lasting in its consequences than any pooling arrangement could ever have been. The union of separate and formerly competing companies into one larger, compact, and firmly organized corporation is something with which the federal law has never been concerned; but the looser and usually more temporary agreements among railways are by the statute expressly declared unlawful. In addition, the law contemplates stability of rates, relatively just rates and other like ends, which depend upon coöperation. At the present time the larger competitive systems of the United States number about twenty, while at the time of the enactment of the Interstate Commerce Act there were more than five times that number.1 That this has been the universal history of railway competition is a fact too familiar to require elaboration in this place. "When we view the facts of railway history, the steady and uninterrupted consolidations which have absorbed line after line, on the one hand; and the contemporary existence and growth and duplication of laws attempting to govern these, on the other, the conclusion is irresistible that somehow these laws did not accomplish the purposes for which they were enacted."2

The first important decision of the United States. Supreme Court, after 1887, bearing upon agreements among railways was the decision against the Trans-Missouri Freight Association in 1897. This

1 Consult Newcomb, "Recent Great Railway Combinations," Review of Reviews, August, 1901. 2 p. 139.

association had been formed in 1889 "for the purpose of mutual protection by establishing and maintaining reasonable rates, rules, and regulations on all freight traffic, both through and local." The decision involved two leading questions: first, Does the "act to protect trade and commerce against unlawful restraints and combinations," popularly known as the Sherman Anti-Trust Law of 1890, apply to and cover railways? Second, If so, does the Trans-Missouri agreement violate any provisions of this law? The court answered both questions in the affirmative.

The Joint Traffic decision,1 which followed a year and a half later and covered essentially the same ground, involved in addition several subsidiary questions: Does the Joint Traffic agreement actually prevent the constituent railways from competing with one another? Is the Anti-Trust Law constitutional? And, finally, does the Joint Traffic agreement violate the anti-pooling provisions of the Interstate Commerce Law? As to the leading questions, the court held that the AntiTrust Law applies to all combinations, including those among common carriers. Combinations "may be different in different kinds of corporations, and yet they all have an essential similarity, and have been induced by motives of individual or corporate aggrandizement as against the public interest." The decision recounts the history of the Anti-Trust Act in Congress, which goes to show that the act 1 171 U. S. 505.

applies to the Trans-Missouri agreement, and that it includes every contract and prohibits every agreement in restraint of trade, no matter what its terms may be. Hence the law forbids all contracts, whether just or unjust, whether in reasonable or unreasonable restraint of trade. "The

claim that the company has the right to charge reasonable rates, and that, therefore, it has the right to enter into combination with competing roads to maintain such rates, cannot be admitted."

Both the Interstate Commerce Law and the Anti-Trust Law have thus had the effect of discountenancing coöperative arrangements of every kind among railways other than that closer coöperation under unified management in corporate form. Both have accelerated the natural tendency of railways toward consolidation, and both have signally failed in accomplishing the purpose for which they were enacted. Both prohibit associated action of companies so long as they are separate, but leave them to themselves after consolidation.1

1 It is needless to say that this statement, while true as a general proposition, requires modification in so far as the actual powers of the commission permit regulation; nor does the statement take cognizance of that form of railway coöperation which is said to exist upon no formal agreements but rather upon what "any one was saying as he looked at his neighbor."

CHAPTER IV

THE CULLOM BILL

In an earlier chapter1 the writer has stated three propositions which may serve as an introduction to a discussion of pending legislation: (1) That the present situation with respect to railway affairs in the United States is untenable and indefensible. (2) That the great majority of railway managers and other railway officials are sincerely desirous of administering, to the best of their abilities, the properties under their control in the most efficient manner, having due regard for the interests of both the stockholders and the public; but that all the various interests affected by their action are not represented in proportion to their importance, if at all; and that consequently injustice may be done.2 (3) That there is nothing in the present statutory and administrative regulation of railways to prevent the arbitrary and harmful action of the weak or unscrupulous manager from defeating the 1 Pt. I, ch. IV.

2 A writer on criminal law, for instance, would hardly consider it necessary to state that the majority of citizens were neither thieves nor robbers. Public opinion has so often passed judgment on railway men en masse that this statement appears to be necessary in the present connection.

desires of the majority of the officials, who would voluntarily pursue a more beneficent course.

The third proposition bears directly upon the present status of the Interstate Commerce Law. "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 so to 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 rightminded 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 here can add to their significance. The Commission is not unmindful of the palliating circumstances under which railway traffic officials act. These have been fully set