1905 Theodore Roosevelt - Railroad Legislation, Elkins and Hepburn Act

Theodore Roosevelt was a president who believed in protecting the people of America from big Business.  In 1905, Roosevelt summed up his philosophy this way:  "I do not believe in the Government interfering with private business more than is necessary."

Early in his presidency, Roosevelt was notified about the abuses within the Railroad industry.   Many small business were being hurt by selective granting of shipping rates to selective companies. This allowed big companies to ship items for less than the smaller companies could.   So in 1903, Roosevelt worked with congress to pass the Elkins Act, ending the practice of shipping rebates.   Unfortunately, the railroad companies were able to get around the law, and the Elkins act was ineffective. While the act prevented the payment of rebates, it did not have the power to determine what rates were reasonable.   Small business owners and shipping companies were clamoring for new legislation for the Interstate Commerce Commission (ICC) to suspend freight rates upon complaint.  To compound things further, inflation was rising and so was the cost of railroading.   Railroads and rail rates were under severe attack,  and President Roosevelt was going to take action, action against the railroads that is.

In his 5th annual address to congress, Theodore Roosevelt explained that the "immediate and most pressing need" was to pass laws that allowed the government to regulate the rates charged by the railroads. 

"the immediate and most pressing need, so far as legislation is concerned, is the enactment into law of some scheme to secure to the agents of the Government such supervision and regulation of the rates charged by the railroads of the country engaged in interstate traffic as shall summarily and effectively prevent the imposition of unjust or unreasonable rates. It must include putting a complete stop to rebates in every shape and form. This power to regulate rates, like all similar powers over the business world, should be exercised with moderation, caution, and self-restraint; but it should exist, so that it can be effectively exercised when the need arises."

To determine what rates are reasonable, Roosevelt suggested that a 'rate court' be established where railroad rate complaints could be investigated.

"In my judgment the most important provision which such law should contain is that conferring upon some competent administrative body the power to decide,  upon the case being brought before it, whether a given rate prescribed by a railroad is reasonable and just, and if it is found to be unreasonable and unjust, then, after full investigation of the complaint, to prescribe the limit of rate beyond which it shall not be lawful to go--the maximum reasonable rate, as it is commonly called--this decision to go into effect within a reasonable time and to obtain from thence onward, subject to review by the courts."

Roosevelt wanted to make it clear that any preferential treatment would be illegal. 

"The law should make it clear so that nobody can fail to understand that any kind of commission paid on freight shipments, whether in this form or in the form of fictitious damages, or of a concession, a free pass, reduced passenger rate, or payment of brokerage, is illegal"

Roosevelt continued to discuss the issue. It was not his intention to take over the railroads, but rather to supervise and regulate them.  Roosevelt suggested that public ownership of railroads "is highly undesirable and would probably in this country entail far-reaching disaster, but I wish to see such supervision and regulation of them in the interest of the public as will make it evident that there is no need for public ownership.".   He did not believe that all railroad men were evil, but he did believe that the honest railroad men need not be exposed to who have ill desire.  In his mind, the only way to  do this was to have some "Government tribunal the power to see that justice is done by the unwilling exactly as it is gladly done by the willing."

Roosevelt then summed up his philosophy, by expressing his "desire to setup a moral standard".

"We desire to set up a moral standard. There can be no delusion more fatal to the Nation than the delusion that the standard of profits, of business prosperity, is sufficient in judging any business or political question--from rate legislation to municipal government. Business success, whether for the individual or for the Nation, is a good thing only so far as it is accompanied by and develops a high standard of conduct--honor, integrity, civic courage. The kind of business prosperity that blunts the standard of honor, that puts an inordinate value on mere wealth, that makes a man ruthless and conscienceless in trade, and weak and cowardly in citizenship, is not a good thing at all, but a very bad thing for the Nation. This Government stands for manhood first and for business only as an adjunct of manhood.

 The task is a great one and underlies the task of dealing with the whole industrial problem. But the fact that it is a great problem does not warrant us in shrinking from the attempt to solve it. At present we face such utter lack of supervision, such freedom from the restraints of law, that excellent men have often been literally forced into doing what they deplored because otherwise they were left at the mercy of unscrupulous competitors. To rail at and assail the men who have done as they best could under such conditions accomplishes little. What we need to do is to develop an orderly system, and such a system can only come through the gradually increased exercise of the right of efficient Government control."

Finally, in 1906, congress passed the Hepburn act which gave the ICC the power to set maximum railroad rates.   It also extended the jurisdiction of the ICC to cover bridges, terminals, ferries railroad sleeping cars and even oil pipelines.   In addition, the act allowed the ICC to view railroads' financial records.  It was one of the most important pieces of railroad legislation in the first half of the 20th century.   

http://www.presidency.ucsb.edu/ws/index.php?pid=29546
http://millercenter.org/president/biography/roosevelt-domestic-affairshttp://dwkcommentaries.com/2014/07/24/federal-regulation-of-railroads-during-u-s-president-theodore-roosevelts-first-term-1901-1905-the-elkins-act/
https://en.wikipedia.org/wiki/Hepburn_Act
http://www.nytimes.com/learning/general/onthisday/harp/1125.html
http://www.legendsofamerica.com/photos-americanhistory/Theodore%20Roosevelt,%20Detroit%20Publishing%20Co,%201905.jpg