of holders of securities. Apparently, wherever competition existed it ran inevitably into suicidal excess. The people, however, clung to it because they had no other hope of fair treatment. Without it, rate-fixing is a one-sided matter. Pooling eliminates it, if the pool is strong enough to hold together. Unless competition determines freight and passenger tariffs, they must be fixed by law ; or, at least, pooling contracts must be so effectually subject to legal supervision that the rights of the public shall be protected. This supervision would fall to the transportation department, which, if it did its duty, would take the place of competition, and become in its turn the only reliance of the public against the aggressions of monopoly.

Every pooling contract must be regarded as a treaty, to which the public, represented by the department, is a party, and a zealous conservation of popular rights will require the most ceaseless vigilance. It being admitted that pooling contracts are to be made legal and to become universal, any permanent law providing for the enforcement of these contracts should require that they be subject to the inspection and approval of the commission, and that no rate sheet, nor contract for the regulation of rates or division of business or territory or earnings, should be of any validity until first assented to by it. If the commission should refuse its assent, the question of the reasonableness of the contract or the proposed rate should be tried before the tribunal of commerce, and the burden laid upon the carrier to prove the affirmative. This court would be the judicial side of the transportation department, a court of exclusive jurisdiction over all cases arising under the laws of Congress relating to interstate commerce, with appeal to the Supreme Court. It should have the right to punish criminally for any violation of such laws. The judges of this court would be selected with reference to their special equipment for the intricate and responsible duties devolving upon them.

Not the least grave of these duties would be the adjudication of causes arising between railway companies and their employees. The want of a court competent to deal with such matters, and of statutory rules to guide the court if one existed, is what makes labor troubles so frequent and so dangerous at present. The Congress which grapples with this subject will be confronted with many hard questions, among them the question whether the government may interfere in any way in the making of contracts of service. It is now thoroughly established that it has something to say as to what tolls shall be charged on interstate commerce, and it interposes between the carrier and shipper, and requires that the contract shall be reasonable. It is only a step, then, to the requirement that all contracts between companies and their servants, whether made individually or through incorporated associations or other accredited representatives, shall be reasonable. It would be scarcely more of an invasion of the right of contract than numerous other laws now in operation. Many States endeavor to prohibit sweating and overtime work ; railroad companies are sometimes forbidden to require their men to sign contracts surrendering civil rights, and such clauses are rejected as contrary to public policy ; railway and telegraph companies are not permitted to insert in their bills of lading or contracts provisions relieving them from their commonlaw liability. Every civilized country interferes in behalf of seamen ; unusual or oppressive clauses in shipping articles are forbidden, and the courts of admiralty in the United States rigidly inspect these contracts, and if additional burdens or sacrifices are imposed upon the seamen without adequate remuneration, the courts interfere, and moderate or annul the stipulation. It is surely introducing no very novel doctrine to require that any railroad that proposes to perform a quasi-public service shall pay fair wages and impose only reasonable conditions of service. It would not be revolutionary to provide a standard contract of service for all railway employees, analogous to the standard statutory insurance policy now generally compulsory in this country, with such flexibility as the varying conditions of the country might require. The government should undoubtedly encourage the incorporation of labor associations, so that railway companies might enter into permanent contract relations with their employees. The supervisory duties of the commission, in the case of contracts between large masses of men thus dealing on terms of equality with their employers, would be very limited.

Whether or not the country is yet prepared to countenance any interposition between the government and the railway employees in the making of the contract of employment, it is rapidly reaching the conclusion that, a contract once made, the faithful performance of duty by the employees must be enforced, and that the public then becomes a party to it, with fixed rights. The engineer who abandons bis train in an exposed place, where it is in danger of collision with other trains, is a criminal, and should be punished. The doctrine that the specific performance of an agreement to work cannot be compelled, and the constitutional prohibition of slavery and involuntary servitude, cannot be made to cover such a case. A hod-carrier who has started up the ladder with his load of bricks may not stop halfway and drop his bricks upon the heads of passers-by, and excuse himself on the ground that he has a right to cease work whenever he pleases. In both cases the public has a right to require the man who has once assumed a duty to proceed with it until he can lay it down without direct and necessary injury to the public. This is true even in the case of merely private employment, and more evidently so where the work undertaken is public, and where whole communities are dependent upon its faithful performance. The law must be made plain by congressional enactment as to when strikes and boycotts on interstate railways are unlawful, and what punishment shall be inflicted on those who engage in a criminal strike. No court should be allowed to forbid such acts, and then punish them summarily without a jury trial. If the act is a crime, it should be dealt with as such.

Public opinion, the universal arbitrator, can be depended upon to enforce the law when it has been clearly enacted beforehand. The managers of strikes always study public opinion, and believe it to be on their side. It is likely to be divided as to the merits of any struggle when the law is obscure and the parties resort to force ; it would not long tolerate outrage and chaos if it believed the government to be seriously determined to see fair play between companies and men, and as ready to punish railway officials for conspiracy to injure labor as it is to punish strikers for acts of physical violence. The law, therefore, which deals effectively with these questions should arm its tribunal with thunderbolts. Let it be understood that any railroad company which becomes a party to an unlawful conspiracy inimical to the rights of labor, or persistently refuses to observe the requirements of the commission in regard to rates, shall be operated by the court through its receivers until the owners are able to satisfy the court that they will obey the law ; and all contracts made by the receivers, under the court’s direction, with incorporated associations of employees in regard to wages, and with other companies for the purposes of pooling, should remain binding on the companies after the owners resume control. Such labor contracts are coming to be recognized in other countries ; they are already largely in effective operation in this ; courts now order their receivers to enter into them with organized bodies of engineers and other employees, and where they are most frankly adopted the relations between employers and employees are most cordial and permanent.

At the present time the railroads resent most bitterly any proposal of intervention on the part of the government ; but this attitude is hostile to their own real interests. They are now engaged in fighting off the very measures of control which their stock and bond holders will some day be demanding for the sake of security and peace. Let them join hands with the impatient public and ask the government to arbitrate the whole matter with even-handed justice, and the public, which is itself both carrier and shipper, creditor and debtor, master and man, will see that everybody has fair play.

Henry J. Fletcher.