THE UNIVERSITY OF ILLINOIS LIBRARY READING ROOM THE TRAFFIC LIBRARY The Traffic Library Interstate Commerce Law PART II Act to Regulate Commerce Administrative Interpretation Prepared under the direction of the Advisory Traffic Council of The American Commerce Association By EDWARD J. MARTIN, LL. B. ELVIN S. KETCHUM, A. B., Pd. M. Editor-in-Chief Originator of Systematic and Scientific Training in Practical Traffic Work EDWARD G. WARD Editorial Director Former President and Editor-in-Chief of the Railway World ; also for- merly with the Interstate Commerce Commission ; also with the U. S. Department of Agriculture as Transportation Expert and with the U. S. Department of Commerce and Labor as Internal Commerce Expert. €|)e American Commerce ^^^octation CHICAGO Copyright 1917 BY The American Commerce Association h PREFACE PART II of "Interstate Commerce Law" continues the amplification by sections of the judicial construc- tion and administrative enforcement of the Act to Regulate Commerce. The important subject of discrimination is begun in this volume, but because of its great scope, is concluded in the next succeeding volume or Part III. Sections 2, 3 and 4, — and section 1, to the extent that it prohibits unreasonable rates and the conditions of unrea- sonableness, — present the major purpose of the Act to Regulate Commerce, which is to destroy unjust discrimina- tion. In the very nature of things, the original Act to Regulate Commerce passed in 1887 (and then known as the Cullom-Reagan Bill) was largely tentative and experi- mental. Its fundamental principles, however, were not alone the result of experience but also of exhaustive in- vestigation. The essential purpose of the Act then and now was to free interstate transportation from undue and unjust discriminations. Through successive enlargements of its powers and the experience gathered by its administrative machinery, the provisions of the Act directed against this evil of public transportation have been developed into a system of con- trol of the public service of railways and the relationships that exist between them and their patrons which has accomplished the practical extirpation of unjust discrimi- nation. Ill iv PREFACE To effectively apply the inhibition of the statute directed against unjust discrimination, requires intelligent analysis of the affairs of transportation and commerce. The ques- tion is not whether there is "railroad discrimination," but whether there is "undue railroad discrimination." Dis- crimination, in a transportation sense particularly, implies either "accurate distinction" or "unequal treatment." In the first sense it is not prohibited by law; in the latter it is condemned as abhorrent to the principles of public service. Hence, the prohibition which has been written into the statute is not directed against all discrimination, but simply against that which is unjust and undue. The law, how- ever, does not provide a measure whereby to determine that discrimination which is undue or unjust and that which is not, but leaves to the administrative function of the Act, by conclusion of fact, to determine the degree of discrimination which shall be considered undue or unjust. Whether the discrimination is the effect resulting from an "accurate distinction" in a transportation sense or is the injurious result of "unequal treatment" of persons, com- modities, or localities, is only capable of determination in a full and impartial examination into all the facts and cir- cumstances surrounding the alleged wrongful act or omis- sion. The subject is therefore treated in the Library from the standpoint of discriminations between persons, between commodities and between localities, and the various de- tails of administration developed from the premises of fact, supported by the authorities of the courts and the Com- mission. TABLE OF CONTENTS CHAPTER I. Act to Regulate Commerce as Amended — (Continued). Amplification of Sections — (Continued). Page § 1. Competition 3 (1) Commercial Competition 3 (2) Cross-Country Competition 14 (3) Railroad Competition 15 (4) Rail-and-Water Competition 19 (5) Water Competition 20 § 2. Direction — Route of Actual Movement Gov- erns Shipment; Rates Not Applicable in Op- posite Direction Unless so Published 36 § 3. Distance 36 § 4. Divisions of Rates — Failure to Agree Upon Does Not Relieve Carriers from Observance of Published Rates 46 § 5. Equalizing Rates 47 § 6. Evidentiary Factors Determinative of Reason- ableness of Rates 48 § 7. Export Rates 48 § 8. Joint Rates — In Excess of Sum of Interme- diate Rates 49 § 9. Joint Rates — Less than Sum of Intermediate Rates 51 § 10. Joint Rates as Affected by Minimum Carload Weights 52 V vi AMERICAN COMMERCE ASSOCIATION Page § 1 1. Import Rates 53 § 12. Import Rates — Inland Proportion May Not Apply on Domestic Traffic 54 § 13. Loading 55 § 14. Long Standing Adjustment of Rates Pre- sumed to be Reasonable 55 § 15. Readjustment of Rate Relationship in Re- gional Rate Structures 64 § 16. Lands Owned by Carriers 66 § 17. Manufacturers — DifTferential Rates on Prod- ucts of 66 § 18. Minimum Rates 67 § 19. Movement of Shipments — Rate Must Apply According to 69 (1) Permissible Diversions 69 § 20. Needs of Shippers 71 § 21. Nonconfiscatory Rate, Not Necessarily a Rea- sonable One 72 § 22. Obsolescent Factors 72 § 2}i. Rates Distinguishing Between "Prepaid'' and "Collect" Shipments Unlawful 72 § 24. Public Policy — Relations of the Carriers and the PubHc 74 § 25. Quantity Rates — Any-Quantity-Rates 78 (1) Train-load Rates Illegal 80 (2) Carload Rates — Relation to Less than Carload Rates 81 § 26. Reasonable Rate May Become Unreasonable. 86 § 27 . Reasonableness of Rates — No Absolute Maxi- mum 86 § 28. Reasonableness of Rates — No Higher Should be Imposed Upon Territory than Adequate for Typical Railroads 87 INTERSTATE COMMERCE LAW vii Page § 29. Reasonableness of Rates — Increasing Pros- perity Offsets Presumption of Reasonable- ness 87 § 30. Returns — Law of Increasing 87 § 31. Rules — Regulation and Practices Affecting Reasonableness of Rates 87 §32. Standard of Reasonableness for Carriers.... 88 § 33. Tariffs — Filing with Commission Not Pre- sumption of Reasonableness 89 § 34. Tariffs — Effect of Failure to File with Com- mission 90 § 35. Traffic Conditions — Reasonableness of Rates Affected by Nature of Traffic 91 § 36. Traffic Conditions — Lower Rates on Low Grade Traffic 92 § 37. Traffic Conditions — Relatively Lower Rates on Long Haul Traffic 93 § 38. Traffic Conditions — Special Rates for Devel- opment Purposes 98 § 39. Traffic Conditions — Rates Conditioned Upon Use of Commodity 99 § 40. Traffic Conditions — Reasonableness of Rates Affected by Volume of Traffic 101 i 41. Wages 105 CHAPTER II. Act to Regulate Commerce as Amended — (Continued). Amplification of Sections — (Continued). § 1. Anti-Pass Provisions 109 § 2. The "Commodities Clause" 109 § 3. Constitutionality of Commodities Clause 110 § 4. Not Unlawful for Boat Lines to Transport Commodities Owned by Them 116 viii AMERICAN COMMERCE ASSOCIATION Page § 5. Switch Connections 116 § 6. Jurisdiction and Authority of Interstate Com- merce Commission Over Switch Connec- tions 117 § 7. Switch Connections with Water Carriers.... 123 § 8. Jurisdictional Powers of Interstate Commerce Commission Not Contravened by Shipping Act 124 CHAPTER III. Act to Regulate Commerce as Amended — (Continued). Amplification of Sections — (Continued). § 1. Statutory Provisions of Section 2 127 § 2. Purpose of Section 2 127 § 3. Relationship of Sections 2, 3, and 4 of the Act to Regulate Commerce 129 § 4. Section 2 of Act to Regulate Commerce Sup- ported by Elkins Act 133 § 5. Discrimination — Enforcement of Provisions of Section 2 of Act to Regulate Commerce by the Interstate Commerce Commission and the Courts 135 CHAPTER IV. Act to Regulate Commerce as Amended — (Continued). Amplification of Sections — (Continued). § 1. Statutory Provisions of Section 3 139 § 2. Relationship of Section 3 with Sections 2 and 4 of the Act to Regulate Commerce 143 § 3. Administrative Application of Provisions of Section 3 of the Act to Regulate Commerce by the Commission 146 § 4. Discrimination and Preferences between Lo- calities 150 INTERSTATE COMMERCE LAW ix Page § 5. Relation of Sections 3 and 7 151 § 6. Discriminations — Enforcement of Provisions of Section 3 of the Act to Regulate Com- merce by the Interstate Commerce Commis- sion and the Courts 152 CHAPTER V. Act to Regulate Commerce as Amended — (Continued). Amplification of Sections — (Continued). § 1. Statutory Provisions of Section 4 155 § 2. The Original Fourth Section 156 § 3. The New Fourth Section 168 § 4. The Purpose of the New Fourth Section. . . . 169 § 5. Constitutionality of New Fourth Section. . .". . 177 § 6. A New Constitutional Question 181 § 7. Fourth Section Board. 191 § 8. Fourth Section Applies to Import and Export Rates 192 § 9. Case Reference to Commission's Rulings un- der Fourth Section 193 § 10. Burden of Proof under Application for Relief from Provisions of Section 4 197 § 11. Discriminations — Enforcement of Provisions of Section 4 of Act to Regulate Commerce by the Interstate Commerce Commission and the Courts 197 CHAPTER VI. Act to Regulate Commerce as Amended — (Continued). Amplification of Sections— (Continued). DISCRIMINATION, § 1. Administrative Enforcement of Sections 1, 2, 3 and 4 of the Act to Regulate Commerce Prohibiting Unjust Discrimination 201 X AMERICAN COMMERCE ASSOCIATION Page § 2. Common Law Prohibition Against Unjust Dis- crimination 204 § 3. Unjust Discrimination Only is Unlawful 206 § 4. Standards of Comparison 209 CHAPTER VII. Act to Regulate Commerce as Amended — (Continued). Amplification of Sections — (Continued). DISCRIMINATION BETWEEN PERSONS. § 1. Allowances, Legality of 215 § 2. Discrimination in Allowances 218 § 3. Allowances for Elevation of Grain 223 § 4. Allowances to Tap Lines 226 § 5. Allowance to Industrial Railways and Plant Facilities 235 § 6. Discriminations Between Carriers 241 § 7. Carrier as Shipper May Not Receive Prefer- ence 245 § 8. Discrimination Resulting from Contact with Shipper 255 § 9. Shipper Interested in Connecting Carrier. . . . 255 §10. Discrimination in Reconsignment Charges.. 256 § 11. Discrimination in Absorption of Switching Charges 257 §12. Discrimination in Terminal Charges 261 § 13. Discrimination by Retention of Overcharge. . 268 CHAPTER VIII. Act to Regulate Commerce as Amended — (Continued) . Amplification of Sections — (Continued). DISCRIMINATION BETWEEN PERSONS— (Continued). § 1. The Person of the Shipper 271 § 2. When Shipper is Owner of Goods. . . ,..: 276 § 3. When Shipper is Forwarding Agent 277 INTERSTATE COMMERCE LAW xi Page § 4. Discrimination by Denying Shipper Choice of Routes 281 § 5. Discriminations Between Persons in Trans- portation Service 282 § 6. Car Spotting 287 § 7. Carriers' Convenience in Distribution of Cars. 290 § 8. Private Cars 291 § 9. Demurrage on Private Cars 293 § 10. Grain Doors and Coopering 293 § 11. Lining and Fitting Cars 296 § 12. Cost of Service 298 § 13. Discrimination in Services and FaciHties. . . . 299 § 14. "Like and Contemporaneous Service" 308 § 15. Discrimination in Distinction Between Pre- paid and Collect Shipments 309 § 16. Local and Through Shipments 310 § 17. Discrimination by Direct Difference in Rates 313 § 18. Discrimination Caused by State Rates 313 CHAPTER IX. Act to Regulate Commerce as Amended — (Continued). Amplification of Sections — (Continued). DISCRIMINATION BETWEEN PERSONS— (Continued). § 1. Discriminations in Services 317 § 2. "Under Substantially Similar Circumstances and Conditions" 317 § 3. Dififerences in Services 321 § 4. Leased Trackage Rights 322 § 5. Trackage Rights Under Contracts 323 § 6. Special Privileges 323 § 7. Discriminations in Special Privileges 324 § 8. Discrimination in Furnishing Interchange Fa- cilities 330 xii AMERICAN COMMERCE ASSOCIATION Page § 9. Discrimination in Wharfage Rights 343 § 10. State and Municipal Regulations Governing Use of Terminals 348 § 11. Discriminations in Transit Privileges 348 § 12. Discrimination in Milling-in-Transit and Ex- port Traffic 349 § 13. Stoppage in Transit 350 § 14. Compression of Cotton in Transit 351 § 15. Stoppage of Cars in Transit to Complete Loading or Unloading 353 § 16. Transfer 359 § 17. Discrimination Confined to Patrons of Car- riers 359 § 18. Long-time Credit to Proprietary Industries Constitutes Unlawful Discrimination 359 § 19. Carrier Extending Financial Aid to Shipper. . 360 CHAPTER X. Act to Regulate Commerce as Amended — (Continued). Amplification of Sections — (Continued). DISCRIMINATION BETWEEN PERSONS— (Continued). § 1. Rebates and Concessions 365 § . 2. Statutory Provisions 367 § 3. What Constitutes a Rebate 375 § 4. Method by Which Rebating is Accomplished Immaterial 384 § 5. Enforcement of Prohibition Against Rebates Has Operated Advantageously to Carriers. 385 § 6. Repayments by Carriers to Shippers Which do not Constitute "Rebates" and Which are not Unlawful 386 (1) Judicial Interpretation of Term "Rate" in Prohibition Against Rebating 391 INTERSTATE COMMERCE LAW xiii Page j» § 7. Judicial Construction of Word "Knowingly' • in the Elkins Act 392 § 8. Forms of Rebating 393 § 9. Concessions to Control Routing of Traffic. . . . 394 § 10. Unlawful Use of Passes to Influence Traffic. . 396 §11. Special Passenger Services Granted to Large Shippers 398 § 12. Concessions Resulting from Alliances Be- tween Carriers and Large Shippers 399 § 13. Leases of Carriers' Property to Shippers at Less than Fair Rental 400 § 14. Unlawful Use of Peddler Cars 400 § 15. Unlawful Concessions Obtained through Fail- ure by Carrier to Observe Published Rates. 400 § l6. Unlawful Concessions Obtained through False Claims 401 § 17. Unlawful Concessions Obtained through Bill- ing to Fictitious Destinations 402 § 18. Unlawful Concessions Obtained through Vio- lations of the Commodities Clause 403 § 19. Allowances to Shippers for Services Rendered or Facilities Furnished 404 § 20. Allowances to Industrial or Terminal Rail- ways or Boat Lines Owned or Controlled by Shippers 406 § 21. False Classification and False Billing as Meth- ods of Rebating 407 " § 22. False Valuation as Method of Rebating 411 § 23. Repayment by Carrier on Account of Cost of Switch Track 412 § 24. Transportation of Commodities Sold and De- livered by a Carrier 412 § 25. Unlawful Concession Obtained through Ex- tension of Credit to Shipper 413 xiv AMERICAN COMMERCE ASSOCIATION Page § 26. Unlawful Concession Obtained through Com- missions Paid by Carrier 414 § 27 . Unlawful Concession Obtained through Can- cellation of Storage Charges 416 § 28. Estimated Weights Permissible, but Billing on Marked Capacity of Car or Carload Mini- mum Illegal 416 § 29. Unlawful Concessions Obtained through Fic- titious Transfer Slips 417 § 30. Unlawful Concessions Obtained through Can- cellation of Demurrage Charges 417 § 31. Inducing Concessions 418 CHAPTER I. ACT TO REGULATE COMMERCE AS AMENDED (CONTINUED). Amplification of Sections (Continued). § 1. Competition. (1) Commercial Competition. (2) Cross-Coimtry Competition. (3) Railroad Competition. (4) Rail-and- Water Competition. (5) Water Competition. § 2. Direction—Route of Actual Movement Governs Shipment; Not Applicable in Opposite Direction Unless so Published § 3. Distance. § 4. Divisions of Rates— Failure to Agree Upon Does Not Relieve Carriers from Observance of Published Rates. § 5. Equalizing Rates. § 6. Evidentiary Factors Determinative of Reasonableness of Rates. § 7. Export Rates. § 8. Joint Rates — in Excess of Sum of Intermediate Rates. § 9. Joint Rates — less than Sum of Intermediate Rates. § 10. Joint Rates as Affected by Minimum Carload Weights. § 11. Import Rates. § 12. Import Rates— Inland Proportion May Not Apply on Domestic Traffic. § 13. Loading. § 14. Long Standing Adjustment of Rates Presumed to Be Reason- able. § 15. Readjustment of Rate Relationship in Regional Rate Structures. § 16. Lands Owned by Carriers. § 17. Manufactures — Differential Rates on Products of. § 18. Minimum Rates. § 19. Movement of Shipments — Rate Must Apply According to. (1) Permissible Diversions. §20. Needs of Shippers. §21. Nonconfiscatory Rate, Not Necessarily a Reasonable One. 17—2 2 AMERICAN COMMERCE ASSOCIATION § 22. Obsolescent Factors. § 23. Rates Distinguishing Between "Prepaid" and "Collect" Shipments Unlawful. § 24. Public Policy — Relations of the Carriers and the Public. § 25. Quantity Rates — Any-Quantity-Rates, (1) Train-load Rates Illegal. (2) Carload Rates — Relation to Less than Carload Rates. § 26. Reasonable Rate May Become Unreasonable. §27. Reasonableness of Rates — No Absolute Maximiun. §28. Reasonableness of Rates — No Higher Should Be Imposed Upon Territory than Adequate for Typical Railroads. §29. Reasonableness of Rates — Increasing Prosperity Offsets Pre- sumption of Reasonableness. § 30. Returns — Law of Increasing. § 31. Rules — Regulation and Practices Affecting Reasonableness of Rates. § 32. Standard of Reasonableness for Carriers. §33. Tariffs — Filing with Commission Not Presumption of Reason- ableness. § 34, Tariffs — Effect of Failure to File with Commission. § 35. Traffic Conditions — Reasonableness of Rates Affected by Nature of Traffic. § 36. Traffic Conditions — Lower Rates on Low Grade Traffic. § 37. Traffic Conditions — Relatively Lower Rates on Long Haul Traffic. § 38. Traffic Conditions — Special Rates for Development Purposes. § 39. Traffic Conditions — Rates Conditioned Upon Use of Commodity. § 40. Traffic Conditions — Reasonableness of Rates Affected by Volume of Traffic. § 41. Wages. CHAPTER I. ACT TO REGULATE COMMERCE AS AMENDED (CONTINUED). Amplification of Sections (Continued). § 1. Competition. While not recognized by the national regulating author- ities as a controlling or exclusive element in determin- ing the reasonableness of rates, competition in either com- mercial or transportation form is responsible for a vast majority of the freight rates and their complex adjust- ments throughout the country. So, it is properly said that while distance is a factor always to be considered and is some times of controlling force in the making of rates, established commercial conditions, competition of water carriers, and competition between railroads with termini at different points make it impractical to consider a rate situation involving these several elements, from the standpoint of distance alone. (1) Commercial Competition. Commercial competition, when of controlling force is considered by the Commis- sion in determining whether the advantage in rates at given commercial centers is undue or that the situation is one the cause of which is not chargeable to the carriers because involuntarily made. Sioux City Terminal Elevator Co. vs. C. M, & St. P. Ry. Co., 23 I. C. C. Rep. 98, 107. Generally speaking, it is not the duty of the carriers nor the function of the Commission to adjust rates to 8 4 AMERICAN COMMERCE ASSOCIATION meet varying commercial conditions due to increased pro- duction and keener competition. Peppard Seed Co. vs. A. T. & S. F. Ry. Co., 36 I. C. C. Rep. 311, 313. And in a case where it was shown that commercial com- petition had influenced an adjustment of rates on one com- modity, it was held that such adjustment might not be just on another commodity. Alpha Portland Cement Co. vs. B. & O. R. R. Co., 34 I. C C. Rep. 414, 421. Technically speaking the competitive forces which affect transportation and the charges therefor are of three kinds — (1) competition of routes, competition in facilities, and competition of markets. In a more common-place sense, we will hereafter, however, speak of these forces of competition, as commercial competition (inclusive of cross-country and market competition), railroad competi- tion, rail-and-water competition, and water competition. These several forces of competition, in varying phases, J have been the more contentious factors in the readjust- ' ment of the transcontinental rate system. In speaking of market competition, the Commission, in the Reno case, said: "Ocean competition, say the carriers, brings about the lower rates from coast to coast; market competi- tion produces the lower rates from the interior to the coast. We have considered ocean competition and see how real was its effect and how the carriers dealt with it. "Market competition" is a phrase with which the railroad traffic manager too often conjures. When no other force can be found which brings about a discrimination, market competition is advanced. It is both a sword and a shield; it is used to protect the carrier against attack because of undue discrimination INTERSTATE COMMERCE LAW 5 as between communities, and it is a weapon of offense as well, by which one carrier invades the territory of another upon a different basis from that which it grants to its own immediately dependent communities and forces concessions from its rival carriers. "Market competition, as we have seen, is a euphem- ism for railroad policy. The history of the fourth section makes clear that it was born out of a desire, and has been amended out of the purpose, to restrict the force and effect of market competition. The ex- amples cited before Congress by those who have ad- vocated an absolute long-and-short-haul section have largely been such as arose out of railroad policy, not such as were developed by transportation competi- tion. Congress, however, has not seen fit to say (and perhaps most wisely so) that this economic force shall not be allowed to have its play in the mak- ing of rates. Market competition must be considered as one of those circumstances affecting a rate situa- tion with which we are called upon to deal. But may it not be said that while the language of the statute does not say that market competition shall not be allowed to justify the charging of the higher rate to the nearer point, the very spirit of the sec- tion makes against the free application of any such justifying principle? A national policy may veto a railroad policy just as a public need may overcome and set aside a private desire. Experience has de- monstrated to the National Legislature that it is not safe to leave to the carriers the determination of the question what markets should be brought into com- petition with one another. The policy of Congress seems to be that a railroad may be compelled by transportation competition to make its rates lower than it otherwise would between two competitive points, and that this will justify a breach of the pro- hibition of the fourth section; but the desire of a number of shippers to reach a market is a force to which the carrier may not yield unless it can estab- lish clearly that the adoption of such policy will not AMERICAN COMMERCE ASSOCIATION unfairly discriminate against one community and in favor of another and will not produce those results which the law was intended to destroy. Clearly to allow for market competition as a sole and controlling factor under the fourth section is to render it nuga- tory, for this would be tantamount to saying that a railroad could justify every discrimination as between communities by the assertion of nothing more than its own determination of policy. "We must regard the proviso in the fourth section as subordinate to the preceding clause prohibiting the higher rate for the shorter haul, and to carry out this intent of the law a carrier must establish before this Commission, in order to secure an order of ex- ception thereunder, more than merely its own desire to haul a great volume of traffic between two distant points; it must prove that by such a policy it will not impose unreasonable rates upon any intermediate point, and that its policy will not work an injustice of which such intermediate point may fairly com- plain. Unless it does make such proof this Commis- sion is not justified under the law in excusing it from adopting its rates to the more distant point as the basis for rates to the nearer points. "In this case and under these applications the Com- mission has given thought to many considerations not touched upon in this report. * * * Such, for instance, as the reasonableness of the transcontinental rates upon commodities in and of themselves when applied from different points of origin and the rela- tion of the cost of service over the Central Pacific when delivery is made at Reno or at San Francisco. And when we have considered the return per ton- mile yielded by many of these rates it is not remark- able that other carriers from the east have pressed forward, even to their own temporary financial em- barrassment, to reach thes^e qoast terminals. No other carriers in this country enjoy such long hauls upon so great a volume of high-class traffic as do these transcontinental railroads. Their fine earnings are INTERSTATE COMMERCE LAW 7 testimony to this efifect, as well as to the competency of their management. If the principle that a railroad should charge what the traffic will bear is the criterion of railroad rates, no exception can be taken to the transcontinental situation, for it is masterfully de- signed to secure a maximum of revenue and yet de- velop such industries and benefit such communities as the railroad in its wisdom may wish to thrive, for the growth of the Pacific coast certainly is in no small part to be accredited to the discretion lodged in and exercised by the transcontinental traffic manager. "The coast cities — those that have direct access to the ocean — can not be materially injured by the policy of the law we have herein considered. They are rendered secure as entrepots of commerce by the presence of the ocean, so long as they choose to avail themselves of its advantages. There is much reason in this record, too, for the belief that they have at times chosen to forego these advantages in the ex- pectation that they would be made secure by the rail carriers of a large distributing market in the interior. With the introduction of a policy which removes from these interior points in some degree the diasdvantage under which they have suffered with relation to east- ern points of production it will become a matter of moment to the coast cities to avail themselves fully of the ocean as well as develop industries upon the Pacific coast itself which will compete with the in- dustries of the east for the interior trade. That which has been done in the middle west within a generation may certainly be accomplished upon the Pacific coast, so that there may come about a competition between real producing markets as well as competition between jobbing houses." R. R. Comm. of Nevada vs. S. P. Co., 21 I. C. C. Rep. 329, 367. An interesting and instructive discussion of the effect of commercial competition in railway rate-making will be found in the testimony in the St. Louis case, in the form 8 AMERICAN COMMERCE ASSOCIATION of a dialogue between Mr. Wm. F. Herrin, Chief Counsel of the Southern Pacific Company, and Mr. Paul Morton, then Vice-President in Charge of Traffic of the Santa Fe Railway. Business Men's League, St. Louis, vs. A. T. & S. F. Ry. Co., 9 L C. C. Rep. 318. It is obvious that a carrier may for competitive reasons, voluntarily do that which it may not lawfully be required to do, for there is no principle of law that compels a car- rier to be content with half the traffic or that prohibits the carrier so adjusting its rates that it may fight for the whole of the traffic the moment the effect of its competi- tor's rates are felt. Swift & Co. vs. C. & A. R. R. Co., 16 L C. C. Rep. 426, 428. Bulte Milling Co. vs. C. & A. R. R. Co., 15 I. C. C. Rep. 351, 359. See also: 1915 Western Rate Advance Case, Part II, 37 I. C. C. Rep. 114. 136, 141. Official Classification Ratings, 37 I. C. C. Rep. 166, 172. Lumber Rates to Eastern Cities, 37 I. C. C. Rep. 212, 216. McCormick & Co. vs. S. P. Co., 37 I. C. C. Rep. 234, 237. Eagle Ice Co. vs. C. M. & St. P. Ry. Co., 37 I. C. C. Rep. 250, 251. Public Service Commission of Missouri vs. Wabash R. R. Co., 37 I. C. C. Rep. 297, 300. Fabrication in Transit at Greenville, Pa., 37 I. C. C. Rep. 370, 371. Kosmos Portland Cement Co. vs. I, C. R. R. Co., 37 I. C. C. Rep. 449, 451. Broom Corn to Cincinnati, Ohio, 37 I. C. C. Rep. 482, 483. Lorain & Southern R. R. Co. Case, 37 I. C. C. Rep. 497, 501. Brownsville Cotton Oil & Ice Co. vs. C. R. I. & P. Ry. Co., 37 I. C. C. Rep. 503, 505. Brown & Sons Lumber Co. vs. L. & N. R. R. Co., 37 I. C. C. Rep. 507, 511. American Steel & Wire Co. vs. A. & V. Ry. Co., 37 I. C. C. Rep. 525, 526. Topeka Traffic Asso. vs. A. & W. Ry. Co., 37 I. C. C. Rep. 598. Holmes & Hallowell Co. vs. G. N. Ry. Co., Z1 I. C. C. Rep. 627, 637. Traffic Bureau of Knoxville. Tenn., vs. C. N. O. & T. P. Ry. Co., 37 I. C. C. Rep. 687, 688. INTERSTATE COMMERCE LAW 9 Cement to Long Island Points, 37 I. C. C. Rep. 694, 695. Harness to Oklahoma, Zl I. C. C. Rep. 726, 729. Big Basin Lumber Co. vs. S. P. Co., 37 L C. C. Rep. 730, 733. Glucose from Chicago, 36 L C. C. Rep. 379, 381. Henderson Commercial Club vs. L C. R. R. Co., 36 L C. C. Rep. 20, 23. The Iron and Steel Cases, 36 I. C. C. Rep. 86, 95. Midcontinent Oil Rates, 36 I. C. C. Rep. 109, 112. Stopping of Cars in Transit to Complete Loading, 36 I. C. C. Rep. 130, 134. Diamond Crystal Salt Co. vs. M. C. R. R. Co., 36 I. C. C. Rep. 172, 174. Foster Lumber Co. vs. Clatskanie Transp. Co., 36 I. C. C. Rep. 190, 193. Coal Sw^itching Reparation Cases at Chicago, 36 I. C. C. Rep. 226, 230. Classification of Chairs, 36 I. C. C. Rep. 243, 246. Rutter & Co. vs. C. & N. W. Ry. Co., 36 I. C. C. Rep. 272, 279. Krauss Bros. Lumber Co. vs. N. C. & St. L. Ry. Co., 36 I. C. C. Rep. 285, 287. Oklahoma Traffic Asso. vs. A. & S. Ry. Co., 36 I. C. C. Rep. 329 334. Import and Domestic Rates, 36 I. C. C. Rep. 389, 398. Rates on Bituminous Coal, 36 I. C. C. Rep. 401, 409. City Ice & Supply Co. vs. C. & N. W. Ry. Co., 36 I. C. C. Rep. 514, 516. Eastern Oregon Producers' Asso. vs. O. W! R. & N. Co., 36 I. C. C. Rep. 526, 527. Morris & Co. vs. U. P. R. R. Co., 36 I. C. C. Rep. 540, 541, 542. Globe Grain & Milling Co. vs. A. T. & S. F. Ry. Co., 36 I. C. C. Rep. 662, 663. Eastern Live-Stock Case, 36 I. C. C. Rep. 675, 700. Cape Girardeau Portland Cement Co. vs. St. L. & S. F. R. R. Co., 35 I. C. C. Rep. 109, 115. Nebraska Bridge Supply & Lumber Co. vs. N. C. & St. L. Ry. Co., 35 I. C. C. Rep. 86, 88. Nebraska Bridge Supply & Lumber Co. vs. A. G. S. R. R. Co.. 35 I. C. C. Rep. 90, 93. Oklahoma Cottonseed Crushers' Asso. vs. M. K. & T. Ry. Co., 35 I. C. C. Rep. 94, 102. Yellow Pine Sash, Door & Blind Mfrs. Assn. vs. S. Ry. Co., 35 I. C. C. Rep. 150, 154. Chattanooga Log Rates, 35 I. C. C. Rep. 163, 170. Lebanon Commercial Club vs. L. & N. R. R. Co., 35 I. C. C. Rep. 204, 214. Imperial Valley Cotton Co. vs. S. P. Co., 35 I. C. C. Rep. 215, 217. Rates for Transportation of Anthracite Coal, 35 I. C. C. Rep. 220, 231. Regulations as to Storage of Dairy Products, 35 I. C. C. Rep. 469, 472. Duncan & Co. vs. N. C. & St. L. Ry. Co., 35 I. C. C. Rep. 477, 482. 10 AMERICAN COMMERCE ASSOCIATION 1915 Western Rate Advance Case, 35 I. C. C. Rep. 497, 590, 601. Hooker-Hendrix Hdwe. Co. vs. M. K. & T. Ry. Co., 34 I. C. C. Rep. 3, 6, 7. Durham Coal & Iron Co. vs. C. of Ga. Ry. Co., 34 I. C. C. Rep. 10, 11, 12. Meech & Stoddard vs. G. T. Ry. Co. of Can., 34 I. C. C. Rep. 39, 40. Farmers' Cooperative Asso. vs. C. B. & Q. R. R. Co., 34 I. C. C. Rep. 60, 66. San Toy Coal Co. vs. A. C. & Y. Ry. Co., 34 I. C. C. Rep. 93 95. City' of Charlotte, N. C, vs. S. Ry. Co., 34 I. C. C. Rep. 128, 132. Rates on Hay to Chicago, 34 I. C. C. Rep. 150, 151. Grand Rapids Plaster Co. vs. L. S. & M. S. Ry. Co., 34 I. C. C. Rep. 202, 206. Monon Coal Co. vs. C. & E. I. R. R. Co., 34 I. C. C. Rep. 221. 226. CoflFeyville Mercantile Co. vs. M. K. & T. Ry. Co., 34 I. C. C. Rep. 231, 232. Corp. Comm. of New Mexico vs. A. T. & S. F. Ry. Co., 34 I. C. C. Rep. 292, 297. Gile & Co. vs. S. P. Co., 34 I. C. C. Rep. 319. 322. Merchants' Exchange of St. Louis vs. B. & O. R. R. Co., 34 I. C. C. Rep. 341, 348. Nebraska State Railway Comm. vs. U. P. R. R. Co., 34 I. C. C. Rep. 381, 382. City of Danville, Va., vs. S. Ry. Co., 34 I. C. C. Rep. 430, 437. Sand and Gravel Rates from Wisconsin Points to Chicago, 34 I. C. C Rep. 467, 468. Stock & Sons vs. C. M. & St. P. Ry. Co., 34 I. C. C. Rep. 481, 483. Chamber of Commerce of Milwaukee vs. C. M. & St. P. Ry. Co., 34 I. C. C. Rep. 581, 583. Rates on Lumber from Southern Points, 34 I. C. C. Rep. 652, 658, 661. Financial Relations, etc , L. & N. R. R. Co., 33 L C. C. Rep. 168, 197. Kellogg Toasted Corn Flake Co. vs. A. T. & S. F. Ry. Co., 33 I. C. C. Rep. 534, 535. Menasha Wooden Ware Co. vs. C. & N. W. Ry. Co., 33 I. C. C. Rep. 563, 565. Cement Rates from Salt Lake City, 33 L C. C. Rep. 5, 7. Boldt Co. vs. C. R. I. & P. Ry. Co., 33 I. C. C. Rep. 8, 12. Wisconsin & Arkansas Lumber Co. vs. St. L. L M. & S. Ry. Co., 33 L C. C. Rep. 33, 38. Public Utilities Commission of Idaho vs. O. S. L. R. R. Co., 33 I. C. C. Rep. 103, 107. Rates on Tomatoes from Jacksonville to Kansas City, 33 I. C. C. Rep. 145, 148. Lindsay & Co. vs. N. P. Ry. Co.. 33 I. C. C. Rep. 150, 153. Lumber Rates from Helena, Ark., and Other Points, 33 I. C. C. Rep. 297, 300. INTERSTATE COMMERCE LAW 11 Rosenblatt & Sons vs. A. A. R. R. Co., 33 I. C. C. Rep. 324, 326. Anson, Gilkey & Kurd Co. vs. S. P. Co., 33 I. C. C. Rep. 332, 334. Eastern Fruit Growers' Asso. vs. B, & O. R. R. Co., 33 I. C. C. Rep. 343, 346. Northern Pine Mfrs. Asso. vs. C. & N. W. Ry. Co., 33 I. C. C. Rep. 360, 362. Lindsay & Co. vs. Northern Exp. Co., 33 I. C. C. Rep. 394, 396 Delphos Mfg. Co. vs. P. Co., 33 I. C. C. Rep. 400, 401. Adrian Wire Fence Co. vs. L. S. & M. S. Ry. Co., 33 I. C. C. Rep. 403, 406. Grain Rates from Milwaukee, 33 I. C. C. Rep 417, 418. Snow Lumber Co. vs. R. C. & S. Ry. Co., 33 I. C. C. Rep. 587, 588. Petit Salt Co. vs. C. M. & St. P. Ry. Co., 33 L C. C. Rep. 590. Rates on Paper and Other Commodities, 33 I. C. C. Rep 609, 611. Cullman Commercial Club vs. L. & N. R. R. Co., 33 L C. C. Rep. 634, 637. Newport Mining Co. vs. C. & N. W. Ry. Co., 33 L C. C. Rep. 645, 657. Texas Refining Co. vs. A. & V. Ry. Co., 32 L C. C. Rep 192, 193. New York Produce Exchange vs. N. Y. C. & H. R. R. R. Co., 32 L C. C. Rep. 212, 217. Board of Trade of Kansas City vs. St. L. & S. F. Ry. Co., 32 L C. C. Rep. 297. 305. Rates on Poultry in Western Trunk Line Territory, 32 L C. C. Rep. 380, 381. Illinois Coal Cases, 32 I. C. C. Rep. 659, 671. Southern Hardwood Traffic Bureau vs. L C. R. R. Co., 31 L- C. C. Rep. 6, 7. Class and Commodity Rates from Stations in Maine, 31 L C. C. Rep. 18, 21. Southern State Supply Co. vs. S. Ry. Co., 31 L C. C. Rep. 30, 31. Financial Investigation of N. Y., N. H. & H. R. R. Co., 31 I. C. C. Rep. 32, 61. Nix & Co. vs. S. Ry. Co., 31 I. C. C. Rep. 145, 148. Stock & Sons vs. L. S. & M. S. Ry. Co., 31 I. C. C. Rep. 150, 151. Coal and Oil Investigation, 31 I. C. C. Rep. 193, 195. Lumber Rates from Southern Ry. Points to Eastern Points, 31 I. C. C. Rep. 244, 250. Decatur Nav. Co. vs. L. & N. R. R. Co., 31 I. C. C. Rep. 281, 284, 286. Five Per Cent. Case, 31 I. C. C. Rep. 351, 408. Pacific Nav. Co. vs. S. P. Co., 31 I. C. C. Rep. 472, 480. Fourth Section Violations in Rates on Sugar, 31 I. C. C, Rep 511, 528, 529. Colonial Salt Co. vs. C. B. & Q. Ry. Co., 31 I. C. C. Rep. 559, 569. 12 AMERICAN COMMERCE ASSOCIATION Empire Coke Co. vs. B. & S. R. R. Co., 31 I. C. C. Rep. 573, 579, 580. Douglas & Co. vs. I. C. R. R. Co., 31 I. C. C. Rep. 587, 592. Hide Rates to Los Angeles, Cal., 31 I. C. C. Rep 633, 635. Beatrice Commercial Club vs. C. B. & Q. R. R. Co., 31 I. C. C. Rep 173. 178. Phoenix Printing Co. vs. M. K. & T. Ry. Co., 31 I. C. C. Rep 289, 290. Wichita Business Asso. vs. C. & O. W. Ry. Co., 31 I, C. C. Rep. 323, 324. Rates on Sugar, 31 I. C. C. Rep. 495, 509. Export Rates on Grain and Grain Products, 31 I. C. C. Rep. 616, 618. Weatherford Chamber of Commerce vs. M. K. & T. Ry. Co., 31 I. C. C. Rep. 665, 667. Fourth Section Violations in the Southeast, 30 I. C. C. Rep. 153, 233, 289. Memphis Freight Bureau vs. I. C. Ry. Co., 30 I. C. C. Rep. 471, 475. American Coal & Supply Co. vs. C. & M. W. Ry. Co., 30 I. C. C. Rep. 492, 493. Rates on Tropical Fruits from Gulf Ports, 30 I. C. C. Rep 621, 630. Omaha Grain Exchange vs. N. P. Ry. Co., 30 I. C. C. Rep. 572, 578. Wichita Business Asso. vs. A. T. & S. F. Ry. Co., 30 I. C. C. Rep. 45, 48. Wheat Rates from Oklahoma, 30 I. C. C. Rep. 93, 96. Hormel & Co. vs. C. M. & St. P. Ry. Co., 30 I. C. C. Rep.; 98, 101. "*r American Refining Co. vs. St. L. & S. F. R. R. Co., 30 I. C. C. Rep. 103. Break-Bulk Rates on Grain, 30 I. C. C. Rep. 357, 360. Grain Rates to Pittsburgh, 30 I. C. C. Rep. 382, 383. Lake Superior Paper Co., Ltd., vs. D. S. S. & A. Ry. Co., 30 I. C. C. Rep. 403, 406. Morris, Johnson, Brown Mfg. Co. vs. I. C. R. R. Co., 30 I. C. C. Rep. 443. Chamber of Commerce of Macon vs. C, N. O. & T. P. Ry. Co.. 30 L C. C. Rep. 477. Coal Rates from Oak Hills, Colo, 30 I. C. C. Rep. 505, 509. Rates on Bananas from Gulf Ports, 30 L C. C. Rep. 510, 520. Decker & Sons vs. C. M. & St. P. Ry. Co., 30 L C. C. Rep. 547, 549. Minneapolis Civic & Commercial Asso. vs. C. M. & St. P. Ry. Co., 30 L C. C. Rep. 663, 672. Southwestern Missouri Millers' Club vs. St. L. & S. F. R. R. Co., 29 I. C. C. Rep. 28, 31. Lake-and-Rail Butter and Egg Rates. 29 L C. C. Rep. 45, 50. Maier & Co. vs. S. P. Co., 29 I. C. C. Rep. 103, 104, 105. Industrial Railways Case. 29 I. C. C. Rep. 212, 230. Youngstown Sheet & Tube Co. vs. P. & L. E. R. R. Co.. 29 I. C. C. Rep. 428, 433. Chicago Board of Trade vs. A. T. & S. F. Ry. Co., 29 L C C. Rep 438, 443. INTERSTATE COMMERCE LAW 13 Kansas-California Four Rates, 29 I. C. C. Rep. 459, 461. Swift & Co. vs. P. R. R. Co., 29 I. C. C. Rep. 464, 469. Atlanta Freight Bureau vs. N. C. & St. L. Ry., 29 I. C. C. Rep. 476, 495. Norman Lumber Co. vs. L. & N. R. R. Co., 29 I. C. C. Rep. 565, 572, 578. Oklahoma Traffic Asso. vs. A. T. & S. F. Ry. Co., 29 I. C. C. Rep. 129, 134. Paducah Board of Trade vs. I. C. R. R. Co., 29 I. C. C. Rep. 583, 585. Sioux City Terminal Elevator Co. vs. C. M. & St. P. Ry. Co., 27 I. C. C. Rep. 457, 463. Indianapolis Freight Bureau vs. C. C. C. & St. L. Ry. Co.. 26 I. C. C. Rep. 53, 58. Union Tanning Co. vs. S. Ry. Co., 26 I. C. C Rep. 159, 164. May Bros. vs. Y. & M. V. R. R. Co., 26 I. C. C. Rep. 323, 328. Blue Grass Lumber Co. vs. L. & N. R. R. Co., 26 L C. C. Rep. 438, 441. Board of Improvement, Waterworks Dist. No. 1, Ft. Smith, Ark., vs. A. T. & S. F. Ry. Co., 26 I. C. C. Rep. 539. Merchants' Freight Bureau of Little Rock vs. A. T. & S. F. Ry. Co., 26 I. C. C. Rep. 543. McKnight-Keaton Gro. Co. vs. C. M. & St. P. Ry. Co., 26 I. C. C. Rep 563, 564. Marian Coal Co. vs. D. L. & W. R. R. Co., 25 I. C. C. Rep. 14. Du Pont De Nemours Powder Co. vs. C. R. R. Co. of N. J., 25 I. C. C. Rep. 19. Evans & Howard Fire Brick Co. vs. St. L., I. M. & S. Ry. Co., 25 I. C. C. Rep. 141, 149, 150. In re Advance in Class and Commodity Rates, 25 I. C. C. Rep. 401, 402. City of Crawford vs. C. & N. W. Ry. Co., 25 I. C. C. Rep. 259, 264. McCullough vs. L. & N. R. R. Co., 25 I. C C. Rep. 48, 49. Farrar Lumber Co. vs. N. C. &• St. L. Ry. Co., 25 I. C. C. Rep. 22, 24. Edwards & Brandford Lumber Co. vs. C. B. & Q. R. R. Co., 25 I. C. C. Rep. 93, 95. Philadelphia Veneer & Lumber Co. vs. C. R. R. Co. of N. J., 25 I. C. C. Rep. 653, 654. R. R. Commissioners of Kansas vs. A. T. &) S. F. Ry. Co., 22 I. C. C. Rep. 407. Georgetown Ry. & Light Co. vs. N. & W. Ry. Co., 22 I. C. C. Rep. 144. Bluefield Shippers' Assn. vs. N. & W. Ry. Co., 22 I. C. C. Rep. 519. Florida Mercantile Agency vs. P. R. R. Co., 21 I. C. C. Rep. 85. Gamble-Robinson Commission Co. vs. St. L. & S. F. R. R. Co., 19 I. C. C. Rep. 114, 115. Corporation Commission of N. C. vs. N. & W. Ry. Co., 19 I. C. C. Rep. 303, 309. Florida Cotton Oil Co. vs. C. of G. Ry. Co., 19 I. C. C. Rep 336, 339. 14 AMERICAN COMMERCE ASSOCIATION Rainey & Rogers vs. St. L. & S. F. R. R. Co., 18 I. C C. Rep. 88, 89. Memphis Cotton Oil Co. vs. I. C. R. R. Co., 17 I. C. C. Rep. 313, 318. Florida Fruit & Vegetable Assn. vs. A. C. L. R. R. Co., 17 I. C. C. Rep. 552, 558. Indianapolis Freight Bureau vs. P. R. R. Co., IS I. C. C. Rep. 567, 576. Oregon & Washington Lumber Mfrs. Assn. vs. U. P. R. R. Co., 14 I. C. C. Rep. 1, 14. Flint & Walling Mfg. Co. vs. G. R. & I. Ry. Co., 14 I. C. C. Rep. 520. I. C. C. vs. C. G. W. Ry. Co., 209 U. S. 108, 119, 28 Sup. Ct. 493, 52 L. Ed. 705. In re Advances in Rates — Eastern Case, 20 I. C. C. Rep. 243 259. Morgan Grain Co. vs. A. C. L. R. R. Co., 19 I. C C. Rep. 460 463 Wilson Saddlery Co. v§. C. & S. Ry. Co.. 18 I. C. C. Rep. 220, 221. Southern Timber & Land Co. vs. S. P. Co., 18 I. C. C. Rep. 232. Schoenhofen Brewing Co. vs. A. T. & S. F. Ry. Co., 17 I. C. C. Rep. 329. (2) Cross-country Competition. Where railway lines parallel each other in populous regions of the country, the cross-country competition effected through wagon hauling is frequently an important factor in the relative adjustment of such carriers' rates in the section thus af- fected. A substantial increase in rates on one road would divert traffic over country roads by wagon to the other line or lines. This fact has been a deterrent toward any change in long established adjustments in many sections of the country. For instance, this form of competition is very intense throughout the apple-producing territory of New York, Southern Pennsylvania, Delaware, Maryland, West Virginia and Virginia. . In some of its cases, the Commission has given consid- eration to cross-country competition in determining the relative reasonableness of rates. Traffic Bureau of Knoxville, Tenn., vs. C. N. O. & T P Ry. Co., 37 I. C. C. Rep. 687, 690. Nebraska Ry. Comm. vs. C. B. & Q. R. R. Co., 36 I. C C Rep. 219, 221. INTERSTATE COMMERCE LAW 15 Foster Lumber Co. vs. Clatskanie Transp. Co.. 36 I C C Rep. 190. 193. Kentucky Distilleries & Warehouse Co. vs. L. & N R R Co., 36 I. C. C. Rep. 293, 300. Merchants' Exchange of St. Louis vs. C. & A. R. R. Co. 36 L C. C. Rep. 268, 269. Lebanon Commercial Club vs. L. & N. R. R. Co., 35 L C. C. Rep 205, 209. Eastern Fruit Growers' Assn. vs. B. & O. R. R. Co., 33 L C. C. Rep. 343, 344. Kansas Wholesale Grocery Co. vs. A. & W. Ry. Co.. 32 L C. C. Rep. 139, 145. Omaha Grain Exchange vs. N„ P. Ry. Co., 30 1. C. C. Rep. 572, 578. Superior Commercial Club vs. G. N. Ry. Co., 25 1. C. C. Rep. 342, 345. Lebanon Commercial Club vs. L. & N. R. R. Co., 25 L C. C. Rep. 277, 279. Compare : Re Rates on Locomotives and Tenders, 21 L C. C. Rep. 103. 109. Wright Wire Co. vs. P. & L. E. R. Co., 21 I. C. C. Rep. 64. R. R. Com., etc., vs. S. P. Co., 21 L C. C. Rep. 329, 352. City of Spokane vs. N. P. Ry. Co., 21 I. C. C. Rep. 400, 414, 418. Re Advances in Rates— Western Case, 20 L C. C. Rep. 307, 354. Re Advances in Rates — Eastern Case, 20 L C. C. Rep 243, 264, 280. R. R. Comm., etc., vs. Atchison, etc., R. Co., 20 I. C. C. Rep. 463, 482. Payne-Gardiner Co. vs. L. & N. R. R. Co., 13 I. C. C. Rep. 638. Morse Co. vs. Chicago, etc., R. Co., 12 I. C. C. Rep. 485. Kindel vs. B. & A. R. R. Co., 11 I. C. C. Rep. 495, 507. Marten vs. L. & N. R. R. Co., 9 L C. C. Rep 581. Hampton Bd. of Trade vs. Nashville, etc., R. Co., 8 I. C. C. Rep. 503. Sprigg vs. B. & O. R. R. Co., 8 I. C. C. Rep. 443, 474. Calloway vs. L. & N. R. R. Co., 7 L C. C. Rep. 431. Cincinnati Frt. Bu. vs. Cincinnati, etc , R. Co., 6 L C. C. Rep. 195, 238. Re L. & N. R. R. Co., 1 L C. C. Rep. 31, 1 L C. Rep. 278. L C. C. vs. A. M. R. Co., 168 U. S. 144. Same case, affirmed in 209 U. S. 108. L C. C. vs. L. & N. R. R. Co., 190 U. S. 273. E. Tenn., etc., R. Co. vs. L C. C, 181 U. S. 1. I. C. C. vs. C. G. W. R. Co., 141 Fed. Rep. 1003, 1016. I. C. C. vs. S. R. Co., 117 Fed. Rep. 741, 122 Fed. Rep. 800. (3) Railroad Competition. The most prevalent form of competition among railroads in a strict transportation 16 AMERICAN COMMERCE ASSOCIATION sense is the competition between routes. This form of competition is in many instances closely interrelated with commercial competition and in still other instances is re- sponsible for commercial competition. Thus the situation is ever present in the American rail- road system wherein it is within the option of the longer line either to meet the rate of the shorter line or to retire from participation in the traffic. This competition against the circuitous line must be considered in determining the reasonableness of rates so situated, as well as the number of competing lines in a given territory. So, it is a well-approved rule that carriers may consider their competition with other carriers in adjusting their rates, but such competition must be genuine and not pre- tential or in the nature of a rate war, for rate wars are unreasonable and their results may not be used to de- termine reasonableness. And it not infrequently happens that carriers do voluntarily, under the stress of railroad competition, that which could not lawfully be required of them. Wattam vs. N. P. Ry. Co., 37 I. C. C. Rep. 101, 102. Lumber to Wisconsin Points, 11 I. C. C. Rep. 198, 200. Grain from Manitowoc, Wis., Z1 I. C. C. Rep. 549, 553. Brownsville Cotton Oil & Ice Co. vs. C. R. I. & P. Ry. Co., 37 I. C C. Rep. 503, 505. Bekkedal vs. C. St. P., M. & O. Ry. Co., 37 I. C. C. Rep. 611, 613. Bituminous Coal Rates to the Southeast, 37 I. C. C. Rep. 652, 663. Shelbyville Business Men's Assn. vs. L. & N. R. R. Co., 37 I. C. C. Rep. 675, 678, 681. Traffic Bureau of Knoxville, Tenn., vs. C. N. O. & T. P. Ry. Co., 37 I. C. C. Rep. 687, 691. Cement to Long Island Points, 37 I. C. C. Rep. 694, 695. Paducah Board of Trade vs. C. B. & Q. R. R. Co., 37 L C. C. Rep. 743, 756. Henderson Commercial Club vs. I. C. R. R. Co., 36 I. C. C. Rep. 20, 28. The Iron & Steel Cases, 36 I. C. C. Rep. 86, 95. Mid-continent Oil Rates, 36 I. C. C. Rep. 109, 117. Stopping of Cars in Transit to Complete Loading, 36 I. C C. Rep. 130. 131. INTERSTATE COMMERCE LAW 17 Ladd & Co. vs. Gould S. W. Ry. Co., 36 I. C. C. Rep. 179, 182. Nebraska Railway Commission vs. C. B. & Q, R. R. Co.. 36 I. C. C. Rep. 219, 221. Class and Commodity Rates from Louisville, 36 I. C. C. Rep. 317, 320. Through Rates from Buffalo-Pittsburgh Territory, 36 I. C, C. Rep. 325, 327. Import and Domestic Rates, 36 I. C. C. Rep. 389, 399. Rates on Bituminous Coal, 36 I. C. C. Rep. 401, 407. Globe Grain & Milling Co. vs. A. T. & S. F. Ry. Co., 36 I. C. C. Rep. 662, 665. Cape Girardeau Portland Cement Co. vs. St. L. & S. F. R. R. Co., 35 I. C. C. Rep. 109, 114. Rates on Cotton Piece Goods, 34 I. C. C. Rep. 41, 43. Grand Rapids Plaster Co. vs. L. S. & M. S. Ry. Co., 34 I. C. C. Rep. 202, 205. Eastbound Transcontinental Cotton Rates, 34 I. C. C. Rep. 248, 250. Corp. Comm. of New Mexico vs. A. T. & S. F. Ry. Co., 34 I. C. C. Rep. 292, 301. Memphis Grain & Hay Assn. vs. I. C. R. R. Co., 34 I. C. C. Rep. 315, 318. Nebraska State Railway Comm. vs. U. P. R. R. Co., 34 I. C. C. Rep. 381, 382. Montrose & Delta Counties Freight Rate Assn. vs. D. & R. G. R. R. Co., 34 I. C. C. Rep. 393, 394. Montrose & Delta Counties Freight Rate Assn. vs. D. & R. G. R. R. Co., 34 I. C. C. Rep. 409, 410. Massie & Pierce Lumber Co. vs. N. & W. Ry. Co., 33 L C. C. Rep. 14, 22. City of Nashville vs. L. & N. R. R. Co., 33 1. C. C. Rep. 76, 77. Coffeyville Mercantile Co. vs. M. K. & T. Ry. Co., 33 I. C. C. Rep. 122, 124. Financial Relations, etc., L. & N. R. R. Co., 33 I. C. C. Rep. 168. Bituminous Coal Rates to Baltimore and Other Points, 33 I. C. C. Rep. 307, 309. Lumber Rates to Central Freight Assn. and Trunk Line Territories, 33 I. C. C. Rep. 322, 323. Rosenblatt & Sons vs. A. A. R. R. Co., 33 L C. C. Rep. 324, 325. Eastern Fruit Growers' Assn. vs. B. & O. R. R. Co., 33 I. C. C. Rep. 343, 348. Rates on Grain and Grain Products, 33 I. C. C. Rep. 374, 375. Grain Rates from Milwaukee, 33 I. C. C. Rep. 417, 418. Ownership of Dallas, Portland & Astoria Nav. Co., 33 I. C. C. Rep. 462, 465. Daly Coal Co. vs. C. & A. R. R. Co., 33 L C. C. Rep. 467, 468. Doran & Co. vs. N. C. & St. L. Ry. Co., 33 I. C. C. Rep. 523, 530. Portland Chamber of Commerce vs. C. M. & St. P. Ry. Co., 32 I. C. C. Rep. 188, 190. 18 AMERICAN COMMERCE ASSOCIATION Cement Rates to Stations on Midland Continental R. R., 32 I. C. C. Rep. 540, 541, 542. Sugar Rates from New Orleans, 32 I. C. C. Rep. 606, 610. Bowling Green Business Men's Assn. vs. L. & N. R. R. Co., 31 I. C. C. Rep. 1, 4. Financial Transactions of N. Y., N. H. & H. R. R. Co., 31 I. C. C. Rep. 32, 41. Switching at Galesburg, 111., 31 I. C. C. Rep. 294, 297. Louisiana Sugar Planters' Assn. vs. I. C. R. R. Co., 31 I. C. C. Rep. 311, 315. Fourth Section Violations in Rates on Sugar, 31 I. C. C Rep. 511, 515. New Orleans Live Stock Exchange vs. L. & N. R. R. Co., 31 L C. C. Rep. 609, 611, 612. Stuarts Draft Milling Co. vs. S. Ry. Co., 31 L C. C. Rep. 623, 627. Pacific Coast Gypsum Co. vs. O. W. R. R. & N. Co., 30 L C. C. Rep. 135, 138. Fourth Section Violations in the Southeast, 30 I. C. C. Rep. 153, 156. Seattle Shingle Co. vs. C. M. & St. P. Ry. Co., 30 L C. C. Rep. 364, 369. ^ t ^ ^ Brownsville, Tex., Class and Commodity Rates, 30 L C. C. Rep. 479, 483. Richmond Chamber of Commerce vs. S. A. L. Ry. Co., 30 I. C. C. Rep. 552, 558. Omaha Grain Exchange vs. N. P. Ry. Co., 30 L C. C. Rep. 572, 579 Page Milling Co. vs. N. & W. Ry. Co., 30 L C. C. Rep. 605, 607. Rates on Tropical Fruits from Gulf Ports, 30 L C. C. Rep. 621, 630. n T ^ ^ Seattle Chamber of Commerce vs. G. N. Ry. Co., 30 1. C. C. Rep. 683, 690. ^ ^ Atlanta Freight Bureau vs. N. C. & St. L. Ry. Co., 29 L C. C. Rep. 476, 495. Emlenton Petroleum Rates, 29 I. C. C. Rep 519, 521. Norman Lumber Co. vs. L. & N. R. R. Co., 29 I. C. C. Rep. 565, 577. ^ ^ Paducah Board of Trade vs. L C. R. R. Co., 29 L C. C. Rep. 583, 585. ^r. r r^ r^ Lumber Rates from Oregon and Washmgton, 29 L C. C Rep. 609, 617. ^ ^„ Fort Scott Industrial Assn. vs. St. L. & S. F. R. R. Co., 29 I. C. C. Rep. 629 631. Refrigeration Charges on Fruits and Vegetables, 29 I. C. C. Rep. 653, 654. ^. . ^ ^ t^ City of Crawford vs. C. & N. W. Ry. Co.. 25 I. C. C. Rep 259 264 McCullough vs. L. & N. R. R. Co., 25 I. C. C. Rep. 48, 49. Farrar Lumber Co. vs. N. C. & St. L. Ry. Co., 25 I. C. C. Edwards & Bradford Lumber Co. vs. C. B. & Q. R. R. Co., 25 I. C. C. Rep. 93, 95. „ ^ r ^t t Philadelphia Veneer & Lumber Co. vs. C. R. R. Co. of N. J., 25 I. C. C. Rep. 653, 654. INTERSTATE COMMERCE LAW 19 In re Advances in Rates — Eastern Case, 20 I. C. C. Rep. . 243, 259. Morgan Grain Co. vs. A. C. L. R. R. Co., 19 I. C. C. Rep. 460, 463. Wilson Saddlery Co. vs. C. & S. Ry. Co., 18 I. C. C. Rep. 220 221. Southern Timber & Land Co. vs. S. P. Co., 18 I. C. C. Rep. 232. Schoenhofen Brewing Co, vs. A. T. & S. F. Ry. Co., 17 I. C. C. Rep. 329. Indianapolis Freight Bureau vs. P. R. R. Co., IS I. C. C. Rep. 567, 576. I. C. C. vs. C. G. W. Ry. Co., 209 U. S. 108, 119. (4) Rail-and-Water Competition. Where routes are operated inclusive of a water movement in connec- tion with the rail haul, the effect of the lower charge for water carriage may militate against the rate of an all-rail competitive route, and when such a situa- tion exists and the competition of the rail-and-water route is genuine and not pretential, the effect of such com- petition should be considered in determining the relative reasonableness of such rates. But in a case where the rail and water competition at one point exists to a sub- stantially different extent than at another point, the rates to the former point may not be used as a measure of the reasonableness of the rates to the latter point. It was in recognition of this principle that the Commission dis- missed the complaint in Georgetown Railway & Light Co., vs. N. & W. Ry. Co., 22 I. C. C. Rep. 144, 146. Massie & Pierce Lumber Co. vs. N. & W. Ry. Co., 33 I. C. C. Rep. 14, 18. Eastern Fruit Growers' Assn. vs. B. & O. R. R. Co., 33 I. C. C. Rep. 343, 351. Rates on Asphaltum, Barley, Beans and Canned Goods, 33 I. C. C. Rep. 480, 485. The Twin Cities Cases, 33 I. C. C. Rep. 577, 582. Proportional Rates on Grain Products from Omaha, 33 I. C. C. Rep. 621, 624. Financial Investigation of N. Y., N. H. & H. R. R. Co., 31 I. C. C. Rep. 32. 67. Fourth Section Violations in the Southeast, 30 I. C. C, Rep. 153. 280. 20 AMERICAN COMMERCE ASSOCIATION Brownsville, Tex., Class and Commodity Rates, 30 I. C. C. Rep. 479, 483. Meridian Fertilizer Factory vs. L. & N, R. R. Co., 30 I. C. C. Rep. 494, 495. In re Advanced Rates for the Transportation of Flaxseed, 23 I. C. C. Rep. 272, 275. (5) Water Competition. A water-compelled rate is never a measure of the reasonableness of an all-rail rate, but the adjustment of freight rates may not overcome such natural advantage of one locality over another as water competition and climatic conditions. Cohen & Co. vs. Mallory S. S. Co., 23 I. C. C Rep. 374, 377. Truck Growers' Assn. vs. A. C. L. R. R. Co., 20 I. C. C. Rep. 190, 193, 194. In the Lindsay case, the Commission held that while water competition may be availed of by a carrier as its justification and excuse for rates that are lower than would otherwise be lawful under sections 2, 3, or 4 of the Act, the existence of such competition is not in itself a ground upon which a shipper may demand a lower rate. It is the privilege of a carrier, in its own interest, to meet such competition, but it is not the privilege of a shipper to de- mand less than normal rates because of the existence of a competition which the carrier in its own behalf does not choose to meet. Lindsay Bros. vs. B. & O. S. W. R. R. Co., 16 I. C. C. Rep. 6,8. The rule followed by the Commission in most cases has been that there may be water competition at each of two points, and yet a difference in rate to those points may be justified. The carriers can not be compelled, as a matter of law, to meet water competition; they do it of their own volition, or whenever the same is potent enough to com- pel them to do so in order to secure the traffic. In each instance the carrier determines for itself whether such INTERSTATE COMMERCE LAW 21 water competition has sufficient influence on the traffic to make it reduce its rates. Bainbridge Board of Trade vs. Louisville, Henderson & St. Louis Ry. Co., 15 L C. C. Rep. 586, 594. Water competition and its effect upon rail-rates has been a troublesome issue for the Commission almost from the inception of its administration of the Act to Regulate Commerce. The most notable investigations involving this element in rate-making have been the transcontinental rate cases, with the several sub-joined controversies re- lating to the intermediate adjustments. Water competition always introduces into a case in- volving the reasonableness of rail-rates made to meet such competition, an unsatisfactory basis of rate-comparison. The cost of water transportation and the potential effect of water competition are culpable factors in rate-issues. The movement of traffic by water involves different ele- ments of cost from those affecting rail transportation. Water carriage involves relatively high terminal costs, an entire absence of maintenance costs for its highway, and extremely low cost of motive power. In addition to these factors inducing low water rates, the small amount of local traffic on the water and the general long-haul nature of water-borne freights further depress the water rates to an extremely low basis. To meet these conditions of water competition the rail carrier must lower its rates on the competitive traffic, but not, In any sense, to the level of the water rates, for the rail service retains a value of expedition, protection and safety of property in trans- portation that water-bottom traffic may never enjoy. This difference in character of the two services necessarily dif- ferentiates water and rail rates. The Interstate Commerce Commission has had to deal with the effect of both actual and potential water competi- ::ax co^3.:i?.: lATIOX ? Act in IS" in the CouBnis- rr m com- irrr: :: :he r. ab- ;•- was a ri:e. n de- east me >jiio in a J^viissis- es, both fa:^ ' - - '--e sit. r- : t rival with in rate alize INTERSTATE C030:z: Z LAW 23 DcsEiiS TKTth :h* zzt—iz- zz Trzicr oocirperiikG iad its cffecT Kai£* c^se, i L IL C-nn. a L c c 229. J4S. In cadi ■IMMML^BI Empire Coke Co. vs. B. & S. R. R. Co., 31 L C. C. Rep. 573, 579, 581. 62 AMERICAN COMMERCE ASSOCIATION Stuart's Draft Milling Co. vs. S. Ry. Co., 31 I. C. C. Rep. 623, 625. Chattanooga Log Rates, 30 I. C. C. Rep. 36, 39. Wichita Business Assn. vs. A. T. & S. F. Ry. Co., 30 I. C. C. Rep. 45, 52. Grain Rates to Pittsburgh, Pa., 30 I. C. C. Rep. 382, 391. Merchants & Mfrs. Assn. vs. C. R. R. Co. of N. J., 30 I. C. C. Rep. 396, 397. Chamber of Commerce of Washington, D. C, vs. B. & O. R. R. Co., 30 I. C. C. Rep. 446, 449. Judd & Detweiler, Inc., vs. B. & O. R. R. Co., 30 I. C. C. Rep. 455, 457. Rates on Bananas from Gulf Ports, 30 I. C. C. Rep. 510, 515. Augusta Cotton Exchange & Board of Trade vs. S. Ry. Co., 30 I. C. C. Rep. 704, 706. Boldt Co. vs. C. R. I. & P. Ry. Co.. 27 I. C. C. Rep. 11, 13. State of Kansas vs. A. T. & S. F. Ry. Co., 27 I. C. C. Rep. 673, 689. Highland Park Mfg. Co. vs. S. Ry. Co., 26 I. C. C. Rep. 67, 70. Edgar & Son vs. L. & N. R. R. Co., 26 I. C. C. Rep. 181, 182. Esson Granite Co. vs. So. Ry. Co., 26 I. C. C. Rep. 449, 450. McGregor-Noe Hardvirare Co. vs. St. L. & S. F. R. R. Co., 26 I. C. C. Rep. 466. Dupont De Nemours Powder Co. vs. C. R. R. Co. of N, J., 25 I. C. C. Rep. 19, 20. Arlington Heights Fruit Exchange vs. S. P. Ry. Co., 22 I. C. C. Rep. 149, 159. Audley Hill & Co. vs. S. Ry. Co., 20 I. C. C. Rep. 225, 226. Commercial Club of Omaha vs. S. P. Ry. Co., 20 I. C. C. Rep. 631, 636. Millar vs. N. Y. C. & H. R. R. R. Co., 19 I. C. C. Rep. 78. Gamble-Robinson Commission Co. vs. St. L. & S. F. R. R. Co., 19 I. C. C. Rep. 114, 116. Morgan Grain Co. vs. A. C. L. R. R. Co., 19 I. C. C. Rep. 460, 468. Clark Co. vs. Buflfalo & Susquehanna Ry. Co., 18 I. C. C. Rep. 380, 381. Bartles Oil Co. vs. C. M. & St. P. Ry. Co., 17 I. C. C. Rep. 146, 148. Memphis Cotton Oil Co. vs. I. C. R. R. Co., 17 I. C. C. Rep. 313, 318. Kiser Co. vs. C. of Ga. Ry. Co., 17 I. C. C. Rep. 430, 440. Sunderland Bros. Co. vs. P. M. R. R. Co., 16 I. C. C. Rep. 450, 451. Green Bay Business Men's Assn. vs. B. & O. R. R. Co., 15 I. C. C. Rep. 59, 63. Darling & Co. vs. B. & O. R. R. Co., 15 I. C. C. Rep. 19, 80. Burgess vs. Transcontinental Freight Bureau, 13 I. C. C. Rep. 668, (m. In re Transportation of Wool, Hides, andi Pelts. 23 I. C. C. Rep. 151, 157. INTERSTATE COMMERCE LAW 63 In re Advances for the Transportation of Fresh Meats, 23 I. C. C. Rep. 652, 655. Traugott. Schmidt & Sons vs. M. C. R. R. Co., 23 I. C. C. Rep. 684, 686. Fairmont Creamery Co. vs. C. B. & Q. R. R. Co., 22 I. C. C. Rep. 252, 254. Milburn Wagon Co. vs. L. S. & M. S. Ry. Co., 22 I. C. C. Rep. 93, 101. Albree vs. B. & M. R. R. Co., 22 I. C. C. Rep. 303, 315. Consumers' Ice Co. vs. A. T. & S. F. Ry. Co., 18 I. C. C. Rep. 277, 278. Gamble-Robinson Commission Co. vs. St. L. & S. F. R. R. Co., 19 I. C. C. Rep. 114. Breese-Trenton Mining Co. vs. W. R. R. Co., 19 I. C. C. Rep. 598, 600. Andy's Ridge Coal Co. vs. So. Ry. Co., 18 I. C. C. Rep. 405, 410. Acme Cement Plaster Co. vs. L. S. & M. S. Ry. Co., 17 I. C. C. Rep. 30, 35. Liebold vs. D. L. & W. R. R. Co., 17 I. C. C. Rep. 503, 505. Avery Mfg. Co. vs. A. T. & S. F. Ry. Co., 16 I. C. C. Rep. 20, 24. Indianapolis Freight Bureau vs. C. C. C. & St. L. Ry. Co., 16 I. C. C. Rep. 56, 72. Green Bay Business Men's Assn. vs. B. & O. R. R. Co., 15 I. C. C. Rep. 59, 64. Beatrice Creamery Co. vs. I. C. R. R. Co., 15 I. C. C. Rep. 109, 128. Marshall Oil Co. vs. C. & N. W. Ry. Co., 14 I. C. C. Rep. 210. 214. Anthony Wholesale Grocery Co. vs. A. T. & S. F. Ry. Co., 13 I. C. C. Rep. 605, 608. Five Per Cent Case, 31 I. C. C. Rep. 351, 353. Rock Springs Distilling Co. vs. I. C. R. R. Co., 29 I. C. C. Rep. 18, 24. Youngstown Sheet & Tube Co. vs. P. & L. E. R. R. Co., 29 I. C. C. Rep. 428, 431, 435. Lumber Rates from Local Points to Chattanooga, 29 I. C. C. Rep. 646. In summary, therefore, of the principle, it should be stated that an advance in a long-established rate at once suggests the propriety of an inquiry of the carrier for a statement of its reasons for making the advance. But in making this explanation, under the apparent meaning of the decision of the court in I. C. C. vs. C. G. W. R. Co., 209 U. S. 118, the carrier is not under the necessity of over- coming the technical w^eight and force of a presumption of law^ that the previously existing lower rate was a rea- 64 AMERICAN COMMERCE ASSOCIATION sonable rate. The long continuance of a lower rate may be said to raise a presumption of fact that the advanced rate is unreasonable. But this in a sense is no presump- tion at all, for it can not carry us beyond the actual tend- ency of the fact itself to produce that belief in the mind of the investigator. The fact that the lower rate has long remained undisturbed has strong probative value. Considered merely as evidence, such a rate history, in the absence of some explanation that satisfies the judg- ment of the propriety and need of an increase in rates, would ordinarily have great force. But in every case the Commission must consider and weigh all the other facts of record before arriving at the conclusion that the increase in rates was unreasonable and therefore unlawful. Compare cases holding that voluntary rate established to meet competition is not a measure of reasonableness: Coal and Coke Rates in the Southeast, 35 I. C. C. Rep. 187, 197. L. & N. R. R. Co. vs. I. C. C, 195 Fed. Rep. 541, 558. Chamber of Commerce, Ashburn, Ga., vs. G. S. & F. Ry. Co., 23 I. C. C. Rep. 140, 149. Simon Cook Co. vs. Wabash R. R. Co., 21 I. C. C. Rep. 563, 564. Georgia-Carolina Brick Co. vs. S. Ry. Co., 20 I. C. C. Rep. 148, 149. Audley Hill & Co. vs. S. Ry. Co., 20 I. C. C. Rep. 225, 226. Pabst Brewing Co. vs. C. M. & St. P. Ry. Co., 19 I. C. C. Rep. 584, 587. Breese-Trenton Mining Co. vs. Wabash R. R. Co., 19 I. C. C. Rep. 598, 600. Frederich & Kempe Co. vs. N. Y. N. H. & H. R. R. Co., 18 I. C. C. Rep. 481, 484. Commercial Club of Omaha vs. Anderson & Saline River Ry. Co., 18 I. C. C. Rep. 532, 536. LaSalle Paper Co. vs. M. C. R. R. Co., 16 I. C. C Rep. 149, 150. Burgess vs. Transcontinental Frt. Bu., 13 I. C. C. Rep. 668, 677. § 15. Readjustment of Rate Relationship in Regional Rate Structures. Where the relationship of rates, even in regional rate structures of long standing adjustment, are repugnant to INTERSTATE COMMERCE LAW 65 the Act to Regulate Commerce, or violative of any right secured by law to the shipper, the Commission, upon af- firmative showing, has not hesitated to correct the wrong despite any consequent disturbance of rate related points. In such cases the matters in controversy must be fully presented and subjected to the utmost scrutiny. 1915 Western Rate Advance Case, Part II, 37 I. C. C. Rep. 114. 1915 Western Rate Advance Case, 35 I. C. C. Rep. 497. Five Per Cent Case, 31 I. C. C. Rep. 351. See also: Bituminous Coal Operators vs. P. R. R. Co., 23 I. C. C. Rep. 385, 391. Indianapolis Freight Bu. vs. C. C. C. & St. L. R. R. Co., 23 I. C. C. Rep. 195, 203. Ashgrove Cement Co. vs. Atchison, etc., R. R. Co., 23 I. C. C. Rep. 519, 526. Chamber of Commerce of Newport News, Va., vs. S. Ry. Co., 23 I. C. C. Rep. 345, 356. N. O. Bd. of Trade vs. G. H. & S. A. Ry. Co., 23 I. C. C. Rep. 210, 213. N. O. Bd. of Trade vs. L. & N. R. R. Co., 23 I. C. C. Rep. 429, 431. Sioux City Terminal Elevator Co. vs. C. M. & St. P. Ry. Co., 23 I. C. C. Rep. 98, 109. Traugott Schmidt & Sons vs. M. C. R. R. Co., 23 I. C. C. Rep. 684, 686. Chattanooga Feed Co. vs. A. G. S. R. R. Co., 22 I. C. C. Rep. 480, 484. Milburn Wagon Co. vs. L. S. & M. S. Ry. Co., 22 I. C. C. Rep. 93, 101. Victor Mfg. Co. vs. So. Ry. Co., 21 I. C. C. Rep. 222, 226. Re Investigation and Suspension Docket No. 24, 21 I. C. C. Rep. 546, 549. Texas Brg. Co. vs. Atchison, etc., Ry. Co., 21 I. C. C. Rep. 171. Natl. Petro. Assn. vs. A. A. R. R. Co., 14 I. C. C. Rep. 272. Natl. Wholesale Lumber Dealers' Assn. vs. A. C. L. R. R. Co., 14 I. C. C. Rep. 154, 163. Fellows Coal, etc., Co. vs. M. P. Ry. Co., 12 I. C. C. Rep. 481. Coml., etc., Assn., etc., vs. C. of Ga. Ry. Co., 12 I. C. C. Rep. 375. Paper Mills Co. vs. P. R. R. Co., 12 I. C. C. Rep. 438, 445. Dallas Frt. Bu. vs. M. K. & T. M. Ry. Co., 12 I. C. C. Rep. 427, 430. Hastings Malting Co. vs. Chicago, etc., R. R. Co., 11 I. C. C. Rep. 675, 682. 17 — 6 66 AMERICAN COMMERCE ASSOCIATION Grain Shippers' Assn. vs. I. C. R. R. Co., 8 I. C. C Reo 158, 175. ^■ Dallas Frt. Bu. vs. M. K. & T. Ry. Co., 8 I. C. C. Rep. Daniels vs. Chicago, etc., R. R. Co., 6 I. C. C. Rep. 458, 483. Rice, etc., vs. W. N. Y., etc., R. R. Co., 2 I. C. C. Rep. 389, 2 I. C. Rep. 496. Lincoln Board of Trade vs. Mo. Pac. R. R. Co. 2 I C C Rep. 155, 2 I. C. Rep. 98. Detroit Board of Trade vs. G. T. R. R. Co., 2 I. C C Reo 315, 2 I. C. Rep. 199. > ^ ^- ^. v.. is.ep. § 16. Lands owned by Carriers. The fact that mineral, ore or other lands are owned by carriers and operated through independent agencies is not a competent factor in determining the reasonable- ness of such carriers' rates charged the public. City of Spokane vs. N. P. Ry. Co., 15 I. C. C. Rep. 376, 407, 408. ^ See also: In the Matter of Rates, Practices, Rules, and Regulations Governing the Transportation of Anthracite Coal, 35 I. C. C. Rep. 220, 225. § 17. Manufactures — Differential Rates on Products of. It is the general rule, to which there is no objection, that carriers may make a reasonable differential between the rates on the raw material and the rates on the manu- factured product thereof, the higher rate being apphcable to the product. Not alone is this desirable from the stand- point of encouraging industry and trade, with its conse- quent beneficial results to the carriers, but there is a cognizable transportation difference between the raw material and its manufactured product, for the latter or- dinarily involves greater risk to the carrier, requires more care in transit and is of greater value than the base ma- terial. Thus, it is patent, that these elements must be INTERSTATE COMMERCE LAW 67 considered in determining the relative reasonableness of industrial and manufacturing rates. Official Classification Ratings, 37 I. C. C Rep. 166, 183. Straw Rates from St. Louis to Anderson, Ind., 36 I. C. C. Rep. 30, 33. The Iron and Steel Cases, 36 I. C. C. Rep. 86, 107. Oklahoma Traffic Assn. vs. A. & S. Ry. Co., 36 I. C. C. Rep. 329, 342. Glucose from Chicago, 36 I. C. C. Rep. 379, 383. Maley & Wertz vs. L. & N. R. R. Co., 36 I. C. C Rep. 657, 658. § 18. Minimum Rates. A minimum weight and charge for the transportation of less-than-carload shipments is deemed reasonable and proper by the Commission, and justified by the expense attendant upon the handling of such shipments, which is practically the same irrespective of size or bulk or weight. Wrigley vs. C. C. C. & St. L. R. R. Co., 10 I. C. C. Rep. 412. But the Commission has no power to prescribe a mini- mum charge for any service or the maximum service for any charge. Rates in Chicago Switching District, 34 I. C. C. Rep. 234, 241. See also: Memphis Freight Bureau vs. So. Ry. Co., 36 I. C. C. Rep. 281, 284. Lighterage and Storage Regs, at N. Y., 35 L C. C. Rep. 47, 63, 64. Regulations as to Storage of Dairy Products, 35 1. C. C. Rep. 469, 470. Larkin Co. vs. E. & W. Transp. Co., 34 L C. C. Rep. 106, 108. National Assn. of Ice Cream Mfrs. vs. Adams Ex. Co., 33 I. C. C. Rep. 411, 413. On July 1, 1911, the carriers operating in Official Classi- fication Territory sought to increase the minimum charge and otherwise change the rules regarding single packages 68 AMERICAN COMMERCE ASSOCIATION and small lots of freight. The increase in charge was from 25 to 35 cents. This increase was provided in Rules 15-B and 15-C of the Official Classification then efifective. Rule 15-B. "A small lot of freight of different classes will be taken at actual weight and at the class rate for each article, provided that the aggregate charge for the shipment shall be not less than for 100 pounds at first class rate; and in no case shall the charge for the entire consignment be less than 35 cents." The history of the minimum charge of L. C. L. or small lot shipments is significant. Since the passage of the original act to regulate com- merce, in 1887, at which time the Official Classification came into existence, the minimum charge on L. C. L. shipments in practically all official classification territory has been 25 cents. A local regulation of the State of New Jersey caused the establishment and maintenance of a minimum charge of 12 cents on single packages or small consignments of freight within that state, and by excep- tions to the classification was extended in application to certain points in Pennsylvania contiguous to the New Jersey-Pennsylvania state line and points in New Jersey. A minimum charge of 22 cents, which was the first class rate, was in effect between New York City and Phila- delphia, from April 1, 1887, to January 1, 1908. Beginning February 15, 1912, the Western Classifica- tion has provided a 25 cents minimum charge on single shipments. Efforts have been made by the carriers in several states recently to advance the minimum charge on single ship- ments, but the state commissions have declined to per- mit any advance in the present minimum of 25 cents. The Interstate Commerce Commission, in denying the increase in Official Classification Territory, heM that the INTERSTATE COMMERCE LAW 69 carriers, in their attempt to show the 25-cent minimum charge unremunerative, failed to show sufficient justifica- tion for the proposed advance. The question, however, is of importance to the small dealer who distributes directly to the consumer. It would amount to a disturbance of conditions which have become settled during the 25-year maintenance of the 25-cent mini- mum. It would create undue discrimination between job- bing centers situated near state lines, by advancing the interstate minimum charge and retaining the lower pres- ent charge on state shipments. This latter situation, were it to exist, would be repugnant to the principle that car- riers may not haul a particular class of traffic or traffic for a particular community at less than cost of the service and recoup themselves from the charges levied against other traffic. This would become an aggravated situation with respect to New Jersey jobbers who enjoy a state minimum charge of 12 cents. See also: In re Investigation and Suspension Dockets 48 to 48-E, 22 I. C. C. Rep. 328. § 19. Movement of Shipments — Rate must Apply Accord- ing to. In the absence of misrouting by carrier, rates must apply via the route of the actual movement of the ship- ment: I. C. C. Confr. Ruling Bull. No. 6, Ruling No. 147. See also: Hill & Webb vs. M. K. & T. Ry. Co., 16 I. C. C. Rep. 569. (1) Permissible Diversions. It will be noted that the diversion referred to in the above conference ruling re- 70 AMERICAN COMMERCE ASSOCIATION suited from the interference of the shipper in directing new routings. A different rule obtains where the carrier re- tains custody of shipment but is unable, from causes be- yond its control, to forward shipment in accordance with original routing. Whenever, by reason of blockade upon the line of a carrier resulting from storm, washout, wreck, or similar casualty, it becomes necessary for it to divert to the line of another carrier passengers or freight that are in transit, the carrier so diverting its business should pay the car- rier or carriers upon whose train such passengers or freight are carried, regular tariff fares or rates from and to the points between which it or they transport such diverted traffic except that if the carrier accepting such diverted traffic is a participant in a joint tariff in which the diverting line is also a participant and under which the diverted traffic is being moved, settlement may be made on basis of the division of the through joint fare or rate. I. C. C. Confr. Bull. No. 6, Ruling No. 213-A. A carrier accepted a carload shipment for movement to a point beyond its line. After delivering the shipment to a connection at a junction point it was advised that the connecting line had been closed by floods. The initial carrier accepted the return of the car from that line and ordered it forward to destination via another route carrying higher rates, taking this action without instructions from the shipper. The Commission declared that the initial line was responsible to the shipper for the resulting increase in the transportation charges. I. C. C. Confr. Rulings Bull. No. 6, Ruling No. 83. Compare : Rulings Nos. 52, 83, 138, 146, 147, 183, and 213-A. INTERSTATE COMMERCE LAW 71 § 20. Needs of Shippers. While the needs of shippers in the way of profits in business is not to be made the basis of reasonableness in rates, the Commission has always deemed the condition of an industry a pertinent fact to be considered in de- termining the reasonableness of the rates it is required to pay the carriers, not contenting itself with the test alone of the reasonableness of a rate that the traffic moves freely under it. Coal Switching Reparation Cases at Chicago, 36 I. C. C. Rep. 226, 232. Newport Mining Co. vs. C. & N. W. Ry. Co., 33 I. C. C. Rep. 645, 656. Superior Commercial Club vs. G. N. Ry. Co., 25 I. C. C. Rep. 342, 348. Oregon & Washington Lumbei Mfrs. Assn. vs. U. P. R. R. Co., 14 I. C. C. Rep. 1, 14. See also: Portland Chamber of Commerce vs. O. R. R. & N. Co., 19 I. C. C. Rep. 265, 280. City of Spokane vs. N. P. Ry. Co., 19 I. C. C. Rep. 162, 170— each considering cost of production in determining reasonableness of rates. Refer to 1911 Western Advance Rate Case, 20 I. C. C. Rep. page 350, for discussion of this subject by the Com- mission. In re Transportation of Wool, Hides, and Pelts, 23 I. C. C. Rep. 151, 156. R. R. Comm. of Kansas vs. A. T. & S. F. Ry. Co., 22 I. C. C. Rep. 407, 410. In re Investigation of Advances in Rates on Grain, 21 I. C. C. Rep. 22, 35. Jennison Co. vs. G. N. Ry. Co., 18 I. C. C. Rep. 113, 121. Florida Fruit & Vegetable Assn. vs. A. C. L. R. R. Co., 17 I. C. C. Rep. 552, 560. Compare : Boileau vs. P. & L. E. R. R. Co., 22 I. C. C. Rep. 640, 647. Railroad Commission of Nevada vs. S, P. Ry. Co., 21 I. C. C. Rep. 329, 368. 72 AMERICAN COMMERCE ASSOCIATION Commercial Club of Omaha vs. A. & S. Ry. Co., 19 I. C. C. Rep. 419, 421. Hitchman Coal & Coke Co. vs. B. & O. R. R. Co., 16 I. C. C. Rep. 512, 519. § 21. Nonconfiscatory Rate, not Necessarily a Reasonable One. A rate or fare that is merely nonconfiscatory may fall short of being one which is entirely just and reasonable. Trier vs. C. St. P. M. & O. Ry. Co., 30 I. C. C. Rep. 352, 355. § 22. Obsolescent Factors. If the accounts of a railway are kept according to the present requirements of the Commission the cost of con- struction as shown by its books can contain no factor of obsolescence, for when a thing goes out of service the value of that thing must be written off. This has not been uniformally done with respect to construction ac- counts in the past, but there always is this element of obsolescence in the development of a railway. Advances in Rates — Eastern Case, 20 I. C. C. Rep. 243, 271. § 23. Rates Distinguishing between "Prepaid" and "Col- lect" Shipments Unlawful. It is a carrier's right to demand prepayment of freight charges on all shipments, but it may not distinguish be- tween those who pay in advance and those who do not. For a carrier to accept a shipment without prepayment' of the freight charges is merely an extension of credit to the consignor. To make rates based upon its waiver of the right to collect freight charges at the time of ship- ment is unlawful, and therefore no question of reasonable- ness may arise from such grounds. Boise Commercial Club vs. Adams Ex. Co. et al., 17 I. C. C. Rep. 115, following 5 I. C. C. Rep. 1, and 5 I. C. C Rep. 13. INTERSTATE COMMERCE LAW 73 Thus, it was said by the Commission of special whiskey- prepaid rates, in the Express Rates Case: "The express service bears a very intimate per- sonal relation to the needs of every householder. The citizen who seldom or never ships by freight is a frequent patron of the express. He knows nothing of classifications or of rates, but he is keenly ahve to discriminations and to unfair treatment. So that when he learns from a merchant whom he patronizes that it will be to his advantage to let the merchant pay the express charges, and when he finds that the parcel is carried for less than he can secure its transportation, he does not know that an obscure provision of a cryptic classification makes this possi- ble; he only knows that he is somehow discriminated against. In the development of large commercial enterprises, the traffic managers who control a heavy tonnage have a keen eye to the framing of such documents. They are almost always present when they are constructed or revised, each intent upon securing some provision that will work to the ad- vantage of his particular line. But the ordinary citi- zen knows nothing of the nature or necessity of .the classification. So there gradually creep into such documents provisions favorable to this or that inter- est which, standing undisputed and unnoticed, in time come to be considered as vested rights, and which are defended with all the vigor and earnestness of virtue assailed. "Of this latter character are the provisions govern- ing the shipment of 'liquor, n. o. s.,' which does not include wine, or liquid medicines, nor drugs, nor al- cohol, nor liquid chemicals. If the charges on a ship- ment of whiskey are prepaid it may be shipped for less than if shipped collect. The mail-order house ■that advertises to ship whiskey charges prepaid knows this, but the ordinary man does not. There are, therefore, two rates on the same commodity — one for the shipper who prepays the charge and a 74 AMERICAN COMMERCE ASSOCIATION hig'her one for the consumer who pays the charge on delivery." In re Express Rates etc., 24 I. C. C. Rep. 380, 398, 399. § 24. Public Policy — Relations of the Carriers and the PubUc. The relations of the shipping public and the carriers have been the subject of constant and learned discussion concomitantly v^ith all movements in the interest of con- trol of regulation of the carriers. As long ago as the seventeenth century, Lord Chief Justice Hale announced the principle that when one devotes his property, as for example, a ferry, to the common use of all the king's sub- jects passing that way and upon a common charge for the service, it becomes a thing of public interest and therefore ought to be subject to public regulation. De Jure Maris, 1 Harg. Law Tracts. 6. This rule of the common law underlies practically all our constitutional and legislative provisions respecting common carriers; and it is now firmly settled, both by the courts and through legislation, that railroads, although constructed with private capital, are public highways sub- ject to public control. In constructing and maintaining such a highway under public sanction, a railroad com- pany really performs a function of the state . Olcott vs. Supervisors, 16 Wall. 678, 694. ' L. & N. R. R. Co. vs. Kentucky, 161 U. S. 677, 696. L. S. & M. S. Ry. Co. vs. Ohio, 173 U. S. 285, 302. Unlike many other countries, we have committed the performance of this public function to companies of pri- vate ownership. Practically the entire railroad mileage of the country, aggregating more than one-third the mile- age of the world, has been constructed with private capital. But the national government, in many instances, has do- INTERSTATE COMMERCE LAW 75 nated the rights of way for railroads and in addition has made them other large grants of land. States, counties, and municipalities have made similar grants and have otherwise aided railway companies by contributions of funds, by issuing bonds, or by guaranteeing the bonds of such companies. The public, through governmental agencies, has therefore played no small part in the develop- ment of our railroad system. Nevertheless the great burden of creating these avenues of communication and transportation has been borne by private investors; and not infrequently they have ventured their capital in such enterprises, by extending through undeveloped territories lines that at the time offered little prospect of substantial returns for many years to come. The general duties that common carriers owe to the public are well understood. They must provide a prompt and safe service and they are held to a strict responsibility for injuries to travelers using their facilities and for loss of or damage to property which they undertake to carry. They are also under the obligation not to charge an ex- cessive rate for the service ; this was the rule at common law and it has been emphasized by specific legislation. On the other hand, we can not doubt that the policy of inviting and authorizing the performance of this public function by privately owned companies involves obliga- tions on the part of the public to the owners of these properties. Those who invest their funds in railroad shares are, of course, charged with responsibility of secur- ing for their properties honest and capable management. Investors in railroad securities, like investors in other securities, must bear the consequences of dishonesty or inefficiency on the part of those selected to manage the properties. No one could reasonably contend that the public should 76 AMERICAN COMMERCE ASSOCIATION pay higher transportation rates because once prosperous properties may now be in need of additional funds as a consequence of mismanagement. Investors in railroad securities must also take the risk of those errors of judg- ment which not infrequently attend even the careful management of enterprises conducted for profit. But they should likewise be permitted to enjoy fully the profits which naturally flow, under a reasonable scale of rates, from the exercise of good judgment, integrity and effici- ency in the management of such properties. While the right to demand a higher rate may be denied when the existing charge is reasonable, even though the particular carrier may be in need of additional earnings, so a car- rier may be entitled to a higher rate for a particular serv- ice because the existing rate is unreasonably low, al- though the carrier may not be in need of additional rev- enues. This principle has found expression in the reports of the Interstate Commerce Commission. In Railroad Com- missioners of Iowa vs. I. C. R. R. Co., 20 I. C. C, 181, 186, it was said : "But the fact that the net revenues of the Illinois Central from its ownership of the bridge * * * may be greater than the returns on ordinary business enterprises is not sufScient in itself to justify a hold- ing that the bridge tolls are excessive * * *. A railroad company may be operated with a less return than it ought to enjoy, or even at a loss, but neither condition of affairs would justify the exaction by it of rates that are higher than they reasonably should be for the service performed, all things being con- sidered. So also the fact that the net earnings of a carrier may be large does not of itself justify us in fixing a rate at less than is reasonable for the service, all other things being considered." Many railroad investments in this country are exceed- INTERSTATE COMMERCE LAW 77 ingly profitable to their owners. In common justice the investors in such properties are entitled to share in the general prosperity and to enjoy the just rewards of their foresight and wisdom so long as the rates exacted are reasonable. It is not only consistent with a national policy that invites the private ownership of railroads that there should be a liberal return on a particular railroad invest- ment, when the property has been wisely planned and honestly constructed and is efficiently managed; but the full development of that policy, as well as justice, requires that such a return should be made. The public interest demands not only the adequate maintenance of existing railroads, but a constant increase of our transportation facilities to keep pace with the growth and requirements of our commerce. If, however, that development is to be accomplished with private capital, in conformity with our traditions, nothing can be more certain than that the facilities will not be provided except under such a system of regulation as will reasonably permit a fair return on the money invested. The Commission said: "The public owes to the private owners of these properties, when well located and managed, the full opportunity to earn a fair return on the investment, and the carriers owe to the public an efficient service at reasonable rates. This fundamental doctrine has been recognized by the Commission in the perform- ance of its duties. The proceeding before us may therefore be described as, in some sense, a controversy between the consuming public which pays the rates, and the investor who furnishes the facilities for mov- ing the freight; and our duty is to ascertain from the record before us what are their respective rights. That, in fact, is the real railroad question — the just balancing of the mutual rights of the public and of the carriers under a national policy that permits and invites the performance of this public function by pri- 78 AMERICAN COMMERCE ASSOCIATION vate interests. From that point of view the problems and difficulties of our railroads become public prob- lems of great national concern." From the Original Report of the Interstate Commerce Com- mission in the Five Per Cent Case, 31 I. C. C. Rep. 351, 357. § 25. Quantity Rates— Any-Quantity-Rates. In a certain general section of the country the carriers have in effect a uniform rate for any quantity of freight, v^hich is applied uniformly to all shippers. The commis- sion has declined to order a different rate applied on car- loads from that applied to less-than-carloads, especially w^hen such" differential will have a tendency to increase the rate on less-than-carloads, and further, to cut off con- sumers and small dealers from purchasing at distant mar- kets in less-than-carload lots. Duncan & Co. et al. vs. N. C. & St. L. Ry. Co. et al., 16 I. C. C. R. 590. The any-quantity rate rests upon sound public policy. It enables the small shipper to compete on fairly equal terms with his powerful competitor, thereby counteracting in a measure the prevalent tendency toward monopoly. While the Commission has consistently sustained the legality of a differential between carload and less-than-carload rates upon the ground that the difference in the cost of service justifies a reasonable difference in charge, it is highly sig- nificant that no order has ever been issued requiring that an any-quantity basis be superseded by a carload basis. Coml. Club of Omaha vs. B. & O. R. R. Co., 19 I. C. C. Rep. 397, 401. Weil vs. P. R. R. Co., 11 I. C. C. Rep. 627. Kindel vs. B. & A. R. R. Co., 11 I. C. C. Rep. 495, 506. Brownell vs. C. & C. M. R. R. Co., 5 I. C. C. Rep. 638. A through carload rate should not be based on an any- quantity rate, for while an any-quantity rate considered INTERSTATE COMMERCE LAW 79 by itself may be reasonable, a through carload rate could not always be fairly based upon it. This is obviously so, because when a carrier, instead of providing a carload and less-than-carload rate, provides only an any-quantity rate, the presumption is that it is higher than a carload rate and lower than a less-than-carload rate would be. This does not mean, however, that replacing an any- quantity rate by a carload and a less-than-carload rate, is in any wise unlawful. But there is, of course, no neces- sity for the establishment of a carload rate if the any- quantity rate is a reasonable one for the service of trans- porting the goods. The question of the unit of trans- portation is one for the carriers, and the fact that they publish a lower rate in carloads on other commodities does not justify the Commission in ordering a carload rate upon the articles in question. Thus, it was said in the Falls case, that one of the benefits, if not one of the objects of an "any-quantity rate" is that it leaves the carrier with some freedom in the use of its equipment. Such a tariff gives the shipper no right to demand a car of a given size. Schmidt-Peters vs. A. T. & S. F. Ry. Co., 28 I. C. C. Rep. 376, 378. Mutual Rice Trade & Develop. Assn. of Houston vs. I. & G. N. R. R. Co., 23 I. C. C. Rep. 219, 224. Jouannet vs. A. C. L. R. R. Co., 23 I. C. C. Rep. 392. Bentley & Olmsted Co. vs. L. S. & M. S. Ry. Co., 17 I. C C. Rep. 56. Greater Des Moines Committee vs. C. R. I. & P. Ry. Co., 17 I. C. C. Rep. 54. Falls & Co. vs. C. R. I. & P. Ry. Co., 15 I. C. C. Rep. 269, 272. See also: Western Rate Advance Case, Part II, 37 I. C. C. Rep. 114, 155. Official Classification Ratings, 37 I. C. C. Rep. 166, 182. Lookout Refining Co. vs. L. & N. R. R. Co., 36 I. C. C. Rep. 667, 668. Western Rate Advance Case, 35 I. C. C. Rep. 497, 615, 634. 80 AMERICAN COMMERCE ASSOCIATION Trap or Ferry Car Service Charges, 34 I. C. C. Rep. 516, 524. Classification of Address Plates, 33 I. C. C. Rep. 281, 282. Eastern Fruit Growers' Assn. vs. B. & O. R, R. Co., 33 I. C. C. Rep. 343, 350. Lindsay & Co. vs. Northern Ex. Co., 33 I. C. C. Rep. 394, 397. Rates on Cofifee, 32 I. C. C. Rep. 90, 92. Salt Lake Mattress & Mfg. Co. vs. A. T. & S. F. Ry. Co., 32 L C. T. Rep. 417, 425, 426. American Round Bale Press Co. vs. A. T. & S. F. Ry. Co., 32 L C. C. Rep. 458, 463, 465. Knight Woolen Mills vs. C. & N. W. Ry. Co., 32 I. C. C. Rep. 490, 491. Rates on Boots and Shoes from Boston, 31 I. C. C. Rep. 154, 156. Rates on Beer and Other Malt Products, 31 L C. C. Rep. 544, 545. Stuart's Draft Milling Co. vs. So, Ry. Co., 31 I. C. C. Rep. 623, 631, 632. Wichita Business Assn. vs. A. T. & S. F. Ry. Co., 30 1. C. C. Rep. 45, 52. Minimum Weight on Fresh Meats and Other Commodities, 30 I. C. C. Rep. 349. Concentration of Cotton at Points in Arkansas, 29 L C. C. Rep. 106, 107. John Taylor Dry Goods Co. vs. Mo. Pac. Ry. Co., 28 I. C. C. Rep. 205. Boston Chamber of Commerce vs. A. T. & S. F. Ry. Co., 28 I. C. C. Rep. 230. Tone Bros. vs. I. C. R. R. Co., 26 I. C. C. Rep. 279. In re Transportation of Wool, Hides, and Pelts, 23 I. C. C. Rep. 151, 163. Weld & Co. vs. Ocean S. S. Co., 21 L C. C. Rep. 581. (1) Train-load Rates Illegal. Lower rates may not be allowed upon a condition which only a few shippers can comply with. Such is the effect of lower rates for a train-load quantity or any number of carloads than for a carload. The Commission regards such rates as unlaw- ful. Planters' Comp. Co. vs. C. C. C. & St. L. Ry. Co. et al., 11 I. C. C. R. 382. Carr vs. No. Pac. R. Co., 9 L C. C. R. 1. Paine Bros. & Co. vs. L. V. R. Co. et. al., 7 L C. C. R. 218 1915 Western Rate Advance Case, Part II, 37 I. C. C. Rep. 114, 155. Woodward-Bennett Co. vs. S. P. L. A. & S. L. R. R. Co., 29 I. C. C. Rep. 664. Anaconda Copper Mining Co. vs. C. & E. R. R. Co., 19 I. C. C. Rep. 592, 596. INTERSTATE COMMERCE LAW 81 (2) Carload Rates — Relation to Less-Than-Carload Rates. It has long been established by the Commission as a sound principle that a lower rate may be charged for a carload shipment than for a less-than-carload shipment of the same article. The circumstances and conditions of the transportation in carload quantities with respect to the service rendered and the revenue earned by the car- rier are sufficiently dissimilar not to be in contravention of the Act to Regulate Commerce, and justify a difference in rate. The differential between the carload and less than carload rate, however, must be reasonable, fair and just. The carrier is not required, under the law, to establish carload rates, and the Commission hesitates to require their establishment where none exist. The Commission has regard for the common unit of shipment in the establishment of carload rates. For instance, if the normal unit of shipment is a carload, such as in the case of grain, coal, ore, etc., it is entirely reasonable, and beneficial to the public good, that carload rates should be established. But if the usual unit of shipment is the ton, hundredweight, or bale, the effect of establishing a carload rate is to render an advantage to the large shipper, which might amount to unjust discrimination. Thurber vs. N. Y. C. & H. R R. Co. et al., 3 I. C. C. R. 473, 2 I. C. R. 742. Harvard Co. vs. Penna. Co. et al., 4 I. C. C. R. 212, 3 I. C. R 257 Browneil vs. C. & C. M. R. Co., 5 I. C. C. R. 638. Blanton Duncan vs. Atchison, etc., R. Co. et al., 6 I. C. C. R 85 N. Y. Prod. Exchg. vs. B. & O. R. R. Co. et al., 7 I. C. C. R. 612. Business Men's League, etc., vs. Atchison, etc., R. Co. et al., 9 I. C. C. R. 318. The rule in the Western Classification is: "Except as provided in Rule 18, carload ratings apply only when a carload of freight is shipped from 17—7 82 AMERICAN COMMERCE ASSOCIATION one station, in or on one car (except as provided in Rule 24), in one day by one shipper for delivery to one consignee at one destination. Only one bill of lading from one loading point and one freight bill shall be issued for such carload shipment." Throughout the entire field of rate-making one is con- fronted with the problem of determining a proper rela- tionship between carload and less-than-carload rates. All the dififerent factors which enter into the establishment of a rate should be considered in the establishment of the proper relationship between carload and less-than-carload ratings. The difference in cost to the carrier should be given due consideration. It is impossible to establish a mathematically correct ratio between carload and less- than-carload quantities. The only rule to be followed is that each case must be considered upon its own merits and that the relationship between the two quantities shouM not be determined merely from a physical service and cost basis, but consideration must be given to the commercial and economic necessities. The importance of the establish- ment of an equitable relationship is equivalent to recogni- tion of practically every principle underlying rate-making. The vital requirements of the Act to Regulate Commerce might easily become warped into commercial viciousness by an excessive difference between carload and less-than- carload ratings. In some essentials, it might be stated that a fair gener- al rule in establishing a proper relationship between the two quantities, would be to follow the economic propor- tionment of the carrier's cost of handling, the demand upon terminal properties of carriers, the utilization of equipment, the offering of freight for shipment in carload quantities and any public interest that might be involved. Theoretically, the weight of the minimum quantity of INTERSTATE COMMERCE LAW 83 freight for which a carload rating is to be established should reflect the average of tonnage from two stand- points, — the average commercial selling unit and the phys- ical transportation unit. In other words, it would seem that the carload minimum weight should be arrived at in a process of equalizing the commercial nature of the traffic and the carrying capacity of a freight car. In the abstract, the rule governing the establishment of carload minimum weights is that such minimum weight shall be so fixed as to give the highest efficiency in the commer- cial use, loading and physical movement of cars. See also: 1915 Western Rate Advance Case, Part II, 37 I. C. C. Rep. 114, 148, ISO, 151, 155. Passow & Sons vs. C. M. & St. P. Ry. Co., Zl I. C. C. Rep. 711. Stopping of Cars in Transit to Complete Loading, 36 I. C. C. Rep. 130, 134. Nitro Powder Co. vs. West Shore R. R. Co., 35 I. C. C. Rep. n, 79. Regulations as to Storage of Dairy Products, 35 I. C. C. Rep. 469, 474. 1915 Western Rate Advance Case, 35 I. C. C. Rep. 497, 616. Mixed Carloads of Lime, Cement, and Plaster, 34 I. C. C. Rep. 124, 125. St. Louis Terminal Case, 34 I. C. C. Rep. 453, 463. Trap or Ferry Car Service Charges, 34 I. C. C. Rep. 516, 524. Mixed Car Dealers' Assn. vs. D. L. & W. R. R. Co., 33 I. C. C. Rep. 133, 139. Lindsay & Co. vs. Northern Ex. Co., ZZ I. C. C. Rep. 394, 396, 397, 398. Memphis Freight Bureau vs. St. L. I. M. & S. Ry. Co., 33 I. C. C. Rep. 472. Crawford & Bunce Co. vs. P. C. C. & St. L. Ry. Co., 32 I. C. C. Rep. 12, 13. Manufacturers' Ry. Co. vs. St. L. I. M. & S. Ry, Co., 32 I. C. C. Rep. 100, 105. Class Rates from Terre Haute, Ind., 32 I. C. C. Rep. 206, 207. Grifflng vs. C. & N. W. Ry. Co., 32 I. C. C. Rep. 283, 285. Salt Lake Mattress & Mfg. Co. vs. A, T. & S. F. Ry. Co., 32 I. C. C. Rep. 417, 421. 423. American Round Bale Press Co. vs. A. T. & S. F. Ry. Co., 32 I. C. C. Rep. 458, 464, 465. 84 AMERICAN COMMERCE ASSOCIATION Milburn Wagon Co. vs. A. A. R. R. Co., 32 I. C. C. Rep. 582, 583, 584. Class and Commodity Rates from Stations in Maine, 31 I. C. C. Rep. 18, 20. Wichita Business Assn. vs. C. & O. W. Ry. Co., 31 I. C. C. Rep. 323, 324. Stuart's Draft Milling- Co. vs. So. Ry. Co., 31 I. C. C. Rep. 623, 632. Greenbaum Co. vs. L. & N. R. R. Co., 31 I. C. C. Rep. 699, 706, 711. Woodward-Bennett Co. vs. S. P. La. & S. L. R. R. Co., 29 I. C. C. Rep. 664, 665. Wright & Co. vs. Vandalia R. R. Co., 25 I. C. C. Rep. 214. In re Western Classification No. 51, 25 I. C. C. Rep. 442, 443, 465, 467, 478, 479, 488, 490, 491, 572, 586, 608, 698. In re Advances on Milk. 23 I. C. C. Rep. 500, 503. Albree vs. B. & M. R. R. Co., 22 I. C. C- Rep. 303, 327. Carstens Packing Co. vs. O. S. L. R. R. Co., 17 I. C. C. Rep. 324. National Wholesale Lumber Dealers' Assn. vs. A. C. L. R. R. Co., 14 I. C. C. Rep. 154, 162. California Commercial Assn. vs. Wells, Fargo & Co., 14 I. C. C. Rep. 422, 431. Compare : Increased Rates on Oysters, 39 I. C. C. Rep. 690. The Commission has declined, in notable instances, to allow economies of carriage to control in the matter of fixing preferential rates. For example, it has repeatedly and without exception refused not only to establish, but even to permit the establishment of rates available only for the shipment of a trainload. Though such shipment could be transported at a minimum of expense per unit of weight and the carriers could well afford to make lower rates upon it, yet those rates would so discriminate in favor of the large shippers and tend to concentrate the business in their hands, that proper considerations have compelled disapproval. Logically extended, these consid- erations would lead to the condemnation of carload rates, but there are two distinctions which have resulted in a different disposition. The first is the fact that the Com- mission, upon its establishment, found carload rates already INTERSTATE COMMERCE LAW 85 an integral part of the American rate structure; the second is, that the shipment unit of these rates is of a size which a great part of the country's ship- pers is prepared to make, so that their discriminatory- effect and tendency to concentrate business is compara- tively slight. Consequently the Commission has, in a mul- titude of cases, permitted the establishment of such rates. American Round Bale Press Co. vs. A. T. & S. F. Ry. Co., 32 I. C. C. Rep. 458, 464, 465. In the recent 1915 Western Rate Advance case, Part II, in commenting upon the reasonableness of the pro- posed less-than-carload rates, the Commission said: "The reasonableness of the proposed less-than-car- load rates requires further comment. From respond- ents' exhibits a fair average of the spread between existing carload and less-than-carload rates is about 50 per cent. What percentage relationship should exist between the carload and less-than-carload rates is difficult to determine in any case, although the Commission has at different times considered various factors entering into the question. It was said in Business Men's League vs. A., T. & S. F. Ry. Co., 9 I. C. C. 318, 367, that a differential of 50 per cent in the less-than-carload rate upon transcontinental traffic there under consideration was not abnormal. While the evidence is not entirely consistent, it would ap- pear that the less-than-carload movement in the terri- tory is generally made up of small individual ship- ments, the traffic officer of one of the respondent lines expressing doubt as to whether 1,000 pounds of the commodity in question would move from Arkansas to Kansas City three times a week. This would nec- essarily tend to increase the cost of service, although a sufficient basis for the determination of a just per- centage relationship between the carload and the less- than-carload rates upon dried and evaporated fruits is not furnished by the record herein. However, from 86 AMERICAN COMMERCE ASSOCIATION the facts of record we are of the opinion that the pro- posed increased spread is not of such a nature that it should of itself be permitted to defeat the new align- ment of less-than-carload rates upon a classification basis as herein proposed." 1915 Western Rate Advance Case, Part II, 37 I. C. C. Rep. 114, 150, 151. § 26. Reasonable Rate May Become Unreasonable. The standard of the law by which the validity of any rate as afifected by its amount is determined, is not more definite than that it must be reasonable and just. The test of reasonableness can be applied only by reference to and upon consideration of all pertinent facts, circumstances, and conditions affecting the rate in efifect at any partii:ular time. In the nature of the case there can be no rule or process whereby the definite absolute maximum limit of reasonableness in the amount of a rate can be fixed with the certainty of a demonstration. Anadarko Cotton Oil Co. vs. Atchison, etc., R. Co. et al., 20 I. C. C. R. 43, 49. Compare : Bancroft & Sons Co. vs. N. Y. N. H. & H. R. R. Co., 40 I. C. C. Rep. 411. § 27. Reasonableness of Rates — No Absolute Maximum. A rate reasonable in view of the circumstances and conditions when it was established may in course of time become unreasonable by virtue of changed circumstances and conditions. It is manifestly impracticable for the carriers or the Commission in such a case to determine at what exact time in the gradual process of changes the rate becomes unreasonable. Anadarko Cotton Oil Co. et al. vs. Atchison, etc., R. Co. et al., 20 I. C. C. R. 43, 50. Riverside Mills vs. Ga. R. R. Co., 20 I. C. C. R. 423, 425. Steinfeld & Co. vs. I. C. R. R. Co., 20 I. C. C. R. 12, 14. INTERSTATE COMMERCE LAW 87 § 28. Reasonableness of Rates — No Higher Should Be Imposed Upon Territory Than Adequate for Typi- cal Railroads. Certain lines may be treated as typical in a given terri- tory and whatever rate may be reasonably imposed upon such lines must be held reasonable for the service by all other lines in the territory. Re Advances in Rates — Eastern Case, 20 I. C. C. R. 243, 274, following 9 I. C. C. R. 382. § 29. Reasonableness of Rates — Increasing Prosperity Offsets Presumption of Unreasonableness. For a short period rates were reduced, then restored to former higher basis, under which it was shown that the shippers had enjoyed increasing prosperity. This fact tends to offset presumption of unreasonableness in ad- vance of rates to old basis. Re Advances on Vehicles, 22 I. C. C. R. 124. § 30. Returns — Law of Increasing. As the earnings of a carrier reach a point where there ought to be a reduction in its revenues, the benefit of such reduction should be distributed in some equitable manner among all commodities transported by such carrier. Pittsburgh Steel Co. vs. L. S. & M. S. Ry. Co., 27 I. C. C. Rep. 173, 185. It is an econornic law of the business of any public utility, conducted through private ownership, that as the returns on the investment increase beyond the point of reasonable return on such investment, the rates for the use of the service should equitably decrease. § 3L Rules — Regulations and Practices Affecting Reason- ableness of Rates. The present requirement of the Act to Regulate Com- merce, that there must be stated separately in the pub- 88 AMERICAN COMMERCE ASSOCIATION lished tariffs all terminal charges, all other charges which the Commission may require, and any rules or regulations which in any wise change, alter or determine any part or the aggregate of the rates, or the value of the service to the shipper, is for the purpose of preventing unjust discrimination between shippers by making it possible for them to readily ascertain from the tariffs just what ag- gregate charges are to be assessed. All such charges, privileges, rules and regulations affecting the rates are competent of inquiry when the question of the reasonable- ness of the rates themselves is raised. Voorhees vs. A. C. L. R. Co. et al., 16 I. C. C. R. 42, 44. Act to Reg. Com. (Amd. 1910), section 6. New England Milk Case, 40 I. C. C. Rep. 699. § 32. Standard of Reasonableness for Carriers. So far as any standard of reasonableness in transporta- tion rates may be established it must be the needs of neither the most prosperous nor the least profitable car- rier affected, but it must inure in average benefits to average-conditioned carriers. Commercial Club of Superior, Wis., vs. G. N. Ry. Co., 24 I. C. C. Rep. 96, 102. See also: 1915 Western Rate Advance Case, 35 I. C. C. Rep. 497. Five Per Cent Case, 31 I. C. C. Rep. 351. In re Transportation of Wool, Hides, and Pelts, 25 I. C. C. Rep. 675, (>n. Advances in Rates — Eastern Case, 20 I. C. C. Rep. 243. Advances in Rates— Western Case, 20 I. C. C. Rep. 307. Receivers' & Shippers' Assn. vs. C. N. O. & T. P. Ry. Co., 18 I. C. C. Rep. 440, 464. City of Spokane vs. N. P. Ry. Co., 15 I. C. C. Rep. 376, 392. Black Mountain Coal Land Co. vs. So. Ry. Co., 15 I. C. C. Rep. 286, 292. Darling & Co. vs. B. & O. R. R. Co., 15 I. C. C. Rep. 79, 83. INTERSTATE COMMERCE LAW 89 § 33. Tariffs — Filing with Commission not Presumption of Reasonableness. Theoretically, under the mandate of the Act to Regu- late Commerce, the rate initiated by the carrier should be a just and reasonable one. Experience, however, demon- strates the fact that no presumption of law that a rate upon a particular commodity is just and reasonable, lies simply because such rate has been duly published and filed by the carrier with the Commission. San Bernardino Board of Trade vs. Atchison, etc., R. Co., 4 I. C. C. Rep. 104, 3 I. C. Rep. 138. See also: I. C. R. Co. vs. I. C. C, 206 U. S. 441, 51 L. Ed. 1128. The publication of a rate in the manner and form pre- scribed by section 6 of the Act is a test only of the legality of the rate, and must not be confused with its lawfulness. This is true of all interstate rates, at least so far as the shipping public generally is concerned, regardless of how the rate may have come to be established, whether know- ingly in the usual course, or inadvertently, or for collusive or other improper purposes. Crescent Coal & Mining Co. vs. C. & E. I. R. R. Co., 24 I. C. C. Rep. 149, 156. The word "legal" looks more to the letter and ''lawful" to the spirit of the law. While the word "legal" implies rather that the forms of law are observed and the rules prescribed obeyed, the word "lawful" is indicative that the act is rightful in substance. It is provided in sec- tion 6 of the act that no carrier shall colleqt or receive a greater or less compensation than the rates specified in the tariff in effect at the time of the movement. Other provisions of law make it a misdemeanor for the carrier to depart from the published rate. In dealing with ship- 90 AMERICAN COMMERCE ASSOCIATION pers, the carrier is therefore required to conform the freight charges actually collected to the amount fixed in its published tariffs. In that sense the published rate in effect at the time of the movement is therefore the legal rate. It is what the letter of the law requires the shipper to pay and the carrier to collect. But the first section of the act, following the rule of the common law, declares that all charges for services ren- dered by a carrier in the transportation of passengers or property shall be reasonable and just. It also declares every unjust and unreasonable charge for such a service to be unlawful. In publishing a rate or a schedule of rates the carrier therefore acts under this admonition of the statute. If it promulgates a rate in violation of this injunction, that is to say, if it establishes a rate that is excessive and therefore unjust and unreasonable, it is not a lawful rate when its reasonableness is subsequently questioned upon complaint filed. While it may be, and indeed is, the legal rate — the rate that must be paid by the shipper and collected by the carrier because it is the published rate — the mere publication can not make a rate lawful that is unreasonable and excessive. No rate can be lawful, in the sense of being immune from attack, either with respect to past or future shipments, if it be excessive and unreasonable in amount. Arkansas Fuel Co. vs. C. M. & St. P. Ry. Co., 16 I. C. C. Rep. 95, 97, 98. See also: Coomes vs. C. M. & St. P. Ry. Co., 13 I. C. C. Rep. 192, 194. Poor Grain Co. vs. C. B. & Q. Ry. Co., 12 I. C. C. Rep. 418. § 34. Tariffs — Effect of Failure to File with Commission. The Federal Court, in U. S. vs. Ills. Terml. R. Co., 168 Fed. Rep. 546, in sustaining a conviction and fine of INTERSTATE COMMERCE LAW 91 $12,000 for failure of the carrier to publish and file its interstate rates with the Commission, said: "The authorities establish that the law regarding publication of rates and charges for interstate trans- portation applies with equal force to all carriers engaging in such interstate transportation, whether such carriers operate trains from one state to another or operate entirely within the boundaries of a single state. 162 U. S. 184, 175 U. S. 648, and 157 Fed. Rep. 321. "The chief object of the Act to Regulate Commerce is the prevention of discrimination. Carriers, being engaged in a public employment, must serve all mem- bers of the public on equal terms. This was the doc- trine of the common law. It has been explicitly stated and strengthened by the successive acts to regulate commerce. The requirement of the Act that all rates should be published is perhaps the chief feature of the scheme provided for the effective out- lawing of all discriminations. If this portion of the Act is not strictly enforced, the entire basis of effective legislative regulation will be lost. Secret rates will inevitably become discriminating rates whenever dis- criminating rates or practices are made public, a thou- sand forces of self-interest and of public policy will be set at work to reduce them to fairness and equal- ity. The failure of any carrier to properly file and publish its rates is quite as serious a violation of the Act to Regulate Commerce as a failure to observe such rates after they have been properly filed and pub- lished." § 35. Traffic Conditions — Reasonableness of Rates Af- fected by Nature of Traffic. The Commission finds that the handling of perishable traffic is probably the severest test of railroad transpor- tation, so far as care, attention and expense are involved. The very essence of such transportation is expedition. In 92 AMERICAN COMMERCE ASSOCIATION addition to the speed required, there must be provided a special car, properly iced, which has to be renewed when the transportation is beyond certain fixed distances, or if for any cause there is delay. It is of vital importance to the growers of perishable products and the further devel- opment of their business, which is increasing beyond the expectations of the most sanguine, that nothing should be done which would have a tendency to decrease the effi- ciency of the service. Since the carrier renders special service, extra care, and incurs necessarily greater expense, it is entitled to charge a higher rate than for ordinary freight. Ozark Fruit Grwrs. Assn. vs. S. L. & S. F. R. Co., 16 I. C. C. Rep. 106. Consolidated Forwarding Co. vs. S. P. Co., 10 I. C. C. Rep. 590 Loud' vs. S. C. Ry. Co., 5 I. C. C. Rep. 529, 4 I. G. Rep. 205. 2 36. Trafftc Conditions — Lower Rates on Low Grade Traffic. There are a large number of commodities, such as coal, brick, soap, ore, cement, stone, lumber, etc., comprising articles in general demand, necessaries of life and the great staples, which must have a reasonable freedom of move- ment, and rates on such low-grade commodities which yield but slight to moderate profit to the carrier are both necessary and justifiable. There is an interdependency in the movement of these articles in which the carrier and the public have an equal interest, and a resulting productivity of traffic which is ancillary to the movement of the staples and necessaries of life. Low rates on certain commodities are usually based on low-value of product rather than the reasonableness of the rates themselves. Midcontinent Oil Rates, 36 I. C. C. Rep. 109, 117. Denison Light & Power Co. vs. M. K. & T. R. Co., 10 L C C. Rep. 337. INTERSTATE COMMERCE LAW 93 Cenl. Yellow Pine Assn. vs. I. C. R. R. Co., 10 I. C. C. Kep. 505. Re Transportation of Grain, 7 I. C. C. Rep. 240. Natl. Hay Assn. vs. L. S. & M. S. R. Co., 9 I. C. C. Rep. 264. Re Food Products Investigation, 4 I. C. C. Rep. 48, 3 I. C. Rep. 93. Colorado Fuel & Iron Co. vs. S. P. Co., 6 I. C. C. Rep. 488. See also: Official iJLlassification Ratings, 37 I. C. C. Rep. 166, 188. Eagle Ii:e Co. vs. C. M. & St. P. Ry. Co., 37 I. C. C. Rep. 250, 253. Kempner vs. M. K. & T. Ry. Co., 37 I. C. C. Rep. 396, 397. Rates for Transportation of Anthracite Coal, 35 I. C. C. Rep. 220, 261. Brantley vs. A. C. L. R. R. Co., 34 I. C. C. Rep. 21, 23. Montrose & Delta Counties Freight Rate Assn. vs. D. & R. G. R. R. Co., 34 I. C. C. Rep. 400. Pacific Creamery Co. vs. So. Pac. Co., 34 I. C. C. Rep. 586, 595. Massie & Pierce Lumber Co. vs. N. & W. Ry. Co., 33 I. C. C. Rep. 14, 17. Boise Lumber Co. (Ltd.) vs. P. & I. N. Ry. Co., 33 I. C. C. Rep. 109, 115. Petit Salt Co vs. C. M. & St. P. Ry. Co., 33 I. C. C. Rep. 590, 591. Chamber of Commerce, Houston, Tex., vs. I. & G. N. Ry. Co., 32 I. C. C. Rep. 247, 259. Freight Rates from Minnesota Points, 32 I. C. C. Rep. 361, 366. Ontario Iron Ore Co. vs. N. Y. C. & H. R. R. R. Co., 30 I. C. C. Rep. 566, 570. Molasses Rates to Knoxville, Tenn., 30 I. C. C. Rep. 613. § 37. Traffic Conditions — Relatively Lower Rates on Long Haul Traffic. The necessity for making concessions to long-haul traf- fic in the case of articles whose value, in proportion to bulk or weight, is small, and especially in that of the neces- saries of life, which are handled in large quantities, and in the supply of which the most distant countries compete, has long been conceded wherever railroads exist. The household goods of immigrants to the West have been carried for them at very low rates, and the results of their agriculture have afterwards been carried to the seaboard Si AMERIC\X COMMERCE ASSOCIATION and to Enropean markets in recognition of the general pfindple that the trafiBc must not be charged rates beyond what it can bear. Re Srr re~ Ry & S S. Assa, 1 L C C Rep. 31, 1 L C ihf C:~~ 55 ::: ::is said: 7 : ^si and sound principle when justly ap- : z : 1 _ :..- country may be said not only to have 1 : : . : T : :? recognition, but to have desired and _ : ; r : : 1 : : ; i : : . in a great variety of cases * * * : can harm no one, but may be, LZ.L ::.e:. ..- :: r.;:. i:: manifest advantage in en- i: :r. r i :f:i :.: ft;: ; : the country to come into L.iitT ::: : f-:i' -t i : ? * * * However, there is 1 : 1 :. :: : r i:: ;:. : the principle that : : T rry IS : : t :i : : - 1 i : rites it will bear ; and the liziit is rti: Ti r ihe rates charged are so low :! 1 : :' - : T : : t _ ; : r would necessitate an increase : t : : : r - : t - t-affic in order to make up to : t i: r: .... .:; i: i^t reduction causes." Ibid AL' I : T ~ :~.~'t?'!Ov. has recognized the justice of e5 . _ : . ,. 1. ^ 7 : iLit I'^i a short two-line haul than ::r i :rt- rt i: equal length, it has not been dis- : : it : : : ; . the necessity for such higher rate as : : r : 1 r ^ t r l :ter of Icmg-distance hauls. I- . =5:^i.:- of An^ed Unreasonable Rates on : Iti.s 23 I. C C Rep. 656. 661, it was held as follows: ' Tiie addition for a two-line haul is somewhat aldn to diat for a terminal serrice. A mileage scale ordi- narily yidds a nnicfa higher rate in proportion for a short haul than for the long one; and when, there- fore, two short hauls are combined, it is usually unjust to require the two carriers to accept compensation at the rate per mile applied for the entire long hauL To a degree they are entitled to a higher rate, in consid- INTERSTATE COMMERCE LAW « eration of the fact that their individual hauls arc short. Now, as distance increases the force of this consid- eration decreases. When distances of over 500 miles are involved, the fact that the service is by two Koes is largely negligible. ♦ * * "Our conclusion therefore is that no addition on account of the two-line haul should be made where the distance exceeds 500 miles." This conclusion \vas cited with approval in Siffidan Chamber of Commerce vs. C B. & Q. R. R. Cc 26 I. C C- Rep. 638, 649, as follows: "Each carrier participating in a two-Hue hanl wiD find that operating expenses for its portioo of that haul are less than they would be if only a one-fine haul to the junction point were involved, and instead of either delivering the car or receiving it from a con- necting carrier, it were necessary to deliver it to the consignee or receive it from the consignor. The one- line haul involves two distinct terminal services. Each carrier's share of a two-line haul involves but one distinct terminal service, plus a switching morement from one carrier to the other. The entire two^nc haul involves two distinct terminal service phis the switching movement from one line to the other. In large cities, where the terminal of cme carrier is far removed from that of the other, switching from one to the other often involves much greater expenditures than in the present case. However, it involves less expenditure than the terminal service of delivering to consignee or receiving from consignor at that statioii. But where the physical ccMmection between con- necting carriers is as simple as in these small ■weston towns, involving no expensive terminal service, the additional cost due to the switching movement is voy smalL so smaU, in fact, that it may not properly be made the basis of an additic«ial charge for a two-line haul of substantial length." OmaJa Graia Exchange rs. V. P. Ry. Co, 30 L C C Rep. 572L 576, 577. 9e AMERICAN COMMERCE ASSOCIATION See also: Lindsay & Co. vs. Nor. Ex. Co., 33 I. C. C. Rep. 394, 397. Joint Rates with Birmingham Southern R. R. Co., 32 I. C. C. Rep. 110, 112. Five Per Cent Case, 31 I. C. C. Rep. 351, 374. West Virginia Coal Rates, 22 I. C. C. Rep. 604, 627. The per-ton-per-mile rule — i. e., as the distance in- creases the rate per mile should decrease — was first an- nounced by the Commission in the Farrar case, thus: "As a rule in the transportation of freight by rail- roads, while the aggregate charge is continually in- creasing the farther the freight is carried, the rate per ton mile is constantly growing less all the time, making the aggregate charge less in proportion every hundred miles after the first, arising out of the char- acter and nature of the service performed and the cost of the service; and thus staple commodities and merchandise are enabled to bear the charges of this mode of transportation from and to the most distant portions of the country." Farrar vs. East Tennessee, Va. & Ga. Ry. Co., 1 I. C. C. Rep. 480, 1 I. C. Rep. 764. This formula in rate testing is but a rule of evidence and when applied must have regard for all circumstances and conditions attending the making of the rate to be judged thereby. In the Ashgrove case, the Commission commented on it as "but one of many influences in rate adjustments." Ashgrove Cement Co. vs. A. T. & S. F. Ry. Co., 23 I. C. C Rep. 519, 524. In re Proposed Advances in Freight Rates, 9 I. C. C. Rep. 383, 396, it was said that "the rate per ton mile, while often instructive, is not by any means a fair index of a reasonable rate." And in Bulte Milling Co. vs. C. & A. R. R. Co., 15 I. C. INTERSTATE COMMERCE LAW 97 C. Rep. 351, 362, the rule was declined as of general ef- fect, the Commission saying: "The Commission has had frequent occasion to say that the rate per ton per mile is not the generally accepted basis for making up rates, so far at least as interstate movements are concerned, and we know of no well-informed shipper or student of transportation who is ready to advocate a mileage system in this country. While a division of a through rate long accepted by a carrier may often be pertinent as evi- dence upon such an inquiry as this, the Commission has also said not infrequently that a division is not, generally speaking, a sound final test of the reason- ableness of the through rate itself." See also: 1915 Western Rate Advance Case, 35 I. C. C. Rep. 497. Wisconsin Steel Co. vs. P. & L. E. R. R. Co., 27 I. C. C. Rep. 152, 162. Nebraska State R. R. Comm. vs. C. B. & Q. R. R. Co., 23 I. C. C. Rep. 121, 125. Compare: Kansas vs. A. T. & S. F. Ry. Co., 27 I. C. C. Rep 673. Compare also probative effect of rule : Rock Springs Distilling Co. vs. I. C. R. R. Co., 27 I. C. C. Rep. 54, 57. Milburn Wagon Co. vs. Toledo, St. L. & W. R. R. Co., 27 I. C. C. Rep. 63, 66. Re Export Rates on Flax Seed Products, 27 I. C. C. Rep. 246, 248. Lake Cargo Coal Rates, 22 I. C. C. Rep. 604, 620. Little Rock Chamber of Commerce vs. St. Louis, I. M. & S. Ry. Co., 26 I. C. C. Rep. 341, 343. Re Advances in Rates on Grain, 21 I. C. C. Rep. 22, 23. Natl. Hay Assn. vs. Michigan C. R. R. Co., 19 I. C. C. Rep. 34. Muskogee Traffic Bureau vs. A. T. & S. F. Ry. Co., 17 1. C. C. Rep. 169, 173. Farrar vs. So. Ry. Co., 11 I. C. C. Rep. 640, 649. Hilton Lumber Co. vs. Wilmington, etc., R. R. Co., 9 L C. C. Rep. 17. Gustin vs. A. T. & S. F. Ry. Co., 8 L C. C. Rep. 277, 288. 17—8 98 AMERICAN COMMERCE ASSOCIATION , Freight Bureau of Cincinnati vs. Cincinnati, N. O. & T. P. Ry. Co., 7 I. C. C. Rep. 180. Mfrs. & Jobbers' Union vs. M. & St. L. Ry. Co., 4 I. C. C. Rep. 79, 3 I. C. Rep. 115. Business Men's Assn. vs. C. & N. W. Ry. Co., 2 I. C. C. Rep. 73, 2 I. C. Rep. 48, 52. Business Men's Assn. vs. C. St. P. M. & O. R. R. Co., 2 I. C C. Rep. 52, 2 I. C. Rep. 41. Logan vs. C. & N. W. Ry. Co., 2 I. C. C. Rep. 604. 2 I. C. Rep. 431. The Supreme Court has held that it does not follow, as a matter of law, that rates should be the same for the same distance over two different' roads, and that the per mile ratio of rates can not be regarded as a necessary standard. I. C. C. vs. Un. Pac. R. R. Co., 222 U. S. 541. See also: Big Basin Lumber Co. vs. So. Pac. Co., 37 I. C. C. Rep. 730, 734. Ladd & Co. vs. Gould S. W. Ry. Co., 36 I. C. C. Rep. 179, 183. Oklahoma Traffic Assn. vs. A/ & S. Ry. Co., 36 I. C. C. Rep. 329, 336. Gray Lumber Co. vs. A. T. & N. Ry. Co., 36 L C. C. Rep. 376, 377. Pig Iron from Virginia Furnaces, 36 L C. C. Rep. 552, 554. § 38. Traffic Conditions — Special Rates for Development Purposes. If a rate has been established and maintained for a con- siderable period for the purpose of developing a particular industry and with full knowledge that the industry could not be developed without it, and if, under the influence of such rate, large amounts of money have been invested in property the value of which must be seriously impaired by an advance of the rate, that fact is an important con- sideration in passing upon the reasonableness of such advance. Western Oregon Lumber Mfrs. Assn. vs. So. Pac. Co., 14 L C. C. Rep. 61. INTERSTATE COMMERCE LAW 99 § 39. Traffic Conditions — Rates Conditioned Upon Use of Commodity. The concurrent existence of two separate and distinct rates on the same commodity is condemned when the traffic moves over the same route in the same direction, between the same points, and the carriers, by their pub- lished tariffs, assume to charge one rate or the other according to the ultimate use to which the commodity is to be put. The Commission has emphasized the impropriety of tariffs which apply rates upon commodities according to their use. It has repeatedly condemned such tariffs, and declares that the carrier has no right to attempt to dictate the uses to which commodities transported by it shall be put. The duty of a common carrier is to transport com- modities at its tariff rates and on equal conditions for all. Ft. Smith Traf. Bu. vs. S. L. & S. F. R. Co. et al., 13 I. C. C. R. 651. In February and November, 1908, the Commission promulgated the following conference rulings : "A tariff providing for reduced rates on coal used fof steam purposes, or that the carrier will refund part of the regular tariff charges on presentation of evi- dence that the coal was so used, is improper and un- lawful — that is to say, that the carrier has no right to attempt to dictate the uses to which commodities 'transported by it shall be put in order to enjoy a transportation rate. "A carrier, or a person or corporation operating a railroad or other transportation line, may not, as a shipper over the lines of another carrier, be given any preference in the application of tariff rates on inter- state shipments, but it may lawfully and properly take advantage of legal tariff joint rates applying to a con- venient junction or other point on its own line, pro- 100 AMERICAN COMMERCE ASSOCIATION vided such shipments are consigned through to such point from point of origin and are, in good faith, sent to such billed destination." I. C. C. Confr. Rulings Bull. No. 6, Rulings Nos. 34 and 225. See also Rulings Nos. 2, 9, 153, 224, and 373. In the Matter of Transportation of Company Material. 22 I. C. C. Rep. 439. In the Matter of Contracts of Express Companies for Free Transportation of Their Men and Material Over Railroads, 16 I. C. C. Rep. 246. Hitchman Coal & Coke Co. vs. B. & O. R. R. Co., 16 I. C C. Rep. 512. Capital City Gas Co. vs. C. Vt. R. Co., 11 I. C. C. Rep. 104. Stowe-Fuller Co. vs. Penna. Co., 12 I. C. C. Rep. 215. Pittsburgh Plate Glass Co. vs. P. C. C. & St. L. Ry. Co., 13 I. C. C. Rep. 87. See also: National Petroleum Assn. vs. A. T. & S. F. Ry., 37 I. C. C. Rep. 287. 293. Rates on Railroad Fuel and Other Coal, 36 I. C. C. Rep. 1. The Iron & Steel Cases, 36 I. C. C. Rep. 86, 107. Rates on Hardwood Lumber, 32 I. C. C. Rep. 521. Carter White Lead Co. vs. N. & W. Ry. Co., 21 I. C. C. 41. Ohio Allied Milk Products Shippers vs. Erie R. R. Co 21 I. C. C. 522, 527. Metropolitan Paving Brick Co. vs. Ann Arbor Railroad Co., 17 I. C. C. Rep. 197. Association of Union Made Garment Manufacturers vs. C. & N. W. Ry. Co., 16 I. C. C. Rep. 405. J. A. Whitcomb vs. C. & N. W. Ry. Co., 15 I. C. C. Rep. 27. Re Charges for Transportation of Coal. 5 I. C. C Reo 466. I. C C. Rep. 157. Import Rate Case, 162 U. S. 197. I. C. C. vs. C. & O. Ry. Co., 22 U. S. 361. I. C. C. vs. A. M. R. R. Co., 168 U. S. 144. Wight vs. U. S., 167 U. S. 512. Mitchell Coal & Coke Co. vs. P. R. R. Co., 188 Fed Rep 405. Penn. R. Co. vs. International Coal Co., 173 Fed Rep. 1. As indicating the different phases of this question that have come to the Commission it may be instructive to note that it has, upon requests for rulings at different times, held that a tariff v^hich limited the application of the rates shown therein to shipments handled by steam power, thus excluding shipments handled by electric power, was un- INTERSTATE COMMERCE LAW 101 lawful ; that where stock in one railway company is owned by another railway company, but both maintain separate organizations and report separately to the Commission, they may not lawfully carry freight free for each other; that a passenger fare tariff offering season excursion fares for schools and different fares between the same points for societies was discriminatory; that property for use in eating houses maintained by carriers for passengers and employees may properly be regarded as necessary and intended for the use of such carriers in the conduct of their business, but that persons and commodities transported for use in serving others than passengers and employees of the carriers may not lawfully be carried except under regular tariff rates; that a carrier may not lawfully transport free or at reduced rates materials for building or repairs on a refrigeration plant built under contract with the carrier, but which also engages in commercial ice business; that the Commission would not give its sanction to an arrange- ment for lease by an interstate carrier of trackage rights over a short connecting line to a quarry for the purpose of hauling from that quarry with its own crews and equip- ment ballast for use on its line, the arrangement being regarded as a mere device to evade the payment of lawful rates, which would necessarily result in unjust discrimina- tion against other stone quarries on the line of the lessor road; that it is unjustly discriminatory against dealers on its line for an interstate carrier to operate a commissary car from which it furnishes and sells to its employees household suppHes, wearing apparel, etc. §40. Traffic Conditions— Reasonableness of Rates Af- fected by Volume of Traffic. While the amount shipped by one concern has little or jiQ bearing on the question of the reasonableness of rates, 102 AMERICAN COMMERCE ASSOCIATION it is of some significance in testing the fairness of the rates that a certain concern's shipments have reached substan- tial proportions under such rates. Acme Cement Plaster Co. vs. L. S. & M. S. Ry. Co. et al., 17 I. C. C. R. 30, 38. In other words, while the volume of traffic is properly considered in determining the reasonableness of rates, however small the volume of traffic, it is entitled to rea- sonable rates. Capital Electric Co. vs. B. & O. C. T. R. R. Co., 26 I. C, C. Rep. 472, 474. In re Rates for Transportation of Flax Seed, 25 I. C. C. Rep. 337, 341. A road in accepting, on a comparatively small volume of traffic moving to a given point, exceptionally low com- petitive rates, which it must establish in order to secure any part of the traffic, is not thereby estopped from ^barg- ing reasonably remunerative rates to other points to which it handles the bulk of the traffic from which it must derive the principal part of its revenues. So to hold would be totally to disregard the effect of competitive conditions which the Supreme Court has held in numerous cases as justifying the application of lower rates to farther distant points over the same line in the same direction. R. R. Comm. of Ky. vs. L. & N. R. R. Co., 13 I. C. C. Rep. 300, 308. The volume of traffic may excuse a lower rate partly because freight can be handled more cheaply in large quantities than in small, and partly because a railroad is justified in making a low rate to induce a large volume of traffic where the circumstances are such that the rate will INTERSTATE COMMERCE LAW 103 have this effect. The first of these reasons refers to the cost of the service. Burgess vs. Trans. Frt. Bureau, 13 I. C. C. Rep. 668, 675. It has been shown, as expressive of this principle, that the greater the differential the greater the tonnage over the lakes. In the past the lake movement has fallen off as differentials have been narrowed. Not only that, but the higher class tonnage has fallen off more rapidly. In In re Separation of Operating Expenses, 30 I. C. C. Rep. 676, 681, the Commission declared that "the length of haul and the volume of traffic are among the determin- ing factors in arriving at cost" of transportation. See also: Grain from Manitowoc, Wis., 37 I. C. C. Rep. 549, 551. Grain to the Southwest, 36 I. C. C. Rep. 660, 661. Excelsior from St. Paul, Minn., 36 I. C. C. Rep. 349, 356. Fall River Bleachery vs. A, C. L. R. R. Co., 36 I. C. C. Rep. 535, 537. Rates for Transportation of Anthracite Coal, 35 I. C, C. Rep. 220, 226, 261, 293, 295, 296, 340, 343, 347. 1915 Western Rate Advance Case, 35 I. C. C. Rep. 497, 585, 593. Commodity Rates to Pacific Coast Terminals, 34 I. C. C. Rep. 13, 17. Goldfield. Cases, 34 I. C. C. Rep. 360, 373. Northbound Rates on Hardwood, 34 I. C. C. Rep. 708, 709, 710. Pub. Utilities Com. of Idaho vs. O. S. L. R. R. Co., 33 I. C. C. Rep. 103, 104. Nor. Pine Mfrs. Assn. vs. C. & N. W. Ry. Co., 33 I. C. C. Rep. 360, 366. Lum vs. G. N. Ry. Co., 33 I. C. C. Rep. 541, 543. Newport Mining Co. vs. C. & N. W. Ry. Co., 33 I. C. C. Rep. 645, 648. Lake Line Applications Under Panama Canal Act, 33 I. C. C. Rep. 699, 714. . Class Rates Between Stations in Louisiana, 33 L C. C. Rep. 302, 304. , T ^ /- Natl. Assn. of Ice Cream Mfrs. vs. Adams Ex. Co., 33 I. C. C. Rep. 411, 413. ^ , ^ ^ Nebraska State Ry. Comm. vs. C. V. Ry. Co., 32 I. C. C. Rep. 41, 46. ^ ^ „ Rates Between Shreveport and Texarkana, 32 I. C. C. Rep. 180, 184. 104 AMERICAN COMMERCE ASSOCIATION Commodity Rates to Pacific Coast Terminals, 32 I. C. C Rep. 611, 628. Five Per Cent Case, 31 I. C. C. Rep. 351, 373 R. R. Comrs. of Montana vs. B. A. & P. Ry. Co., 31 I. C. C. Rep. 641, 650. Brownsville (Texas) Class and Commodity Rates, 30 I. C. C Rep. 479, 484. R. R. Comm. of Arkansas vs. M. & N. A. R. R. Co., 30 I. C. C. Rep. 488, 489. Rates on Bananas from Gulf Ports, 30 I. C. C. Rep. 510, 515. Low Moor Iron Co. of Virginia vs. C. & O. Ry. Co , 30 I. C. C. Rep. 615, 618. Youngstown Sheet & Tube Co. vs. P. & L. E. R. R. Co., 29 I. C. C. Rep. 428, 431. Woodward-Bennett Co. vs. ~S. P. L. A. & S. L. R. R. Co., 29 I. C. C. Rep. 664, 665. Lumber Rates from the South to Points North, 29 L C. C. Rep. 1. Springfield Traffic Bureau vs. St. L. & S. F. R. R. Co., 29 L C. C. Rep. 600, 603. Hughes Creek Coal Co. vs. K. & M. Ry. Co., 29 L C. C. Rep. 671, 674. Lake-and-Rail Butter and Egg Rates, 29 L C. C. Rep. 45, 51. Erickson Co. vs. C. M. & St. P. Ry. Co., 29 I. C. C. Rep. 414, 416. Comml. Club of Terre Haute vs. V. R. R. Co., 29 I. C. C. Rep. 383, 389. Kansas-California Flour Rates, 29 L C C. Rep. 459, 461. Paducah Board of Trade vs. I. C. R. R. Co., 29 L C. C Rep. 593, 598. Boldt Co. vs. C. R. L & P. Ry. Co., 27 L C. C. 11, 13. Dixie Dairymen's Assn. vs. Y. & M. V. R. R. Co., 27 I. C. C. 618, 621. Union Tanning Co. vs. S. Ry. Co., 26 L C. C. Rep. 159, 164. Michigan Copper & Brass Co. vs. D. S. S. & A. Ry. Co., 25 L C. C. 357, 363. Western Classification Case, 25 I. C. C. Rep. 442, 472. RickardiS vs. A. C. L. R. R. Co., 23 I. C. C. Rep. 239 Albree vs. B. & M. R. R. Co., 22 L C. C. Rep. -303, 320. In re Advances in Rates— Eastern Case, 20 I. C. C. Rep. 243. 275. National Hay Assn. vs. M. C. R. R. Co., 19 I. C. C. Rep. 34, 47. Commercial Club of Salt Lake City vs. A. T. & S. F. Ry Co.. 19 I. C. C. Rep. 218, 223. Commercial Club of Omaha vs. B. & O. R. R. Co., 19 I. C. C. Rep. 397, 402. Hydraulic-Press Brick Co. vs. M. & O. R. R. Co., 19 I. C. C. Rep. 530, 531. Anaconda Copper Mining Co. vs. C. & E. R. R. Co., 19 I. C. C. Rep. 592, 5%. Virginia-Carolina Chemical Co. vs. St. L. I. M. & S. Ry. Co.. 18 I. C. C. Rep. 1. Hood & Sons vs. Del. & Hud. Co., 17 I. C. C. Rep. IS, 20. INTERSTATE COMMERCE LAW 105 Acme Cement Plaster Co. vs. L. S. & M. S. Ry. Co., 17 I. C. C. Rep. 30, 38. Bentley & Olmstead Co. vs. L. S. & M. S. Ry. Co., 17 I. C. C. Rep. 56. Carstens Packing Co. vs. O. S. L. R. R. Co., 17 I, C. C. 324, 328. Railroad Commission of Wisconsin vs. C. & N. W. Ry. Co., 16 r. C. C. Rep. 85, 90. Ozark Fruit Growers' Assn. vs. St. L. & S. F. R. R. Co., 16 I. C. C. Rep. 134, 139. Chicago Lumber & Coal Co. vs. Tioga Southeastern Ry. Co., 16 I. C. C. Rep. 323, 328. Moise Bros. Co. vs. C. R. I. & P. Ry. Co., 16 I. C. C. 550, 555. Compare : California-Nevada Lumber Rates, 31 L C. C. Rep. 464, 465, holding that because of tonnage falling oflf no reason for increasing rates. §41. Wages. The Commission has not given definite consideration to the element of wages of employees of carriers or of other persons or interests in determining reasonableness of rates. Whatever weight it may be permissible under the statute to give to considerations of this kind in the deter- mination of the question of reasonableness, it would seem that wages of miners and their standard of living should be kept in view in scrutinizing coal rates, and that great issues affecting them should not be decided without at least bringing their interests into the horizon of consciousness. Boileau vs. P. & L. E. R. R. Co., 22 L C C. Rep. 640, 647. See also: Western Passenger Fares, 37 I. C. C. Rep. 1, 71. 1915 Western Rate Advance Case, 35 L C. C. Rep. 497, 593. San Toy Coal Co. vs. A. C. & Y. Ry. Co., 34 I. C. C. Rep. 93 95 Goldfiel'd Cases, 34 L C. C. Rep. 360, 370, 373. Illinois Coal Cases, 32 L C. C. Rep. 659, 667, 673. Five Per Cent. Case, 31 I. C. C. Rep. 351, 379, 412. Arkansas Railroad Commission vs. M. & N. A. R. R. Co., 30 L C. C. Rep. 488, 489. ^ ^^ Youngstown Sheet & Tube Co. vs. P. & L. E, R. R. Co., 29 I. C. C. Rep. 428, 435. CHAPTER II. ACT TO REGULATE COMMERCE AS AMENDED (CONTINUED). Amplification of Sections (Continued). § 1. Anti-pass Provisions. § 2. The "Commodities Clause." § 3. Constitutionality of Commodities Clause. §4. Not Unlawful for Boat Lines to Transport Commodities Owned by Them. § 5. Switch Connections. § 6. Jurisdiction and Authority of Interstate Commerce Commission over Switch Connections. § 7. Switch Connections with Water Carriers. § 8. Jurisdictional Powers of Interstate Commerce Commission not Contravened) by Shipping Act. 107 CHAPTER II. ACT TO REGULATE COMMERCE AS AMENDED (CONTINUED). Amplification of Sections (Continued). § 1. Anti-Pass Provisions. Prior to its amendment in 1906, the Act to Regulate Commerce contained no specifically expressed prohibition against the granting by carriers of free transportation to persons and property, although the statute inferentially prohibited the issuance of passes or franks by reason of its condemnation of favoritism and unjust discrimination and also by the illustrative provisions of section 22 of the Act, which are permissive, however, rather than restrictive. In the Amendment of 1906, section 1 of the Act was so amended as to permit of the issuing of interstate free tickets, passes, or transportation to certain designated classes of persons. Since the anti-pass clause of section 1, as well as the excepted classes of persons, must be construed in connec- tion with the illustrative section 22 of the Act, the amph- fication thereof will be found in the sections devoted to a discussion of the provisions of the latter section. §2. The "Commodities Clause." By the amendment of the Act to Regulate Commerce in 1906, it was declared unlawful for any railroad company from and after May 1, 1908, to transport from any State, Territory, or the District of Columbia, to any other State, Territory, or the District of Columbia, or to any foreign 109 no AMERICAN COMMERCE ASSOCIATION countn', any article or commodity (other than timber and the manufactured products thereof), manufactured, mined, or produced by it, or under its authority, or which it may own in whole or in part, or in which it may have an inter- est, direct or indirect, except such articles or commodities, as may be necessary and intended for its use in the conduct of its business as a common carrier. § 3. Constitutionality of Commodities Clause. Almost immediately upon its taking eftect, the consti- tutionality of the commodities clause was raised on the ground that its enactment was beyond the power vested in Congress under the commerce clause of the constitution, and also as being in contravention of the due process of law clause of the fifth amendment of the constitution. It was further attacked as being repugnant to constitutional power because of the discrimination which might lie in the exceptions of timber and manufactured products thereof. The Supreme Court reversed the decision of the Circuit Court of the United States for the Eastern District of Pennsylvania which had declared the commodities clause contravened the constitutional limitation, and held that the dissociation of railway companies prior to transporta- tion, from the articles or commodities transported, is the common purpose of the commodities clause and that the clause disjunctively applies four generic prohibitions. In other words, it forbids a railroad company from transport- ing in interstate commerce articles or commodities (1) which it has manufactured, mined, or produced; (2) which have been so mined, manufactured, or produced under its authority; (3) which it owns in whole or in part, and (4) in which it has an interest, direct or indirect. The Supreme Court further held that transportation of INTERSTATE COMMERCE LAW HI its own commodities by a carrier is all that is forbidden by the clause, and if the carrier does not in good faith, prior to the act of transportation, dissociate itself there- from, the law condemns the act. But ownership by a rail- way carrier of stock in a bona fide corporation engaged in manufacturing, mining, producing, or owning the com- modity carried is not the interest, direct or indirect, in such commodity which is forbidden to the carrier by the statute, for, said the Supreme Court, the law refers only to a legal and equitable interest in the commodity to which the act of transportation applies, and railway companies enjoying the right, under existing state legislation, of own- ership of or association with the articles or commodities carried, are not denied the due process of law guaranteed by the United States Constitution (Fifth Amendment) because of the enactment of the commodities clause. Nor does the exception in favor of timber and manufactured products thereof in the clause render the statute invalid for discrimination. U. S. vs. Del. & Hud., 213 U. S. 366, 53 L. Ed 836. I. C. C Ann. Rep. 1909. Thus the Supreme Court of the United States declared the commodities clause a valid exercise of the power of Congress under the commerce clause of the constitution, and not in conflict with the fifth amendment thereof, nor constitutionally defective because not applied to all com- modities alike. In the same year, 1909, the Interstate Commerce Com- mission commented upon the effect of this decision by the Supreme Court in the following language : "A number of complaints are in hand concerning the leasing of property by carriers to shippers for a nominal rental, with a further agreement that all ship- ments made by the lessees shall be routed over the 112 AMERICAN COMMERCE ASSOCIATION lines of the lessors. The ownership of shipping cor- porations by carrying corporations, having been held by the Supreme Court not to be in violation of the commodities clause, still continues and gives rise to many discriminations. It becomes increasingly evi- dent that complete freedom from discrimination can be secured only by a complete separation of the busi- ness of transportation from all other businesses. The evils most difficult to detect and prove today are those arising from the identification of ownership of car- riers and shippers, and those arising from the pretense that services performed by shippers for themselves are in reality services for the carriers, to be paid for by the latter. The lighterage situation in the harbor of New York, between the trunk lines and certain ship- pers of sugar, and the various industrial railroad ar- rangements with divisions of joint rates, are examples of the identification of shippers and carriers which naturally result in embarrassing, if not preferential, relations. As soon as a shipper secures an arrange- ment by which he is to furnish a portion of the service of transporting his shipments, with a right to an agreed portion of the freight rate, it becomes impos- sible to determine whether or not the net cost to him is the same as other shippers are forced to pay. In many cases, however, it is entirely possible to say that such shippers have a competitive advantage in the market. The so-called elevation allowances upon grain are fair examples of the arrangements by which services performed by shippers for themselves are pre- ' tended to be services for the carriers and paid for as such. These elevation allowances serve simply to make a lower rate upon shipments of grain unloaded into elevators than is open to shipments unloaded in any other way. The order of the Commission con- demning the allowances is now being resisted in the courts by the shippers having contracts for the same." The decision in the Delaware & Hudson Case was fol- lowed by a ruling in the Lehigh Valley Case, in which INTERSTATE COMMERCE LAW 113 latter case the Supreme Court clarified its meaning in the Delaware & Hudson Case in which it held that stock ownership by a carrier in a mining or producing company- was not repugnant to the law where such stock ownership was used for the purpose of the bona fide separate ad- ministration of the affairs of such corporation. Said the Court : "While that decision (in the Delaware & Hudson Case) expressly held that stock ownership by a rail- road company in a bona fide corporation, irrespective of the extent of such ownership, did not preclude a railroad company from transporting the commodities manufactured, mined, produced, or owned by such corporation, nothing in that conclusion foreclosed the right of the government to question the power of a railroad company to transport in interstate commerce a commodity manufactured, mined, owned, or pur- chased by a corporation in which the railroad held stock and where the power of the railroad company as a stockholder was used to obliterate all distinctions between the two corporations. That is to say, where •the power was exerted in such a manner as to so com-, mingle the affairs of both as by necessary effect to make such affairs practically indistinguishable and therefore to cause both corporations to be one for all purposes. * * * "Our duty is to enforce the statute, and not to ex- clude from its prohibitions things which are properly embraced within them. Coming to discharge this duty it follows, in view of the express prohibitions of ■the commodities clause, it must be held that while the right of a railroad company as a stockholder to use its stock ownership for the purpose of a bona fide sepa- rate administration of the affairs of a corporation in which it has a stock interest may not be denied, the use of such stock ownership in substance for the pur- pose of destroying the entity of a producing, etc., cor- poration and of commingling its affairs in administra- 1.— 9 114 AMERICAN COMMERCE ASSOCIATION tion with the affairs of the railroad company, so as to make the two corporations virtually one, brings the railroad company so voluntarily acting as to such pro- ducing, etc., corporation within the prohibitions of the commodities clause. In other words, that by operation and effect of the commodities clause there is a duty cast upon a railroad company proposing to carry in interstate commerce the product of a producing, etc., corporation in which it has a stock interest not to abuse such power so, as virtually to do by indirection that which the commodities clause prohibits, a duty which plainly would be violated by the unnecessary commingling of the affairs of the producing company w^ith its own, so as to cause them to be one and inseparable." U. S. vs. Lehigh Valley R. R. Co., 220 U. S. 257, 55 L. Ed. 458. See also: D. L. & W. R. R. Co. vs. U. S., 231 U. S. 363, 58 L. Ed. 269. U. S. vs. D. L. & W. R. R. Co.. 238 U. S. 516. The question was again raised in the Tap Line Case, where certain lumber companies in the southwest, having built short railroads from their logging camps to connec- tions with nearby trunk lines, which short roads became known as "tap lines," received a portion of the joint rates of the trunk lines charged for the transportation of their lumber products. In some instances, the tap line trans- ported other trafific than that of the proprietary companies. Having been accepted by the trunk lines as common car- riers, the question of their subsidiary ownership was nega- tively decided by the Interstate Commerce Commission. The Supreme Court, however, applied an incorporation test in determining the status of these tap lines, and in the course of its opinion said : "While Congress in enacting the commodities clause amendment, section 1 of the Act to Regulate INTERSTATE COMMERCE LAW 115 Commerce (34 Stat. 584), sought to divorce transpor- tation from production and manufacture and to make transportation a business of and by itself unallied with manufacture and production in which a carrier was itself interested, the debates, which may be resorted to for the purpose of ascertaining the situation which prompted this legislation, show that the situation in some of the states as to the logging industry and transportation was sharply brought to the attention of Congress and led to the exemption from the com- modities clause of timber and the manufactured prod- ucts thereof, thus indicating the intention to permit a railroad to haul such lumber and products, although it owned them itself. And that Congress had the constitutional power to enact such exemption was held in United States vs. Delaware & Hudson Com- pany, 213 U. S. 366, 416-7, 53 L. Ed. 836, 29 Sup. Ct. 527. This declaration of public policy which is now part of the commerce Act cannot be ignored in inter- preting the power and authority of the Commission under the Act. The discussion resulting in the action of Congress shows that railroads built and owned by the same persons who own the timber were regarded as essential to the development of the timber regions in the southwest and the necessity of such roads was dwelt upon and set forth with ample illustration by Commissioner Prouty in his concurring opinion in this case." U. S. vs. Sou. & Pac. R. Co., 234 U. S. 1, 58 L. Ed. 1185. U. S. vs. Butler Co. R. Co., 234 U. S. 29, 58 L. Ed. 1196. It is instructive to note that prior to the 1906 amend- ment by which the commodities clause was inserted in the Act to Regulate Commerce, the Supreme Court had held that a carrier could not legally agree to sell and transport coal, after the purchase cost thereof and cost of deHvery beyond its own lines had been deducted, at a price which 116 AMERICAN COMMERCE ASSOCIATION would not yield in the net to the carrier the amount of the published and lawful freight rate. N. Y., N. H. & H. R. R. Co. vs. Interstate Commerce Com- mission, 200 U. S. 361, 50 L. Ed. 515. See also: Rates for Transportation of Anthracite Coal, 35 I. C. C. Rep. 220, 248. Campbell Creek Coal Co. vs. A. A. R. R. Co., 29 I. C. C. Rep. 682. Consolidated Fuel Co. vs. A. T. & S. F. Ry. Co., 27 I. C. C. Rep. 554, 556. Plymouth Coal Co. vs. D. L. & W. R. R. Co., 36 I. C. C. Rep. 76, n. § 4. Not Unlawful for Boat Lines to Transport Commodi- ties Owned by Them. The commodities clause does not make it unlawful for boat lines to transport commodities owned by them. Cumberland Transportation Co. vs. C. N. O. & T. P. Ry. Co., 37 I. C. C. Rep. 463, 467. § 5. Switch Connections. Every common carrier subject to the provisions of the Act to Regulate Commerce is required, upon application of any lateral, branch line of railroad, or of any shipper tendering interstate traffic for transportation, to "con- struct, maintain, and operate upon reasonable terms a switch connection with any such lateral, branch line of railroad, or private side track which may be constructed to connect with its railroad, where such connection is rea- sonably practicable and can be put in with safety and will furnish sufficient business to justify the construction and maintenance of the same; and shall furnish cars for the movement of such traffic to the best of its ability without discrimination in favor of or against any such shipper." INTERSTATE COMMERCE LAW 117 Summarized, the requirements to make the switch con- nections are predicated upon three conditions: (1) That the connection is reasonably practicable. (2) That it can be put in and maintained with safety, and (3) That it will furnish sufficient business to justify the construction and maintenance of the connection. § 6. Jurisdiction and Authority of Interstate Commerce Commission Over Switch Connections. The Act provides: "If any common carrier shall fail to install and operate any such switch or connection as aforesaid, on application therefor in writing by any shipper or owner of such lateral, branch line of railroad, such shipper or owner of such lateral, branch line of rail- road may make complaint to the Commission, as pro- vided in section thirteen of this Act, and the Commis- sion shall hear and investigate the same and shall determine as to the safety and practicability thereof and justification and reasonable compensation there- for, and the Commission may make an order, as pro- vided in section fifteen of this Act, directing the com- mon carrier to comply with the provisions of this section in accordance with such order, and such order shall be enforced as hereinafter provided for the enforcement of all other orders by the Commission, other than orders for the payment of money." A careful reading of this entire paragraph of the statute renders the intent of the law very clear, i. e., that the rail- road making the application for the switch connection must be a "lateral, branch line," at the time of the making of the application. The power vested in the Interstate Commerce Commission is not a plenary one under which it may order a switch connection wherever it may arbi- 118 AMERICAN COMMERCE ASSOCIATION trarily determine, but it is a limited authority whereunder the Commission may require the construction and main- tenance, upon reasonable terms, of a switch connection with a lateral, branch line of railroad, or private side track which may be constructed to connect with the railroad. The specific language of the statute is that the applica- tion for switch connection may be made by "any lateral, branch line of railroad," or "any shipper tendering inter- state traffic for transportation," and the connection may only be ordered by the Commission between a lateral, branch line of railroad, or the private side track of the shipper making the application. Again, the power of the Commission is limited because it may only take such action when the connection is reasonably practicable, can be put in with safety, and will furnish sufficient business to justify the construction and maintenance of the same. The question of the proper interpretation of this section of the statute has been before the Supreme Court of the United States in several cases, in each of which the Su- preme Court, since the 1910 amendment to the Act to Regulate Commerce, has uniformly held that carriers sub- ject to the Act are required to establish switch connections with the lines described in the statute on certain conditions named, and, as now amended, the law permits owners of such lines, as well as shippers, to make complaint to the Commission in case of the carrier's failure upon written application and authorizes the Commission to hear, inves- tigate, and determine whether the conditions exist, and to make an order directing the carrier to comply with the Act. United States vs. B. & O. S. W. R. R. Co., 226 U. S. 14, 57 L. Ed. 104. The most important question encountered in the inter- pretation of this section of the Act is the proper construe- INTERSTATE COMMERCE LAW 119 tion to be given to "a lateral, branch line of railroad," and to this question the Supreme Court has spoken as follows : "There certainly is force in the contention that the words of the statute mean a railroad naturally tribu- tary to the line of the common carrier ordered to make the connection, and dependent upon it for an outlet to the markets of the country, which, according to the bill, the Rahway road is not. There is force in the argument that a road already having connec- tion with the roads of two carriers subject to the Act and having joint routes and through rates with them cannot be regarded as a lateral, branch line of another road situated like the appellee. On the other hand, it would be going far to lay down the universal propo- sition that a feeder might not be a lateral, branch road of one line at one end and of another at the other. We leave this doubtful question on one side because we agree with the circuit judges in the con- siderations upon which they decided the case. The statute creates a new right not existing outside of it. Wisconsin, Minnesota & Pacific Railroad Co. vs. Ja- cobson, 179 U. S. 287, 296, 45 L. Ed. 1194, 21 Sup. Ct. 124. It is plain from the provisions of the Act, the history of the amendments and justice, that the object was not to give a roving commission to every road that might see fit to make a descent upon a main line, but primarily, at least, to provide for shippers seeking an outlet either by a private road or a branch." I. C. C. vs. D. L. & W. R. R. Co., 216 U. S. 531, 54 L. Ed. 605. The real intent of Congress in its enactment of this pro- vision of the law is readily determined from the manner in which the provision has been amended. As originally passed by Congress the right was given only to shippers to demand switching connections with lateral, branch rail- roads. I. C. C. vs. D. L. & W. R. R. Co., 216 U. S. 531, 54 L. Ed. 605. 120 AMERICAN COMMERCE ASSOCIATION The Amendment . of 1910 inserted after the word "shipper" the words "or owner of such lateral, branch line of railroad," in both the sixteenth and seventeenth lines of the section, thereby giving to the owner of the lateral, branch Hne of railroad the same rights as the^ shipper possessed. Prior to the amendment of 1906 of the Act to Regulate Commerce containing this regulative provision governing switch connections, state statutes had been upheld by the Supreme Court of the United States, where such right of the state had been exercised through administrative bodies requiring the railroads to make reasonable track connections. Union Lime Co. vs. C. & N. W. Ry. Co., 233 U. S. 211, ' 58 L. Ed. 924. Washington ex. rel. Oregon R. & Nav. Co. vs. Fairchild, 224 U. S. 510, 528, 56 L. Ed. 863. Missouri Pac. R. Co. vs. Kansas, 216 U. S. 262, 54 L. Ed. 472. Wisconsin M. & P. R. R. Co. vs. Jacobson, 179 U. S. 287, 45 L. Ed. 194. Chicago, etc., vs. Thompkins, 176 U. S. 167, 44 L. Ed. 417. Atlantic Coast Line R. R. Co. vs. North Carolina Comm., 206 U. S. 1, 51 L. Ed. 933. Compare : L. & N. R. R. Co. vs. Hidgon, 234 U. S. 592, 58 L. Ed. 1184. McNeill vs. Southern Ry. Co., 202 U. S. 543, 50 L. Ed. 1142. In those cases where the Supreme Court upheld the right of the state to require switch connections, the merits and necessities of each local situation controlled, and it is instructive to note that in the McNeill Case, supra, the Supreme Court, in viewing the order of the State Com- mission as an assertion of its general power to direct car- riers engaged in interstate commerce to deliver all cars containing such commerce beyond the carrier's right of way and to a private siding, held that "the order mani- festly imposed a burden so onerous as to leave no room INTERSTATE COMMERCE LAW 121 for question that it was a regulation of interstate com- merce," and therefore unconstitutional. Again, referring to the Traction Line Case, U. S. vs. B. & O. S. W. Ry. Co., (supra), it is worth while to note the point upon which the question turned in that case. There the court said : "The words 'lateral branch line' do not refer to what the applicant may become or be made by order of the Commission, but to what it already is when it applies. The power of the Commission does not ex- tend to ordering a connection wherever it sees fit, but is limited to a certain and somewhat narrow class of lines. The most obvious examples of such lines are those that are dependent upon and incident to the main line — feeders, such as may be built from mines or forests to bring coal, ore, or lumber to the main line for shipment. We agree with the Commerce Court that the traction company is not within this class. It is an independent venture, in its general course parallel to, more or less competing with, the steam roads and working on a different plan. Pre- sumably and so far as appears it was built and would have been run without regard to the existence of the steam roads. The cases cited on behalf of the appel- lants as to the power of railroad companies to con- struct branch roads under their charter do not apply. There the determination of the company fixes the character of the branch; it builds the branch from the beginning as incident to the purposes of the com- pany. But here, as we have said, this determination of the Commission that the applicant shall be a branch is not enough; the applicant must be a branch before it applies. This is the absolute and reason- able condition. That some shippers would be ac- commodated by a switch connection is not enough." Federal Sugar Refining Co. vs. C. R. R. of N. J. Co., 35 I. C. C. Rep. 488. Huerfano Coal Co. vs. C. & S. E. R. R. Co., 28 I. C. C Rep. 502, 505. 122 AMERICAN COMMERCE ASSOCIATION Morris Iron Co. vs. B. & O. R. R. Co., 26 I. C. C. Rep 240. St. Louis, S. & P. R. R. Co. vs. Peoria & P. U. Ry. Co., 26 I. C. C. Rep. 226. Ralston Townsite Co. vs. M. P. R. Co., 22 I. C. C. Rep. 354. Ridgewood Coal Co. vs. L. V. R. Co., 21 I. C. C. Rep. 185. Winters Metallic Paint Co. vs. C. M. & St. P. R. Co., 16 I. C. C. Rep. 587. The third section of the Act to Regulate Commerce provides that carriers subject thereto, must afford, accord- ing to their respective powers, reasonable, proper and equal facilities for the interchange of traffic between the respective lines, and for the receipt, forwarding and de- livery of passengers and property to and from the several lines and those connected therewith. They are forbidden to discriminate in their rates and charges between such connecting lines, but no such common carrier is required to give the use of its tracks and terminal facilities to another carrier engaged in like business. This exception, however, does not prevent the Commission in justifiable cases from compelling a carrier to accept cars from a connecting line for movement over its tracks and ter- minals. In the Grand Trunk Case, the Supreme Court held that such a requirement, when the haul is "a sub- stantial part of a continuous transportation routing" and necessary thereto, does not amount to an appropriation of terminal facilities for the use and benefit of another road. Grand Trunk R. Co. vs. Mich. Railroad Comm., 231 U. S. 567, 58 L. Ed. 310. See also : Michigan C. R. R. Co. vs. Mich. R. R. Comm., 236 U. S. 615. Penn. R. Co. vs. U. S., 236 U. S. 351. INTERSTATE COMMERCE LAW 123 III. Cent. R. Co. vs. Railroad Comm. of La., 236 U. S. 157. So. R. Co. vs. St. Louis Hay & Grain Co., 214 U. S. 297, S3 L. Ed. 1004, holding that the carrier performing the service through its terminal is entitled to reasonable compensation therefor. See also: Industrial Rys. Case, 29 L C. C. Rep. 212, discussing the al- lowance from rates to industries and their subsidiary rail- ways in the service of switching. § 7. Switch Connections with Water Carriers. Under the provisions of the Panama Canal Act the jurisdiction of the Interstate Commerce Commission over interstate transportation has been extended to in- clude such transportation "by rail and water through the Panama Canal or otherwise" and "of the carriers, both by railroad and by water, which may, or do engage in the same." Incident to this enlargement of authority, the Com- mission has been empowered to require the establish- ment of physical connections between the lines of rail carriers and the docks of water carriers, in those cases where such "connection is reasonably practicable" and "can be made with safety to the public and where the amount of business to be handled is sufficient to justify the outlay." In its construction given to the words "or otherwise" the Commission has held its jurisdiction sufficient to establish through routes and joint rates between rail and water carriers with the necessary construction and main- tenance of physical connections essential to the operation of such through routes. Act to Regulate Commerce, section 6, as amended by Act of March 24, 1912. Augusta & Savannah S. S. Co. vs. Ocean Steamship Co. of Savannah, 26 I. C. C Rep. 380, 385. 124 AMERICAN COMMERCE ASSOCIATION See also: Port Huron & Duluth S. S. Co. vs. Penn. R. R. Co., 35 I. C. C. Rep. 475. Federal Sugar Refining Co. vs Cent. R. R. Co. of N. J., 35 I. C. C. Rep. 488. Bowling Green Business Men's Protective Association vs. L. & N. R. R. Co., 31 I. C. C. Rep. 1. Pacific Navigation Co. vs. Southern Pac. Co., 31 I. C. C. Rep. 472. Decatur Navigation Co. vs. L. & N. R. R. Co., 31 I. C. C. Rep. 281. For general reference to the subject, compare: Second Industrial Railways Case, 38 I. C. C. Rep. 316, 319. In re Muncie & Western R. R. Co., 38 I. C. C. Rep. 510, 514. Second Industrial Railv^rays Case, 37 I. C. C. Rep. 408, 415. Second Industrial Railways Case, 37 I. C C. Rep. 491, 494. § 8. Jurisdictional Powers of Interstate Commerce Com- mission Not Contravened by Shipping Act. The Act of September 7, 1916, regulating vessels in domestic commerce provides that it shall not be construed to "afifect the power or jurisdiction of the Interstate Com- merce Commission, nor to confer upon the board concur- rent power or jurisdiction over any matter within -the power or jurisdiction of such commission; nor shall this Act be construed to apply to intrastate commerce." Act of September 7, 1916, chapter 451, section 33, 39 Stats, at L., Pub. 260, 64th Congress. The board referred to in the last preceding paragraph is one provided by the statute for its administrative en- forcement. For full context of the act regulating vessels in domestic commerce, see Appendix Interstate Commerce Law, Part IV. CHAPTER III ACT TO REGULATE COMMERCE AS AMENDED (CONTINUED). Amplification of Sections (Continued). § 1. Statutory Provisions of Section 2. § 2. Purpose of Section 2. §3. Relationship of Sections 2, 3 and 4 of the Act to Regulate Com- merce. § 4. Section 2 of Act to Regulate Commerce Supported by Elkins Act. § 5. Discrimination — Enforcement of Provisions of Section 2 of Act to Regulate Commerce by the Interstate Commerce Commis- sion and the Courts. 125 I f i CHAPTER III ACT TO REGULATE COMMERCE AS AMENDED (CONTINUED). Amplification of Sections (Continued). § 1. Statutory Provisions of Section 2. ''That if any common carrier subject to the pro- visions of this Act shall, directly or indirectly, by any special rate, rebate, drawback, or other device, charge, demand, collect, or receive from any person unju^j ducrim- or persons a greater or less compensation for any anV''forbrdd''M. service rendered, or to be rendered, in the transpor- tation of passengers or property, subject to the provi- sions of this act, than it charges, demands, collects, or receives from any other person or persons for doing for him or them a like and contemporaneous service in the transportation of a like kind of traffic under substantially similar circumstances and condi- ■ tions, such common carrier shall be deemed guilty of unjust discrimination, which is hereby prohibited and declared to be unlawful." § 2. Purpose of Section 2. The Supreme Court has said that the purpose of sec- tion 2 of the Act to Regulate Commerce is, "to compel every carrier to give equal rights to all shippers over its own road and to forbid it by any device to enforce higher charges against one than another." Wight vs. U. S., 167 U. S. 512. 42 L. Ed. 258. The language of the section has never been changed 127 128 AMERICAN COMMERCE ASSOCIATION since its original enactment. In terms it prohibits the carrier from receiving, directly or indirectly, by any de- vice whatsoever, a greater or less compensation for trans- portation service rendered, or to be rendered, from one person than from another, for "a like and contemporane- ous service in the transportation of a like kind of traffic under substantially similar circumstances and conditions." This latter phrase relates solely to transportation and haulage, and while the individual element is removed, an underlying principle of "fair play" is inculcated into the section. The objective of the section is the destruction of rebates and unequal charges between different shippers. It was disclosed in the preliminary investigations pre- ceding the passage of the Act that preferences were not only frequent in transportation operations but had become the universal rule. It was to uproot these evil practices of rebates and favors, discriminations and preferences, and iniquitous interference with commercial competition by favoring localities and enterprises, that this section of the Act was passed. The section is molded upon a somewhat similar one in the Railway Clauses Consolidation Act of 1845, section 90, 8 and 9 Vict. ch. 20, and its intended operation is to bring about absolute equality between shippers. The effectiveness of this section was early demonstrat- ed, and is referred to by the Commission in its first annual report : "A vast number of instances have been found where special rates, rebates and drawbacks have been dis- continued, and where preferences and advantages which were formerly thereby given, have been ter- minated. INTERSTATE COMMERCE LAW 129 "It was also found that the earnings of the car- riers had been increased by the ehmination of these vicious practices against which the section is directed." U. P. Ry. Co. vs. Goodridge, 149 U. S. 680. Second Industrial Railways Case, 34 I. C. C. Rep. 596, 607. Douglas & Co. vs. I. C. R. R. Co., 31 I. C. C. Rep. 587, 594. Transit Case, 24 I. C. C. Rep. 340, 350. St. Louis Blast Furnace Co. vs. V. Ry. Co., 25 T. C. C. 183. In re Advances in Demurrage Charges, 25 I. C. C. Rep. 314, 323. In re Advances on Manganese Ore, 25 I. C. C. Rep. 663, 668. In re Restricted Rates, 20 I. C. C. Rep. 426, 433. Rail & River Coal Co. vs. B. & O. R; R. Co., 14 I. C. C. Rep. 86, 88. The primary jurisdiction over undue or unjust discrimi- nation by carriers is with the Interstate Commerce Com- mission, the power of the courts being that of review and confined in that review to constitutional questions and all pertinent questions as to whether the action of the Com- mission is within the scope of the delegated authority under which it purports to have acted. I. C. C. vs. C. R. I. & P. Ry. Co., 218 U. S. 88. 110. A discussion by the Supreme Court of the principles of the common law applicable to common carriers prior to the passage of the Act to Regulate' Commerce will be found in the opinion of the court in the Party Rate Case, I. C. C. vs. B. & O. R. R. Co., 145 U. S. 263, 36 L. Ed. 699. § 3. Relationship of Sections 2, 3 and 4 of the Act to Regu- late Commerce. The full scope of the prohibitions of the Act to Regu- late Commerce directed against unjust discriminations is best comprehended by a reading of sections 2, 3 and 4 together. In fact, section 1 of the Act must also be con- 17—10 130 AMERICAN COMMERCE ASSOCIATION sidered, for, while not defining a specific form of dis- crimination it forbids the imposition of an unreasonable transportation charge or practice, the result of which in the aggregate must be discriminatory. So it may be said that section 1 of the Act condemns unreasonable rates and their correlative result of unjust discrimination, and sec- tions 2, 3 and 4 define and prohibit specific forms of dis- crimination, the first four sections of the Act thereby con- summating a prohibition against inequahties and favorit- ism as between shippers. Not all discrimination is condemned by the Act; only that which is undue is prohibited. Carriers may. do many things in the course of lawful competition that the Com- mission could not require them to do nor charge them with undue discrimination for not doing. The term "discrimination," as now employed in the regulating Act, is used in a qualified sense. Discrimination is relative in its present use and, more often than not, de- notes the effect of an omission to equitably differentiate or distinguish relative results, where established condi- tions operate differently. Discrimination as a term, does not necessarily mean an unjust difference. In fact, a close reading of the many court decisions dealing with this sub- ject reveals a literal meaning of a proper or justifiable dif- ference, and in this strict sense the word means exactly what the prohibition of the Act seeks to effect, i. e., a morally equitable difference which creates differences or distinctions between persons, localities, or commodities, that are just, fair, and equitable. Under existing circum- stances and conditions, such differences are sanctioned by the law. It is the discrimination which operates to the undue ad- INTERSTATE COMMERCE LAW 131 vantage of one person and inflicts injustice upon another, that comes within the prohibition of the Act. And so far as the descriptive nature of the prohibited discrimination is concerned, it is clearly defined in the language of the Act to be an unjust or undue discrimination in rates, fares, charges, or service between, first, persons, second, like kinds of traffic, or third, localities, where the service is rendered under substantially similar circumstances and conditions. If the quality of "unjust" or "undue" were capable of tangible measurement, the problem of determining unjust or undue discrimination would be a reasonably simple one. But the facts and circumstances surrounding each alleged act of undue or unjust discrimination must be de- terminative of the degree of difference which is justified in comparison with other related facts and circumstances which are sufficient, in degree, to cause the existence of an unjust or undue preference or disadvantage. Thus, it is clear that the vital purpose of the Act is to re- quire the carrier to serve the public without undue dis- crimination against one of its patrons and unjust prefer- ence of another, but restricts the prohibition to a discrimi- nation involving a relationship between the person favored and the one injured. In this equitable sense, the com- mon law right of the carrier to diflferentiate between its shippers is still preserved by the statute law. Section 2 defines as the unjust discrimination against which its prohibition is directed, the charging or receiving by any common carrier of a greater or less compensation for its services in the transportation of passengers or prop- erty from any person or persons than it charges or te- ceives from any other person or persons under the three conditions named: 132 AMERICAN COMMERCE ASSOCIATION ( 1 ) When the service is a like and contemporaneous one ; (2) In the transportation of a like kind of traffic; and (3) Under substantially similar circumstances and con- ditions. The manner in which such greater or less compensa- tion is charged or received, or in other words, the method by which the unjust discrimination is perpetrated, may be in the form of a special rate, rebate, drawback of other device, directly or indirectly resorted to by the car- rier. Summarily stated, the prohibition of section 2 is against unjust discrimination in rates and charges. Section 3 is less restrictive than section 2, for it includes any form of discrimination whereby "any particular person, company, firm, corporation or locality, or any particular description of traffic," is subjected "to any undue or unreasonable prejudice or disadvantage in any respect whatsoever." Thus, section 3, while, generally speaking, can be said to prohibit undue discrimination in rates, it is sufficiently broad in its scope to include any act or omission on the part of the carrier which results in an undue or unreasonable prejudice or disadvantage to any person, locality or de- scription of traffic. The discrimination provisions of the Act to Regulate Commerce, however, do not stop with those of the third section, irrespective of the apparent completeness of the prohibition, when sections 1, 2 and 3 are considered to- gether, but proceed to the fourth section of the Act and specifically condemn a kind of discrimination which arises out of the relation of long and short haul rates. The provisions of section 4 are directed against a specific form of discrimination in rates between different localities, INTERSTATE COMMERCE LAW 133 and while under wording of section 3, the extension of any- undue or unreasonable preference or advantage to any particular locality is forbidden, the purpose of the fourth section is to narrow this prohibition down to exclude a higher rate for a nearer than for a more distant point on the same line, except in such instances as the Interstate Commerce Commission has lawfully sanctioned the exist- ing relation of the rates. It is, therefore, clear that the first four sections of the Act to Regulate Commerce are comprehensive in their prohibition of the several kinds of discriminations and preferences which may operate among shippers in an un- just and unreasonable manner — the first section prohibit- ing unreasonable rates and their correlative effect of un- just discrimination, the second forbidding unjust discrimi- nation in rates, the third condemning any form of undue or unreasonable prejudice or disadvantage suffered by any person, firm, locality or description of traffic in any re- spect whatsoever, and the fourth section regulating the degree of discrimination which may lawfully exist in the relation of long and short haul rates. §4. Section 2 of Act to Regulate Commerce Supported by Elkins Act. It has been said that "the effectiveness of the Act to Regulate Commerce is more distinctly expressed in the second section than in any other." The problem of rea- sonableness of rates is even more complex today than before the passage of the Act and the purpose of section 2 is a climaxial expression of the abstract result obtain- able from the regulation as a whole — the prevention of 134 AMERICAN COMMERCE ASSOCIATION any unjust discrimination between shippers in any form or by any device. The early history of the second section of the Act was influenced, to an important extent, by efforts of evasion on the part of carriers and shippers. Commercial competition and the intense solicitation of traffic gradually developed, despite the strictly worded prohibitions of the section, into practices and avoidances which found expression in allow- ances to private car lines and owners, incidental conces- sions to influential shippers, divisions of rates with plant- facility-railroads and other devices resorted to in subtle evasion of the inhibition of the section. For a discussion of these matters, see: I. C. C. Ann. Rep. for 1904. See also: 10 I. C. C. Rep. 385, and 10 I. C. C. Rep. 450. The Elkins Act of February 19, 1903, materially rein- forced the second section by its provisions, that any prac- tice on the part of the carriers "whereby any such prop- erty shall by any device whatever be transported at a less rate than that named in the tariffs published and filed by such carrier, as is required by said Act to Regu- late Commerce and the Acts amendatory thereof, or whereby any other advantage is given or discrimination is practiced," amounts to a misdemeanor punishable by fine for each wrongful act. Thus, a discrimination or wrongful practice, even though applied equally to all shippers similarly situated, becomes unlawful and subject to severe penalty. Elkins Act, Pub. No. 103, approved Feb. 19, 1903; 32 Stats, at Large, 847. INTERSTATE COMMERCE LAW 135 The immediate effect of the Elkins Act upon section 2 of the Act to Regulate Commerce was the change in the standard of comparison by which the discrimination was determined. Under the second section of the Act to Reg- ulate Commerce the standard of comparison was the treat- ment accorded to shippers, and it was necessary to show not only that the shipper enjoying the advantage paid less than the tariff rate for his transportation service but that other shippers paid a greater charge than that collected from the favored shipper. Under the provisions of the Elkins Act, the published rate became the standard and an allegation setting forth a violation of the Act was sustained by simply showing that the favored shipper paid a less rate than that published in the tariff filed with the Com- mission. C. & A. Ry. Co. vs. U. S., 212 U. S. 563, 53 L. Ed. 653 (for discussion see 156 Fed. Rep. 558, and also 148 Fed. Rep. 646). Wight vs. U. S., 157 U. S. 512, 42 L. Ed. 258. § 5. Discrimination — Enforcement of Provisions of Sec- tion 2 of Act to Regulate Commerce by the Inter- state Commerce Commission and the Courts. In order to bring into the most compact form and at the same time conserve completeness, the administrative enforcement by the Interstate Commerce Commission and the judicial construction by the courts of the prohibitions of the first four sections of the Act to Regulate Commerce directed against unjust discriminations, and additionally supported by the Elkins Act, will be found in the chapters following the "Amplification of Section 4 of the Act to Regulate Commerce, as Amended," post. This arrange- ment of the subject also enhances the conjunctive effect of the first four sections of the Act. CHAPTER IV ACT TO REGULATE COMMERCE AS AMENDED (CONTINUED). Amplification of Sections (Continued). § 1. Statutory Provisions of Section 3. §2. Relationship of Section 3 with Sections 2 and 4 of the Act to Regulate Commerce. §3. Administrative Application of Provisions of Section 3 of the Act to Regulate Commerce by the Commission. § 4. Discrimination and Preferences between Localities. § 5. Relationship of Sections 3 and 7. § 6. Discriminations — Enforcement of Provisions of Section 3 of the Act to Regulate Commerce by the Interstate Commerce Com-^ mission and the Courts. 137 CHAPTER IV ACT TO REGULATE COMMERCE AS AMENDED (CONTINUED). Amplification of Sections (Continued). § 1. Statutory Provisions of Section 3. "That it shall be unlawful for any common carrier undu. or uibp^- -' , senable prefer- subject to the provisions of this act to make or give ^,°,' fit'iudin* any undue or unreasonable preference or advantage to any particular person, company, firm, corporation, or locality, or any particular description of traffic, in any respect whatsoever, or to subject any particular person, company, firm, corporation, or locality, or any particular description of traffic, to any undue or un- reasonable prejudice or disadvantage in any respect whatsoever. "Every common carrier subject to the provisions of ^fe"'*';j*jJJ7e'Si" this Act shall, according to their respective powers, <^*'"e- afford all reasonable, proper, and equal facilities for the interchange of traffic between their respective lines, and for the receiving, forwarding, and deliver- ing of passengers and property to and from their several lines and those connecting therewith, and shall not discriminate in their rates and charges be- Discrimination ,. , 1-111 i.u between c o n - tween such connectmg Imes ; but this shall not be {"^'g^j'^;' ""•• construed as requiring any such common carrier to give the use of its tracks or terminal facilities to an- other carrier engaged in like business." Like the second section, the third section of the Act to Regulate Commerce bears a strong resemblance to the second section of the English Act to Regulate Railways of July 10, 1854, and the eleventh section of the English 139 140 AMERICAN COMMERCE ASSOCIATION Amplifying Act of July 21, 1873. In fact, the only radical distinction between the second section of the English Railways Act and the third section of the Act to Regulate Commerce is that the latter includes localities in the pro- hibition of undue or unreasonable preferences or advan- tages, whereas the English Act does not contain the word locality. I. C. C. vs. B. & O. R. R. Co. (Party Rate Case), 145 U. S. 263, 36 L. Ed. 699. T. & P. Ry. Co. vs. I. C. C. (Import Rate Case), 162 U. S. 197, 40 L. Ed. 940. The third section of the Act to Regulate Commerce has never been amended since its original passage. The first paragraph of the section prohibits the making or giving of — (a) Any undue or unreasonable preference or advan- tage to — (b) Any person, company, firm, corporation, or local- ity, or to — (c) Any particular description of traffic. And, conversely, prohibits the subjection of any such person, company, firm, corporation, locality, or particular description of traffic, to any undue or unreasonable prej- udice or disadvantage. While section 3 condemns all discriminations and pref-- erences which are unjust and unreasonable, it is in itself an admission that there are discriminations and prefer- ences that may be just and reasonable in their effect. "It is not all discriminations or preferences that fall within the inhibition of the statute ; only such as are unjust and unreasonable * * *. indeed, the possibility of just discriminations and reasonable preferences is recognized INTERSTATE COMMERCE LAW 141 by those sections, in declaring what shall be deemed un- just,'' said the Supreme Court in the Party Rate Case, supra. In the Import Rate Case, supra, the Supreme Court had under consideration the scope of the prohibitions of this section. Speaking to that issue, the court said: "The third section forbids any undue or unreason- able preference or advantage in favor of any person, company, firm, corporation or locality; and as there is nothing in the Act which defines what shall be held to be due or undue, reasonable or unreasonable, such questions are questions not of law, but of fact. The mere circumstance that there is, in a given case, a preference or an advantage does not of itself show that such preference of advantage is undue or unrea- sonable within the meaning of the Act. Hence it follows that before the Commission can adjudge a common carrier to have acted unlawfully, it must ascertain the facts; and here again we think it evi- dent that those facts and matters which carriers, > apart from any question arising under the statute, would treat as calling, in given cases, for a preference or advantage, are facts and matters which must be considered by the Commission in forming its judg- ment whether such preference or advantage is undue or unreasonable. When the section says that no locality shall be subjected to any undue or unreasona- ble prejudice or disadvantage in any respect whatso- ever, it does not mean that the Commission is to re- gard only the welfare of the locality or community where the traffic originates, or where the goods are shipped on the cars. The welfare of the locality to which the goods are sent is also, under the terms and spirit of the Act, to enter into the question. * * * "Our reading of the Act does not disclose any pur- pose or intention, on the part of Congress, to thereby reinforce the provisions of the tariff laws. These laws differ wholly in their objects from the law to regulate commerce. Their main purpose is to collect 142 AMERICAN COMMERCE ASSOCIATION revenues with which to meet the expenditures of the government and those of their provisions whereby Congress seeks to so adjust rates as to protect Amer- ican manufacturers and producers from competition by foreign low priced labor, operate equally in all parts of the country. The effort of the Commission, by a rigid general order, to deprive the inland con- sumers of the advantage of through rates, and to thus give an advantage to the traders and manufacturers of the large seaboard cities, seems to create the very mischief which it was one of the objects of the Act to remedy." Referring again to the same subject matter in a sub- sequent case, the Supreme Court reannounced the princi- ple of its conclusions in the Import Rate Case, thus: "The prohibition of the third section, when that section is considered in its proper relation, is directed against unjust discrimination or undue preference arising from the voluntary and wrongful act of the carriers complained of as having given undue prefer- ence, and does not relate to acts, the result of condi- tions wholly beyond the control of such carriers. And special attention was directed to this view in the Behlmer case, in the passage which we have previous- ly excerpted. To otherwise construe the statute would involve a departure from its plain language, and would be to confound cause with effect. For, if the preference occasioned in favor of a particular place by competition there gives rise to the right to charge the lesser rate to that point, it cannot be that the availing of this right is the cause of the preference, and especially is this made clear in the case supposed, since it is manifest that forbidding the carrier to meet the competition would not remove the discrimination. "The only principle by which it is possible to en- force the whole statute is the construction adopted by the previous opinions of this court; that is, that competition which is real and substantial, and exer- cises a potential influence on rates to a particular INTERSTATE COMMERCE LAW 143 point, brings into play the dissimilarity of circum- stance and condition provided by the statute, and justifies the lesser charge to the more distant and competitive point than to the nearer and noncom- petitive place, and that this right is not destroyed by the mere fact that incidentally the lesser charge to the competitive point may seemingly give a prefer- ence to that point, and the greater rate to the non- competitive point may apparently engender a dis- crimination against it. We say seemingly on the one hand and apparently on the other, because in the sup- posed cases the preference is not 'undue' or the dis- crimination 'unjust.' This is clearly so, when it is considered that the lesser charge upon which both the assumption of preference and discrimination is predi- cated is sanctioned by the statute, which causes the competition to give rise to the right to make such lesser charge." E. Tenn., Va. & Ga. Ry. Co. vs. I. C. C, 181 U. S. 1, 18, 45 L. Ed. 719. T. & P. Ry. Co. vs. I. C. C. (Import Rate Case), 162 U. S. 197, 40 L. Ed. 940. C. N. O. & T. P. Ry. Co. vs. I. C. C. (Social Circle Case), 162 U. S. 184, 40 L. Ed. 935. I. C. C. vs. B. & O. R. R. Co., 43 Fed. Rep. 37 (Af- firmed in 145 U. S. 263, 36 L. Ed. 699). § 2. Relationship of Section 3 with Sections 2 and 4 of the Act to Regulate Commerce. The language of section 3 of the Act to Regulate Com- merce is constructively broad enough to include even the discriminations prohibited by section 2, the inhibition of which applies specifically to discriminations in rates. The provisions of section 3 cover a form of discrimination or preference which operates to place any person, company, corporation, firm, locality, or kind of traffic, at an unjust disadvantage or prejudice with any other individual, locality or kind of traffic. The discriminations referred to in section 2 relate to like kinds of traffic whereas the 144 AMERICAN COMMERCE ASSOCIATION discriminations brought within the provisions of section 3 are between different kinds of traffic as well. At one time a federal court declared that the prohibition in sec- tion 3 against the carrier giving or making any undue or unreasonable preference or advantage to any particular kind of traffic had relation only to the property transport- ed, and not to the method of transportation or the rate charged therefor. This seems too narrow a construction and in view of the decisions of the Supreme Court the clear meaning of section 3 is that its prohibitions include unreasonable rates, also prohibited by section 1 of the Act, for, any rate which operates to subject any individual, locality, or kind of traffic to an undue or an unreasonable prejudice or disadvantage is an unreasonable rate. It is the relation which a rate bears to other rates that most frequently determines its reasonableness or unreason- ableness and it is the prejudicial or advantageous effect of the rate, rather than of practices or regulations, upon par- ticular individuals, localities, or kinds of traffic, which is contemplated by the prohibitions of both sections 1 and 3. Thus, the issue where a rate is attacked under section 3 is as to its relative reasonableness only, but proceedings may be brought raising the issue of discrimination in the rate under all of the first four sections of the Act, (1) relative unreasonableness of the rate under section 1, (2) unduly discriminatory effect of the rate under section 2, (3) unduly discriminatory effect of the rate under sec- tion 3, and (4) unduly discriminatory effect of the rate under the long-and-short-haul provisions of the fourth section. Kansas City Missouri River Nav. Co. vs. C. & O. Ry. Co . 34 I. C. C. Rep. 67, 74. INTERSTATE COMMERCE LAW 145 Southern States Supply Co. vs. S. Ry. Co., 31 I. C. C. Rep. 30, 31. Pacific Nav. Co. vs. S. P. Co., 31 I. C. C. Rep. 472. 480. Wickwire Steel Co. vs. N. Y. C. & H. R. R. R. Co., 30 1. C. C. Rep. 415, 419. Pacific Coast Gypsum Co. vs. O.-W. R. R. N. Co., 30 I. C. C. Rep. 135, 139. Santa Rosa Traffic Assn. vs. S. P. Co., 29 I. C. C. Rep. 65, 68 Flour City S. S. Co. vs. L. V. R. R. Co., 24 I. C. C. Rep. 179, 185, 189. Board of Trade of Carrollton, Ga., vs. C. of Ga. Ry. Co., 28 I. C. C. Rep. 154, 167. Hennipen Paper Co. vs. N. P. Ry. Co., 27 I. C. C. Rep. 699. Board of Trade, etc., vs. C. & A. R. R. Co., 27 I. C. C. Rep. 530, 534. North Fork Cannel Coal Co. vs. A. A. R. R. Co., 25 I. C. C. Rep. 241, 246. In re Advances in Demurrage Charges, 25 I. C. C. Rep. 314, 323. Mayor, etc., vs. A. C. L. R. R. Co., 24 I. C. C. Rep. 50, 51. Kellogg Toasted Corn Flake Co. vs. M. C. R. R. Co., 24 I. C. C. Rep. 604. 605. R. R. Comm. of La. vs. St. L. S. W. Ry. Co., 23 I. C. C. Rep. 31, 41. Rail & River Coal Co. vs. B. & O. R. R. Co., 14 I. C. C. Rep. 86, 88. The second paragraph of section 3 requiring carriers subject to the Act to afford all reasonable, proper, and equal facilities for the exchange of traffic between their respective lines and for the receiving, delivering and for- w^arding of property to and from their several lines and those connecting therewith, prohibits discrimination in rates and charges between such connecting carriers. This provision has the effect of broadening the requirement of section 1 and makes plain the intent of Congress that every reasonable and proper facility of the carrier shall be extended to all its connections equally and that no discrimination in its charges shall be made in favor of or against any connecting line, except that such carrier shall not be compelled to give the use of its tracks or terminal facilities to another carrier, it being specifically provided in the last paragraph of the section that the requirement 17—11 146 AMERICAN COMMERCE ASSOCIATION "shall not be construed as requiring any such common carrier to give the use of its tracks or terminal facilities to another carrier engaged in like business." Flour City S. S. Co. vs. L. V. R. R. Co., 24 I. C. C. Rep. 179, 185. See also this volume, chapter III, section 3, "Relation- ship of sections 2, 3 and 4 of the Act to Regulate Com- •nerce." § 3. Administrative Application of Provisions of Section 3 of the Act to Regulate Commerce by the Com- mission. From its inception until in the year 1898, the Commis- sion, in its administrative enforcement of the provisions of sections 3 and 4, of the Act proceeded upon the theory that competition v^as no justification for the charging of a greater rate on the shorter haul and the necessary pref- erences resulting to localities. It must be remembered that the relation of sections 3 and 4 is in many ways inter- dependent. Section 3 generally forbids undue or unrea- sonable preference or advantage to any locality, and sec- tion 4 specifically prohibits a greater charge for a shorter than for a longer haul over the same line. These two sec- tions of the Act reached to the very heart of the American railway rate problem. Within their scope lay two ex- tremes — a yard stick measurement of all rates or a flexi- bility compatible with the competitive necessities of an unrestricted commerce. Upon the construction of the phrase "unjust or unreasonable preference" hinged either the destruction of competition or the preservation of this greatest of comtnercial forces. INTERSTATE COMMERCE LAW 147 The Supreme Court of the United States construed the clause "unjust and unreasonable preference" to admit, in the spirit of the entire Act, of the elimination of those necessary preferences which arise in railway and commer- cial competition. Thus the competition rule was announced by the court to the effect that if competition was real and controlling, it created substantially different circum- stances and conditions. The qualification, however, was interposed that where lower rates were induced by com- petition, they should not be below the point of reasonable- ness and remunerativeness to the carrier, and if not un- reasonable and unremunerative they could not become unjustly preferential or advantageous within the meaning of the Act. In all, the court qaulified the competition rule in the following respects: (a) The competition must be controlling, in that the carrier must meet it or loss of the business will result. (b) The competition must he real and not created by agreements between the carriers destroying real competi- tion; (c) The lower rate at the competing or preferred point must be remunerative to the carrier; and (d) The rates thus made must be reasonable them- selves. It is apparent, therefore, at the outset, that the Commis- sion, in applying the sections of the Act dealing with dis- criminations and preferences, must determine from ques- tions of fact how far the competition rule is controlling. And, if competition is controlling, whether the lower rates resulting therefrom are reasonable. I. C. C. vs. L. & N. R. Co., 190 U. S. 273, 47 L. Ed. 1047, af- firming the same case in 108 Fed. Rep. 988. , 148 AMERICAN COMMERCE ASSOCIATION I. C. C. vs. Cinn., etc., R. Co., 124 Fed. Rep. 624. Brewer vs. Cent., etc.. R. Co . 84 Fed. Rep. 258. I. C C vs. L. & N. R. Co., 73 Fed. Rep. 409. See also: L. B. Meneffee Lumber Co. vs. T. & P. Ry. Co., IS I. C. C Rep. 49. Commercial Coal Co. vs. B. & O. R. R. Co., 15 I. C. C. Rep. 11. Hydraulic Press Brick Co. vs. St. L. & S. F. R. R. Co., 13 I. C. C. Rep. 342. Bovaird Supply Co. vs. A. T. & S. F. R. R. Co., 13 I. C. C. Rep. 56. Texas Cement Plaster Co. vs. St. L. & S. F. R. R. Co., 12 I. C. C. Rep. 68. While, as we have seen, the courts qualified the applica- tion of the competition rule in the elimination of certain competitive preferences, competition may not alv^rays justify a preference, and that question must be determined under the third section of the Act as a question of fact in each case — whether the preference or advantage is undue or unreasonable. The section itself recognizes the necessary existence of preferences, but its prohibition is against those preferences which are unjust and unreason- able. T. & P. R. Co. vs. I. C. C, 162 U. S. 197, 40 L. Ed. 940. I. C. C. vs. A. M. R. Co., 168 U. S. 144, 40 L. Ed. 414. N. Y., etc., Exch. vs. B. & O. R. R. Co., 7 I. C. C. Rep. 612. Phills, etc., Co. vs: L. & N. R. Co., 8 I. C. C. Rep. 93. See also: 10 I. C. C. Rep. 460 10 I. C. C. Rep. 456. 9 I. C. C. Rep. 581. 9 I. C. C. Rep. 160. 8 I. C. C. Rep. 608. 8 I. C. C. Rep. 503. 8 I. C. C. Rep. 316. 8 I. C. C. Rep. 290. 6 I. C. C. Rep. 586. 2 I. C. C. Rep. 231. 2 I. C. C. Rep. 137. Where by ownership of otherwise competitive lines, or suppression by agreement of combination of real competi- INTERSTATE COMMERCE LAW 149 tion, or the creation of artificial market conditions by the carriers, preferences are created, they are unlawful and violative of section 3. The determination of whether the preference results from controlling competition forced upon the carrier, or whether the competition is artificial and the preference the result of agreement or combina- tion among the carriers, is always a question of fact. Sav. Bu. of Frt. vs. L. & N. R. Co., 8 I. C. C. Rep. 377. I. C. C. vs. L. & N. R. Co., 118 Fed. Rep. 613, enforcing the Commission's order in 8 I. C. C. Rep. 2)11 . Chamber of Com., etc., vs. Chicago, etc., R. Co., 15 I. C. C. Rep. 460. Star Grain & Lbr. Co. vs. Atchison, etc., R. Co., 14 I. C. C. Rep. 364. I. C. C. vs. So. R. Co., 117 Fed. Rep. 741. I. C. C. vs. L. & N. R. Co., 190 U. S. 273, 47 L. Ed. 1047. It is neither sound in principle nor equitable in practice for carriers to create artificial differences in market con- ditions by an arbitrary differential in rates whereby the product of one section of the country is assigned to one market and the product of another section of the country to another market. Re Export Rates, etc., 8 I. C. C. Rep. 185. The mere fact that a given town has been recognized as a "trade center" and is enabled by its more favorable rate adjustment to distribute in a certain territory, cannot justify the continuance of relative rates which result in undue preference. The law contemplates relatively fair rates as between different places, and the dealer located in a small town is entitled to a reasonable adjustment which will enable him to compete on an equitable basis with dealers at trade centers enjoying the benefit of com- petitive rates. Payne & Gardner Co. vs. L. & N. R. Co., 13 I. C. C. Rep. 638. 150 AMERICAN COMMERCE ASSOCIATION § 4. Discrimination and Preferences Between Localities. So far as the inhibition of section 3 against discrimina- tions or preferences between different points or localities is concerned as an element in rate adjustment, it is direct- ed to such unjust discriminations or preferences as arise from the voluntary and wrongful action of the carriers, and are therefore such unjust discriminations as are within the control of the carriers. The dissimilarity of conditions in rates at a given point brought about by actual competition between carriers creates the situation contemplated by the provisions of the 4th section and constitutes the only ground of justifi- cation for the lesser charge to the more distant point. In o'ther words, the permissive advantage accruing to the competitive point over the nearer non-competitive point on the same line can be justified when the influence of real and substantial competition does not create an unjust difference in rates between the two points. It must be borne in mind however, that the right of preference given by section 4 only results from the competition that is real and controlling, and not a merely potential one. Neither may the competition be created by carriers through com- bination or agreement. "If by agreements or combina- tions among carriers," said the Supreme Court in the Louisville & Nashville case, "it were found that at a par- ticular point rates were unduly influenced by a suppression of competition, that fact would be proper to consider in determining the question of undue discrimination and the reasonableness per se of the rates at such possible compet- itive points." The question, however, of whether such difference in rates between localities amounts to an unjust discrimination or preference, or comes within the justifica- INTERSTATE COMMERCE LAW 151 tion contemplated by section 4, is a question of fact deter- minable by the Interstate Commerce Commission. It is not a question of law, but simply a question of fact over which the Commission exercises original and complete jurisdiction. I. C. C. vs. L. & N. R. R. Co.. 190 U. S. 273. 47 L. Ed. 1047. § 5. Relationship of Sections 3 and 7. With the provisions of section 3 requiring the carrier to furnish reasonable, proper, and equal facilities of inter- change, and to receive, forward and deliver shipments to connecting lines, and the requirements of section 7 that the carrier shall not by agreement, combination, or con- tract, express or implied, prevent the continuous move- ment of shipments from origin to point of destination, makes the stoppage, break, or interruption of through shipments, unless physically necessary, or made in good faith and without intent to evade the law, unlawful and in violation of the Act. Act to Reg. Com., section 7. See also: Cutting vs. Fla. R. & N. Co., 46 Fed. Rep. 641. The purpose of the provisions of the third and seventh sections of the Act relating to interchange of traffic is to secure through carriage and the freest possible inter- change of traffic along and over all lines and routes where the physical connections and conditions for such inter- change exist, both in the interest of commerce and to secure impartial treatment of railroad companies connect- 152 AMERICAN COMMERCE ASSOCIATION ing with others, it being- the duty of the carriers subject to the Act to exchange, interchange and return cars. I. C. C. Ann. Rep. for 1895. Act to Reg. Com. section 1. • § 6. Discriminations — Enforcement of Provisions of Sec- tion 3 of Act to Regulate Commerce by the Inter- state Commerce Commission and the Courts. In order to bring into the most compact form and at the same time conserve completeness, the administrative enforcement by the Interstate Commerce Commission and the judicial construction by the courts of the prohibi- tions of the first four sections of the Act to Regulate Com- merce directed against unjust discriminations, and addi- tionally supported by the Elkins Act, will be found in the chapters following the "Amplification of section 4 of the Act to Regulate Commerce, as Amended," post. This arrangement of the subject also enhances the conjunctive effect of the first four sections of the Act. CHAPTER V ACT TO REGULATE COMMERCE AS AMENDED (CONTINUED). Amplification of Sections (Continued). § 1. Statutory Provisions of Section 4. § 2. The Original Fourth Section. § 3. The New Fourth Section. § 4. The Purpose of the New Fourth Section. § 5. Constitutionality of New Fourth Section. § 6. A New Constitutional Question. § 7. Fourth Section Board. § 8. Fourth Section Applies to Import and Export Rates. § 9. Case Reference to Commission's Rulings under Fourth Section. § 10. Burden of Proof under Application for Relief from Provisions of Section 4. § 11. Discriminations — Enforcement of Provisions of Section 4 of Act to Regulate Commerce by the Interstate Commerce Com- mission and the Courts. 153 1 CHAPTER V ACT TO REGULATE COMMERCE AS AMENDED (CONTINUED). Amplification of Sections (Continued). § 1. Statutory Provisions of Section 4. "(As amended June 18, 1910.) That it shall be unlawful for any common carrier subject to the pro- "-"hVui'JIivjMoI* visions of this Act to charge or receive any greater compensation in the aggregate for the transportation of passengers, or of like kind of property, for a shorter than for a longer distance over the same line or route in the same direction, the shorter being included with- in the longer distance, or to charge any greater com- pensation as a through route than the aggregate of the intermediate rates subject to the provisions of this Act; but this shall not be construed as author- izing any common carrier within the terms of this Act to charge or receive as great compensation for a shorter as for a longer distance : Provided, however, That upon application to the Interstate Commerce Commission such common carrier may in special *'",™?h"!?? "t" cases, after investigation, be authorized by the Com- fJim^'hSTpJ?! mission to charge less for longer than for shorter dis- »wtron.°* **"* tances for the transportation of passengers or prop- erty; and the Commission may from time to time pre- scribe the extent to which such designated common carrier may be relieved from the operation of this section: Provided further, That no rates or charges lawfully existing at the time of the passage of this amendatory Act shall be required to be changed by reason of the provisions of this section prior to the expiration of six months after the passage of this Act, nor in any case where application shall have been 155 156 AMERICAN COMMERCE ASSOCIATION filed before the Commission, in accordance with the provisions of this section, until a determination of such application by the Commission. Rates reduced t» "Whenever a carrier by railroad shall in competi- trSf'Jaue"] tion w^ith a w^ater route or routes reduce the rates on m\M°on. "**"' the carriage of any species of freight to or from com- petitive points, it shall not be permitted to increase such rates unless after hearing by the Interstate Com- merce Commission it shall be found that such pro- posed increase rests upon changed conditions other than the elimination of water competition." § 2. The Original Fourth Section. The original fourth section of the Act to Regulate Com- merce has been the subject of review in the courts to a far greater extent than any other section of the Act. For over twenty years the construction of the section turned on the qualification as to dissimilarity of conditions effect- ed by competition. As originally enacted it contained the qualifying phrase "under substantially similar circum- stances and conditions," but since this volume is devoted to the operations of the law in its present amended form, no extended discussion of the interpretation and effect of this now obsolete qualification of the former section will be indulged in. This phrase was stricken from the section by the amendment of June 18, 1910, and a new proviso added to the effect that a carrier, having once reduced its rates to meet water competition, may not increase such rates unless the Commission finds that the proposed in- crease results from changed conditions other than the elimination of the water competition. The earliest announcement by the Commission of its views on the subject of what competition might be con- sidered as authorizing a departure from the rule of section INTERSTATE COMMERCE LAW 157 4, was in Re Petition of Louisville & Nashville R. R. Co. (1887) 1 L C. C Rep. 31 where it said: "That the existence of actual competition which is of controlling force, in respect to traffic important in amount, may make out the dissimilar circumstances and conditions entitling the carrier to charge less for the long'er than for the shorter haul over the same line in the same direction, the shorter being included in the longer, in the following cases : (1) when the com- petition is with carriers by water which are not sub- ject to the provisions of the statute; (2) when the competition is with foreign or other railroads which are not subject to the provisions of the statute; (3) in rare and peculiar cases of competition between railroads which are subject to the statute, when a strict application of the general rule of the statute would be destructive of legitimate competition," The courts, in passing upon the qualified prohibition of the section, held that the real and substantial com- petition which justifies a lesser charge for a longer than for a shorter haul is not confined to carriage from the same initial point, but includes carriage from other and inde- pendent points; thus, all competition may be considered in fixing the rate for the longer haul, provided it exercises a substantial and material effect upon traffic and rate making. In other words, in order to constitute dissimilarity un- der the fourth section of the Act, the competition must be real, and not imaginary or trifling, and even then its effect must not be permitted to cause undue discrimination against related rate points. Thus, each case involved an issue of fact unto itself and the determination thereof could not be reached through extraneous comparisons with other cases. 158 AMERICAN COMMERCE ASSOCIATION The objective of the section has always been and is the prevention of undue discrimination, and its language prior to the amendment of 1910 had been the subject of much judicial consideration. In 1892 the first decision of the courts was handed down in which a dissection of the sec- tion was resorted to that, in its finality, rendered the long- and-short-haul clause largely inoperative. Prior to this decision the courts had in every material sense, uniformly interpreted the section to the effect that — (1) the prohibi- tion against a greater charge for a shorter than for a longer distance over the same line in the same direction, the shorter being included within the longer distance, was limited to cases in which the circumstances and conditions of transportation were substantially similar; (2) the car- rier might judge in the first instance as to the similarity or dissimilarity of such circumstances; (3) that this judg- ment was not final but was subject to review by the Com- mission and the courts. Most prominent of the conditions accepted as constitut- ing such dissimilarity of circumstances and conditions as to entitle the carrier to charge less for the longer haul, was the existence of water competition and the competition of railroads not subject to the Act, and some "rare and peculiar" cases of competition between railroads which were subject to the law. But the Commission had de- clined to recognize distinctions based upon differences be- tween local and through traffic or factors of expense to the carrier as justifying causes. Likewise trade-building was not accepted by the Commission as sufficient reason for claiming exemption from the operation of the section. The word "line" was early held to mean a physical line and not a mere business arrangement, and the real signifi- INTERSTATE COMMERCE LAW 159 cance of the phrase "under substantially similar circum- stances and conditions" was that of physical carriage in- stead of general transportation conditions. The "separate and independent line" case defined the word "line," as used in the fourth section, by holding that the "joint line" formed by two or more roads was wholly independent of the individual hues represented by the several roads taken separately and apart, and that the total "joint rate" over two or more roads, not being over the "same line," might for anything contained in the fourth section of the Act, not only be as low but even lower than the local rate of either. Thus, the railroads were permitted to engage in traffic agreements for through carriage of freight and by so doing legally be- come a line separate and independent from the same phys- ical property when engaged in the transportation of freight over its own line. This was directly opposed to the early interpretation of the Commission in the Central Vermont case, where it had held the word "line" to mean the physical line and not a mere traffic agreement. Under the court's decision as many lines could exist over one set of rails as there were traffic agreements for through movement of freight between its terminal points. Nor did the effect of this judicial interpretation stop here. Subsequent court decisions not only followed the ruling just mentioned, but elaborated upon it and expand- ed its effect. The Georgia Federal Court case reached the climax of nullification of the section, when it held that traffic from Cincinnati to Augusta or Atlanta was carried over a different line than that which was used for trans- portation to points intermediate between Atlanta and Augusta, since the several carriers agreeing upon the 160 AMERICAN COMMERCE ASSOCIATION joint rate as far as Atlanta from the north, were dififerent, and that the road from Atlanta to Augusta being wholly within the State of Georgia, might by making a local rate from Atlanta which was added to the through rate into Atlanta, constitute itself merely a state road, and there- fore be exempted from the prohibition of the Act. Osborne vs. Railroad Co., 52 Fed. Rep. 912, Commenting upon this judicial destruction of the sec- tion's effectiveness, the Commission in its annual report for 1893 declared "that in addition to the embarrassments proposed by the original 'line' decision, the very juris- diction of the law itself is invaded by the extension of the line theory indulged in by the Georgia Federal Court." This construction of the section remained in effect un- til the Supreme Court of the United States, in the so- called "Social Circle" case, held that when goods are shipped on a through bill of lading, they constitute an interstate carriage subject to Federal supervision and control. The effect of this decision was to overrule the former decisions and restore to the word "line" the mean- ing in its original interpretation by the Commission. C. N. O. & T. P. Ry. Co. vs. I. C. C. (Social Circle Case), 162 U. S. 184, 40 L. Ed. 935. But this interpretation of the section was not to become permanent, for in 1896, in the Alabama & Midland case, the Supreme Court in effect struck down the ruling in the Social Circle case and the construction of the Com- mission by holding that railroad competition did consti- tute that dissimilarity of circumstances and conditions which would entitle a carrier to exemption from the pro- hibitive operation of the section. While the court in the latter case held that competition, whether commercial INTERSTATE COMMERCE LAW 161 or of railroads, must be recognized as a factor in the de- termination of the similarity of circumstances and condi- tions, but that such competition "was only one of the ele- ments of consideration, the railroads seized upon this in- terpretation of the law as a justification for whatever departure they desired to make from the practice origi- nally contemplated in the adjustment of long-and-short haul transportation charges. I. C. C. vs. Alabama & Midland Ry. Co., 168 U. S. 144, 42 L. Ed. 414. More than this the court held that all forms of competi- tion must be considered in determining whether circum- stances and conditions were similar at two points, but this did not act as a deterrent to the railroads in their departures from the economic purpose of the fourth sec- tion. The Commission understood this decision to mean that if circumstances and conditions were different at the more distant point, that of itself removed the case from the inhibition of the section and from the jurisdiction of the Commission thereunder. The Commission might inquire whether the dissimilarity existed, and if it found that it did not, might require carriers to cease and desist from making the higher charge at the intermediate point, but if it found that the dissimilarity did exist it could go no further; it had no power to inquire whether the dissimi- larity justified the discrimination. In its annual report to Congress for the year 1897, in commenting upon the effect of this decision, the Commission said, at page 43: "That section (the fourth) enacts that the carrier shall not charge more for the short than for the long haul under substantially similar circumstances and conditions. If the circumstances and conditions are similar, the greater charge can not be made. If the 17—12 162 AMERICAN COMMERCE ASSOCIATION circumstances and conditions are not similar the sec- tion does not apply. The court holds that railway- competition of controlling- force makes the circum- stances dissimilar. If, therefore, we find in a partic- ular case that competition of controlling force actually exists, that ends the matter. We have no power to say whether, nor to what extent, such competition justifies the hig-her rate to the intermediate point. ^ "The third section is still left, and under that sec- tion we may inquire whether under all the circum- stances the rates as adjusted give as undue preference to the competitive point, but the fourth section is by this decision eliminated from the act. "While the effect of the Alabama & Midland case in the actual application of the fourth section seemed to be exactly as stated above by the Commission, there is, nevertheless, some language in the opinion which leaves room for a different interpretation. For example, at page 167 of that opinion, the court said: Tn order further to guard against any mis- apprehension of the scope of our decision, it may be v\'ell to observe that we do not hold that the mere fact of competition, no matter what its character or extent, necessarily relieves the car- rier from the restraints of the third and fourti. sections but only that these sections are not so stringent and imperative as to exclude in all cases the matter of competition from considera- tion in determining the question of 'undue or unreasonable preference or advantage,' or what are 'substantially similar circumstances and con- ditions.' The competition may in some cases be such as, having due regard to the interests of the public and of the carrier, ought justly to have effect upon the rates, and in such cases there is no absolute rule which prevents the Commission or the courts from taking that matter into con- sideration.' " Certain of the federal courts took a somewhat diflferent INTERSTATE COMMERCE LAW 163 view of the decision from that of the Commission, insist- ing that it was the duty of the Commission in cases aris- ing under the fourth section to inquire, not merely wheth- er circumstances and conditions differed at the longer- distant point, but whether under all the circumstances, the discrimination was or was not justifiable. Severens, district judge, speaking with reference to certain language of the Commission similar to that used in its report just quoted from, said: "Now, I do not understand that such a conclusion follows from that decision. On the contrary, I sup- pose that when a violation of the long-and-short-haul provision is charged, competition is one of the ele- ments which enter into the determination whether the conditions are similar, and if dissimilarity is found, then the further question arises whether the dissim- ilarity is so great as to justify the discrimination which is complained of. The language of the act ought not to be tied up by such literal construction. If it were, then if it should be found that the dissimilarity of conditions is really in favor of the locality discrim- inated against, the provision would not apply — a re- sult contrary to the manifest intent. In other words, my opinion is that the restraint of section 4 is to be applied upon the scale of comparisons between the dissimilarity of conditions and the disparity of rates, and that it is competent under that section to restrain the exaction of the greater charge for the shorter haul, although there may be a substantial dissimilarity of conditions, provided the dissimilarity is not so great as to justify the discrimination made. I. C. C. vs. East Tennessee, V. & G. Ry. Co., 85 Fed. Rep. 107, 118; E. T. V. & G. Ry. Co. vs. I. C. C, 99 Fed. Rep. 52." The report of the Commission proceeds: "The Commission itself, somewhat reanimated by the dicta of these judges, adopted a similar view which 164 AMERICAN COMMERCE ASSOCIATION it endeavored to apply in one or two instances. It held, for example, in the Danville Case, 8 I. C. C. Rep. 409, that competition did exist at Lynchburg, the more distant point, which did not exist at Danville, the intermediate point, and that therefore rates to Lynchburg might properly be somewhat lower than to Danville but that the difference ought not to be as great as that enforced by the tariffs of the defendants, and it ordered the carriers to cease and desist from maintaining a great discrimination against Danville than was found by its opinion to be proper. "Again in Board of Trade of the City of Hampton, Fla. vs. N. C. & St. L. Ry. Co., 8 I. C. C. Rep. 503, we held that rates to Palatka, the more distant point from certain points of origin', might properly be lower than to Hampton, the intermediate point, but that the Hampton rate should not exceed the rate to Palatka by the full amount of the local, and we ordered car- riers to cease and desist from maintaining the adjust- ment then in effect. "Proceedings were begun before the circuit court to enforce the orders of the Commission in both these cases, but in each case it was held by the circuit court of appeals that where dissimilarity of circumstances at the more distant point was shown, the Commission could only inquire as to whether the rate at the more distant point could not be made the standard of the reasonable rate at the intermediate point. I. C. C. vs. N. C. & St. L. Ry. Co., 120 Fed. Rep. 934; I. C. C. vs. S. Ry. Co., 122 Fed. Rep. 800. "These cases were never brought to the attention of the Supreme Court, for the reason that that court had meantime apparently decided the question ad- versely to the contention of the Commission in E. T. V. & G. Ry. Co. vs. L C. C, 181 U. S. 1. "The complainant in the proceeding before the Commission out of which that suit grew was the city of Chattanooga, and its complaint was that carriers leading through Chattanooga to Nashville made a lower rate from eastern points of origin to Nashville INTERSTATE COMMERCE LAW 165 than to Chattanooga. The Commission had found that there was no water competition which forced this lower rate, but that there was a competition of rail- ways and of markets which forced the defendants to accept the Nashville rates, and that if compelled to observe the long-and-short-haul provision they must either reduce their rates at Chattanooga or retire from the Nashville business. The Commission had ordered the carriers to cease and desist from charg- ing more to Chattanooga than to Nashville, and this order had been affirmed first by the circuit court and afterwards by the circuit court of appeals. E. T. V. & C. Ry. Co. vs. I. C. C, supra. "The Supreme Court of the United States reversed all these findings and held that upon the admitted case competition did exist at the more distant point which compelled the making of the lower rate and, that this being so, circumstances and conditions were dissimilar and the fourth section not applicable. The following excerpt from the opinion clearly states the view of the court: 'Although the Interstate Commerce Commis- sion found as a fact that the competition at Nash- ville, which forms the basis of the contention in this case, was of such a preponderating nature that the carriers must either continue to charge a lesser rate for a longer haul to Nashville than was asked for the shorter haul to Chattanooga, or to abandon all Nashville traffic, nevertheless they were forbidden by the Act of February 4, 1887, c. 104, 23 Stat., 379, to make the lesser charge for the longer haul; but since that ruling of the Commission was made it has been settled by this court in Louisville & Nashville Railroad Company vs. Behlmer, 175 U. S., 648, and other cases cited, that competition which is controlling on traffic and rates produces in and of itself the dissimilarity of circumstances and conditions de- scribed in the statute, and that where this con- dition exists a carrier has a right of his own mo- 166 AMERICAN COMMERCE ASSOCIATION tion to take it into view in fixing rates to the competitive point; and it follows that the con- struction affixed by the Commission to the statute upon which its entire action in this case was predicated was wrong.' "This decision of the Supreme Court fully confirmed the interpretation which this Commission had placed upon the Alabama Midland Case. If circumstances and conditions at the more distant point were dissim- ilar, carriers might without restraint depart from the long-and-short-haul rule. This virtually repealed that section, for the reason that it is always possible to show in the interlacing network of railways in this country, and in view of the intricate commercial con- ditions, that circumstances are different at one point from another. To hold that carriers may, wherever the dissimilarity exists, meet that competition or de- cline to meet it, partially meet it here and fully meet it there, is to hold that they may without practical restraint discriminate between different localities. "The Commission was forced to and did dismiss complaint after complaint upon the ground that there was a substantial dissimilarity of conditions at the more distant point, without inquiring whether, in point of fact, under the circumstances, the discrimina- tion against the intermediate point should have been permitted. That provision of the section authorizing the Commission to prescribe the instances in which carriers might depart from the rule of the section and the extent of that departure could be given no prac- tical effect. "The history of the judicial interpretation of this section has been given in detail, in order that the effect of the words "similar circumstances and condi- tions" upon the actual application of the statute might be clearly apprehended. The fourth section was for practical purposes a nullity. For 20 years this Com- mission has made no order of consequence under that section which could be enforced, and this because of the existence of these words. Their presence hap INTERSTATE COMMERCE LAW 167 rendered futile the prohibition of the section and has made it impossible to give any effect to the proviso v^hich allowed the Commission to designate the in- stances in which the rule of the prohibition might be departed from." I. C. C. vs. L. & N. R. R. Co., 190 U. S. 273, 47 L. Ed. 1047. E. Tenn., Va. & G. Ry. Co. vs. I. C. C, 181 U. S. 1, 45 L. Ed. 719. I. C. C. vs. Clyde S. S. Co., 181 U. S. 29, 45 L. Ed. 729. L. & N. R. R. Co. vs. Behlmer, 175 U. S. 648, 44 L. Ed. 309 I. C.*C. vs. Ala. & Mid. Ry. Co., 168 U. S. 144, 42 L. Ed. 45. I. C. C. vs. D. G. H. & M. Ry. Co., 167 U. S. 633, 42 L. Ed. 310. C. N. O. & T. P. Ry. Co. vs. I. C. C, 162 U. S. 184, 40 L. Ed. 935. I. C. C. vs. B. & O. R. Co., 145 U. S. 263, 36 L. Ed. 699. R. R. Comm. of Ga. vs. Clyde S. S. Co., 5 I. C. C. Rep. 329, 332. R. R. Comm. of Nev. vs. S. P. Co., 21 I. C. C. Rep 329, 332. In re L. & N, R. Co.. 1 I. C. C. Rep. 31, 78. City of Spokane vs. N. P. Ry. Co., 20 I. C. C. Rep. 400, 404. Behlmer vs. M., etc., R. Co., 6 I. C. C. Rep. 257, 4 I. C. C. Rep. 520. World's Fair Cases, 6 I. C. C. Rep. 323, 328. See also: I. C. C. vs. Western & A. R. Co., 88 Fed. Rep. 186, 197. Behlmer vs. L. & N. R. Co., 83 Fed. Rep. 898. I. C. C. vs. L. & N. R. Co., 7Z Fed. Rep. 409. Behlmer vs. L. & N. R. Co., 71 Fed. Rep. 835. I. C. C. vs. N. O. & T. P. R. Co., 56 Fed. Rep. 925. I. C. C. vs. A. T. & S. F. Ry. Co., 50 Fed. Rep. 295. M. P. Ry. Co. vs. T. & P. Ry. Co.. 31 Fed. Rep. 862. Ex parte Koehler, 31 Fed. Rep. 315. For reference to summary of rulings by the Interstate Commerce Commission upon applications for relief under the Fourth Section prior to the ruling of the Supreme Court as to the light of the carrier to judge for itself what constituted controlling competition, see the following annual reports of the Commission: I. C. C. Ann. Rep. 1895, page 24. I. C. C. Ann. Rep. 1894, page 18. I. C. C. Ann. Rep. 1893, page 22. I. C. C. Ann. Rep. 1892, page 18. 168 AMERICAN COMMERCE ASSOCIATION § 3. The New Fourth Section. The Amendatory Act of June 18, 1910, struck the clause under substantially similar circumstances and conditions from the fourth section, and, with minor changes, con- summated the purpose of the new section in forbidding the carriers "to charge any greater compensation as a through route than an aggregate of the intermediate rates subject to the provisions of the act." The review of the judicial emasculations of the fourth section just recited, pointedly disclose the havoc wrought by the similarity clause. Many and distorted were the constructions of the law which had been urged upon the Commission. They varied in. plausibility and led to dif- ferent ends. One of the most interesting was that presented by a group of shippers who urged that by the elimination of the words under substantially similar circumstances and conditions Congress had deprived the Commission of any standard by which it can determine whether a carrier should be granted relief; for without these words ag a guide, and no other standard being substituted, the pro- vision became a clear delegation of legislative power which might be exercised arbitrarily, and therefore the proviso under which exceptions might be allowed became void and the section stood as if the proviso did not exist — an absolute long and short haul provision. This, it was said, was done with purpose, indeed with cunning. The section was the result of a compromise between the two elements in the national legislature which had been com- promising as to this section ever since the Act to Regulate Commerce was first proposed. There have been those who favored an absolute prohibition and those who fa- vored a prohibition tempered with exceptions. When these INTERSTATE COMMERCE LAW 169 two forces met, after long and fruitless discussion, the present compromise section was suggested. This it is said, was acceptable to the radicals — ^the absolutists, so to speak — for they believed that without these words, under substantially similar circumstances and conditions, in the Act the proviso would be unconstitutional and the provision would become clearly mandatory and a perfect prohibition against the charging more for the shorter than for the longer distance. Quite naturally there was a still further view presented, that if the proviso was un- constitutional and fell for this reason the entire section was destroyed. From these extreme views there were modifications of varying degree, with all or any of which it seems now unnecessary to deal. The commission is performing a legislative function for Congress which the national legislature itself can not directly exercise because of the multiplicity of its duties. "We are not inclined to any view which renders the act of Congress unconstitutional, much less do we look with kindliness upon a construction which makes the act of Congress absurd," said the Commission in the Nevada Case. R. R. Comm. of Nevada vs. So. Pac. Ry. Co., 21 I. C. C. Rep. 329, 334. See also: City of Spokane vs. Northern Pac. Ry. Co., 21 I. C. C. Rep. 400,404. § 4. The Purpose of the New Fourth Section. In its amendment of the fourth section in 1910, Con- gress determined upon strengthening the protection to be afforded those portions of the country against which the 170 AMERICAN COMMERCE ASSOCIATION greatest discriminations were perpetrated. The members of Congress from those sections presented amendments seeking to make the fourth section rigid, inflexible and absolute. The protests of the carriers were supported with reason, and the Commission itself, although the opportunity had frequently been presented to it, had never indorsed a rigid long-and-short haul section. The result- ing revision of the section was along lines which had re- ceived the tentative approval of the Commission. Those who advocated the absolute clause realized there might be circumstances under which the revision would do grave injustice to the carriers and they yielded to those who were in opposition thereto. At the same time, how- ever, they insisted that the long-and-short haul section should be made stronger, more certain, and more effective. It was charged that the courts, by their construction of the section, had devitalized this provision of the law and had rendered it without value either to the south or to the far west, where its provisions were most needed. This fusion of ideas resulted in a recouped section which accom^ plished two things — (1) the elimination of the destructive similarity clause and (2) the substantial strengthening of •the fore part of the section. There was no mistaking the meaning of Congress that it intended that the law should require as a general rule that there should be no lesser charge to the more distant point but that there might be justifiable exceptions to such general rule. But the rail- roads were not to be left to make these exceptions them- selves. Exceptions were to be made only upon petition to the Commission upon public justification being shown. It was upon this point that the criticism heretofore mentioned was made, that a standard was not set by which the Commission could say whether an exception should be made or not, or, in other words, that the sec- INTERSTATE COMMERCE LAW 171 tion instead of lodging the power in the Commission, subject to a fixed criterion, vested such power to make exceptions arbitrarily in the Commission subject only to its own caprice. "The latter is a construction of this law," said the Commission, "abhorrent to the theory of our in- stitutions, and certainly not to be presumed as the one which Congress intended." A study of the history of the section since 1887, the debates thereon in Congress, more particularly the considerations that were given to the provision during the session of 1910, lead to a construc- tion that is more simple, and entirely consonant with the power of Congress and with the theory of the entire Act. Section four as amended was clearly a continuance of the stringent prohibitions against discrimination which are found in the first, second and third sections of the Act. In the second section of the Act the carriers are for- bidden to prefer one individual over another in the matter of rates. In the third section it is made unlawful to give a preference not only to a person, but to a locality, or to a particular description of traffic. Concededly, all traffic cannot be treated alike, nor all commodities be given the same rate, so that the prohibition against these forms of discrimination is limited by the expression that such pref- erences or advantages must not be undue or unreason- able. But because these words undue and unreasonable are used in the statute, it does not follow that Congress attempted to lodge arbitrary power in the Commission in determining when the preference is undue, nor can it be said that the presence of these qualifying words in any way minimizes the very direct declaration of Congress that there shall be no preference as between localities. Congress itself could have undertaken to make rates and to estabHsh relationships between communities and between commodities, but, because of inconvenience, this ■^' 172 AMERICAN COMMERCE ASSOCIATION method was not followed. Rather, it laid down certain rules which its administrative representatives must follow, and who are required to take into consideration the vari- ous circumstances which properly would have acted upon the mind of Congress in determining what was unreason- able, undue or unjust. The Commission, as the adminis- trative representative of Congress, cannot act arbitrarily, for it must exercise reason. The exercise of judgment necessarily implies some play for the individual mind. All men will not come to the same conclusion from the same set of facts, for they do not all see with the same perspec- tive or regard things from the same standpoint. Before the Commission had completed its readjustment of the commodity rates in the Nevada case, the new fourth section had become effective, and in the course of its report, after an extensive inquiry as to the justification which the carriers could give for charging higher rates at intermediate points than at terminal points, the Com- mission said: "Now, the Congress has pursued, it seems to us, precisely the same theory in regard to the fourth section that it pursued in regard to the first, second, and the third sections. The fourth is but a definite continuation of the policy it was announcing through- out the whole act. Discriminations must stop, viz, undue discriminations. Preferences and advantages must be put an end to — those, to be sure, that are undue and unreasonable. The rule is absolute; but there is a modification to this rule which allows the exercise of a wise and a judicial discretion. So with reference to the long and short haul section. It is in its nature a discrimination for a community that is nearer New York to be charged a higher rate upon freight from New York than a community that is at a greater distance from New York, the same line be- ing used for the traffic. Upon its face nothing could INTERSTATE COMMERCE LAW 173 appear more unjust than the relationship that exists between the intermountain cities such as Reno and the coast cities such as San Francisco. "And Congress 24 years ago having in mind such situations throughout the country (for this the de- bates and the Cullom report evidence), sought to condemn such discrimination, and for the public wel- fare to put an end to a situation that was so provoca- tive of complaint and created such friction between the shipping public and the transportation agencies. The state has an interest of the highest order in secur- ing harmony of relationship between the railroads, which are the people's highways, and the shipping public. It has a political interest in seeing that com- munities are not embittered against each other; that the people of Nevada, for instance, do not feel that they are oppressed and placed at a disadvantage by reason of favors extended to their neighbors on the west of them by the railroads. No one can doubt that it is within the proper function of the state to make rules by which peace will be established between cities as between individuals, and this Commission was erected so that there might be a tribunal to which appeal could be made by that community which felt itself wronged by reason of an advantage given to a rival community. For 20 years this Commission has labored to secure laws and their enforcement which will lead to the destruction of those preferences as between individuals, which were a cause of a bitter- ness between business rivals, and within the last few years we have indulged the confidence that the prac- tices under which such preferences thrived had fallen into neglect and some degree of disgrace. The more difficult labor of the Commission latterly has been to adjust difficulties as between communities, and we have as one guide in this respect the fourth section of the act. Congress felt the old section to be inade- quate; it substituted another; it cast the burden upon the carrier of establishing its right to an exception from the general rule which it lays down and to which 174 AMERICAN COMMERCE ASSOCIATION it expects adherence — the shorter haul shall not be charged the higher rate. So, as we feel our way back through the vast mass of legislative and judicial con- struction touching this particular section of the act (which in most part serves more to confuse than to clarify the problems confronting us), we come at the end of the long and devious journey to section four as originally reported by the Cullom committee in 1886. The Senate select committee, of which the now venerable Senator Cullom was chairman, found itself in precisely the same state of mind relating to this problem that we know by Congressional history to have been that of the last Congress which dealt with this problem, for in the Cullom report it is said that: *No question which can enter the problem of railroad regulation has given the committee more perplexity than that relating to the utility and expediency of legislation prohibiting a carrier from charging more for a shorter than a longer haul under any circumstances; not that we have any doubt as to the injustice of such a charge under most circumstances, but because it seems inexpedient to enforce such a regulation under all circumstances.' "Being, therefore, of the mind that there should be such a general rule, subject, however, to proper ex- ceptions, the Cullom report suggested this section four: 'Section 4. That it shall be unlawful for any common carrier subject to the provisions of this act, to charge or receive any greater compensa- tion in the aggregate for the transportation of passengers or property for a shorter than for a longer distance over the same line in the same direction, and from the same original point of departure, if such greater charge for the shorter distance constitute an unjust discrimination; but such greater charge for a shorter distance shall INTERSTATE COMMERCE LAW 175 be presumptive evidence of unjust discrimination, which may, however, be rebutted by the common carrier.' 'Upon application to the Commission appointed under the provisions of this act, such common carriers may, in special cases, be authorized to charge less for longer than for shorter distances for the transportation of passengers or property, and the Commission may, from time to time, make general rules covering exceptions to any such common carrier in cases where there is competition by river, sea, canal, or lake, exempt- ing such designated common carrier from the operation of this section of this act; and when such exceptions shall have been made and pub- lished, they shall have like force and effect as though the same had been specified in this sec- tion.' "The language of this first paragraph reveals the philosophy upon which this section was orginally based. The Congress is continuing its declaration of antagonism to unjust discrimination. This provi- sion is not a distinct and separable part of the act; it is but one declaration or pronouncement as to what Congress regards as inimical to public policy. In- stead of allowing this kind of discrimination to remain in obscurity as others are, the law separates and dis- tinguishes it by naming it. To charge more for the shorter haul over the same line shall be presumptive evidence of unjust discrimination, and the burden is cast upon the carrier justifying a condition which is prima facie unlawful and unjust. "If, now, we turn again to the new section four and read the first paragraph again, we see that it varies in no degree whatever in spirit and intent from this section reported to the Senate nearly 25 years ago. We have reverted to the idea of an earlier day, broadened, perhaps, slightly. The test which the Commission must now apply to determine whether the carrier may be given the advantage of an excep- 176 AMERICAN COMMERCE ASSOCIATION •tion to the general rule of section fom is the same test that it may apply with respect to any other dis- crimination or inequality. There is incorporated in section four every standard set up by Congress as a guide to this Commission which is to be found in any section of the act. And the leeway or discretion which may properly be exercised by this Commission under any other section may properly be exercised under this section. For instance, it is for us, acting within the Hmitations of the law, to determine what is a reasonable practice for a common carrier to pursue. This calls for the widest exercise of discretion. And if our judgment is arbitrary, or we transcend those limitations properly binding such a tribunal, our act may be set aside. But in every decision of this Com- mission, under any section whatsoever, there enters the element of personal judgment, just as in every verdict of a jury the result is colored necessarily by the mental attitude and experience of the juror." Railroad Commission of Nevada vs. S. P. Co., 21 I. C. C Rep. 329, 334, 336. Again, in the Spokane Case, referring to the intention of Congress in revising the fourth section, the Commis- sion said: "In view of these facts what was probably the in- tention of Congress in removing that phrase from the statute? It is earnestly contended by the carriers that the only effect was to take from the railway the power of initiative. The carrier can no longer judge in the first instance whether it may disregard the rule of that section, but is compelled to submit that ques- tion to the Commission. "Counsel for the Great Northern and Northern Pacific insist that the sole duty of the Commission under the present statute is to determine whether competition exists at the more distant point. If it does, permission to depart from the rule of the sec- tion must of necessity be granted; if it does not exist, it must be denied. INTERSTATE COMMERCE LAW 177 "To this view we can not subscribe. The effect of the present section is certainly to require carriers to first obtain from the Commission leave to depart from the rule of that section, and that of itself is a most significant and important thing. There is certainly a wide difference between the situation formerly, when some complainant must attack the existing rate and make good by evidence his complaint, and now, when the railroad must assume the burden of its justi- fication. It is a matter of consequence that every discrimination of this sort must be brought directly to the attention of the Commission and passed upon by that body, but we think that something beyond this was* in the legislative mind. "The real difficulty before had not been that the existing relation of rates must be attacked by com- plaint. Many complainants were ready and anxious to initiate such proceedings, and many complainants did initiate such proceedings only to be told that the Commission had no authority to grant relief, even though it were of the opinion that such relief should be granted. It was the manifest intent of Congress not only to provide by the amendment of this section that carriers must become the advancing party in justifying this particular species of discrimination, but also to give to the Commission some effective power to deal with the case when presented. Had the only purpose of Congress been to shift the burden of proof it would have said so, as it did with respect to certain other rate conditions. If the only function of the Commission is to inquire whether competition exists at the more distant point the matter stands, for all practical purposes, exactly where it has stood from the first. Congress certainly meant to go further than this. It meant not merely to declare a wrong, but to provide a remedy." § 5. Constitutionality of New Fourth Section. Immediately following its enactment, it had been charged that the new fourth section had left the Commission 17—13 178 AMERICAN COMMERCE ASSOCIATION without a proper test to apply; In other words, with no fixed criterion with which to measure the right of the carrier to a departure from the strict tenor of the section. But the Commission was not left without a proper test to apply, for it was compelled, in its administration of the section, to apply the test of justness, of reasonable- ness, of discrimination, of preference and advantage — "the test of fair play as between communities." Under this construction, the statute became both practicable and con- stitutional and the Commission, under the variable meas- ures known as the canons of statutory construction, was neither forced to disregard the section as a whole nor to eliminate any of its provisions. It did not become an absolute long-and-short haul section, for the proviso per- mitting of exceptions remained and, as the Commission said, "the provisional clause does not relegate the entire section to the limbo of unconstitutionality, because we find that it may be administered in thorough harmony with the whole act, part of which it is, and the tests and stand- ards to be applied are not matters of fancy, but are the express and positive words in the law itself." Clearly, Congress undertook to specify distinctly one practice which it wished especially to destroy, and charged the Commission not to permit it to obtain unless such discrimination, such preference, such practice could be shown not to be a discrimination that was unjust, a pref- erence that was undue, or a practice that was unreason- able, because of peculiar facts and conditions. The burden of establishing these justifying conditions was placed upon the carriers and it was the expressed and clear wish of Congress that the doubts be resolved against them. The carrier must set forth clearly what it is doing and convince the administrative representatives that its exceptional policy in a special case is in harmony with INTERSTATE COMMERCE LAW 179 the intent of Congress, that communities shall be treated in fairness, one with relation to the other. The more distant community shall not be preferred over the nearer one. Fundamentally, a purely economic principle is in- volved. Since it costs more to carry traffic a longer dis- tance, so the rate to the farther point shall not be made less than the rate to the nearer point merely because of railroad policy. Thus, aside from the proviso, the section establishes a shipper's principle, and is in sympathy with and expressive of the most primary principle of equality. The proviso is primarily for the carrier's benefit, for it recognizes that the carrier may engage in competitive traffic to more distant points at lower rates than may be charged to intermediate points without doing injury or injustice to such intermediate points, and it is in recogni- tion of and to the end that such a policy may be reasonably limited that the proviso is found in the section. Said the Commission in the Nevada Case: "There is in our minds no doubt but that the Con- gress can put into efifect a long-and-short-haul clause, such as is here considered. Similar provisions obtain in the laws of Arkansas, Indiana, Kentucky, Iowa, Massachusetts, Michigan, Minnesota, Nevada, New Hampshire, New Jersey, North Dakota, Ohio, South Carolina, South Dakota, Texas, Vermont, Virginia, and West Virginia. The provision of our law is al- most identical with that of Kentucky, which was up- held by the Supreme Court in the case of L. & N. R. R. Co. vs. Kentucky, 183 U. S., 503, in which the court said (page 515) : 'But if it be competent for the state, as this argument supposes, to wholly forbid, in every case, and by every carrier, the charging of more for a short than a long haul, it is not easy to see why the state may not permit such charges through the action of a tribunal authorized to 180 AMERICAN COMMERCE ASSOCIATION investigate the subject and to afford relief in cases deemed proper. Such a provision is ex gratia, in the direction of exonerating the carrier from what the argument concedes to be a lawful limitation. Such an exercise of discretion by the ^railroad commission would be no more arbitrary than if the Constitution had authorized the legis- lature to allow in special cases a greater charge for the shorter than for the longer distance, and to prescribe the extent of such excess. We are not prepared to accept the view that the railroad commission, in acting under section 218, is mere- ly an administrative body, and as such subject to judicial review. It is rather a constitutional tribunal, empowered, upon the application of the carrier, to investigate the special circumstances and conditions which are claimed to justify the relief of the carrier from the operation of this section. It is not compulsory upon the carrier to make such application for relief to the commis- sion. If he does not choose to do so, he will continue to operate his railroad under and sub- ject to the constitutional prohibition. If he elects to resort to the commission, he can no more com- plain that its judgment is final, when it is against his contention, than the community affected can complain when its judgment is in his favor.' "It has been said that while a sovereign state by incorporating such a provision in its constitution could make it the law, it was beyond the power of Congress to enact a statute of this character in that Congress itself legislates under constitutional limita- tions. It is not profitable to argue this attenuated proposition. The fundamental right of Congress to regulate the rates and the practices of the carriers engaged in interstate commerce takes from these car- riers the power to set up a policy of their own in contravention of the determination of the national legislature. Until a carrier could demonstrate that its property was being confiscated by the enactment INTERSTATE COMMERCE LAW 181 of a hard and fast long-and-short-haul clause it could not be heard to complain against the enactment of such a law. But this is no such provision. This section as it stands now reveals the mind of the Con- gress that in fairness to the carriers they may be al- lowed in exceptional cases to meet exceptional con- ditions at distant points, but these exceptions shall be controlled, not by the whim of the carrier or by its own desire to give preference or to increase earn- ings. The public will permit the discrimination against the nearer points if it is reasonably established that the carrier will suffer if such discrimination is not permitted, and, too, that the public will not suffer by such procedure. The proviso of the act is an ex- tension of governmental leniency. It is made in the carriers' interest, and if it were removed from the act there is doubt if the carriers themselves could be heard to complain." R. R. Comm. of Nevada vs. S. P. Co., 21 I. C. C. Rep. 329, 339, 340. § 6. A New Constitutional Question. The order made by the Commission in the Spokane Case (21 I. C. C. Rep. 400) was issued under the authority conferred upon it by the new fourth section, — not that lamentably incongruous fourth section which had been mutilated and devitalized by judicial construction until its relation to the other portions of the Act was humorous rather than substantial, but the new fourth section which Congress gave to the statute on July 18, 1910, with the firm intention that it should meet and correct the very situation which was then before the Interstate Commerce Commission in the Intermountain Cases. From a legal standpoint, this order of the Commission was ingeniously framed, and that, too, only after a most exhaustive review of its powers to make such an order. The new fourth section in its practical application was 182 AMERICAN COMMERCE ASSOCIATION entirely different and the question presented for considera- tion differed from the former section and the matters which might be considered under it. The Commission was no longer confined to determining merely whether the cirqumstances at two points were dissimilar, but rather the larger and more important question to the public, which Congress had intended it should consider — whether in view of all the facts and circumstances, the dissimilarity which does exist justifies a departure from the rule of the section that a higher charge shall not be made for a lesser haul. This was the pith of the new statute. It showed the grasping by Congress of a great economic principle which was salient to the commercial and indus- trial development of the country and not an absolute rule of action which a single varying circumstance might de- feat. Its purpose was a broad and economic one — to preserve harmony between communities, individuals, and carriers, to allay discord, and prevent, so far as may be, oppression and injustice. "The leeway or discretion," said the Commission in the Spokane Case, "which may be properly exercised by the Commission under any other section, may properly be exercised under this (fourth) section. For instance, it is for us, acting within the limita- tions of the law, to determine what is a reasonable prac- tice for a common carrier to pursue. This calls for the widest exercise of discretion. And if our judgment is arbitrary, or we transcend those limitations properly binding such a tribunal, our act may be set aside. But in every decision of this Commission, under any section what- soever, there enters the element of personal judgment, just as in every verdict of a jury the result is colored necessarily by the mental attitude and experience of the juror." Had Congress, through its past experience with the INTERSTATE COMMERCE LAW 183 Commission, not been content to leave to the discretion of the Commission, the degree of dissimilarity which shall warrant a departure from the rule, it would have made the rule rigid, inflexible, and absolute. This it did not do. Nor shall we assume that the Commission was not ap- preciative of the proceedings that would inevitably follow its order in the exercise of the new fourth section powers, for it adroitly framed its order to preclude the usual ground of the carriers' attack — confiscation. A scrutiny of the order of June 22, 1911, reveals an order entirely different from the other fourth section orders of the Com- mission, intended to correct discrimination. Previous orders had named an absolute rate to be put into effect to remove the discrimination. This order prescribed the territorial basis of a relative adjustment of rates one with another. All the other orders in the inter-mountain cases had found the existing rates inherently unreasonable. This order condemned them as relatively unreasonable and discriminatory, and prescribed in their place a system of relatively adjusted differentials, to remove the discrim- ination to the extent the Commission deemed just. It replaced in effect a principle that had been conspicuously absent in the transcontinental rate structure since prior to 1887 — the principle of graded rates. It added a princi- ple consonant with transportation and commercial neces- sities — the zone or distance principle of applying rates. This legal strategy followed by the Commission in this ingeniously-planned order prevented that "classic" defense of the carriers under the constitution, that the reduction of their revenues resulting from the Commission's order would amount to a confiscation of their property. Since it left to the carriers all the latitude of readjusting their own rates, they could not prove the order confiscatory, except that they established the fact that the rates which 184 AMERICAN COMMERCE ASSOCIATION the carriers themselves had adopted were unremunera- tive and confiscatory in their effect upon their revenues. Baffled upon this score by the keen sense of anticipation of the Commission, the carriers were left to but two avenues of attack — first, that the order of the Commis- sion exceeded the powers delegated to it by Congress, or, secondly, conceding the Commission had been delegated such powers, the legislation itself was unconstitutional. In prescribing the relation of rates, the Commission, in effect prescribed the minimum rates, because, if the carriers voluntarily established a rate at a given point, the relativity of the rates fixed by the Commission would in a sense establish the minimum rate at another point. There is, however, no such implication necessarily forced by the language of the Commission's order. For instance, the order is that rates from points in Zone No. 3 "to inter- mediate points may properly exceed those to terminal points by not more than 15 per cent." There is nothing antagonistic to the maximum rate theory in that language, since the carrier may fix the intermediate rate at 10 per cent of the terminal if it so desires. In practice, however, it would amount in most instances to a minimum rate. Following the argument, however, if the fixing of the relation of rates impliedly determines the minimum rate, then the logical effect is to establish absolute rates. This question had long been a subtle subject of consideration in the pressure which had been brought to bear at differ- ent times to prevent Congress from delegating to the Commission the authority to fix absolute rates. In fact, the constitutionality of such legislative action by Congress was by no means conceded. Indeed, it is hardly logical to contemplate a scheme of government regulation com- petent to deal with discrimination which does not possess the power to fix the relation of rates and minimum rates INTERSTATE COMMERCE LAW 185 when necessary to correct discriminations. Nor must it necessarily be assumed, so far as judicial expression has thus been given, that such a power implies the establish- ing of absolute rates. The carriers took their appeal to the Commerce Court, and that court (191 Fed. Rep. 856) set aside the Com- mission's orders. The Commerce Court took direct issue with the Commission's interpretation of the fourth section and its assumption of power to prescribe the relation of rates, holding that the distinction made by the Commis- sion between water competition and market competition was not cognizant in the law, and specifically that the dis- criminations in the inter-mountain rates were due entirely to competitive forces beyond the control of the carriers, that "when the rate for the longer haul is forced unrea- sonably low by competition, the only elements that enter into the consideration of the rate for the shorter haul are its reasonableness," etc., that the Commission exceeded its powers when it prescribed the relative limitations of rates instead of fixing a schedule of specific rates as maxima. The Commission appealed from the decrees of the Com- merce Court. The Supreme Court reversed the decrees f the Commerce Court and sustained the validity of the Commission's orders, considering the case from a four- fold viewpoint, namely, (1) the meaning of section four as amended; (2) its constitutionality; (3) jurisdiction of the court, and (4) the validity of the orders in the light of the statute as interpreted. The constitutional objection was that the fourth section constituted a delegation to the Commission of legislative power which Congress was incompetent to make, but this point the Supreme Court held to be without merit. The objection to the jurisdiction of the court rested principally 186 AMERICAN COMMERCE ASSOCIATION on the assumption that the order of the Commission re- fusing to grant the application of the carrier made under section four was purely negative, and therefore not sub- ject to review in the courts. Upon this point, the Supreme Court held that "while the refusal to grant it may be in one sense negative, in another and broader view, it is af- firmative, since it refuses that which the statute in affirma- tive terms declares shall be direct declaration granted if only the conditions which the statute provides are found to exist." Speaking to the constitutional point, Mr. Chief Justice White, in the opinion of the court, said: "Before considering the amended text we state briefly some of the more important requirements of the section before amendment and the underlying conceptions of private right, of public duty and policy which it embodied, because to do so will go a long way to remove any doubt as to the amended text and will moreover serve to demonstrate the intent of the legislative mind in enacting the amendment. "Almost immediately after the adoption of the Act to Regulate Commerce in 1887 the Interstate Com- merce Commission in considering the meaning of the law and the scope of the duties imposed on the Com- mission in enforcing it, reached the conclusion that the words 'under substantially similar circum- stances and conditions' of the fourth section domin- ated the long and short haul clause and empowered carriers to primarily determine the existence of the required dissimilarity of circumstances and conditions and consequently to exact in the event of such differ- ence a lesser charge for the longer than was exacted for the shorter haul and that competition which ma- terially affected the rate of carriage to a particular point was a dissimilar circumstance and condition within the meaning of the Act. We say primarily because of course it was further recognized that the authority existing in carriers to the end just stated INTERSTATE COMMERCE LAW 187 was subject to the supervision and control of the In- terstate Commerce Commission in the exertion of the powers conferred upon it by the statute and espe- cially in view of the authority stated in the fourth sec- tion. In considering the Act comprehensively it was pointed out that the generic provisions against pref- erence and discrimination expressed in the second and third sections of the Act were all-embracing and were therefore operative upon the fourth section as well as upon all other provisions of tlie Act. But it was pointed out that where within the purview of the fourth section it had lawfully resulted that the lesser rate was charged for a longer than was exacted for a shorter haul such exaction being authorized could not be a preference or discrimination and there- fore illegal. In re Louisville & Nashville R. R. Co., 1 I. C. C. Rep. 31. These comprehensive views announced at the inception as a matter of administrative construction were subsequently sustained by many decisions of this court. Vide. Interstate Commerce Commission vs. Baltimore and Ohio Railroad, 145 U. S., 263, 36 L. Ed. 699, 12 Sup. Ct. 844; Cincinnati, New Orleans and Texas Pacific Railway vs. Interstate Commerce Commission, 162 U. S. 184, 40 L. Ed. 935, 16 Sup. Ct. 700; Texas and Pacific Railway vs. In- terstate Commerce Commission, 162 U. S. 197, 40 L. Ed. 940, 16 Sup. Ct. 666; Louisville and Nashville Railway Co. vs. Behlmer, 175 U. S. 648, 44 L. Ed. 309, 20 Sup. Ct. 209; Eastern Tennessee, etc., Railway Co. vs. Interstate Commerce Commission, 181 U. S. 1, 45 L. Ed. 719, 21 Sup. Ct. 516. We observe, more- over, that in addition it came to be settled that where competitive conditions authorized carriers to lower their rates to a particular place, the right to meet the competition by lowering rates to such place was not confined to shipments made from the point of origin of the competition, but empowered all carriers, in the interest of freedom of commerce and to afford en- larged opportunity to shippers to accept, if they chose to do so, shipments to such competitive points at 188 AMERICAN COMMERCE ASSOCIATION lower rates than their general tariff rates; a right which came aptly to be described as 'market compe- tition' because the practice served to enlarge markets and develop the freedom of trafific and intercourse. It is to be observed, however, that the right thus conceded was not absolute because its exercise was only permitted provided the rates were not so low- ered as to be nonremunerative and thereby cast an unnecessary burden upon other shippers. Eastern Tennessee, etc.. Railway Co. vs. Interstate Commerce Commission, 181 U. S. 1, 45 L. Ed. 719, 21 Sup. Ct. 516. As the statute as thus construed imposed no obligation to carry to the competitive point at a rate which was less than a reasonable one, it is obvious that the statute regarded the rights of private owner- ship and sought to impose no duty conflicting there- with. It is also equally clear that in permitting the carrier to judge primarily of the competitive condi- tions and to meet them at election the statute lodged in the carrier the right to exercise a primary judg- ment concerning a matter of public concern broader than the mere question of the duty of a carrier to carry for a reasonable rate on the one hand and of the right of the shipper on the other to compel carriage at such rate, since the power of primary judg- ment which the statute conferred concerned in a broad sense the general public interest with reference to both persons and places, considerations all of which therefore in their ultimate aspects came within the competency of legislative regulation. It was apparent that the power thus conferred was primary, not abso- lute, since its exertion by the carrier was made by the statute the subject both of administrative control and ultimate judicial review. And the establishment of such control in and of itself serves to make mani- fest the public nature of the attributes conferred upon the carrier by the original fourth section. Indeed that in so far as the statute empowered the carrier to judge as to the dissimilarity of circumstances and conditions for the purpose of relief from the long and INTERSTATE COMMERCE LAW 189 short-haul clause it gave the carrier the power to exert a judgment as to things pubhc was long since pointed out by this court. Texas and Pacific Railway vs. Interstate Commerce Commission, 162 U. S. 197, 218, 40 L. Ed. 940, 16 Sup. Ct. 666. "With the light afforded by the statements just made we come to consider the amendment. It is certain that the fundamental change which it makes is the omission of the substantially similar circum- stances and conditions clause, thereby leaving the long and short-haul clause in a sense unqualified ex- cept in so far as the section gives the right to the carrier to apply to the Commission for authority 'to charge less for longer than for shorter distances for the transportation of persons or property" and gives the Commission authority from time to time 'to pre- scribe the extent to which such designated common carrier may be relieved from the operation of this section.' From the failure to insert any word in the amendment tending to exclude the operation of com- petition as adequate under proper circumstances to justify the awarding of relief from the long and short- haul clause and there being nothing which minimizes or changes the application of the preference and dis- crimination clauses of the second and third sections, it follows that in substance the amendment intrinsic- ally states no new rule or principle but simply shifts the powers conferred by the section as it originally stood; that is, it takes from the carriers the deposit of public power previously lodged in them and vests it in the Commission as a primary instead of a review- ing function. In other words the elements of judg- ment or so to speak the system of law by which the judgment is to be controlled remains unchanged but a different tribunal is created for the enforcement of the existing law. This being true, as we think it plainly is, the situation under the amendment is this: Power in the carrier primarily to meet competitive conditions in any point of view by charging a lesser rate for a longer than for a shorter haul has ceased 190 AMERICAN COMMERCE ASSOCIATION to exist because to do so, in the absence of some authority would not only be inimical to the provision of the fourth section but would be in conflict with the preference and discrimination clauses of the second and third sections. But while the public power, so to speak, previously lodged in the carrier is thus with- drawn and reposed in the Commission the right of carriers to seek and obtain under authorized circum- stances the sanction of the Commission to charge a lower rate for a longer than for a shorter haul be- cause of competition or for other adequate reasons is expressly reserved and if not is in any event by necessary implication granted. And as a correlative the authority of the Commission to grant on request the right sought is made by the statute to depend upon the facts established and the judgment of that body in the exercise of a sound legal discretion as to whether the request should be granted compatibly with a due consideration of the private and public in- terests concerned and in view of the preference and discrimination clauses of the second and third sec- . tions." In referring to the validity of the orders of the Commis- sion in the Inter-mountain Cases, which it had made under the fourth section, the court further stated: "The main insistence is that there was no power after recognizing the existence of competition and the right to charge a lesser rate to the competitive point than to intermediate points to do more than fix a reasonable rate to the intermediate points; that is to say, that under the power transferred to it by the section as amended, the Commission was limited to ascertaining the existence of competition and to authorizing the carrier to meet it without any author- ity to do more than exercise its general powers con- cerning the reasonableness of rates at all points. But this proposition is directly in conflict with the statute as we have construed it, and with the plain purpose and intent manifested by its enactment. •:= * * INTERSTATE COMMERCE LAW 191 As the prime object of the transfer was to vest the Commission within the scope of the discretion im- posed and subject in the nature of things to the limi- tations arising from the character of the duty exacted and flowing from the other provisions of the act, with authority to consider competitive conditions and their relation to persons and places, necessarily there went with the power the right to do that by which alone it could be exerted, and therefore a considera- tion of the one and the other and the establishment of the basis by percentages was within the power granted." U. S. vs. A. T. & S. F. Ry. Co., 234 U. S., 476. U. S. vs. U. P. R. R. Co., 234 U. S. 495. See also: I. C. C. Ann. Rep. 1914, pages 30-32. Transcontinental Rates, 40 I. C. C. Rep. 35. Duncan vs. N. C. & St. L. R. Co., 35 I. C C. Rep. 477. Transcontinental Commodity Rates, 32 I. C. C. Rep. 449, 457. Fourth Section Violation in Rates on Sugar, 31 I. C. C. Rep. 511. Rates on Sugar, 31 I. C. C. Rep. 495. Fourth Section Violation in Southeast, 30 I. C. C. Rep. 495. Emlenton Petroleum Rates. 29 I. C. C. Rep. 519, 521. Maier & Co. vs. S. P. Co., 29 I. C. C. Rep. 103. Commercial Club of Duluth vs. B. & O. R. R. Co., 27 I. C. C. Rep 639, 660. Kellogg Toasted Corn Flakes Co. vs. M. C. R. R. Co., 24 I. C. C. Rep. 604. Compare : U. S. vs. L. & N. R. R. Co., 235 U. S. 314, 59 L. Ed. . L. & N. R. R. Co. vs. U. S., 235 Fed. Rep. 511. Mayor, etc., of Boston, Ga., vs. A. C. L. R. R. Co., 24 I. C. C. Rep. 50. § 7. Fourth Section Board. The importance and extent of the work involved in handling carriers' applications for relief under the fourth section has caused the Commission to constitute certain of its examiners a Fourth Section Board, before which 192 AMERICAN COMMERCE ASSOCIATION all proceedings for departure from the long-and-short haul prohibition must have their beginning. Formerly these applications were instituted in the tariff division of the Commission. § 8. Fourth Section Applies to Import and Export Rates. Inland export and import rates are subject to the pro- visions of the act and within the jurisdiction of the Com- mission. The fourth section of the^ amended act forbids carriers subject thereto, without authority from the Commission in accordance with said section, to charge more for the transportation of a like kind of export or import trafific for a shorter than for a longer haul over the same line in the same direction; that is, the validity of a rate under this section is determined by comparison of an export rate with an export rate, or an import rate with an import rate. So far as the fourth section is concerned, carriers are not required in the first instance to establish export and import rates which shall be measured and limited by do- mestic interstate rates between the same points of origin and destination in the United States; but as export and import rates, as well as domestic interstate rates, are sub- ject to the provisions of the act and the jurisdiction of the Commission, it is clear that the reasonableness of any of these rates under the provisions of section 1, and ques- tions of discrimination under the third section, may all be considered and the Commission may condemn any dis- crimination in export and import rates, upon comparison with those applicable on domestic interstate traffic, to the extent that the same may be found unjust or unreasonable in any particular case upon investigation and full hearing. INTERSTATE COMMERCE LAW 193 §9. Case Reference to Commission's Rulings under Fourth Section. In the following cases applications by carriers for relief from the strict prohibition of the fourth section or the determination of the reasonableness or discriminatory- character of long-and-short haul rates, have been passed upon by the Commission, and while in no sense complete in number, these cases are sufficient in scope to emphasize the many and varied sets of facts and circumstances with which the Commission is confronted in its administration of the provisions of the fourth section. Rates on Plaster, 41 I. C. C. Rep. 1. Transcontinental Rates, 40 I. C. C. Rep. 35. Fourth Section Application, 40 I. C C. Rep. 90. Nat. Rolling Mill Co. vs. C. & E. I. R. Co., 38 I. C. C. Rep. 108, 110, 111. Merchants' Prod. Co. vs. O.-W. R. R. & N. Co., 38 I. C. C. Rep. 209, 210. Rates on Iron and Steel Articles, 38 I. C. C. Rep. 237, 241. McCauU-Dunsmore Co. vs. G. N. Ry. Co., 38 I. C C. Rep. 297, 298. Bennett & Son vs. C. & O. Ry. Co., 38 I. C. C. Rep. 310, 314, 315. Class and Commodity Rates between St. Louis, East St. Louis and Ohio River Points, 38 I. C. C. Rep. 411, 423, 426, 428, 431. Wells Lumber Co. vs. C. M. & St. P. Ry. Co., 38 L C. C. Rep. 464, 466. Darragh Co. vs. C. R. I. & P. Ry. Co., 38 L C. C. Rep. 549. Chamber of Commerce of Washington, D. C, vs. P. R. R. Co., 38 I. C. C. Rep. 593. Mt. Pleasant Fertilizer Co. vs. N. O. & N. E. R. R. Co., 38 I. C. C. Rep. 602, 609. Bituminous Coal from Points on the P. R. R. Co., 38 L C. C. Rep. 658. Rates on Iron and Steel Articles to Spokane, 38 I. C. C. Rep. 669. Shippers of Eastman, Ga., vs. So. Ry. Co., 38 I. C. C. Rep. 672. 674. Updike Elevator Co. vs. C. R. I. & P. Ry. Co., 38 I. C. C Rep. 687, 688. Ulland Coal Co. vs. L. & N. R. R. Co., 38 I. C. C Rep. 704, 706. Ice Rates to Long Branch, 35 I. C. C. Rep. 73, 75. Coal and Coke Rates in the Southeast, 35 I. C. C. Rep. 187, 188. Lebanon Commercial Club vs. L. & N. R. R. Co., 35 I. C. C. Rep. 204, 212. 17—14 194 AMERICAN COMMERCE ASSOCIATION Rates on Grain Milled in Transit, 35 I. C. C. Rep. 27, 31. McCaull-Dinsmore Co. vs. M. P. Ry. Co., 35 I, C. C. Rep. 69, 70. Nebraska Bridge Supply & Lumber Co. vs. A. G. S. R. R. Co., 35 I. C. C. Rep. 90. The Ogden Gateway Case, 35 I. C. C. Rep. 131, 142. Yellow Pine Sash, Door & Blind Mfrs'. Assn. vs. S. Ry. Co., ^ 35 I. C. C. Rep. 150, 156. Coal and Coke Rates in the Southeast, 35 I. C. C. Rep. 187, 196. Lebanon Commercial Club vs. L. & N. R. R. Co., 35 L C. C. Rep. 204, 211. Duncan & Co. vs. N. C. & St. L. Ry. Co., 35 I. C. C Rep. 477, 479, 484. Commodity Rates to Pacific Coast Terminals, 34 I. C. C. Rep. 13, 17. New Orleans Shippers' Assn. vs. I. C. R. R. Co., 34 L C. C Rep. 32, Z7. R. R. Comrs. of Iowa vs. A. T. & S. F. Ry. Co., 34 L C. C. Rep. 111. City of Charlotte, K C, vs. S. Ry. Co., 34 L C. C. Rep. 128, 133. Dewey Bros. Co. vs. P. C. C. & St. L. Ry. Co., 34 I. C. C. Rep. 135, 138. Enns Milling Co. vs. C. R. I. & P. Ry. Co., 34 L C. C. Rep. 197, 198. Proportional Class Rates to Iowa Points, 34 I. C. C. Rep. 278. 280. Des Moines Commodity Rates, 34 I. C. C. Rep. 281, 286. Corp. Comm. of New Mexico vs. A. T. & S. F. Ry. Co., 34 I. C. C. Rep. 292. Lumber Rates from Helena, Ark., and Other Points, 33 I. C. C. Rep. 297, 299. Eastern Fruit Growers' Assn. vs. B. & O. R. R. Co., 33 I. C. C. Rep. 343, 347. Daly Coal Co. vs. C. & A. R. R. Co., 33 I. C. C. Rep. 467, 469. Rates on Paper and Other Commodities, 33 I. C. C. Rep. 609, 610. Rates on Grain and Grain Products, 33 I. C. C. Rep. 613, 618. Cullman Commercial Club vs. L. & N, R. R. Co., 33 I. C. C. Rep. 634, 637. Rates on Scrap Iron from Gulf Ports, 33 I. C. C. Rep. 668, 672. Kenner Truck Farmers' Assn. vs. I. C. R. R. Co., 32 I. C. C. Rep. 1, 3. Fourth Section Violations in the Southeast, 32 I. C. C. Rep. 61, 71. Kansas Wholesale Grocery Co. vs. A. & W.. Ry. Co., 32 I. C. C. Rep. 139, 143, 145. Rates between Shreveport and Texarkana, 32 I. C. C. Rep. 180. . Commercial Club of Joplin, Mo., vs.. M. P. Ry. Co., 32 I. C. C. Rep. 226, 228. Chamber of Commerce, Houston, Tex., vs. I. & G. N. Ry. Co., 32 I. C. C. Rep. 247, 260. INTERSTATE COMMERCE LAW 195 Board of Trade of Kansas City vs. St. L. & S. F. R. R. Co., 32 I. C. C. Rep. 297, 315. R. R. Comrs. of Montana vs. A. T. & S. F. Ry. Co., 32 I. C C. Rep. 316, 318. Five Per Cent. Case, 32 I. C. C. Rep. 325. 331. Freight Rates from Minnesota Points, 32 I. C C. Rep. 361, 368. Cement Rates from Points in Illinois, 32 I. C. C. Rep. 369, 375 Bellg'rade Lumber Co. vs. I. C. R. R. Co., 32 I. C. C. Rep. 403 406. Salt Lake Mattress & Mfg. Co. vs. A. T. & S. F. Ry. Co., 32 1. C. C. Rep. 417, 427. Transcontinental Commodity Rates, 32 L C. C. Rep. 449, 457. Columbia Chamber of Commerce vs. L. R. Co., 32 L C. C. Rep. 504, 508. „ ^^, ^,^ Northbound Rates on Hardwood, 32 I. C. C. Rep. 521, 530. Rates on Fertilizer Material from Charleston, 32 L C. C. Rep. 537, 539. ^ ^ ^ Milburn Wagon Co. vs. A. A. R. R. Co., 32 L C. C. Rep. 582, 589. Reshipping Rates on Grain from Omaha, 32 L C. C. Rep. 590, 596. Kansas-California Flour Rates, 32 L C. C. Rep. 602, 605. Sugar Rates from New Orleans, 32 I. C. C. Rep. 606, 609. Commodity Rates to Pacific Coast Terminals, 32 1. C. C. Rep. 611. Bowling Green Business Men's Assn. vs. L. & N. R. R. Co., 31 L C. C. Rep. 1, 4. Nix & Co. vs. S. Ry. Co., 31 L C. C. Rep. 145, 149. Rates on Boots and Shoes from Boston, 31 L C. C. Rep. 154, 157. Pacific Fruit Exchange vs. S. P. Co., 31 L C. C. Rep. 159. Beatrice Commercial Club vs. C. B. & Q. R. R. Co., 31 L C. C. Rep. 173, 182. AUentown Portland Cement Co. vs. P. & R. Ry. Co., 31 I. C. C. Rep. 277, 279. Rates on Sugar, 31 L C. C. Rep. 495, 502, 510. Royster Guano Co. vs. A. C. L. R. R. Co., 31 L C. C. Rep. 458. Rates on Sugar, 31 L C. C. Rep. 495, 502. Fourth Section Violations in Rates on Sugar, 31 I. C. C. Rep. 511. Colonial Salt Co. vs. C. B. & Q. R. R. Co., 31 L C. C. Rep. 559 573 Douglas & Co. vs. I. C. R. R. Co., 31 I. C. C. Rep. 587, 602. R. R. Comrs. of Montana vs. B. A. & P. Ry. Co., 31 L C. C Rep. 641, 652. Greenbaum Co. vs. L. & N. R. R. Co., 31 L C. C. Rep. 699, 708. Fourth Section Violations in the Southeast, 30 I. C. C. Rep. 153, 160. Cement Rates from Mason City, 30 L C. C. Rep. 426. Chamber of Commerce of Washington vs. B. & O. R. R. Co., 30 I. C. C, Rep. 446, 453. 196 AMERICAN COMMERCE ASSOCIATION Memphis Freight Bureau vs. I. C. R. R. Co., 30 I. C. C. Rep, 471. 476. Brownsville, Tex., Class and Commodity Rates, 30 I. C. C. Rep. 479, 482. Rates on Bananas from Gulf Ports, 30 I. C. C. Rep. 510, 522. Lumber Rates from Knoxville, Tenn., 30 I. C. C. Rep. 524, 526. .Molasses Rates to Knoxville, Tenn., 30 I. C. C. Rep. 613, 614. Rates on Tropical Fruits from Gulf Ports, 30 I. C. C. Rep. 621, 628. Rock Spring Distilling Co. vs. I. C. R. R. Co., 29 I. C. C. Rep. 18, 25. Rates on Grain and Grain Products to Texarkana, 29 I. C. C. Rep. 35, 36. Santa Rosa Traffic Assn. vs. S. P. Co., 29 I. C. C. Rep. 65, 68. Maier & Co. vs. S. P. Co., 29 I. C. C. Rep. 103. Stewart-Greer Lumber Co. vs. St. L. L M. & S. Ry. Co., 29 I. C. C. Rep. 120, 122. Pacific Creamery Co. vs. S. P. Co., 29 L C. C. Rep. 405, 410. Emlenton Petroleum Rates, 29 L C. C. Rep. 519, 521. Standard Oil Co. vs. P. Co.. 29 L C. C. Rep. 524. Interior Iowa Cities Case, 29 I. C. C. Rep. 536, 538. Rates to North Carolina Points, 29 I. C. C. Rep. 550.' Paducah Board of Trade vs I. C. R. R. Co., 29 I. C. C. Rep. 583. 587. Rates to North Carolina Points, 29 I. C. C. Rep. 550. 556. Springfield Traffic Bureau vs. St. L. & S. F. R. R. Co., 29 I. C. C. Rep. 600. Fort Scott Industrial Assn. vs. St. L. & S. F. R. R. Co., 29 I. C. C. Rep. 629. Blakely Southern R. R. Co. vs. A. C. L. R. R. Co., 26 I. C. C. Rep. 344. 348. Gillis & Son vs. P. B. & W. R. R. Co., 26 I. C. C. Rep. 61. Transcontinental Commodity Rates, Westboundi, 26 I. C. C. Rep. 456. Janesville Clothing Co. vs. C. & N. W. Ry. Co., 26 I. C. C. Rep. 628. Granada Oil Mill vs. I. C R. R. Co., 24 I. C. C. Rep. 318. Board of Trade of Morristown vs. A. C. L. R. R. Co., 24 I. C. C. Rep. 372. Kellogg Toasted Corn Flakes Co. vs. M. C. R. R. Co., 24 I. C. C. Rep. 604. 605. Lesinsky Co. vs. A. T. & S. F. Ry. Co., 24 I. C. C. Rep. 620. Board of Trade of Cheraw, S. C, vs. S. A. L. Ry. Co., 26 L C. C. Rep. 364. National Refrigerator & Butchers' Supply Co. vs St. L. I. M. & S. Ry. Co., 26 I. C. C. Rep. 524. Grand Junction Chamber of Commerce vs. D. & R. G. R. R. Co., 23 I. C. C. Rep. 115. Huntingdon Lumber Co. vs. I. C. R. R. Co., 23 I. C. C. Rep. 507, 509. Southern Illinois Millers' Assn. vs. L. & N. R. R. Co., 23 I. C. C. Rep. 672, 674. In re Application of the S. P. Co. for Relief under the Pro- visions of the Fourth Section. 22 I. C. C. Rep. 366. 376. INTERSTATE COMMERCE LAW 197 Switzer Lumber Co. vs. A. & M. R. R. Co., 22 I. C. C. Rep. 471, 474. Bluefield Shippers' Assn. vs. N. & W. Ry. Co., 22 I. C. C. Rep. 519, 531. In re Suspension of Rates on Packing House Products, 21 I. C. C. Rep. 68, 70. City of Spokane vs. N. P. Ry. Co., 21 I. C. C. Rep. 400, 411. Railroad Commission of Nevada vs. S. P. Co., 21 I. C. C. Rep. 329, 335. Kenworthy & Son vs. U. P. R. R. Co., 21 I. C. C. Rep. 515. § 10. Burden of Proof under Application for Relief from Provisions of Section 4. The burden of establishing such justifying conditions and convincing the Commission that the carrier's applica- tion for relief from the strict prohibition of section 4 is in harmony with the intent of Congress and the purport of the section, is cast upon the carrier. Transcontinental Rates, Westbound, 21 I. C. C. Rep. 456, 460. Railroad Commission of Nevada vs. S. P. Co., 21 I. C. C. Rep. 329, 339. City of Spokane vs. N. P. Ry. Co., 21 I. C. C. Rep. 400, 410. Commercial Club of Duluth vs. B. & O. R. R. Co., 27 I. C. C. Rep. 639, 660. Emlenton Petroleum Rates, 29 I. C. C. Rep. 519, 521. L. & N. R. R. Co. vs. U. S., 225 Fed. Rep. 511. See also: U. S. vs. L. & N. R. R. Co., 235 U. S. 314. See also: — "Interstate Commerce Law," Part IV, "Practice and Procedure," "Applications for Relief under Fourth Section of Act to Regulate Commerce." § 11. Discrimination — Enforcement of Provisions of Sec- tion 4 of Act to Regulate Commerce by the Inter- state Commerce Commission and the Courts. In order to bring into the most compact form and at the same time conserve completeness, the administrative en- forcement by the Interstate Commerce Commission and 198 AMERICAN COMMERCE ASSOCIATION the judicial construction by the courts of the prohibitions of the first four sections of the Act to Regulate Commerce directed against unjust discriminations, and additionally supported by the Elkins Act, will be found in this volume beginning with Chapter VI, post. This arrangement of the subject also enhances the con- junctive effect of the first four sections of the Act. CHAPTER VI ACT TO REGULATE COMMERCE AS AMENDED (CONTINUED). Amplification of Sections (Continued). DISCRIMINATION. § 1. Administrative Enforcement of Sections 1, 2, 3 and 4 of the Act to Regulate Commerce Prohibiting Unjust Discrimination. § 2. Common Law Prohibition against Unjust Discrimination. § 3. Unjust Discrimination Only Is Unlawful. § 4. Standards of Comparison. 199 CHAPTER VI ACT TO REGULATE COMMERCE AS AMENDED (CONTINUED). Amplification of Sections (Continued). DISCRIMINATION. § 1. Administrative Enforcement of Sections 1, 2, 3 and 4 of the Act to Regulate Commerce Prohibiting Unjust Discrimination. Discrimination, in the sense contemplated by the Act to Regulate Commerce, may be between persons or in- dividuals, commodities, localities, and service, in the charge imposed for transportation, or there can be dis- crimination in the classification of articles, by direct differ- ences in rates or charges, or by rebates and other devices, and in the transportation service as between individuals and localities. Still another form of discrimination of more or less indirect or subtle effect upon shippers is that between carriers themselves. Discriminations between commodities may, and usually do, involve discrimination in the classification of the article or in the rate of charge assessed thereunder; discrimina- tions in service may involve discrimination in the use of the facilities of transportation, such as an unfair distribution of cars, or in the quality of the service rendered by the car- rier to different shippers. Broadly speaking there can be as many different kinds of discrimination as there are acts or omissions committed by the carriers which have the effect of placing in disad- 201 202 AMERICAN COMMERCE ASSOCIATION vantageous or preferred positions patrons of the carrier whose relationship would otherwise afford them substan- tial equality. The prohibition against inequalities among shippers is the vital fundamental of the Act to Regulate Commerce and its supporting statutes. It is the government guar- anty to the public that all shall be admitted to the enjoy- ment of transportation service upon equal, reasonable and impartial terms. The regulatory statutes do not prohibit all discrimination, but only that which is unjust. The basic principle of the Act to Regulate Commerce is "fair play," and its mandates and inhibitions have for their objective not an ideal but rather a practical equality. It is the simpler task to define what is not unjust dis- crimination than to definitely outline that w^hich is un- due dififerentiation. Discrimination to be unjust must, in its effect, do a wrong to the just rights of one person, while at the same time favoring or advancing the same rights of another. If the rights of two shippers are exactly alike then they should be placed upon an absolute equality by the carrier. If each of two shippers has the same right to a like transportation service, any discrimination be- tween them whereby one receives more than his just right entitles him to, or the other is afforded less than his just right assures him, such difference in treatment is unjust and unlawful. But the facts surrounding each shipper and the conditions and circumstances of the service ren- dered him are solely determinative of the justness or un- justness of any differentiation made by the carrier. The prohibition against discrimination is not confined solely to the person of the shipper. The inhibition is suf- ficiently broad and comprehensive to place its protection over the traffic, the transportation service, and localities. The carrier can only meet these broad purposes of the Act INTERSTATE COMMERCE LAW 203 by fulfilling its duty to receive and carry upon reasonable terms all goods tendered in suitable condition, and it may not lawfully unduly discriminate against any person, prod- uct, or locality. In re Mileage Books, 28 I. C. C. Rep. 318, 324. Mobile Chamber of Commerce vs. M. & O. R. R. Co., 23 I. C. C. Rep. 417. 426. Federal Sugar Refining Co. vs. B. & O. R. R. Co., 20 I. C. C. Rep. 200, 214. Herbeck-Demer Co. vs. B. & O. R. R. Co., 17 I. C. C. Rep. 88. Chamber of Commerce of Newport News vs. S. Ry. Co., 23 I. C. C. Rep. 345, 356. Milburn Wagon Co. vs. L. S. & M. S. Ry. Co., 22 I. C. C. Rep. 93, 100. Virginia-Carolina Chemical Co. vs. A. C. L. R. R. Co., 22 I. C. C. Rep. 394, 397. In re Application of S. P. Co., 22 I. C. C. Rep. 366, 375. Receivers' and Shippers' Assn. of Cincinnati vs. C N. O. & T. P. Ry. Co., 18 I. C. C. Rep. 440, 457. Loch Lynn Construction Co. vs. B. & O. R. R. Co., 17 I. C. C. Rep. 396. Standard Lime & Stone Co. vs. Cumberland Valley R. R. Co., 15 L C. C. Rep. 620. See also: The Mississippi River Case, 28 L C. C. Rep. 47, 55. _ Mayor, etc., vs. A. B. & A. R. R. Co., 28 L C. C. Rep. 445, 450. Port Arthur Board of Trade vs. A. & S. Ry. Co., 27 L C. C. Rep. 388. Aransas Pass Channel & Dock Co. vs. G. H. & S. A. Ry. Co., 27 L C. C. Rep. 403, 415. Topeka Traffic Assn. vs. A. & V. Ry. Co., 27 L C. C. Rep. 428, 436. Sioux City Terminal Elevator Co vs. C. M. & St. P. Ry. Co., 27 L C. C. Rep. 457, 463. Board of Trade, etc., vs. C. & A. R. R. Co., 27 L C. C. Rep. 530, 534. Consolidated Fuel Co. vs. A. T. & S. F. Ry. Co., 27 I. C. C. Rep. 554, 557. Hennepin Paper Co. vs. N. P. Ry. Co., 27 I. C. C. Rep. 699. Indianapolis Freight Bureau vs. C. C. C. & St. L. Ry. Co., 26 L C. C. Rep. 53, SB. North Fork Cannel Coal Co. vs. A. A. R. R. Co., 25 I. C. C. Rep. 241, 246. In re Advances in Demurrage, 25 I. C. C. Rep. 314, 323. Wichita Board of Trade vs. A. T. & S. F. Ry. Co., 25 I. C. C. Rep. 625, 632. Rosenbaum Bros. vs. B. & O. R. R. Co.. 24 I. C. C. Rep. 287 289 Casassa vs. P. R. R. Co., 24 I. C. C. Rep. 629. 631. 204 AMERICAN COMMERCE ASSOCIATION § 2. Common Law Prohibition Against Unjust Discrim- ination. A common carrier is obligated to treat all shippers who are entitled to be so treated alike, and can be compelled to perform this common law duty by mandamus or other proper writ. This duty is laid upon the common carrier even in the absence of statutory provision to that effect. Mo. Pac. Ry. Co. vs. Larabee Flour Mills Co., 211 U. S. 612, 53 L. Ed. 352. The railroad is justly regarded as a public facility which every person may enjoy at pleasure, a common right to which all are admitted and from which none can be ex- cluded. The essence of this right is equality, and its en- joyment can be complete only when it is secured on like conditions by all who desire its benefits. The railroad ex- ists by virtue of authority proceeding from the State, and thus differs in its essential nature from every form of pri- vate enterprise. The carrier is invested with extraordi- nary powers which are delegated by the sovereign, and thereby performs a governmental function. The favorit- ism, partiality, and exactions which the law was designed to prevent resulted in large measure from a general mis- apprehension of the nature of transportation and its vital relation to commercial and industrial progress. So far from being a private possession, it differs from every species of property and is in no sense a commodity. Its ofhce is pe- culiar, for it is essentially public. The railroad, there- fore, can rightfully do nothing which the state itself might not do if it performed this public service through its own agents instead of delegating it to corporations which it has created. The large shipper is entitled to no advantage over his smaller rival in respect of rates or ac- commodations, for the compensation exacted in every case INTERSTATE COMMERCE LAW 205 should be measured by the same standard. To allow any exceptions to this fundamental rule is to subvert the prin- ciple upon which free institutions depend and substitute arbitrary caprice for equality of right. Ann. Rep. of I. C. C. for 1892. The principles of common law applicable to common car- riers before the enactment of the Act to Regulate Com- merce, required barely more than that they should carry for all persons who desire to use their service, in the order in which the goods were delivered to the carrier, and at charges for the service which should be reasonable. In the Party Rate Case, the Supreme Court of the United States, referring to these conditions, said: "Prior to the enactment of the Act of February 4, 1887, to regulate commerce, commonly known as the Interstate Commerce Act, railway traffic in this coun- try was regulated by the principles of the common law applicable to common carriers, which demanded little more than that they should carry for all persons who applied, in the order in which the goods were de- livered at the particular station, and that their charges for transportation should be reasonable. It was even doubted whether they were bound to make the same charge to all persons for the same service ; though the weight of authority in this country was in favor of an equality of charge to all persons for similar serv- ices. In several of the states Acts had been passed with the design of securing the public against unrea- sonable and unjust discriminations; but the inefficacy of these laws was beyond the limits of the state, the impossibility of securing concerted action between the legislatures toward the regulation of traffic between the several states, and the evils which grew up under a policy of unrestricted competition, suggested the ne- cessity of legislation by Congress under its constitu- tional power to regulate commerce among the sev- 206 AMERICAN COMMERCE ASSOCIATION eral states. These evils ordinarily took the shape of inequality of charges made, or of facilities furnished, and were usually dictated by or tolerated for the pro- motion of the interests of the officers of the corpora- tion or of the corporation itself, or for the benefit of some favored persons at the expense of others, or of some particular locality, or community, or of some lo- cal trade or commercial connection, or for the destruc- tion or crippling of some rival or hostile line." Interstate Commerce Commission vs. B. & O. R. R. Co., 145 U. S. 263, 36 L. Ed. 699. § 3. Unjust Discrimination Only Is Unlawful. The provisions of section 2 of the Act clearly indicate the legislative intent to recognize the possibility of just dis- crimination in the transportation of persons or property and to prohibit only those forms of discrimination which are unjust and unreasonable and create undue preference of persons or localities, the one over another. This is patent from the specification in this section of what shall constitute unjust discrimination as defined therein. It is primarily obvious that a uniform rate between different shippers is not always possible. The kind of traffic, the quality of the service essential to its safe and prompt trans- portation, the circumstances and conditions surrounding a particular shipper or locality, may justly alter or change the obligations of the carrier. The federal courts have qualified unjust discrimination within the meaning of the Act by holding that a difference in charge must apply to a like kind of traffic, in a service that is like and contemporaneous, and where the transport tation is rendered under substantially similar circumstances and conditions in order to constitute unjust discrimination. I. C C. vs. B. & O. R. R. Co., 43 Fed Rep. 37. In later decisions the same courts have held that a car- INTERSTATE COMMERCE LAW 207 rier subject to the Act to Regulate Commerce is only bound to give the same terms to all persons alike under the same conditions and circumstances. Any fact which produces an equality of conditions and a change of cir- cumstances justifies an equality of charge. I. C C. vs. C. G. N. R. Co., 141 Fed. Rep. 1003. The Act to Regulate Commerce does not, therefore, prohibit the giving of all preferences and advantages or the protection of all prejudices or disadvantages, but only those that are undue and unreasonable, and an interstate carrier is free to exercise all its rights under the common law to the full extent to which such exercise has not been made unlawful by the Act. Gamble-Robinson Com. Co. vs. C. & N. W. R. Co., 168 Fed. Rep. 161. American Coal & Coke Co. vs. M. C. R. R. Co., 36 I. C. C. Rep. 195, 197. The Commission has likewise held that in fixing rates for differing and analogous services, the carrier has a right to exercise honest discretion. Trifling differences of cost or character of the services rendered do not justify dis- parity of charges; but where the dififerences are substan- tial, either in the work performed or in the utility and value to the person served, a fair relation of rates meets the carrier's obligation. Carr vs. Nor. Pac. R. Co., 9 I. C. C. Rep. 1. For cases upholding the right of the carrier to create and maintain just and reasonable discriminations, see : I C. C. vs. B. & O. R. R. Co., 43 Fed. Rep. 37. affmd. in 145 U. S. 263, 36 L. Ed. 699. _ , ^^ C. N. O. & T. P. R. Co. vs. I. C. C, 162 U. S. 184, 40 L. Ed. 935 T. &P. R. Co. vs. I. C. C, 162 U. S. 197, 40 L. Ed. 940. 208 AMERICAN COMMERCE ASSOCIATION I. C. C. \'$. C. N. O. & T. p. R. Co., 167 U. S. 479, 42 L. Ed. 414. Cattle Raisers' Assn. vs. Ft. W., etc., R. Co., 7 I. C. C. Rep. The attitude of the courts toward discriminations may- be accurately summarized to the effect that discrimination may- be unjust when not based upon substantial difference in the commodity and in the kind of service rendered in its transportation. As a principle of equity that forbids any difference in charge which is not based upon difference in the service, w^hen based upon a difference in service, it must have some reasonable relation to the amount of the dif- ference. It was the intention of Congress that whatever would be regarded by common carriers as matters which war- ranted differences in charges should be considered in form- ing a judgment whether such conditions were or were not unjust. Said the Supreme Court, in the Import Rate Case: "The principal purpose of the second section is to prevent unjust discrimination between shippers. It implies that, in deciding whether differences in charges, in given cases, were or were not unjust, there must be a consideration of the several questions whether the services rendered were 'like and contem- poraneous,' whether the kinds of traffic were Mike,* whether the transportation was effected under 'sub- stantially similar circumstances and conditions.' To answer such questions, in any case coming before the Commission, requires an investigation into the facts; and we think that Congress must have intended that whatever would be regarded by common carriers, apart from the operation of the statute, as matters which warranted differences in charges, ought to be considered in forming a judgment whether such dif- ferences were or were not 'unjust.' Some charges might be unjust to shippers — others might be unjust to the carriers. The rights and interests of both INTERSTATE COMMERCE LAW 200 must, under the terms of the Act, be regarded by the Commission." Texas & Pac. Ry. Co. vs. Interstate Commerce Commis- sion, 162 U. S. 197, 40 L. Ed. 940. § 4. Standards of Comparison. The carriers subject to the provisions of the regulatory acts are common servants of all shippers and, to every in- tent and purpose, are bound to serve them all reasonably and without undue prejudice. Nor does the system of laws regulating the interstate railway transportation of the country deal with the carriers as unrelated corporate enti- ties, but, on the contrary, looks upon lines of railways as constituting a national railway system with a national purpose and national integrity. And whether or not an act of discrimination by a single line of railway or by the national system of railroads is undue is a fact to be found and not a question of law. Discrimination in transporta- tion of any degree is a relative condition, and the Com- mission may, within its extensive authority, draw upon the standards set by any carrier in the national railway sys- tem as a basis to assist it in determining the relative pro- priety of the challenged rate or practice. It possesses the license of comparison to the extent that general equity may be done among shippers in the national spirit of the law, and is not limited to local conditions alone in its de- termination of the just rights of shippers and carriers in discrimination cases. To compare the rate or practice un- der complaint with some other rate or practice presumably justly and fairly applied under substantially similar cir- cumstances and conditions, is an inductive measure of the equitable propriety of the rate or practice under considera- tion. During the years in which the Commission has en- forced the prohibitions of the law against undue discrim- 17—15 210 AMERICAN COMMERCE ASSOCIATION inations, certain acceptable methods of comparison have been developed. Moore in his treatise on "The Law of Interstate Commerce," section 124, page 223, asserts: "The unlawfulness under section 2, in charging any person or persons a greater or less compensation for "service rendered or to be rendered in the transporta- tion of persons or property than is charged any other person or persons for doing a like and contempora- neous service, is in the doing of a service by a carrier in the manner forbidden by the statute, and, if no serv- ice has been done, no contravention of the Act has oc- curred. An indictment under section 2 is defec- tive in not alleging that other shippers were required to pay more than those specified. Mere proof of a railroad rule, without evidence of its practical work- ing, does not establish unfair competition. The existence of a merely theoretical or paper rate is not sufficient to complete a violation of the long and short haul clause, no shipment having ever been made at that rate. It was held by the Circuit Court of Ap- peals that 'under the Cullom Act (1887) the standard of comparison was the treatment of other shippers. It was necessary to prove not only that the favored shipper really paid less than the published rate, but also that other shippers paid the full rate or a greater rate than that of the favored shipper. Under the El- kins Act the standard of comparison is the published rate. It is only necessary to prove that the favored shipper has had his property transported at a rate less than that published and filed.' But under sec- tions 2 and 3 it had been held that it is immaterial whether or not the rate was published and filed with the Commission." Merchants' Cotton Press & Storage Co. vs. I. C. R. R. Co., 17 I. C. C. Rep. 98, 105. Avery Mfg. Co. vs. A. T. & S. F. Ry. Co., 16 I. C. C. Rep 20, 24. See also: Griffee vs. Burlington, etc., R. Co., 2 I. C. C. Rep. 310, 2 I. C. Rep. 194. . INTERSTATE COMMERCE LAW 211 Re Huntington, 68 Fed. Rep. 881. DeBary Baya Mer. Line vs. Jacksonville, etc., R. Co., 40 Fed. Rep. 392. U. S. vs. Hanley, 71 Fed. Rep. 672. Richmond Elevator Co. vs. P. M. Co., 10 I. C. C. Rep. 629. Missouri, etc., Assn. vs. Missouri, etc., R. Co., 12 I. C. C. Rep. 483. Topeka Banana Dealers' Assn. vs. St. Louis, etc., R. Co., 13 I. C. C. Rep. 620. L. V. R. Co. vs. Rainey, 112 Fed. Rep. 487. C. & A. R. Co. vs. U. S., 156 Fed. Rep. 558. U. S. vs. Vacuum Oil Co., 153 Fed. Rep. 558. C. & A. R. Co. vs. U. S., 156 Fed. Rep. 558. CHAPTER VII ACT TO REGULATE COMMERCE AS AMENDED (CONTINUED). Amplification of Sections (Continued). DISCRIMINATION BETWEEN PERSONS. § 1. Allowances, Legality of. § 2. Discrimination in Allowances. § 3. Allowance for Elevation of Grain. § 4. Allowances to Tap Lines. § 5. Allowances to Industrial Railways and Plant Facilities. § 6. Discrimination Between Carriers. § 7. Carrier as Shipper May not Receive Preference. § 8. Discrimination Resulting from Contract with Shipper. § 9. Shipper Interested in Connecting Carrier. § 10. Discrimination in Reconsignment Charges. §11. Discrimination in Absorption of Switching Charges. § 12. Discrimination in Terminal Charges. § 13. Discrimination by Retention of Overcharge. 213 CHAPTER VII ACT TO REGULATE COMMERCE AS AMENDED (CONTINUED). Amplification of Sections (Continued), DISCRIMINATION BETWEEN PERSONS. § 1. Allowances, Legality of. Allowances are frequently made by a trunk line to an in- dustry under section 15 of the Act for services rendered by an industrial line owned by it or its stockholders, as for an instrumentality furnished by the shipper, and the only concern of the Commission in such case is to satisfy itself that the allowances are not above the reasonable cost of the service and therefore are not indirectly a rebate of a part of the trunk line's charge to the owning industry through the medium of the latter's industrial railway. These al- lowances also are voluntarily made as for services per- formed by the shipper for the trunk line, and it is not set- tled law that they shall be required to be made by the trunk line, any more than the latter may be required to absorb the published rate of the terminal carrier subject to the act referred to. Frequently the industrial line develops new traffic and shippers other than the owning industry located on its rails, whereupon the owning industry or its stock- holders separately incorporate the railway, which there- upon files tariffs with the Commission, claims thenceforth to be wholly separate and distinct from the owning indus- try, and thereafter holds itself out to serve the owning 215 216 AMERICAN COMMERCE ASSOCIATION industry and its other shippers impartially. Assuming the newly made carrier to be under the law a common car- rier in all respects such as it represents itself to be, it is evident that allowances under section 15 of the Act can no longer be made to the owning industry as for services ren- dered by the shipper, as the railway is no longer a part of or in law connected with the latter, which is "the owner of the property transported," to whom alone, under that sec- tion of the statute, allowances may be made, but is in the contemplation of the act in the same position as it would be if it had been constructed and was being operated by parties having no interest whatever in the owning indus- try. Conversely, the owning industry would be on the same plane as if it had located as an independent shipper upon the newly made railroad after the latter's construction by parties having no connection with the industry. The rail- way is now a public agency which, if it lives up to the ob- ligations attached by the act to its own representations, should collect its charges from the former owning industry the same as it does from other shippers on its line. On lo- cal shipments this complete separation of carrier from shipper usually is not only maintained with respect to the owning industry as well as the independent shipper, but what is more pertinent to the specific point at hand is that, there being no third party in the form of a connecting trunk line involved in the transaction, both the owning industry and the independent shipper must recognize this local service as being performed for them as shippers for which they are expected to pay, and that it is to them that the carrier must look for its rate. The Commission in passing upon the point said: "If, therefore, this service is recognized as being performed for them on local shipments, by what proc- ess of reasoning can it be transformed into one per- INTERSTATE COMMERCE LAW 217 formed for the trunk line when rendered as a part of a through haul for the same shipper. Yet this in ef- fect must necessarily be the contention of such a com- plainant railway and its shippers when the trunk line, owing perhaps to the absence of the same competitive conditions as existed with reference to the terminal line of the industry with its industrial line, referred to, or for other reasons, is not disposed to ask the com- plainant railway to render it that service and to ab- sorb the latter's charge therefor, and they petition this Commission for the establishment of joint rates which shall not exceed the rate of the trunk line. Such a course cannot and should not be required by this Com- mission. In the contemplation of the Act what the Commission in such a case is really asked to do is not to make the trunk line absorb the other's charge but is, instead, to take the two separate local rates of the two separate carriers for the two separate services, both rendered for the shipper, and to combine them into one rate commensurate with the value of the through service which in its entirety and its constitu- ent parts also is rendered for the shipper. We are not to be understood as saying that when carriers in the through route under their tariffs absorb the switching charge of a terminal line, the resulting rates are not to all intents and purposes, and in fact, joint rates so far as concerns the shipping public. What we do say is that while the trunk lines may thus voluntarily es- tablish such rates on that basis, we would not be jus- tified in requiring them to do so." Manufacturers' Railway Co. vs. St. L. I. M. & S. Ry. Co., 28 I. C. C. Rep. 93, 101. An allowance to or division with a tap line which is a part of or a plant facility is an unlawful preference and dis- crimination and an unlawful departure from the published rate. But whether a tap line is a plant facility or a com- mon carrier is a question of fact. If it is a common car- rier, it may not haul for the proprietary company free of charge. 218 AMERICAN COMMERCE ASSOCIATION Before the decision by the Supreme Court in the Tap Line Cases, the Commission held that if the carrier is a common carrier and transports for others than its owners a substantial amount of interstate commerce, it is entitled to a division of the joint rate, despite the fact that it is owned by one who is the principal shipper over its line. The de- cision of the Supreme Court did not enter the domain of defining the abuses created by the tap lines, but on the contrary gave common carrier status to many tap lines held by the Commission to be plant facilities, and left to the Commission's administrative function the determina- tion of the abuses which might exist and their remedy. I. C. C. vs. L. & P. Ry. Co., 234 U. S. 1, 29. Mfrs. Ry. Co. vs. St. L. I. M. & S. Ry. Co., 28 I. C. C. Rep. 93, 102. McCloud River Lumber Co. vs. S. P. Co., 24 I. C. C. Rep. 89, 94. Tap Line Case, 23 L C. C. Rep. 277, 292, 297, 298. Star Grain & Lumber Co. vs. A. T. & S. F. Ry. Co., 17 I. C. C. Rep. 338, 344. In the original Tap Line Cases the Commission held it was unlawful for a tap line to receive divisions in excess of a reasonable switching charge, or where the mill of the controlling company was within a few hundred feet of the trunk line. Tap Line Case, 23 L C. C. Rep. 549, 569, 582. The Commission also refused to order a reduction in the rate in order to remove i^ discrimination caused by tap-line allowances. Industrial Lumber Co. vs. St. L. W. & G. Ry. Co., 19 I. C. C. Rep. 50, 53. § 2. Discrimination in Allowances. As heretofore noted, the amended Act authorizes the carriers to make certain allowances to shippers who fur- nish some facility or render a certain service essential to INTERSTATE COMMERCE LAW 219 the transportation of their property, and which such ship- pers might, as a matter of lawful right, demand of the car- rier as a part of its transportation service. It is funda- mental, obviously, that there may be no undue or unjust discrimination on the part of the carrier in granting these allowances, but, while it is true that a failure on the part of the carrier to observe rules of equality in granting allow- ances involves necessarily unjust discrimination between shippers or localities affected, such practice results in a more serious evil condemned by the law as a rebate or un- lawful concession. To pay an allowance to one shipper while declining to pay it to another or to pay an allowance at one point while refusing to pay it at another amounts to an unjust discrim- ination, unless justifying circumstances and conditions ex- ist. Allowances have been made subjects of abuse in the past and the Commission scrutinizes them with a view to prevent recurrence thereof. The courts have held that whatever allowances are made must be just, reasonable and nondiscriminatory. Section 15 of the amended act provides that "it the owner of property transported under this act directly or indirectly renders any service connected with such trans- portation, or furnishes any instrumentality used therein, the charge and allowance therefor shall be no more than is just and reasonable," and the Commission may, after hear- ing on a complaint or on its own initiative, determine what is a reasonable charge as the maximum to be paid by the carrier or carriers for the services so rendered or for the use of the instrumentality so furnished, and fix the same by appropriate order. This section of the Act is not a warrant to a carrier for making an allowance to one shipper providing a facility and performing a service in the transportation of his own 220 AMERICAN COMMERCE ASSOCIATION property, while refusing a similar allowance to another shipper providing a similar facility and performing the same service in the transportation of property. Nor may a carrier, while giving to one shipper the privilege of pro- viding a facility and performing a service in the transpor- tation of his property, refuse the same privilege to another shipper, and compensate the former while refusing any allowance to the latter. Nor is that the law. Manifestly it could not be the law when the two shippers are com- petitors in the same line of business and in the same markets. In Federal Sugar Refining Co. vs. B. &. O. R. R. Co., 20 I. C. C. Rep. 200, 213 (the order of the Commission being subsequently enjoined in B. & O. R. R. Co. vs. U. S., 200 Fed. Rep. 779, 791) the Commission held that a carrier is not warranted under section 15 of the Act to Regulate Commerce in making an allowance to one shipper who provides a facility and performs a service in the transpor- tation of his own property, while refusing a similar allow- ance to another shipper, competing in the same markets and in the same line of business, who provides a similar facility and performs the same service in the transporta- tion of his property. In the report of the Commission it was found that the allowance paid by the defendants on sugar brought by Ar- buckle Brothers on floats and lighters to their regular freight stations on the Jersey shore (no allowances being paid to complainant on sugar brought by it on lighters to the same stations), resulted in inequalities, preferences and discriminations and was unduly prejudicial to the com- plainant as a shipper over the defendant's lines in competi- tion with Arbuckle Brothers in the same markets. The fact that Arbuckle Brothers operated their dock in Brooklyn as a terminal for the defendant carriers did not INTERSTATE COMMERCE LAW 221 justify an allowance to them for lightering their sugar to the regular stations of the defendant on the Jersey shore, so long as an allowance to the complainant for lightering its sugar to the same stations from Pier 24 was refused, and it was further found that a receiving station operated for carriers by a competitor in the same line of business was not a reasonable facility of transportation to offer a shipper. The Commerce Court in passing upon the order of the Commission held that the practice of the petitioning car- riers in granting the allowances referred to by the Com- mission was neither illegal as constituting a violation of the Act to Regulate Commerce under section 3, nor that the fact that Federal Sugar Refining Co. shipped sugar from its refinery at Yonkers, N. Y., consigned to its of- fice at New York, within the lighterage limits, having the same transported to the pier of the boat company, also within the limit, there rebilled and carried to the terminal of the petitioning carriers, entitled it to a lighterage al- lowance. An appeal was taken from the decree of the Commerce Court to the Supreme Court of the United States. The issue before the Supreme Court was the validity of the or- der of the Commission requiring certain carriers to cease and desist from a discrimination which the Commission held resulted from the payment by such carriers of lighter- age allowances to Arbuckle Brothers on their shipments of sugar which originated at Brooklyn, N. Y., and were light- ered therefrom to the Jersey shore of New York Harbor, whence they were transported by the carriers over their lines of railway to western points of destination, and a re- fusal to pay like allowances to the Federal Sugar Refining Co. on its shipments of sugar which originated at Yonkers, N. Y., and were lightered by it to said Jersey shore. 222 AMERICAN COMMERCE ASSOCIATION * whence they were transported by the carriers over their lines of railway to the same western points of destination. In the facts of record before the Supreme Court, it ap- peared that Brooklyn was within the lighterage limits to which the carriers applied the New Jersey shore rate, while Yonkers was not, and that the allowances paid to Arbuckle Brothers were covered by a contract which pro- vided for other allowances to them and obligated them to perform for the carriers services in connection with the receipt, delivery and lighterage of traffic shipped to and from Brooklyn from and to points on the carriers' lines, while there was no such contract in effect between the car- riers and the Federal Sugar Refining Co. Upon these facts the Supreme Court held that by pay- ing the allowances to Arbuckle Brothers and refusing to pay like allowances to the Federal Sugar Refining Co. the carriers did not violate the prohibitions against unjust dis- crimination, undue preference, and undue prejudice, con- tained in sections 2 and 3 of the Act to Regulate Com- merce, since the record did not contain any evidence tending to show that the contract between Arbuckle and the carriers had not been entered into in good faith, and the Commission had not found that the allowances paid to Arbuckle Brothers, when compared with the services to which they were by the contract made to apply, were unreasonable per se. The court held that the lighterage services performed by Arbuckle Brothers under the contract were transporta- tion services, within the meaning of section 15 of the Act to Regulate Commerce, for which they could, under the circumstances, compel the carriers to pay a reasonable compensation, while' the lighterage services performed by the Federal Sugar Refining Co. were accessorial services for which a like payment could not be required. INTERSTATE COMMERCE LAW 223 The manner in which the Federal Sugar Refining Co. Hghtered their shipments was as follows: From Yonkers to the New Jersey shore, the Federal Sugar Refining Co. forwarded its shipments in the first instance to itself at pier 24, a point within the lighterage limits, and afterwards sent them to the terminals of the carriers on the New Jer- sey shore for transportation to western points of destina- tion. The court said: "The sugar had been sold before it was loaded at Yonkers, and the stopping at this pier and the re- ceipt of unsigned bills of lading showing the con- signees and destinations were, as the Commerce Court held, not a break in the continuity of the transporta- tion, but a plain subterfuge to give the transaction the appearance of a shipment from Pier 24." U. S. vs. B. & O. R. R. Co., 231 U. S. 274, 58 L. Ed. 218. U. S. vs. B. & O. R. R. Co., 225 U. S. 306, 56 L. Ed. 1100. To pay an allowance to one shipper while decHning to pay it to another, or to pay it at one place while refusing to pay it at another, unless justifying circumstances and conditions are shown, creates an undue discrimination. Southwestern Missouri Millers' Club vs. St. L. & S. F. R. R. Co., 26 I. C. C. Rep. 245, 253. § 3. Allowances for Elevation of Grain. The Commission held in the Peavey & Co. case that "an allowance made to a shipper of grain, who furnishes eleva- tion service under an arrangement with a carrier, is a re- bate and an unlawful discrimination when it involves a profit over and above the actual cost to such shipper of the service rendered. It is not a rebate when the allowance does not so exceed the actual cost." Re Allowances by Un. Pac. Ry. Co. to Elevators, 12 I. C. C. Rep. 85. 224 AMERICAN COMMERCE ASSOCIATION It must be remembered that the question of allowances for elevation has received conflicting treatment by the Commission. Reviewing the Peavey case, supra, the Com- mission, in 1908, held that an allowance by the Union Pa- cific Railroad Company to Peavey & Co., under the con- tract between them, when made on their own grain which had been mixed, treated, stored, weighed or inspected in any elevator belonging to Peavey & Co., or which had been reshipped out of any of their elevators more than ten days after its receipt therein, amounted pro tanto to a contribution by the said carrier to Peavey & Co. of the cost of securing the commercial benefits growing out of such treatment of the grain, and was an undue preference, and, therefore, unlawful. Re Allowances to Elevators by Un. Pac. Ry. Co., 14 I. C. C. Rep. 315, 316. The Commission followed these decisions with holdings distinguishing between commercial elevation and trans- portation elevation, declaring the former an unlawful dis- crimination and upholding the latter as a necessity. It made the ten-day-period the essence of determining the transportation elevation. St. Louis Traffic Bu. vs. Chicago, etc., R. Co., 14 I. C. C. Rep. 317. Duncan & Co. vs. Nashville, etc., R. Co., 16 I. C. C. Rep. 590. Merriam & Holmquist vs. Un. Pac. R. R. Co., 16 I. C. C. Rep. 337. The orders of the Commission in the Peavey & Co. and the St. Louis cases were declared unlawful by the Su- preme Court in the Diffenbaugh case (I. C. C. vs. DifTen- baugh, 222 U. S. 42), the only qualification being that the order of the Commission in the Peavey & Co. case was un- lawful so far as it prohibited the payment of an elevation allowance as to the grain of Peavey & Co., which had been INTERSTATE COMMERCE LAW 225 commercially treated, and lawful in so far as it required that the payment of such allowance should be confined to grain passing through the elevator in ten days. The Commission, thereupon, reopened these cases, and instead of making an order, recommended to the carriers in interest a readjustment of these allowances upon the basis of the allowances fixed by the Commission. The Commission fixed j^ oi a. cent per bushel as the allowance for each ten days, or part thereof, after the first ten days, and adhered to the ten-day limitation, upon the ground that nothing in the evidence tended to convince the Com- mission that transportation elevation could not be brought within the ten-day limit. The Commission expressed its view that the payment of all elevation allowances and the giving of all free elevation should be prohibited, for in no other way can discrimination be prevented, and every service of benefit to a shipper should be charged for at a reasonable sum and no advantage should be allowed one shipper over another. But it accepted the ruling of the Supreme Court that under the Act some sort of an eleva- tion allowance may be made and recommended as nondis- criminatory an adjustment of such allowances by the car- rier as is possible of accomplishment. Re Elevation Allowances, etc., 24 I. C. C. Rep. 197 (1912). Compare : Traffic Bu. of St. Louis vs. C. B. & Q. Co., 22 I. C. C. Rep. 496, where the Commission, considering the Elevator Al- lowance cases in the Supreme Court together, concluded that it was the intention of the Supreme Court to hold that whatever might be the case if a railroad saw fit to con- fine its payment to elevation actually required in trans- portation of grain, it must, when it makes this allowance to one elevator under such circumstances as to give that elevator payment for commercial elevation, extend the same privilege to all other elevators similarly situated. "A railroad has no right, under the pretext of a transfer which 17—16 226 AMERICAN COMMERCE ASSOCIATION it does not require, to furnish a grain dealer commercial elevation, or, what amounts to the same thing, to pay an elevator allowance for the commercial elevation of his grain; and if it does so, it must accord the same privilege or make the same payment to other persons and at other points." See also: Un. Pac. R. Co. vs. Updike Grain Co., 178 Fed. Rep. 224. The original case in which these elevation allowances were considered by the Commission was Re Allowances to Elevators, 10 I. C. C. Rep. 309. See also: I. C. C. vs. C. & O. R. Co., 200 U. S. 361. Washer Grain Co. vs. Mo. Pac. R. Co., IS I. C. C. Rep. 147 (1909). Nebraska-Iowa Grain Co. vs. U. P. R. Co., IS I. C. C. Rep. 90 (1909). § 4. Allowances to Tap Lines. Allowances in the form of divisions of joint rates granted to tap lines or railroads controlled by shippers which do not bear a proper relation to the value of the service rendered by such tap lines or railroads, are unjust discriminations in the nature of rebates and are unreason- able. Re Division of Joint Rates and Other Allowances to Terminal Railroads, 10 I. C. C. Rep. 385. Re Transportation of Salt, 10 I. C. C. Rep. 148. Re Transportation of Salt from Hutchinson, Kansas, 10 I. C. C. Rep. 1. See also: I. C. C. Ann. Rep. for 1904. Since the early case of the Yellow Pine Lumber Associa- tion, supra, the question of discrimination effected through allowances to tap-line roads has been constantly agitated before the Commission. The Commission held that the INTERSTATE COMMERCE LAW 227 discrimination caused by these tap-line allowances could not be removed by reducing the trunk line rates. See — Industrial Lbr. Co. vs. St. L. W. & G. R. Co., 19 I. C. C Rep. 50, 53 (1910) ; Star Grain & Lbr. Co. vs. R. R. Co., 17 I. C. C Rep. 338 (1909) ; Chicago Lumber & Coal Co. vs. R. R. Co., 16 I. C. C. Rep. 323 (1909) and Spiegle & Co. vs. So. R. Co., 19 I. C. C. Rep. 522 (1910). The status of the tap line, either as a plant facility or as a common carrier, is determinative of its legal ability to receive allowances. In the Tap-Line Cases, 23 I. C. C. Rep. 277, and 23 I. C. C. Rep. 549, the Commission established the status of the nu- merous tap lines, and where such roads were lawfully com- mon carriers, allowances or divisions of the through rates were approved by the Commission; but where such private railroads were simply plant facilities, allowances to them were condemned by the Commission as rebates and un- lawful discriminations. The Tap Line Cases involved certain divisions of through rates which were demanded by the tap lines and declared to be unlawful by the Commission. After an extensive investigation of the tap lines in the lumber regions, particularly in Arkansas, Missouri, Louisi- ana and Texas, the Commission held that the tap lines in- volved were, with respect to the proprietary lumber indus- tries, merely plant facilities and not common carriers, al- though the tap lines had assumed the form of common car- riers; and ordered the trunk lines to cease and desist from paying divisions or allowances to the tap lines on traffic of the proprietary industries. On nonproprietary traffic the Commission held that the trunk lines could lawfully pay such divisions and allowances to the tap lines. The position of the Commission was that the proprie- tors of the tap lines in controversy were receiving rebates from the trunk lines prior to the passage of the Hepburn 228 AMERICAN COMMERCE ASSOCIATION Act; and that after the Hepburn Act went into effect the proprietors incorporated the tap hnes as common carriers, and then received in the shape of divisions what before they had gotten as rebates. This assumption by the tap lines of the character of common carriers was held by the Commission to be merely a device. The Commerce Court annulled the Commission's order, and from this decision the Commission appealed. In affirming the decree of the Commerce Court and holding the Commission's order to be invalid, the Supreme Court decided three propositions: (1) That the Commission cannot hold that the assump- tion of the form or character of common carrier by a tap line is a mere device to shield rebates when by the public policy of the state and national governments, as evidenced by legislation on the subject, tap lines are recognized to be common carriers. (2) That there can be no discrimination between pro- prietary and nonproprietary traffic — that is to say, if a tap line is entitled to a division or an allowance on traffic car- ried for strangers, it is also entitled to a similar division or an allowance on traffic carried for the industry of which the tap line is an adjunct. (3) That the Commission can fix the divisions of through rates to prevent discrimination and rebating with- out establishing through routes and joint rates and with- out a disagreement on the question of divisions among the carriers. On this last point the court said: "Because we reach the conclusion that the tap lines involved in these appeals are common carriers, as well of proprietary as nonproprietary traffic, and as such entitled to participate in joint rates with other com- mon carriers, that determination falls far short of de- ciding, indeed does not at all decide, that the divisions of such joint rates may be made at the will of the car- INTERSTATE COMMERCE LAW 229 riers involved and without any power of the Commis- sion to control. That body has the authority and it is its duty to reach all unlawful discriminatory prac- tices resulting in favoritism and unfair advantages to particular shippers or carriers. It is not only within its power, but the law makes it the duty of the Com- mission to make orders which shall nullify such prac- tices resulting in rebating or preferences, whatever form they may take and in whatsoever guise they may appear. If the divisions of joint rates are such as to amount to rebates or discriminations in favor of the owners of tap lines because of their disproportion- ate amount in view of the service rendered, it is with- in the province of the Commission to reduce the amount so that a tap line shall receive just compensa- tion only for what it actually does." U. S. vs. L. & P. Ry. Co., 234 U. S. 1, 29. See also: Annual Report of Interstate Commerce Commission for 1914, page 35. Following the opinion of the Supreme Court of the United States and the orders relating thereto in the Tap Line Cases, the Commission issued its second supplemen- tal report, and by an order entered in connection therewith on July 29, 1914, the orders of the Commission entered on May 14, 1912, and October 20, 1912, and all orders entered subsequent thereto with respect to through routes, joint rates and divisions between trunk lines and tap lines par- ties to the original proceeding were vacated and set aside, and the trunk lines were required, on or before October 1, 1914, on not less than five days' notice, to reopen through routes and pubHsh joint rates to interstate destinations with each of the tap lines parties to the record with which they respectively have connections or junctions. That or- (ler fixed the maximum allowances and divisions that may 230 AMERICAN COMMERCE ASSOCIATION be paid by the trunk lines named to their respective tap line connections on interstate shipments of lumber and forest products moving from points thereon from May 1, 1912, to the effective date of the rates and divisions estab- lished in compliance with the order. In the third supple- mental order, entered January 4, 1915, the maximum al- lowances or divisions fixed in the order of July 29, 1914, were made applicable on tap lines which were dismissed as parties to the tap line proceeding prior to that date. The second supplemental report of the Commission was as follows: "In our original and supplemental reports herein, we found that certain of the tap lines that were par- ties thereto did not perform a service of transporta- tion for their respective proprietary companies, either in the movement of the lumber of the proprietary com- pany from its mill to the trunk line or in the movement of the logs from the forest to the mill; that this was a plant service with plant facilities, and that any allow- ances or divisions out of the rate on account thereof were unlawful and resulted in undue and unreason- able preferences and unjust discriminations. Other tap lines that were parties to the proceeding were rec- ognized as performing a service of transportation with respect both to proprietary and nonproprietary traffic, and in those cases we authorized the re-establishing of through routes and joint rates, and fixed the divisions that might be paid by the connecting trunk lines to those tap lines out of the through rate. An order was issued in conformity with these findings. Later five of the tap lines to which, as we had held, divisions could not lawfully be paid by the trunk lines, filed pe- titions in the Commerce Court, seeking to have the order of the Commission enjoined and annulled. The decree of that court vacated and set aside that portion of the order of the Commission wherein it was held that with respect to the product of the proprietary mills the five tap lines did not perform a service of INTERSTATE COMMERCE LAW 231 transportation. From this order an appeal was taken to the Supreme Court of the United States. *Tn its opinion in the case above cited the Supreme Court held these five lines to be common carriers with respect both to proprietary and nonproprietary traffic, and that the Commission had exceeded its authority in condemning the divisions previously allowed to them out of the through rate, as an attempt to evade the law and to secure rebates and preferences. "There were fifty-seven tap lines to which, in its original and supplemental reports, the Commission re- fused to sanction allowances on the general grounds above stated; but although the appeal was taken to the courts on behalf of only five of these tap lines, nev- ertheless the rulings announced by the court extend in principle to all of them, and we have felt in duty bound to apply the rulings to the entire group. "In its opinion the Supreme Court, among other things, said, id., 28: Tt is doubtless true, as the Commission am- ply shows in its full report and supplemental re- port in these cases, that abuses exist in the con- duct and practice of these lines and in their deal- ings with other carriers which have resulted in unfair advantages to the owners of some tap lines and to discriminations against the owners of others.' "With respect to each of the tap lines that are par- ties to this proceeding, the original orders of the Com- mission, and the orders subsequently entered, so far as they relate to through routes, joint rates, and divi- sions, will be vacated and set aside ; and upon the facts of record we conclude and find that all the through routes and joint rates in effect prior to May 1, 1912, between the trunk lines and tap lines named on the record should be restored and re-established, and that the divisions out of the through rate on interstate shipments of lumber and forest products, from points on such of these tap lines as file tariffs and have other- 232 AMERICAN COMMERCE ASSOCIATION wise complied with our accounting rules, etc., should not exceed the following maximum amounts: For switching a distance of 1 mile or less from the junc- tion, $2 per car; over 1 mile and up to 3 miles from the junction $3 per car; on shipments from points over 3 miles and not more than 6 miles from the junction, 1^^ cents per 100 pounds; over 6 miles and not more than 10 miles from the junction, 2 cents per 100 pounds; over 10 miles and not more than 20 miles from the junction, 2^ cents per 100 pounds; over 20 miles and not more than 30 miles from the junction, 3 cents per 100 pounds; over 30 miles and not more than 40 miles from the junction, 3^^ cents per 100 pounds; over 40 miles from the junction, 4 cents per 100 pounds. These divisions are the net amounts that may be paid out of the trunk line rates from the junctions, and when the rates from points on the tap line are made by the addi- tion of an arbitrary, such arbitrary shall accrue to the tap line. "These divisions should be applied to all interstate shipments of lumber and forest products that moved from points on the tap lines between May 1, 1912, and the date the through rates and divisions are made ef- fective in compliance with the order entered herein, and are a readjustment of the findings of our original report with respect to the divisions. In making these adjustments the tap lines should file with the Commis- sion statements of cars moving during this period, in substantially the form used in our special reparation docket, certified to by the proper officer of the con- necting trunk line over which the shipments moved. Upon these statements, when approved by the Com- mission, settlements may be made for the divisions that will have accrued under the order herein. "In case the delivery of lumber and forest products to a trunk line involves a haul over two or more tap lines the divisions herein fixed should be applied to the aggregate haul, and not to the separate service of each of the tap lines. "The trunk lines will be expected to file with the INTERSTATE COMMERCE LAW 233 Commission a copy of their division sheet with each of their respective tap-Hne connections, making ef- fective the divisions fixed herein. The division sheet should show^ the distance in miles from each station or shipping point to the junction with the issuing carrier, in addition to the amount of the division. The tap lines should file with the Commission a copy of their distance tariff or a table of distances from all shipping points on their respective lines to the junctions with the connecting carriers. "With respect to the milling-in-transit rate on logs as formerly practiced on the tap lines, we adhere to our original conclusion that the rate on lumber at the junction or mill point may not lawfully be extended back to the point on the tap line where the logs origi- nate, and that any division out of the through lumber rate on account of the log haul can not be sanctioned. "Since the original report and orders herein, two of the tap lines, parties to the original proceedings, have notified the Commission that they have ceased opera- tions, and in the case of two others each has been pur- chased by and merged with a connecting line, and some additional orders and amended orders have been entered with respect to individual tap lines. Upon intervening petition five additional tap lines were made parties to this proceeding; five other tap lines were dismissed as parties, upon a showing that all the proprietary lumber had been cut out and the proprietary mill shut down, or that there had been a complete separation of the interests that controlled the tap line from the interests that controlled the lumber company. In the case of other tap lines we increased the allowances or divisions upon a showing that an increased service was performed, and in other cases, upon a showing of an extension of the track to another junction, we fixed the allowances through the new gateway. In all these cases hearings or re- hearings were held and the additional facts put of record. The specific action taken in each of these cases is recited in the order attached," 234 AMERICAN COMMERCE ASSOCIATION At the reargument it was admitted by practically all the attorneys who appeared on behalf of the various tap lines that the abuses and discriminatory practices shown of rec- ord in this investigation had been largely corrected by the action of the Commission. I. C. C. vs. L. & P. Ry. Co., 234 U. S. 1, 29. Tap Line Case, 35 I. C. C. Rep. 485. Tap Line Case, 34 L C. C. Rep. 116. Tap Line Case, 31 I. C. C. Rep. 490, 496. Tap Line Case, 23 L C. C. Rep. 277. Tap Line Case, 23 I. C C. Rep. 549. See also: Tap Line Case — Butler County R. R. Divisions, 41 L C. C. Rep. 36. Second Industrial Rys. Case, 41 L C. C. Rep. 68. Second Industrial Rys. Case, 41 I. C. C. Rep. 42. Second Industrial Rys. Case, 37 I. C. C. Rep. 566. Second Industrial Rys. Case, 37 I. C. C. Rep. 558. Second Industrial Rys. Case, 37 I. C. C. Rep. 497. Second Industrial Rys. Case. 37 I. C. C. Rep. 491. Second Industrial Rys. Case, 37 I. C. C. Rep. 408. Car Spotting Charges, 34 I. C. C. Rep. 609. Second Industrial Rys. Case, 34 I. C. C. Rep. 609. Industrial Rys. Case, 32 I. C. C. Rep. 129. In re Muncie & Western Ry. Co., 30 I. C. C. Rep. 434, 435, 436. Industrial Rys. Case, 29 I. C. C. Rep. 212. Mfrs. Ry. Co. vs. St. L. I. M. & S. Ry. Co., 28 I. C. C. Rep. 93, 102. Central Coal & Coke Co. vs. M. & L. R. R. Co., 27 I. C. C. Rep. 40. In re Cancellation of Joint Rates on Coal on the C. Z. & G. R. R. Co., 27 I. C. C. Rep. 353. Commercial Club of Omaha vs. A. & S. R. Ry. Co., 27 I. C C. Rep. 302, 324 Joint Rates with the Washington Western Ry. Co., 27 I. C. C. Rep. 630, 634 Blakely Southern Ry. Co. vs. A. C. L. R. R. Co., 26 I. C. C. Rep. 344, 348, 349, 350. B. & G. N. R. R. Co. vs. A. T. & S. F. Ry. Co., 24 I. C. C. Rep. 16. For rulings afifecting the participation of tap lines and industrial railways in through routes and joint rates, see the following cases : I. C. C. vs. L. & P. Ry. Co., 234 U. S. 1, 29. Second Industrial Rys. Case, 37 I. C. C. Rep. 408. INTERSTATE COMMERCE LAW 235 Second Industrial Rys. Case., 37 I. C. C. Rep. 491. Second Industrial Rys. Case, 37 I. C. C. Rep. 497. Second Industrial Rys. Case, 37 I. C. C. Rep. 558. Second Industrial Rys. Case, 37 I. C. C. Rep. 566. Second Industrial Rys. Case, 41 I. C. C. Rep. 42. Second Industrial Rys. Case, 41 I. C. C. Rep. 68. Second Industrial Rys Case, 34 I. C. C. Rep. 596, 598. In re Joint Rates of the Birmingham So. Pac. R. R. Co., 32 I. C. C. Rep. 110, 111. L. & N. R. R. Co. vs. M. St. P. & S. S. M. Ry. Co., 24 I. C. C. Rep. 639, 643. Compare : Industrial Rys. Case, 29 I. C. C. Rep. 212. C. V. & N. Ry. Co. vs. M. St. P. & S. S. M. Ry. Co., 24 I. C. C. Rep 634. McCloud River Lumber Co. vs. S. P. Co., 24 I. C. C. Rep. 89, 94. Consolidated Fuel Co. vs. A. T. & S. F. Ry. Co., 24 I. C. C. Rep. 213, 217. Crescent Coal & Mining Co. vs. C. & E. I. R. R. Co., 24 I. C. C. Rep. 149, 157. Beaumont & Great Northern Ry. Co. vs. A. T. & S. F. Ry. Co., 24 I. C. C. Rep. 161, 163. Laona & Nor. P. R. Co. vs. M. St. P. & S. S. M. Ry. Co., 24 I. C. C. Rep. 639, 643. In re Divisions of Joint Rates on Coal, 22 I. C. C. Rep. 51, 55. Kaul Lumber Co. vs. C. of Ga. Ry. Co., 20- 1. C. C. Rep. 450. Industrial Lumber Co. vs. S. L. & W. G. Ry. Co., 19 I. C. C. Rep. 50, 53. Fathaner Co. vs. St. L. I. M. & S. Ry. Co., 18 I. C. C. Rep. 517. 519. Star Grain & Lumber Co. vs. A. T. & S. F. Ry. Co., 17 I. C. C. Rep. 338, 345. Crane Iron Works vs. Central of N. J. R. R. Co., 17 I. C. C. Rep. 514, 518, 520. Cedar Hill Coal & Coke Co. vs. A. T. & S. F. Ry. Co., 16 I. C. C. Rep. 402, 403, 464. § 5. Allowances to Industrial Railways and Plant Facili- ties. In 1909 the eastern trunk lines and certain iron and steel industries having plant railways voluntarily undertook an investigation with a view to determining the legality of certain allowances and free services which were being made to industrial and plant railways. The demands of plant railways for larger allowances. 236 AMERICAN COMMERCE ASSOCIATION the increasing number of industries that were incorporat- ing railroad companies to take over the operation of their plant tracks and locomotives with a view to demanding allowances, and the growing volume of complaint against the discriminations arising out of these relations between the line carriers and the industries so favored, together with certain formal and informal rulings by the Commis- sion in other cases, had combined, as the original report herein explains, to raise a doubt on the part of the car- riers and certain large industries as to the legality of such practices. The matter reached the Interstate Commerce Commis- sion in the spring of 1911 in the form of a stipulation be- tween the United States Steel Corporation on the one hand and the line carriers on the other, accompanied by recommendations that the line carriers could lawfully dis- continue the allowances to all except a small number of the industrial railways mentioned in the stipulation. The Commission instituted a general investigation, and in its report found that allowances were then being made to industries or to their subsidiary plant railways in the form of (1) divisions out of the rate, (2) per diem reclaims, (3) remission of demurrage, and (4) furnace allowances. It was held by the Commission that all allowances to or divisions of rates with any of the so-called industrial railways were unlawful. No distinction was made be- tween the industrial roads, although the physical charac- teristics and conditions surrounding them varied widely. As a result of that report, although no order was en- tered, the line-haul carriers promptly withdrew all allow- ances, divisions, demurrage and per diem arrangements with the industrial roads that were before the Commission in the proceeding, and also with other similar roads that were not before it. Protests against such cancellations INTERSTATE COMMERCE LAW 237 led the Commission to suspend them in a number of in- stances. Subsequently, the Supreme Court of the United States handed down its decision in the Tap Line Cases, supra, overruling the holding of the Commission in those cases that the tracks and equipment of the tap lines were plant facilities and that the service performed therewith for the proprietary lumber companies in moving logs to the mills and in moving the products of the mills to trunk line con- nections was not a service of transportation by a common carrier railroad, but a plant service by a plant facility, and that any allowances or divisions of rates on that account were unlawful and resulted in undue and unreasonable preferences and unjust discriminations. This holding of the Commission was supported by its former similar rul- ings in the General Electric Company Case, 14 L C. C. Rep. 237, and Solvay Process Co. case 14 L C. C. Rep. 246. Referring to these holdings by the Commission, the Su- preme Court in the Solvay Process Company Case said : "A perusal of the findings and orders of the Com- mission make it apparent that the grounds of decision upon which it proceeded were two: First, that these roads were mere plant facilities; second, that they were not common carriers as to proprietary traffic." The opinion of the Supreme Court then proceeded: "It thus becomes apparent that the real question in these cases is the true character of the roads here in- volved. Are they plant facilities merely or common carriers with rights and obligations as such? "It is insisted that these roads are not carriers be- cause the most of their traffic is in their own logs and lumber and that only a small part of the traffic carried is the property of others. But this conclusion loses sight of the principle that the extent to which a rail- 238 AMERICAN COMMERCE ASSOCIATION road is In fact used does not determine the fact whether it is or is not a common carrier. It is the right of the public to use the road's facihties and to demand service of it rather than the extent of its busi- ness which is the real criterion determinative of its character. "Furthermore, these roads are common carriers when tried by the test of organization for that pur- pose under competent legislation of the state. They are so treated by the public authorities of the state, who insist in this case that they are such and submit in oral discussion and printed briefs cogent arguments to justify that conclusion. They are engaged in car- rying for hire the goods of those who see fit to em- ploy them. They are authorized to exercise the right of eminent domain by the state of their incorporation. They were treated and dealt with as common carriers by connecting systems of other carriers, a circum- stance to be noticed in determining their true char- acter," Speaking of the power of the Commission to control such allowances, the court further said: "It is not only within its power, but the law makes it the duty of the Commission to make orders which shall nullify such practices resulting in rebating or preferences, whatever form they take and in whatso- ever guise they may appear. If the divisions of joint rates are such as to amount to rebates or discrimina- tions in favor of the owners of the tap lines because of their disproportionate amount in view of the serv- ice rendered, it is within the province of the Commis- sion to reduce the amount so that a tap line shall receive just compensation only for what it actually does." In its supplemental report in the Industrial Railways Case, the Commission stated that the case did not differ INTERSTATE COMMERCE LAW 239 in fundamental principles from the Tap Line Cases. While there might be a distinction as to the application of the commodities clause, that could not properly affect the con- clusions or actions of the Commission in the Industrial Railways Case. If the commodity clause was violated that infraction of law could not be corrected or punished by rate adjustment. It was absolutely demonstrated in the records in both the Tap Line Cases and Industrial Railway Case that the granting of allowances to industrial roads owned in whole or in part by the principal or sole industries served by such roads had been carried to indefensible extremes and resulted in many grossly discriminatory practices. It was admitted, however, that many of the abuses and unlawful practices had been eliminated as a result of the Commis- sion's investigation.' The findings of the Commission in the original report in the Industrial Railways Case were given general and substantial effect by the trunk line roads. The withdrawal of allowances to many of the industrial roads was accepted as proper without question, but as to a few of them it was insisted that the Commission's findings invaded their le- gal rights and then urged the Commission to issue an or- der so that those questions might be tested in the courts. In its supplemental report the Commission said: "We have concluded, however, that it is our duty to refrain from issuing an order and to avoid the delay which would be attendant upon such litigation. We think that in the light of the decision of the Supreme Court in the Tap Line Cases it is our duty to so mod- ify our findings in the original report herein as to per- mit the trunk line roads, if they so elect, to arrange by agreement with any of the industrial roads men- tioned in our former report which are common car- riers under the test applied by the Supreme Court in 240 AMERICAN COMMERCE ASSOCIATION the Tap Line Cases, and which perform a service of transportation, for a reasonable compensation for such service in the form of switching charges or divi- sions of joint through rates. Each road that becomes a party to such an agreement must file with us imme- diately upon the consummation thereof a full state- ment of the arrangement entered into, showing specif- ically the allowances or divisions granted thereby. We shall, in the exercise of the duty pointed out by the Supreme Court, undertake at the earliest available opportunity to inquire carefully into any of these al- lowances or divisions which may seem to be unwar- ranted or unreasonable or to effect unjust discrim- ination. "The commodities clause of the act excepts tim- ber and manufactured products thereof from the pro- hibition against the transportation by a railroad of any article or commodity manufactured, mined, or produced by it or under its authority, or which it may own wholly or in part, or in which it may have an in- terest, direct or indirect, except such articles or com- modities as may be necessary and intended for its use in the conduct of its business as a common carrier. What we have said relative to establishment of al- lowances or divisions with the industrial roads re- ferred to is not to be understood as a finding by us that those industrial roads can resume these relations with the trunk line carriers without transgressing the provisions of the commodities clause. If infractions of that law come to our notice, we shall in the proper way bring them to the attention of the Department of Justice. "We shall expect the trunk line roads, under the modification here made of our original findings, to re- establish allowances, divisions or demurrage or per diem arrangements with industrial roads only in in- stances in which the transaction is bona fide, and in which it is clearly lawful and proper. Each case must be judged by its own facts and merits. Each of the in- dustrial railways is or is not a common carrier. If it INTERSTATE COMMERCE LAW 241 is a common carrier, it is entitled to all the rights and subject to all of the limitations provided in the act." Industrial Railways Case, 32 I. C. C. Rep. 129, 130, 132. Since the rendering of this supplemental report in the Industrial Railways Case, the Commission has held the proceedings open and from time to time so fixed the amount of allowances and divisions granted to industrial railways that proper effect has been given to the ruling of the Supreme Court. § 6. Discriminations Between Carriers. The obligation of a common carrier to serve the public is a broad one, and cannot always be fulfilled in the way that is most advantageous to the carrier. This, in prin- ciple, is true both in its relations to the public and in its relations with other carriers. Section 3 of the Act to Reg- ulate Commerce requires every carrier subject thereto to afford all reasonable, proper and equal facilities for the in- terchange of traffic between their respective lines, and for the receiving and forwarding and delivering of passengers or property to and from their several lines and those con- necting therewith, and forbids discrimination in rates and charges between connecting carriers. The provision in section 1 of the Act to Regulate Com- merce that it shall be the duty of every common carrier subject to the provisions of the Act **to establish through routes and just and reasonable rates" applicable thereto and to provide reasonable facilities for operating such through routes and to make reasonable rules and regula- tions with respect to the exchange, interchange and return of cars used therein, and for the operation of such through routes, and providing for reasonable compensation to those entitled thereto, "should not be subjected to too nar- row a construction, but should be read in connection with 17—17 242 AMERICAN COMMERCE ASSOCIATION the latter portion of section 3, above referred to, with sec- tion 15, and with a regard to the intendment of the Act as a whole and the correction of the evils it has sought to remedy." The provision of section 3 broadens that of section 1, and makes plain the intent of Congress, that every reason- able and proper facility should be extended equally by the carrier to all of its connections, and that no discrimination in its charges shall be made in favor of or against any con- necting line. The provision of section 15 is to the effect that the Com- mission may establish through routes and joint rates and prescribe divisions of such rates and the terms and condi- tions under which such through routes shall be operated, whenever the carriers themselves shall have refused or neglected to establish voluntarily such through routes or joint rates. And this provision of the section applies when one of the carriers is a water line. Flour City S. S. Co. vs. Lehigh Valley R. R. Co., 24 I. C. C. Rep. 179, 184. In the Peoria Terminal Case, the Peoria & Pekin Union Railway Company was essentially a terminal company, and at Peoria, 111., furnished all terminal facilities and services in connection therewith to nine steam railroads, and par- tial facilities and services to the other two steam railroads that reached that city. It also performed switching serv- ice from and to the lines of another steam carrier at Pekin, 8.8 miles distant from Peoria. The St. Louis, Springfield & Peoria Railroad, an interur- ban railway operating into Peoria, 111., sought an inter- change of traffic with the terminal company by the estab- lishment of through routes. The terminal company re- fused the use of its terminals and facilities, claiming its INTERSTATE COMMERCE LAW 243 right under section 3 of the Act to Regulate Commerce, but indicated a wiUingness to permit the use of its ter- minals and facilities upon the same terms and conditions which had been accepted by the lines without any ter- minals and facilities in Peoria. The Commission found that the terms of the terminal company were prohibitive for the services actually sought by the electric line, and that the terminal company was endeavoring to compel the line to pay for services which it did not desire, and of which it could make no use. Reverting to the terminal company's contention, un- der section 3 of the Act, the Commission said : "If the defendant 'has the right to absolutely refuse the use of its terminals and facilities to complainants,' then it also has the right similarly to refuse the use of its terminals and facilities to every one of the other eleven carriers which now serve Peoria by means of its facilities. In other words, the defendant asserts the right literally to seal the city of Peoria through the instrumentality of the rails owned by it and hold that community as a closed domain. And why? Because the defendant regards these terminal properties as its private property, subject to no limitations except such as inhere in all other forms of private property. "This suggests the inquiry how it is possible that property which was acquired under eminent domain and which is affected with a public use and which, as a matter of fact, is now being devoted to a public use, can be purely private in any accepted sense of the term? It suggests the further inquiry, in what re- spect is the public interest which affects a carrier's ter- minal properties different from the public interest which affects the remainder of the carrier's property? In the valuation of the property of public utilities for the purpose of testing the reasonableness of their charges it is not customary to include purely private property as such. The whole theory of regulation rests not upon an assumption of private property but 244 AMERICAN COMMERCE ASSOCIATION of private property devoted to a public use, and prop- erty which is devoted to a public use is to that extent not private but quasi-public. If the terminal proper- ties of carriers are, as a matter of fact, private to such an extent that their ov^ners may 'absolutely refuse' access to them and use of them unless any terms which they may see fit to dictate are met, should not their value be deducted from the gross value of the carrier's property in order to arrive at that 'fair value' upon which every carrier is entitled to earn a reason- able rate of return? "These are among the momentous and severely practical questions which arise out of the situation presented by this case. If a carrier receives fair com- pensation for the service it performs, how can it be claimed and argued that its property is being confis- cated as a result of the compulsory performance of such a service? If the respondent receives fair com- pensation for the service which the petitioners herein desire it to perform, there can be no question of the confiscation of property. The terminal properties of carriers, like all other parts of their property, are de- voted to the public use, and must be treated exactly as all other parts of the property of common carriers are treated in carrying out the spirit and letter of reg- ulatory statutes. Respondent is not asked to 'give' the use of its terminal properties, nor any part of them, to any other carrier. It is asked to perform a service upon reasonable and just terms. The performance of such a service is the very reason of its existence. If the contention of respondent to the effect that its ter- minal properties are absolutely subject to its determin- ing will were to be upheld, every community in this country would to that extent be absolutely at the mercy of those who control the existing terminals. Terminal properties are devoted to the public use of the whole of the communities in Vv^hich they have been created. They are not a pre-empted domain, against which the public can assert no rights and upon which it may impose no duties. If such a doctrine were to INTERSTATE COMMERCE LAW 245 be accepted every growing community would find it impossible to accept and encourage the service, of carriers still to be created at reasonably convenient points within their respective boundaries, and thus many of the larger purposes of the Act would be defeated. "We think that a common carrier is bound to ac- cept a car for transportation whenever such a car is offered at places where it can reasonably receive it. To determine whether or not it will transport the car, the carrier cannot lawfully inquire into the ownership and origin of the contents, nor into the route over which it has been moved in order to reach its rails. It can only ask that it be given reasonable compen- sation for the service it performs." St. Louis, Springfield & Peoria R. R. Co. vs. Peoria & Pekin Union Ry. Co., 26 I. C. C. Rep. 226, 236. Rates from Walsenburg Coal Field, 26 I. C C. Rep. 85, 88. § 7. Carrier as Shipper May not Receive Preference. A railroad company as a shipper is entitled to the same consideration as any commercial shipper and no more, even when the shipment moves in part over the rails of such railroad company. It is the character and nature of the movement of traffic, i. e., whether the movement is a through or local movement, and not the mere accidents of billine-, that determine the nature of the commerce and the rate applicable. Sou. Pac. Term. Co. vs. I. C. C, 219 U. S. 498. Ohio R. R. Commission vs. Worthington, 225 U. S. 101. T. & N. O. R. R. Co. vs. Sabine Tram Co.. 227 U. S. 111. Baer Bros. vs. D. & R. G. R. R. Co., 233 U. S. 479. R. R. Commission of La. vs. T. & P. Ry. Co., 229 U. S. 336. I. C. R. R. Co. vs. La. R. R. Comm., 236 U. S. 157. Kanotex Refin. Co. vs. A. T. & S. F. Ry. Co, 34 L C. C. Rep. 271. The contract of purchase and sale of the property shipped and the actual or technical ownership of it at the 246 AMERICAN COMMERCE ASSOCIATION. time it is shipped or during the transportation are not mat- ters of importance or concern so long as such contracts and ownership are not resorted to or permitted to be cloaks or excuses for effecting, either directly or indirectly, evasion of or departure from lawful tariff rates, rules and charges. Any attempt to evade the law or to apply the rulings of the Commission to other than bona fide transactions in good faith, or in other than their clear intent and purpose, w^ll, of course, be treated and dealt with in accordance with the facts in the case. The question of company material rates has been before the Commission on numerous occasions, and it has con- sistently adhered to its ruling that "a carrier, or a person or corporation operating a railroad or other transportation line, may not, as a shipper over the lines of another car- rier, be given any preference in the application of tariff rates on interstate shipments, but it may lawfully and properly take advantage of legal joint tariff rates applying to a convenient junction or other point on its own line, providing such shipments are consigned through to such point from point of origin, and are, in good faith, sent to such billed destination." I. C. C. Confr. Rulings Bull. No. 6, Ruling No. 225. I. C. C. Confr. Rulings Bull. No. 6, Ruling No. 34. Firms and individuals have undoubted right to enter into contracts of purchase and sale under which the con- signor pays an agreed portion of the transportation charges and the purchaser or consignee another portion of those charges. A carrier as a shipper has the same right. Un- der the law and the long-established custom a carrier has the right to require prepayment of its charges, or to trans- port the freight and collect all of such charges on delivery thereof, or to accept part of the charges in prepayment and collect the remainder upon dehvery. INTERSTATE COMMERCE LAW 247 The rulings of the Commission relating to shipments of property by carriers as shippers have been numerous. In Conference Ruling 207 of September 15, 1906, the Commission decided that nothing but money can lawfully be received or accepted in payment for transportation sub- ject to the Act, w^hether of passengers or property, or for any service in connection therewith. This ruling has been sustained by the courts. I. C. C. Confr. Rulings Bull. No. 6, Ruling No. 207. On November 18, 1907, in Ruling No. 9, the Commis- sion held that where stock in one railway company is owned by another railway, but both maintain separate or- ganizations and report separately to the Commission, they may not lawfully carry freight free for each other. I. C. C. Confr. Bull. No. 6, Ruling No. 9. In Ruling No. 143, February 8, 1909, the Commission held, in a case where the initial carrier disregarded routing instructions for a shipment which was consigned to a pri- vate person, but was in fact the property of a connecting line which, under the routing designated, could have hauled it from the junction point indicated in the instruc- tions, that a carrier accepting a shipment with specific routing instructions must move the traffic in accordance therewith or bear the damages arising out of its departure from those instructions. I. C. C. Confr. Bull. No. 6, Ruling No. 143. On November 13, 1908, in Ruling No. 225, the Commis- sion said: "When a carrier is the consignee of a shipment of its own property which moves under a joint rate, and is to participate in the haul of same via its own Hnc, 248 AMERICAN COMMERCE ASSOCIATION routing instructions of consignor to a specified junc- tion point on the line of consignee carrier must be ob- served." The words "of its own property" were not there used with reference to the technical or actual ownership of the property during transportation; they were intended to re- fer to property actually owned by the carrier, or in good faith purchased or contracted for for its use. I. C. C. Confr. Bull. No. 6. Ruling No. 225. The gist of the Commission's ruling in In the Matter of Restricted Rates, 20 I. C. C. Rep. 426, was that preferen- tial rates on property consigned to or intended for the use of a railroad, lower than those accorded to other shippers of the same commodities between the same two points, were unlawful. In the Matter of Transportation of Company Material, 22 I. C C. Rep. 439, 440. While the matter of preferential rates on company ma- terial has been before the Commission in many different phases, involving many of the important articles consumed by railroads in the construction, maintenance and opera- tion of their properties, so far as the principles laid down by the Commission are concerned they are fully covered in those investigations which have involved rates on railway fuel coal. The order of the Commission in In the Matter of Re- stricted Rates, supra, was reviewed and upheld by the Su- preme Court in I. C. C. vs. B. & O. R. R. Co., 225 U. S. 326. Just prior to that decision the practice of the car- riers had been to establish a special rate lower than the lo- cal rate applicable only to railway fuel coal. These special rates usually applied from the mine to the junction point INTERSTATE COMMERCE LAW 249 where the coal was actually delivered to the purchasing carrier. The Commission held this practice to be unlaw- ful, since it involved the charging of different rates based merely on the different uses to which the shipments were put, although the transportation service was the same. It was argued before the Commission that the same result could be brought about through the manipulation of divi- sions of through rates. In passing upon this point the Su- preme Court, on page 344 of the opinion, said: "But the companies say, in criticism of the reason- ing and order of the Commission, they are permitted to do indirectly what they want to do directly: that an easy way of evasion of the prohibiting order is to make a joint rate from the point of origin of the fuel coal to its points of consumption and thereby be en- abled 'to charge a lower rate for the fuel coal than for the commercial between the same points.' And fur- ther, in display of the easiness with which this can be accomplished and 'how readily the Commission's or- der lends itself to manipulation of rates,' they say that they have only to publish a nominal delivery point be- yond the real delivery point, publish a rate to that point which they do not intend to charge, and call their actual rate to the junction point, based on the special circumstances and conditions, a 'division.* They then ask : 'If the Commission can so easily jug- gle a rate for a good purpose, will not ingenious traffic agents and coal operators do the same for their own perverse ends?' If such a situation artfully pro- duced be used as a device for giving preference, the Commission might be able to find some means to de- feat it." It was also said by the Court: "The railroad company cannot be put out of view as a favored shipper, and we see many differences be- tween such a shipper receiving coal for use in its loco- motives and a nation as the destination of goods from 250 AMERICAN COMMERCE ASSOCIATION other nations for distribution throughout its expanse on through rates from points of origin." Subsequent to the ruHng of the Supreme Court in the B. & O. R. R. Case, supra, the practice sprang up among the carriers of biUing fuel coal under joint rates to points on the line of the consuming carrier and allowing to the consuming carrier divisions of the joint rates applying to such points. This method of handling such shipments had been resorted to before, and since upon its face it was not contrary to any provision of the law it was not condemned. In fact, the Commission had ruled prior to the decision in the B. & O. R. R. Case, supra, that it was unlawful for carriers to make special and discriminatory divisions of joint rates on locomotive fuel as between an originating or participating carrier and a purchasing carrier. In the di- vision of joint rates a railroad must be treated precisely as any other shipper is treated, and the Commission regards any special division as a device to defeat the published rate. All divisions upon fuel coal must be made in good faith without respect to the fact that one of the carriers is the purchaser of such coal. In this manner the Commission has impliedly approved the practice of treating such ship- ments as through shipments under joint rates and dividing such rates between the originating and purchasing carrier on condition that the divisions are made "in good faith, without respect to the fact that one of the carriers is the purchaser of such coal." Numerous prosecutions of carriers were instituted for se- curing rebates and concessions through such practices as handling fuel coal under joint rates, whereby the coal was billed to points on their lines beyond where it was actually consumed. The coal never reached the billed destination, although the rates and divisions to that point were applied. Rates on Railroad Fuel and Other Coal, 36 I. C. C. Rep. 1, 4. INTERSTATE COMMERCE LAW 251 There is no valid reason why the earnings of one carrier should be sacrificed or reduced in order that another car- rier may secure its fuel at less cost to it. There is appar- ently no room for any conclusion other than that officially expressed by the Commission, that a carrier as a shipper over the lines of another carrier cannot lawfully be given any preference in the application of tariff rates on inter- state shipments; in other words, that one carrier shipping its fuel, material or other supplies over the lines of another carrier must pay the legal tarifif rates applicable to the same commodities shipped between the same points by an indi- vidual. The Commission adheres to the view that that is the law. Hitchman Coal & Coke Co. vs. B. & O. R. R. Co., et al, 16 I. C. C. Rep. 512. 518. Confr. Rulings Bull. No. 6, Ruling No. 225. The difference in transportation conditions must be sub- stantial in order to remove the application of section 2 of the Act. If a lower rate upon railway fuel coal is warrant- ed because the railroad has facilities for receiving coal which make the cost of service less, any shipper who pro- vides like facilities must be entitled to the same rate ac- corded the railway. While it might logically appear that a lower rate should be permitted to a large shipper who has provided facilities for the prompt unloading of his traffic than is at the same time accorded to his smaller competitor who is not able to provide and who does not need such facilities, if that were done and it were finally held that it did not constitute a violation of section 2 of the Act, it would constitute clearly unjust discrimination in violation of section 3 of the Act. There are few commodities that are not purchased and used directly or indirectly by railroads, and- if a railroad were accorded special or favored rates as compared with 252 AMERICAN COMMERCE ASSOCIATION other shippers, discrimination such as that cited would be injected into ahnost every field of commerce and nearly every locality of production or manufacture. In the Matter of Restricted Rates, 20 I. C. C. Rep. 426, 435, 437. Confr. Rulings Bull. No. 6, Ruling No. 34. Confr. Rulings Bull. No. 6, Ruling No. 225. It is important to note that the Supreme Court in the B. & O. R. R. Case, supra, held that railroad fuel does not come into competition with commercial coal, although it is in competition with other fuel coal coming upon the line of the consuming railroad, and is not in violation of sec- tions 2 and 3 of the Act. I. C. C. vs. B. & O. R. R. Co., 225 U. S. 326. In the Matter of Filing with the Interstate Commerce Com- mission Divisions of Joint Rates Applicable to Kailway Fuel Coal, 37 I. C. C. Rep. 265. Rates on Railroad Fuel and Other Coal, 36 I. C. C. Rep. 1, 4. In the Matter of Transportation of Company Material, 22 I. C. C. Rep. 439. In re Divisions of Joint Rates on Coal, 22 I. C. C. Rep. 51. In the Matter of Restricted Rates, 20 I. C. C. Rep. 426. See also: U. S. vs. C. I. & L. R. Co., 163 Fed. Rep. 114, 118. Hitchman Coal & Coke Co. vs. B. & O. R. R. Co., 16 I. C. C. Rep. 512, 518. Board of Mayors and Aldermen vs. V. & W. R. S. Co., 15 I. C. C. Rep. 354, 356. Cedar Hill Coal & Coke Co. vs. A. T. & S. F. Ry. Co., 15 I. C. C. Rep. 73, 78. Compare : S. P. Co. Ownership of Oil Steamers, 34 I. C. C. Rep. 37, 81. Five Per Cent. Case, 31 I. C. C. Rep. 351, 412. Coal Rates from Virginia Mines, 30 I. C. C. Rep. 635, 646. In the Galveston Wharf Co. Case, 23 I. C. C 535, the Commission found that the terminal company was enjoy- ing a preference in its division of through rates and said (page 548) : "We shall expect the parties in interest to confer INTERSTATE COMMERCE LAW 253 with respect to the readjustment of the divisions of the Texas City Terminal Company and promptly to lay before us a schedule of new divisions in compliance with what was here said. If it shall prove to be necessary an order will be entered by the Commission fixing the divisions of Texas City, and otherwise giv- ing effect to the conclusions that we have reached." In the case of the Commercial Club of Duluth vs. B. & O. R. R., 27 I. C. C. 639, the Commission said (page 656) : "And in opposition to Duluth's contention that the differentials applying to the twin cities are not remu- nerative to the northwestern lines, the twin cities take the position that those differentials are a part of through rates that have been approved by the Com- mission as reasonable rates to the twin cities, and that neither the public nor the Commission is therefore in- terested in the divisions that the carriers may make of the rates among themselves. Ordinarily we are not concerned in the divisions of joint through rates, and this has been said by the Commission in numerous cases. The language used, however, in all those re- ports indicates that the Commission was well aware of the fact that the divisions of the through rates in particular instances might be of importance and might be the means of effecting undue discriminations. This is the case here." To like effect was the Commission's decision in Manu- facturers' Ry. Co. vs. St. L. I. M. & S., 28 I. C. C. 93. The Supreme Court of the United States in the so-called Tap Line Cases, 234 U. S. 1, 28-29, held: "Because we reached the conclusion that the tap lines involved in these appeals are common carriers, as well of proprietary as of nonproprietary trafBc, and as such entitled to participate in joint rates with other common carriers, that determination falls far short of deciding — indeed, does not at all decide — that the di- vision of such joint rates may be made at the will of S54 AMERICAN COMMERCE ASSOCIATION the carriers involved and without any power of the Commission to control. That body has the authority, and it is its duty, to reach all unlawful discriminatory practices resulting in favoritism and unfair advan- tages to particular shippers or carriers. It is not only within its power, but the law makes it the duty of the Commission to make orders which shall nullify such practices resulting in rebating or preference, whatever form they may take and in whatsoever guise they may appear. If the divisions of joint rates are such as to amount to rebates or discriminations in favor of the owners of the tap lines, because of their disproportion- ate amount in view of the services rendered, it is with- in the province of the Commission to reduce the amount so that a tap line shall receive just compensa- tion only for what it actually does." Therefore the Commission has the undoubted right, where one of the carriers is, in fact, a shipper, to inquire into the reasonableness of the divisions received by it and fix proper ones. This was done in the supplemental order in the so-called Tap-Line Case, 31 I. C. C. Rep. 490. Rates on Railroad Fuel and Other Coal, 36 I. C. C. Rep. 1, 12. Compare : Tap Line Cases — Butler County Railroad Divisions, 21 I. C. C. Rep. 36. Second Industrial Railway Case, 41 I. C. C. Rep. 68. Second Industrial Railways Case, 41 I. C. C. Rep. 42. Second Industrial Railways Case, 37 I. C. C. Rep. 408. Second Industrial Railways Case, 37 I. C. C. Rep. 491. Second Industrial Railways Case, 2)7 I. C. C. Rep. 497. Second Industrial Railways Case, 37 I. C. C. Rep. 558. Second Industrial Railways Case, 37 I. C. C. Rep. 566. Tap Line Cases, 35 I. C. C. Rep. 485. Tap Line Cases, 34 I. C. C. Rep. 116. Tap Line Cases, 31 I. C. C. Rep. 490, 496. Tap Line Cases, 23 I. C. C. Rep. 277. Tap Line Cases, 23 I. C. C. Rep. 549. While an interstate carrier may not charge a dififerent rate for the transportation of railroad fuel coal to a given INTERSTATE COMMERCE LAW 255 point than for commercial coal to the same point, in the matter of transporting supplies and employes of contrac- tors engaged in the construction of its road, or in the mak- ing of additions thereto, it does not act as a common car- rier, and arrangements made in good faith with such con- tractors for carrying such supplies or employes either free or at reduced rates do not constitute rebates or discrim- inations in violation of the Act. If the contract has been entered into by the carrier in good faith and not as a sub- terfuge, it is not obnoxious to the provisions of law pro- hibiting departures from the published tariffs, for the rea- son that such an agreement lies outside the policy of those provisions. Santa Fe. Prescott & Phoenix Ry. Co vs. Grant Bros., 228 U. S. 177, 57 Law Ed. 787. In the Matter of Railroad — Telegraph Contracts, 12 I. C. C. Rep. 10, 11. § 8. Discrimination Resulting from Contract with Shipper. Unjust discrimination cannot be justified because of con- tractual relationship of carriers and shippers or between carriers themselves. Baltimore Butchers', etc., Co. vs. P. B. & W. R. R. Co., 20 I. C. C. Rep. 124, 128. Compare : Shoemaker vs. C. & P. Tel. Co., 20 I. C. C. Rep. 614, 621. § 9. Shipper Interested in Connecting Carrier. Discriminations effected through joint rates and divi- sions with connecting carriers controlled by the shipper which do not bear proper relation to the value of the serv- ice rendered by such connection, are in effect rebates and arc unlawful. Ann. Rep. of I. C. C. for Year 1904. Industrial Rys. Cases, supra. 256 AMERICAN COMMERCE ASSOCIATION Tap Line Cases, supra. Five Per Cent. Case, supra. In re Car Spotting Case, 34 I. C, C. Rep. 609, See also: Re Division of Joint Rates and Other Allowances to Ter- minal Railroads, 10 I. C. C. Rep. 385. Re Transportation of Salt, 10 I. C. C Rep. 148. Re Transportation of Salt from Hutchinson, Kans., 10 I. C. C. Rep. 1. § 10. Discrimination in Reconsignment Charges. It has been held by the Commission to be unreasonable and unjustly discriminatory to withdraw a reconsignment privilege from one shipper while the same is accorded to his competitors in other parts of the country, but that the carrier is entitled to a reasonable charge based on the aver- age cost where the service is not uniform. Reconsignment and Storage of Lumber and Shingles, 27 I. C. C. Rep. 451. See also: St. Louis Hay & Grain Co. vs. M. & O. R. R. Co., 11 L C C Rep. 90. St. Louis Hay & Grain Co. vs. L C. R. R. Co., 11 I. C. C. Rep. 486. Southern Ry. Co. vs. St. Louis Hay & Grain Co., 214 U. S. 297, 53 L. Ed. 1004. Commercial Exchange of Philadelphia vs. N. Y., N. H. & H. R. R. Co., 38 I. C. C. Rep. 551, 559. Compare : St. Louis Hay & Grain Co. vs. Southern Ry. Co., 149 Fed. Rep. 609. Southern Ry. Co. vs. St. Louis Hay & Grain Co., 153 Fed. Rep. 728. Beekman Lumber Co. vs. T. & G. Ry. Co., 36 I. C. C. Rep. 368. 369. Also, compare the holdings of the Commission and de- cision of the Supreme Court of the United States, relating INTERSTATE COMMERCE LAW 257 to unjust discrimination in rebilling and reshipping in the following cases : U. S. vs. L. & N. R. R. Co., 235 U. S. 314. Duncan vs. N.. C. & St. L. Ry. Co., 35 I. C. C. Rep. 477. Duncan vs. N. C. & St. L. Ry. Co., 21 I. C. C. Rep. 186. Duncan vs. N. C. & St. L. Ry. Co., 16 I. C. C. Rep. 590. V See also: L. & N. R. R. Co. vs. U. S., 197 Fed. Rep. 58. Nashville Grain Ex. vs. U. S., 191 Fed. Rep. 37. Alabama & Vicksburg R. Co. vs. R. R. Comm. of Mississippi, 203 U. S. 496, 51 L. Ed. 298. § 11. Discrimination in Absorption of Switching Charges. Generally speaking, carriers absorb switching charges only upon competitive traffic, but as to shippers similarly situated such absorption must be free from discrimination. There is in legal effect a well-defined distinction be- tween an absorption which may be made by a trunk line voluntarily and the division of the joint rate which may by lawful order be prescribed by the Commission. This be- ing so, it follows that there is also in legal contemplation a well-defined distinction between the character of the services rendered by the railway under the absorption tar- iffs of the trunk lines formerly in effect and the same serv- ices under the joint rate which could by lawful order be prescribed by the Commission. In the absence of an undue discrimination with respect to such absorptions the Com- mission could make no lawful order that they be made, and its order, even in case of such discrimination, would probably be in the alternative to absorb the charge of the railway or to cease absorbing similar terminal charges un- der like conditions. That the trunk lines have for years voluntarily absorbed charges for terminal switching cannot be treated as a basis 17—18 258 AMERICAN COMMERCE ASSOCIATION for an order by the Commission continuing the practice if they could not have been required originally by the Com- mission to make such absorptions. Absorption by a carrier of a switching or other charge incidental to the transportation service is an act which must be diligently searched for freedom from a discrim- inating effect upon shippers. Thus, the absorption by a carrier of switching charges on cars containing less than carload freight, in lots of 6,000 pounds or more, received from connecting carriers within switching limits, destined to its freight houses or warehouses and thence to points on its line, while refusing to absorb such switching charges on cars of like nature handled through its train yards, consti- tutes an unjust discrimination. The Commission has no power to compel a carrier to absorb charges for switching or other movement beyond its own rails, in the absence of discrimination. The act imposes no requirement upon the Commission that in de- termining a reasonable charge for the interchange move- ment it must in some way or other take into its calcula- tions the fact that the charge may be absorbed by a com- petitor. Mfrs'. Ry. Co. vs. St. L. I. M. & S. Ry. Co., 28 I. C. C. Rep. 93, 103, 109. Mfrs. & Merchants' Assn. vs. A. & A. R. R. Co., 25 I. C. C. Rep. 116. Mfrs. & Merchants' Assn. vs. A. & A. R. R. Co., 24 I. C. C. Rep. 331, 336, 339. Curtis Bros. & Co. vs. S. P. Co., 23 I. C. C. Rep. 372, 373. Swift & Co. vs. M. P. Ry. Co., 22 I. C. C. Rep. 385 Deeves Lumber Co vs. C. & N. W. Ry. Co., 19 I. C. C. Rep. 482, 483. Utica Traffic Bu. vs. N. Y. O. & W. Ry. Co., 18 I. C. C. Rep. 168. Acme Cement Plaster Co. vs. St. L. & S. F. R. R. Co., 18 I. C. C. Rep. 376, 377. Milwaukee Falls Chair Co. vs. C. M. & St. P. Ry. Co., 16 I. C. C. Rep. 217, 218. Wellington vs. St. L. & S. F. R. R. Co., 13 I. C. C. Rep. 534, 535. INTERSTATE COMMERCE LAW 259 See also: National Dock & Storage Warehouse Co. vs. B. & M. R. Co., 38 I. C. C. Rep. 643. Boardman Co. vs. S. P. Co., 37 I. C. C. Rep. 81, 86. Chicago, W. Pullman & So. R. Co. Case, 27 I. C. C. Rep. 408, 415. Grain from Manitowoc, Wis., 37 I. C. C. Rep. 549, 555. Consumers' Co. vs. C. & N. W. Ry. Co., 36 I. C. C. Rep. 259, 261. Rates on Grain Milled in Transit, 35 I. C. C. Rep. 27, 30. Columbia Gold Mining Co. vs. O.-W. R. & N. Co., 35 I. C. C. Rep. 42, 44. Drain Tile from Illinois Points, 35 I. C. C. Rep. 83, 85. Cape Girardeau Portland Cement Co. vs. St. L. & S. F. R. R. Co., 35 I. C. C. Rep. 109, 120. Coal Rates from Oak Hills, Colo., 35 I. C. C. Rep. 456, 459. Sloss-Sheffield Steel & Iron Co. vs. L. & N. R. R. Co., 35 I. C. C. Rep. 460, 466. Kansas City, Mo., River Nav. Co. vs. C. & O. Ry. Co., 34 I. C. C. Rep. 67, 71. A. A. R. R. Co. Operation of Car-Ferry Boats, 34 I. C. C. Rep. 83, 84. Rates on Hay to Chicago, 34 I. C. C. Rep. 150. Rates in Chicago Switching District, 34 I. C. C. Rep. 234, 240. Trap or Ferry Car Service Charges, 34 I. C. C. Rep. 516, 525. Second Industrial Railways Case, 34 I. C. C. Rep. 596, 601, 602. Coal Rates from Illinois Mines to Omaha, 34 I. C. C. Rep. 623, 624, 625. Lumber Rates from Helena, Ark., and Other Points, 33 I. C. C. Rep. 297, 300. Grain Rates from Milwaukee, 33 I. C, C Rep. 417, 420, 423. De Pont De Nemours Powder Co. vs. Wabash R. R. Co., 33 I. C. C. Rep. 507, 508. Chicago, Ottawa & Peoria Ry. Co. vs. C. & N. Ry. Co., 33 I. C. C. Rep. 573, 574. Mfrs'. Ry. Co. vs. St. L. I. M. & S. Ry. Co., 32 I. C. C. Rep. 100. Joint Rates with Birmingham Southern R. R. Co., 32 I. C. C. Rep. 110, 112. Eastern Shore Development S. S. Co. vs. B. & O. R. R. Co., 32 I. C. C. Rep. 238, 241. Gravel and Sand Switching Charges at Chicago, 32 I. C. C. Rep. 291, 296. Corp. Comm. of Oklahoma vs. K. C. M. & O. Ry. Co., 32 I. C. C. Rep. 384, 386. Merchants & Mfrs'. Assn. vs. P. R. R. Co., 32 I. C. C Rep. 434, 436. Switching Charges on Coal and Coke, 32 I. C. C. Rep. 444-. 446. Transcontinental Commodity Rates, 32 I. C. C. Rep. 449, 456. American Round Bale Press Co. vs. A. T. & S. F. Ry. Co., 32 I. C. C. Rep. 458, 461. 260 AMERICAN COMMERCE ASSOCIATION Switching Charges at Milwaukee, Wis., 31 I. C. C. Rep. 509, 511. Illinois Coal Cases, 32 I. C. C. Rep. 659, 677, 678, 683. Bowling Green Protective Assn. vs. E. & B. G. Packet Co., 31 I. C. C. Rep. 301. Wabash Sand & Gravel Co. vs. V. R. R. Co., 31 I. C. C. Rep. 344 346. Burford vs. L. & N. R. R. Co., 31 I. C. C. Rep. 182, 184. Five Per Cent. Case, 31 I. C. C. Rep. 351, 373, 409. Fourth Section Violations in Rates on Sugar, 31 I. C. C. Rep. 511, 530. Colonial Salt Co. vs. C. B. & Q. R. R. Co., 31 I. C. C. Rep. 559, 567. Buffalo, Attica & Arcade R. R. Co. vs. B. & S. R. R. Corp., 31 I. C. C. Rep. 583, 585. Pittsburgh & Southwestern Coal Co. vs. W.-P. T. Ry. Co., 31 I. C. C. Rep. 660, 663. Rates on Lumber and Other Forest Products, 31 I. C. C. Rep. 673, 675. Rates on Grain and Grain Products, 30 I. C. C. Rep. 16, 17. Chattanooga Log Rates, 30 L C. C. Rep. 36, 38. Hammerschmidt & Franzen Co. vs. C. & N. W. Ry. Co., 30 L C. C. Rep. 71, 75. Poehlman Bros. Co. vs. C. M. & St. P. Ry. Co., 30 I. C. C. Rep. 89, 90. Hormel & Co. vs. C. M. & St. P. Ry. Co., 30 I. C. C. Rep. 98, 99. Pacific Coast Gypsum Co. vs. O.-W. R. R. & K Co., 30 I. C. C. C. Rep. 135, 136. Seattle Shingle Co. vs. C. M. & St. P. Ry. Co., 30 I. C. C. Rep. 364, 365. In re Muncie & Western R. R. Co., 30 L C. C. Rep. 434, 435. Richmond Chamber of Commerce vs. S. A. L. Ry. Co., 30 L C. C. Rep. 552, 554, 559. Switching at Baltimore, Md., 30 I. C. C. Rep. 581, 584. People's Fuel & Supply Co. vs. G. T. W. Ry. Co., 30 L C. C. Rep. 657, 662. Seattle Chamber of Commerce vs. G. N. Ry. Co., 30 L C. C. Rep. 683, 690. Elevation Allowances at St. Louis and East St. Louis, 30 I. C. C. Rep. 696, 698. Norman Lumber Co. vs. L. & N. R. R. Co., 29 I. C. C. Rep. 565. Paducah Board of Trade vs. I. C. R. R. Co., 29 I. C. C. Rep. 583 Adams & Sons Co. vs. V. S. & P. Ry. Co., 29 L C. C. Rep. 52. Chicago Board of Trade vs. A. T. & S. F. Ry. Co., 29 L C. C. Rep. 438, 447. Rates on Flaxseed from Minneapolis to Fredonia, 29 L C. C. Rep. 633. 638. INTERSTATE COMMERCE LAW 261 § 12. Discrimination in Terminal Charges. Railroad companies entering Chicago imposed a ter- minal charge for delivery of live stock at the Union Stock Yards. Similar charges were not imposed for delivery of live stock at other markets, such as Kansas City, Sioux City and Omaha. In an early case it was held that the imposition of the terminal charge at Chicago, while sim- ilar charges were not made at the other markets, was not unlawful under section 2 of the Act, since the services were not rendered over the same line and were therefore not "like" within the meaning of that section. Cattle Raisers' Assn. vs. Ft. W. & D. C. R. Co., 7 I. C. C. Rep. 513 (1898). Whether an unjust discrimination is created when a trunk line pays a terminal line controlled by a shipper for its services, is a question that would arise primarily under section 15 of the Act, but may also arise under those other sections which seek to prohibit the giving of unlaw- ful concessions by any device whatsoever. Manufacturers' Ry. Co. vs. St. L. I. M. & S. Ry. Co., 28 I. C. C. Rep. 93, 111. The provisions of the Act to Regulate Commerce were enacted with respect to the American method of stating rates, and when it is provided in section 6 that the sched- ules, which shall be published and filed with the Commis- sion, "shall also state separately all terminal charges, stor- age charges, icing charges and all other charges which the Commission may require, all privileges or facilities granted or allowed," it was not intended that the carriers should be required to state separately what are known in the Eng- lish law as station terminals — that is to say, that they shall state separately the hauling charge between the stations and the charge for the use of the terminal at both ends of 262 AMERICAN COMMERCE ASSOCIATION the line. The terminal charges referred to in section 6, and which must be expressly set forth in the carrier's tar- iff, are those for other services at the terminal which the carrier may furnish, such as storage, elevation, switching and cartage. This construction of the act is borne out fully by its history and has been formally accepted by the carriers. The railroads recognize their duty to make delivery under the flat rate stated in their tariffs, and such delivery is made upon industry tracks, which are part of the carrier's terminals, without additional charge. They treat an independent spur as a part of their own depot to which the published rate carries all freight. They have recognized the value of having industries located on their tracks and have competed in proper and in improper ways to secure them as dependencies. They have, accordingly, given to such industries the same service that is given at their team tracks, treating the one as the substitute or equivalent of the other. If delivery is made at the team track the carrier must haul the car from the main line and place it on the team track. And so, if delivery is to be made at an industry, it must be conveyed from the main Hne to the industry. In the former as in the latter case there is an inter-terminal switching and a placement of the car. The refinement of the English method of stating rates has not appealed to the mind of the American railroad man, for the same reason, perhaps, that American hotel keepers do not make a separate charge to their guests for lights or soap. The American railroad rate is made to cover a terminal delivery, while the English railroads make a separate charge for the use of their terminals. In Eng- land, if the terminal of the carrier is not used, the stated terminal charge is not imposed. Beale & Wyman, "Railroad Rate Regulation," section 694. L. & Y. vs. Gidlow, L. R. 7, H. L. 517. INTERSTATE COMMERCE LAW 263 N. S. R. vs. Salt Union, 10 Ry. & Ca. Tr. Cas. 194. Simonds & Soji vs. G. W. R., 3 Boyle & Waghorn, 17. In the case of the North Staffordshire Ry. Co. vs. Salt Union, supra, it was said: "It is not impHed in our judgment that the railway company can charge beyond the conveyance rate for anything done on their own lines which is properly in- cidental to delivery or collection of trafBc to or from sidings, no matter how much the cost and trouble may be increased by the inconvenience of the siding or the nature of the traffic, unless the defects or inconven- iences are such as to relieve the railway Company from their duty to deliver and collect. The very existence of a siding implies, in practice, that the railway com- pany must, in order to collect and deliver from or to the siding, do on their own lines something beyond ■the mere work of transit. But they may be entitled to make a carrier's or service charge if they are re- quired, for the convenience of the siding owner, to do work on his siding; and where they are so required, then, if by reason of the insufficiency of the siding or otherwise, that work involves extra work on their own line, that extra work may be the ground for an extra charge." The English cases as a whole seem to proceed upon the theory that a switching movement into a "private" sid- ing, one not owned by the railroad and which is not a part of the railroad's own terminals, justifies an additional charge in some cases, but one not equal to the rate that would be charged if delivery had been made upon the rail- road's own terminal. In this country the railroads have recognized by universal custom that it is but fair, where their team tracks are not used, to give delivery without ex- tra charge at an industry track as an equivalent service — although where the shipper provides tracks, land and facil- ities, the mere switching service furnished by the carrier 264 AMERICAN COMMERCE ASSOCIATION is in many cases by no means equivalent in cost to the ex- pense attached to deHvery upon its own tracks. The theory of the carrier is that in placing the car upon a side track it is giving a terminal service in the nature of cartage by rail, ignoring the fact that this so-called cartage antecedes any delivery and is nothing more than the plac- ing of a car on a specially indicated spur track instead of in a large yard. Cartage may, of course, be furnished as an accessorial service by the delivering carrier, and it may charge therefor as a distance and separate terminal serv- ice, but such cartage presupposes deHvery upon the team tracks of the carrier and is supplementary thereto. It is a service additional to that v^hich the regular tariff rate pays for, and therefore may, possibly must, be properly the subject of an additional and distinct charge. The parallel between such service and the delivery made upon a spur track can only be found if the car were first ordered by the consignee to be placed upon a team track for delivery, and later, after such movement had taken place, was ordered to the private track of the consignee. For such a switch- ing terminal service carriers may charge, and, in fact, do, but to such a charge no exception can properly be taken. It is a terminal charge of the character required to be pub- lished under section 6 of the Act to Regulate Commerce, a charge for service rendered at a terminal supplementing the delivery which the carrier has given and for which it has been paid in the transportation rate. Again it is not to be overlooked that the delivery given on an industry spur is not supplemental to any other de- livery. Cars destined to industry spurs are not placed first at a spur, depot, or on the team tracks, or at the sheds, and later switched to oblige the consignee. A train of freight cars goes to the breaking-up yards which lie at the entrance to the city, and there it is divided up with respect INTERSTATE COMMERCE LAW 265 to the character of the freight in the various cars and their destinations. No one has access to the cars at this point. This yard is purely a railroad facility. After the cars are segregated they are taken to the tracks to which they are ordered — some to the various team tracks distributed along the main line, some to different industries, some per- haps to the railroad shops or to freight sheds or to the stock yards. Before the cars are placed the consignees are given notice of the tracks to which they are to be sent, so that there is no confusion, and the switch engines which place the cars on one track also serve to haul the "loads" in and "empties" out on the other tracks. After a most exhaustive inquiry the Commission could not find, taking this service as a whole in the same way that it is treated by the carriers, that the service is more expensive to the carrier than if all cars were given team track delivery. Said the Commission, in the Los Angeles case : "An additional charge may be made when an addi- tional service is given. But the service here given is not additional to that for which that rate pays. If the shipper pays for team track delivery and does not receive it, but asks instead and is given a side track delivery which costs the carrier no more, he may not be compelled to pay an additional charge upon the as- sumption that he has received a terminal team track service which has not been given. A carrier may not so construct its rates as to compel an extra charge for like service, and this, in our judgment, the defend- ants at Los Angeles have done. "Since this case was argued before the Commission, the Supreme Court of the United States has handed down an opinion, written by Mr. Justice Brewer, in what is known as the Union Stock Yards case, and the carriers defending have drawn our attention to this case as fully supporting the position which they take. That opinion holds that a carrier is justified in charg- ing a reasonable rate for a delivery which it cannot 266 AMERICAN COMMERCE ASSOCIATION make upon its own line, and that this rate, when sep- arately stated, must be judged as to its reasonableness by itself. The doctrine therein announced we accept fully. We have no right to take from an independent delivering road any portion of a reasonable charge be- cause the line charge, when added to the transporta- tion rate of a connecting line, makes an unreasonable total charge. We must deal with the unreasonable rate of the preceding carrier, if the aggregate of the rate to destination and the special delivery required is excessive and unlawful. "In the Union Stock Yards case emphasis is placed upon the fact that the Union Stock Yards Railroad is the property of a separate and distinct legal entity, which makes a charge for the service it renders to the main line entering Chicago. That rate for the service given, having been held to be reasonable, was not properly subject to reduction because other rates of connecting roads which form the through route were unreasonable. Therefore, says the court: 'If any shipper is wronged by the aggregate charge from the place of shipment to the Union Stock Yards, it would seem necessarily to follow that the wrong was done in the prior charges for transportation, and, as we have already stated, should be corrected by proper proceedings against the companies guilty of that wrong, other- wise injustice will be done. If this charge, rea- sonable in itself, be reduced, the Union Stock Yards Company will suffer loss while the real wrong-doers will escape.' "In other words, if the Southern Pacific Railroad at Los Angeles made connection with an independent belt-line railroad, which led to various industries, and provided in its tariffs that delivery on such belt line would cost $2 extra per car, this Commission could not reduce this $2 charge, provided the same were reasonable for the service which the belt line gave. Such holding is not tantamount, however, to a finding INTERSTATE COMMERCE LAW 267 that the Southern Pacific might itself charge $2 for de- livery to such industries when located on its own tracks, if such delivery was no more expensive than the dehvery included in its own transportation rate. The governing principle of Mr. Justice Brewer's opin- ion is that one carrier may not be made to suffer for the shortcomings of another. The Stock Yards Rail- road should not have its revenue abridged because the Rock Island Railroad, for instance, charges a rate to Chicago which includes the cost of a delivery which it does not render. In attacking the unlawful charge we must move back from the terminal road exacting the reasonable rate for the service it gives to the con- nection charging an excessive amount for its service. This is far, indeed, from holding that a carrier which delivers freight at a spur track at its own terminal is rendering a service which justifies the imposition of an additional charge. In fact, Mr. Justice White, in a preceding case arising out of this terminal charge at Chicago, distinctly held that the principles laid down in that decision, I. C. C. vs. C. B. & Q., 186 U. S. 320, were not to be construed as necessarily govern- ing in a case where delivery was made upon a carrier's own tracks." Associated Jobbers of Los Angeles vs. A. T. & S. F. Ry. Co., 18 I. C. C. Rep. 310, 315. U. S. vs. Union Stock Yards, 226 U. S. 286, 57 L. Ed. 226. Carriers may not segregate terminal service, heretofore treated as a part of transportation service covered by the freight rate, and assign to it a separate charge without tak- ing into consideration the entire through service of which it forms a part and the compensation heretofore received for such through service. Lighterage and Storage Regulation at New York, 3S I. C. C Rep. 49, 52, 61. See also: New Orleans Shippers' Assn. vs. I. C. R. R. Co., 34 I. C. C, Rep. 32, 38. Trap or Ferry Car Service Charges, 34 L C. C. Rep. 516, 537. 268 AMERICAN COMMERCE ASSOCIATION Switching Charges at Milwaukee, Wis., 32 I. C. C. Rep. 509, 512. Mobile Chamber of Commerce vs. M. & O. R. R. Co., 32 I. C. C. Rep. 272, 279. Industrial Railways Case, 29 I. C. C. Rep. 212, 237. Rates on Crushed Stone, 29 I. C. C Rep. 136, 137, 138. See also, this volume, chapter IX, section 1, "Discrimina- tions in Services." § 13. Discrimination by Retention of Overcharge. The retention by a carrier of an overcharge for transpor- tation is in effect an unjust discrimination, and a practice that is condemned by the Commission. If the refund of an excessive charge is unnecessarily de- layed for a considerable period the officials responsible therefor become fairly chargeable w^ith wilful intent to vio- late the law, for the retention of an overcharge has all the effect of extortion and unjust discrimination against the person from whom its payment has been required, Phelps & Co. vs. T. & P. Ry. Co., 6 I. C. C. Rep. 36, 50, and 4 I. C. C. Rep. 363. _ _ Jerome Hill Cotton Co. vs. M. Kans. R. R. Co., 6 I. C. C. Rep. 601. See also: Ohio Coal Co. vs. Whitcomb, 123 Fed. Rep. 359, holding that shipper not estopped from maintaining suit to recover over- charge under an agreement by shipper to pay excessive charge in order to obtain service to which he was lawfully entitled without such charge. Curtis & Gartside Co. vs. A. T. & S. F. Ry. Co., 38 I. C. C. Rep. 276, 277. Updike Grain Co. vs. C. St. P. M. & O. Ry. Co., 38 I. C. C. Rep. 616, 617. Hottelet & Co. vs C. & O. Ry. Co., 37 I. C. C. Rep. 382. Foster Lumber Co. vs. Clatskanie Transportation Co., 36 I. C. C. Rep. 190, 194. Krause Bros. Lumber Co. vs. N. C. & St. L. Ry. Co., 36 I. C. C. Rep. 285, 288. Merrill Bros. vs. L C. R. R. Co., 36 L C. C. Rep. 523, 525. The rule is so well settled, further citation of authority is unnecessary. CHAPTER VIII ACT TO REGULATE COMMERCE AS AMENDED (CONTINUED). Amplification of Sections (Continued). DISCRIMINATION BETWEEN PERSONS (CONTINUED). § 1. The Person of the Shipper. § 2. When Shipper Is Owner of Goods. § 3. When Shipper Is Forwarding Agent. § 4. Discrimination by Denying Shipper Choice of Routes. § 5. Discriminations Between Persons in Transportation Service. § 6. Car Spotting. § 7. Carrier's Convenience in Distribution of Cars. § 8, Private Cars. § 9. Demurrage on Private Cars. § 10. Grain Doors and Coopering. § 11. Lining and Fitting Cars. § 12. Cost of Service. § 13. Discrimination in Services and Facilites. § 14. "Like and Contemporaneous Service." § 15. Discrimination in Distinction Between Prepaid and Collect Ship- ments. § 16. Local and Through Shipments. § 17. Discrimination by Direct Difference in Rates. § 18. Discrimination Caused by State Rates. 269 CHAPTER VIII ■ ACT TO REGULATE COMMERCE AS AMENDED (CONTINUED). Amplification of Sections (Continued). DISCRIMINATION BETWEEN PERSONS (CONTINUED). § 1. The Person of the Shipper. Section 3 of the Act to Regulate Commerce specifically provides that it shall be unlawful for any common carrier subject to the Act to make or give any undue preference or advantage to any particular person, firm, company or corporation in any respect whatsoever, or to subject any particular person, firm, company or corporation to any un- due or unreasonable prejudice or disadvantage in any re- spect whatsoever. A carrier is bound to charge equally all persons using its services, regardless of their relative standing in the com- munity. The qualifying phrase in the Act, "under sub- stantially similar circumstances and conditions," relates to the nature and character of the service rendered by the carrier, and not to the official, social or business position of the shipper. Nor may the carrier dictate the use to w^hich the ship- per's commodity must be put in order to enjoy a trans- portation rate. Re Carriage of Persons Free or »t Reduced Rites, 5 I. C. C. Rep. 69, 3 1. C. C. Rep. 717. Re Alleged Unreasonable Charges for Transportation of Coal, 5 I. C. C. Rep. 466, 4 I. C. C. Rep. 157. 271 i 272 AMERICAN COMMERCE ASSOCIATION See also: Capital City Gas Co. vs. C. R. R. of Vermont, 11 I. C. C. Rep. 104. I. C. C. Confr. Rulings Bull. No. 6, Ruling No. 34. Thus, a practice of restricting rates to certain consignees when a commodity is put to a particular use is unjustly discriminatory and, therefore, unlawful. Re Restricted Rates, 20 I. C. C. Rep. 426, 437. Where a large shipper provides facilities for the prompt unloading of shipments, and receives thereby a lower rate from the carrier than is accorded his competitor, who is unable to furnish such facilities, the act of the carrier in granting such lower rate to the larger shipper is in viola- tion of the provisions of the Act prohibiting unjust dis- crimination. Re Restricted Rates, 20 I. C. C. Rep. 426, 437. See also: Baltimore Butchers' Live Stock Co. vs. P. B. & W. R. R. Co., 20 I. C. C. Rep. 124. Moore vs. N. Y. & L. B. R. R. Co., 20 I. C. C. Rep. 557, 558. Shoemaker vs. C. & P. Tel. Co., 20 I. C. C. Rep. 614, 621. Chappelle vs. L. & N. R. R. Co., 19 I. C. C. Rep. 56, 59. Hillsdale Coal & Coke Co. vs. P. R. R. Co., 19 I. C. C. Rep. 356. Jacoby & Son vs. P. R. R. Co., 19 I. C. C. Rep. 356. Oak Grove Farm Creamery vs. Adams Express Co., 19 I. C. C. Rep. 454. Pierce & Co. vs. N. Y. C. & H. R. R. R. Co., 19 I. C. C. Rep. 579, 581. In the Meeker case it was alleged in the petition that between November 1, 1900, and August, 1901, Meeker shipped 88,336 tons of coal from the Wyoming region to tidewater at Perth Amboy, N. J., a distance of about 165 miles, on which he paid a sum total of freight charges of $129,989.99. INTERSTATE COMMERCE LAW 273 Meeker claimed that upon the 35 per cent basis of rates which he contended was the necessary result of the so- called 65 per cent, contract entered into by the Lehigh Val- ley Coal Co., on August 1, 1901, whereby that company agreed to pay the coal operator 65 per cent, of the tide- water price on the highest grade of anthracite coal and lesser percentages on the lower grades, the freight charges should have been only $118,867.21, the amount of his over- payment being $11,121.97. In its report in the case the Commission said: "From the facts disclosed it is apparent that the payment of the $231,090.19, which was ostensibly made by the Lehigh Valley Coal Company to the coal operators from which it had purchased coal dur- ing the period from November 1, 1900, to August 1, 1901. was in fact made from funds advanced as cash by the Lehigh Valley Railroad Company to the Le- high Valley Coal Company, and was therefore the equivalent of a readjustment of the freight rates upon the basis of the 65 per cent, contract on such coal as was purchased by the Lehigh Valley Coal Company and shipped to tidewater during the period from No- vember 1, 1900, to August 1, 1901. We are of the opinion and so hold that complainants have sustained the allegation of unjust discrimination under the sec- ond section of the Act." Meeker & Co. vs. Lehigh Valley R. R. Co., 21 I. C. C. Rep. 129, 137. I. C. C. vs. B. & O. R. R. Co., 225 U. S. 326. Compare : Division of Joint Rates on Railway Fuel Coal. 37 I. C. C. Rep. 265. Rates on Railroad Fuel and Other Coal, 36 I. C. C. Rep. 1. Manufacturers' Ry. Co. vs. St. L. I. M. & S. Ry. Co., 28 I. C. C. Rep. 93. Commercial Club of Duluth vs. B. & O. R. R. Co., 27 I. C. C. Rep. 639. Galveston Wharf Co., 23 I. C. C. Rep. 535, 548. In the Matter of Transportation of Company Material, 22 I. C. C. Rep. 439. In re Restricted Rates, 20 I. C. C. Rep. 426. 17—19 274 AMERICAN COMMERCE ASSOCIATION ^. Attention is also directed to the following cases, which firmly establish the rule that the character and nature of the movement of the traffic, i. e., whether the movement is a through or local one, and not the mere accidents of bill- ing, determine the nature of the commerce and rate ap- plicable. Southern Pacific Terminal Co. vs. I. C. C, 219 U. S. 498. Ohio R. R. Commission vs. Worthington, 255 U. S. 101. T. & N. O. vs. Sabine Tram. Co., 227 U. S. 111. Baer Bros. vs. D. & R. G. R. R. Co., 233 U. S. 479. R. R. Commission of La. vs. T. & P. Ry. Co., 229 U. S. 336. 111. Cent. R. R. Co. vs. La. Railroad Commission, 236 U. S. 157. Kariotex Refining Co. vs. A. T. & S. F. Ry. Co., 34 I. C. C. Rep. 271. It has also been definitely settled that the determining factor is not whether the person who receives an unpub- lished refund out of the rate is directly connected with the shipment, but whether that person controls its routing. U. S. vs. Lehigh Valley R. R. Co., 222 Fed. Rep. 685. U. S. vs. D. L. & W. R., 152 Fed. Rep. 269. U. S. vs. Milwaukee Refrigerator Transit Co., 145 Fed. Rep. 1007. If free storage or free cartage is allowed by a carrier for some shippers at a given point and not for all, it is an un- lawful discrimination. Am. Warehousemen's Assn. vs. L C. R. R. Co., 7 L C. C, Rep. 556. I. C. C. vs. Detroit, etc., R. Co., 167 U. S. 633. Nor may the carrier lawfully discriminate between per- sons in allowances for elevation of grain, or in the stopping of commodities in transit for treatment or reconsignment. Nebraska-Iowa Grain Co. vs. Un. Pac. R. Co., 15 I. C. C. Rep. 90 (1909). Merriam & Holmquist vs. U. P. R. Co., 16 I. C. C Rep. 337 (1909). Duncan & Co. vs. Nashville, etc., R. Co., 16 L C. C. Rep. 590 (1909). INTERSTATE COMMERCE LAW 275 Re Allowances to Elevators, 12 I. C. C Rep. 85 (1906). St. Louis H. & G. Co. vs. M. & O. R. Co., 11 I. C. C. Rep. 90 (1906). Such privileges must be furnished on equal terms to all. An arbitrary classification of his goods because of the use of packages or cases of a certain kind or size is an un- due discrimination against a shipper. It is not, however, an unjust discrimination if the shipper is left free to choose either method of shipment and thereby gets the rate in ac- cordance with his choice of methods. R. I. E. & B. Co. vs. L. S. & M. S. R. Co., 6 I. C. C. Rep. 176. Phila., etc., vs. P. & R. R. Co., 8 I. C. C. Rep. 368. The person of the shipper may not lawfully, under any construction of the Act, be subjected to undue or unrea- sonable prejudice or discrimination in any of the elements of rate-making or rendering of transportation service by carriers subject to the provisions of the Act, such as in absorption of charges, advanced rates, allowances, bills of lading, blanket rates, bridge tools, cars and car supply, classification, credit account, demurrage, differentials, drayage charges, equalization of rates, export rates, facili- ties and privileges, import rates, lighterage, long-and- short-haul rates, preshipment preservation, proportional rates, reasonableness of rates, reconsignment, restricted rates, shrinkage rates, switch tracks, switching service and switching charges, storage, tap line service and rates, ter- minal facilities, through routes and joint rates, water transportation and rates, track storage, weights and weigh- ing. In the case of Glade Coal Company vs. B. & O. R. R. Co., 10 I. C. C. Rep. 226, 243, the Commission refused to accept the fact that the comparative cost of the service was reduced by an increase in the tonnage shipped as a suffi- cient justification for discrimination in rates. It held that competition is a public benefit. That the fact that the 276 AMERICAN COMMERCE ASSOCIATION greater part of a product was in the hands of a few was im- portant as creating stronger competition with reference to products. The fewer number of shippers, the greater the opportunities for manipulating the market and decreasing tonnage. In numerous cases the Commission has recognized the tendency on the part of the carriers to favor large shippers at the expense of small ones, and has held that the differ- ence in the cost of the service does not justify differences in rates amounting to a prohibition of small shipments, or a difference in rates where two methods of shipment are not easily accessible to all shippers. Indp. Refrs. Assn. vs. W. N. Y. & P. R. Co^ 5 I. C C Rep. 415, 4 I. C. Rep. 162. Rice vs. Cin., etc., R. Co., 5 I. C. C. Rep. 193, I. C Rep. 841. Rice, etc., vs. W. N. Y. & P. R. Co., 4 I. C. C. Rep. 131, 3 I. C. Rep. 162. Re Relative Tank and Barrel Rates on Oil, 2 I. C C. Rep. 365, 2 I. C. Rep. 245. Schofield vs. L. S. & M. S. R. Co., 2 I. C. C. Rep. 90, 2 I. C Rep. 67. Rice vs. L. & N. R. R. Co., 1 I. C. C. Rep. 503, 1 I. C. Rep. 722. The practice of naming specific consignors and con- signees as entitled to certain service is not only objection- able as to form, but may easily result in unjust discrimina- tion between persons similarly situated and equally en- titled to the carrier's service. Pierce Co. vs. N. Y. C. & H. R. R. R. Co., 19 I. C. C. Rep. 579. § 2. When Shipper Is Owner of Goods. The Commission has held that the requirement to en- title a shipper to a carload rating on his goods when shipped in such quantity that the goods may be loaded at one time and place, a single bill of lading issued, and the shipment made from one consignor to one consignee, is a proper one, but that when the goods are so loaded and by the terms of sale become the property of the consignee INTERSTATE COMMERCE LAW 277 upon delivery to the carrier, the carrier has not the right to inquire whether the consig-nee obtained his title from one or several owners. If the carrier accords the carload rate in the case where the consignor is the owner, its fail- ure to extend the same privilege when the consignee is the owner is a violation of sections 1, 2 and 3 of the Act to Regulate Commerce. Buckeye Buggy Co. vs. C. C. C. & St. L. R. Co., 9 I. C. C. Rep. 620. Bell Co. vs. B. & O. S. W. R. Co., 9 I. C. C. Rep. 632. § 3. When Shipper Is Forwarding Agent. The question of the right of a carrier to make its rates to base upon the ownership of the property transported was first brought before the Commission in the case of Cal- ifornia Commercial Association vs. Wells, Fargo & Co., 14 I. C. C. Rep. 422, where shipments belonging to, and in- tended ultimately for, various consignees had been united in a bulked shipment from one consignor to one consignee, the carrier having refused to apply the rate applicable upon the shipment as a whole, but had insisted upon making a separate charge upon the package or packages intended for each ultimate consignee. In its original report in 14 I. C. C. Rep. 422, the Commission held that the practice of the carrier was unlawful. It did not, however, allow its order to go into effect, owing to the fact that the legal question involved was taken into court in what is known as the Export Shipping Case, 14 I. C. C. Rep. 437. The Export Shipping Case involved railroad carriers, while the California Commercial Association Cases each involved an express carrier. Both the railroads and the express com- panies contended in these cases that they might make rates with relation to the ownership of the property trans- ported. The Commission held to the contrary, and the Supreme Court of the United States, in its opinion in I. C. 278 AMERICAN COMMERCE ASSOCIATION C vs. D. L. & W. R. R. Co., 220 U. S. 235, upheld the Commission, where, speaking through Chief Justice White, it said: "The contention that a carrier when goods are ten- dered to him for transportation can make the mere ownership of the goods the test of the duty to carry, or, what is equivalent, may discriminate in fixing the charge for carriage, not upon any difference inhering in the goods or in the cost of the service rendered in transporting them, but upon the mere circumstance that the shipper is or is not the real owner of the goods is so in conflict with the obvious and elemen- tary duty resting upon a carrier, and so destructive of the rights of shippers, as to demonstrate the unsound- ness of the proposition by its mere statement. We say this because it is impossible to conceive of any ra- tional theory by which such a right could be justified consistently either with the duty of the carrier to transport or of the right of a shipper to demand trans- portation. This must be, since nothing in the duties of a common carrier by the remotest implication can be held to imply the power to sit in judgment on the title of the prospective shipper who has tendered goods for transportation. In fact, the want of founda- tion for the assertion of such a power is so obvious that in the argument at bar its existence is not directly contended for as an original proposition, but is de- duced by implication from the supposed effect of some of the provisions of the second section of the Act to Regulate Commerce. In substance, the contention is that as the section forbids a carrier from 'charging a greater or less compensation for any service rendered or to be rendered, in the transportation of persons or property than it charges, demands, collects or receives from any other person or persons for doing for him or them a like and contemporaneous service in the trans- portation of a like kind of traffic under substantially similar circumstances and conditions, authority is to be implied for basing a charge for transportation upon INTERSTATE COMMERCE LAW 279 ownership or nonownership of the goods tendered for carriage upon the theory that such ownership or non- ownership is a dissimilar circumstance and condition within the meaning of the section. "But this argument, in every conceivable aspect, amounts only to saying that a provision of the statute which was plainly intended to prevent inequality and discrimination has resulted in bringing about such conditions. Moreover, the unsoundness of the con- tention is demonstrated by authority. It is not open to question that the provisions of section 2 of the Act to Regulate Commerce were substantially taken from section 90 of the English railways clauses consolida- tion act of 1845, known as the equality clause. Texas & Pacific Railway vs. Interstate Com. Comm., 162 U. S. 197, 222. Certain also is it that at the time of the passage of the Act to Regulate Commerce, that clause in the English act had been construed as only embracing circumstances concerning the carriage of the goods and not the person of the sender, or, in other words, that the clause did not allow carriers by railroad to make a difference in rates because of differ- ences in circumstances arising either before the serv- ice of the carrier began or after it was terminated. It was, therefore, settled in England that the clause forbade the charging of a higher rate for the carriage of goods for an intercepting or forwarding agent than for others. Great Western R. Co. vs. Sutton, 1869, L. R., 4 H. L., 226; Evershed vs. London & N. W. Ry. Co., 1878, 3 App. Cas., 1029; and Denaby Main Col- Hery Co. vs. Manchester, etc., Ry. Co., 1885, 11 App. Cas., 97. And it may not be doubted that the set- tled meaning which was affixed to the English equal- ity clause at the time of the adoption of the Act to Regulate Commerce applies in construing the second section of that act, certainly to the extent that its in- terpretation is involved in the matter before us. Wight vs. United States, 167 U. S. 512; Interstate Commerce Commission vs. Alabama M. R. Co., 168 U. S. 144, 166. 280 AMERICAN COMMERCE ASSOCIATION "It is urged that as the wide range of carload rates and the extent of the facility for combining articles for the purpose of obtaining such rates allowed in official classification territory are the result of the voluntary act of the railroads, therefore the power existed in the railroads to restrict and limit the employment of such rate as was done by the assailed rule. In the interest of the public it is urged that a limitation should not be now enforced which would compel the carrier to with- draw the facilities which shippers enjoy by the volun- tary act of the carriers. But the proposition rests upon the fallacious assumption that because a carrier has the authority to fix rates it has the right to dis- criminate as to those who shall be entitled to avail of them. Moreover, the contention is not open to re- view, because the legal question of the right of the carrier to consider ownership under the second sec- tion having been disposed of, the finding of the Com- mission that to permit the enforcement of the rule would give rise to preferences and engender discrim- inations prohibited by the act to regulate commerce, embodies a conclusion of fact beyond our competency to reexamine." A supplemental order of the Commission enforcing its findings in harmony with the holding of the Supreme Court was thereupon put into effect, condemning and prohibiting the use of Rule No. 28, of Official Express Classification No. 20, parts a to h, and formerly desig- nated as Rule 3 of Wells, Fargo & Company's tariff, en- titled — "Special Rates on Merchandise in large lots be- tween Eastern offices and Pacific Coast terminals reached exclusively by Wells, Fargo & Company," and Rules 5-B and 15-E of the then effective Official Classification. Compare : Calif. Coml. Assn. vs. Wells, Fargo Co., 14 I. C. C. Rep. 422. Export Shipping Co. vs. Wabash R. R. Co., 14 I. C. C. Rep. 437. INTERSTATE COMMERCE LAW 281 Calif. Coml. Assn. ts. Wells, Fargo & Co., 21 I. C. C. Rep. 300. California Coml. Assn. vs. Wells, Fargo & Co., 16 I. C. C. Rep. 458, dealt with the question of aggregating weights on two or more packages under the conditions provided in certain tariffs, and not with the question of discrimination in rates because of nonownership of consignor. See also: Consolidated Forwarding Co. vs. S. P. Co., 9 I. C. C. Rep. 182. D. L. & W. R. Co. vs. I. C. C, 169 Fed. Rep. 894. from which appeal to U. S. Sup. Ct. was taken in 220 U. S. 235. § 4. Discrimination by Denying Shipper Choice of Routes. In a case where the carriers, as a condition to guarantee- ing a through rate on certain traffic from CaHfornia points to eastern destinations, reserved to themselves by tariff provision the right to route the traffic over eastern con- nections, thereby effecting a division of tonnage between such connections, it was held by the commission that the regulation subjected the owners and shippers of such traf- fic to undue prejudice and disadvantage in violation of the Act to Regulate Commerce. Sou. Pac. Co. vs. I. C. C, 200 U. S. 536, 50 L. Ed. 585. I. C. C. vs. Sou. Pac. Co., 132 Fed. Rep. 829. See also: Panky vs. Rich. & D. R. R. Co., 3 I. C. C. Rep. 658, 3 I. C. Rep. 33. The right is given the shipper, under the provisions of the Act to Regulate Commerce, to designate in writing the route via which he desires his shipment to move and it is also the duty of the carrier, where the shipper tenders traffic not routed, to forward it via the cheapest available route. The carrier may not be relieved of the duty of 282 AMERICAN COMMERCE ASSOCIATION making a reasonable investigation of recognized practical routes in connection with a designated delivering line, but no obligation rests upon the carrier to hunt up unnat- ural connections to practically unknow^n gateways in order to determine the lowest possible combination for a given shipment. Amer. Agricultural Chem. Co. vs. Bangor & Aroostock R. R. Co., 28 I. C. C. Rep. 398, 400. Newman Lbr. Co. vs. Mississippi Cent. T. T. Co., 26 I. C. C. Rep. 97, 100. Goodman Mfg. Co. vs. P. R. R. Co., 26 I. C. C. Rep. 423, 426. The rights of shippers and carriers in the routing of shipments are sufficiently well settled to make the citation of further authority unnecessary. § 5. Discriminations Between Persons in Transportation Service. An analysis of the language of the discrimination provi- sions of the Act to Regulate Commerce discloses a policy, wisdom and foresight adopted by the lawmakers in fram- ing the several sections of the statute. The basic principle of the act being one of "fair play," it would have failed of its purpose had Congress incorporated into the law only a definition of undue discrimination limited to unjust dif- ferences in rates and charges. In such event, a simple subterfuge could be employed by the carriers, confined to differentiations in transportation services and facilities, without causing any changes to occur in the rate factors. Even in connection with rates this practice was (until the amending of the Act in 1906 and 1910) indulged in by the carriers with respect to classification changes. But the lawmakers, while not specifying that the Inter- state Commerce Commission should regulate every detail of railroad operation, did provide, by the terms of the act, INTERSTATE COMMERCE LAW 283 that the Commission should determine whether any rate or any regulation or practice affecting transportation is just, reasonable, and nondiscriminatory. Sections 1, 2, 3, 15 and 16 of the amended act leave no doubt of the power of the commission to determine whether or not, in specific cases, the carriers have furnished the transportation serv- ice and adequate facilities properly connected with such service as required by the first section upon just, reason- able and nondiscriminatory rates, upon reasonable request, and if it is determined by the Commission that the carriers failed to comply with the requirements of the act in this respect, it is empowered by the terms of section 15 to pro- vide a remedy for the wrong committed. It has been insistently argued at times by the carrier interests that the law confers no power on the Commis- sion to make any order with reference to any regulation or practice of the carriers not affecting rates. This argu- ment has been advanced not infrequently in car distribu- tion cases. The question is one of very large importance. If the numerous and varied regulations and practices of carriers which enter so vitally into questions of transpor- tation do not "affect rates," and therefore lie outside the jurisdiction of the Commission, its power to protect the shipping public against abuses is much less extensive than has generally been understood. There is no more insidious or effective way by which a carrier may discriminate be- tween its shippers than through a regulation or practice that denies to them the equal enjoyment of its facilities. And if this be the rule, then the scope of the law and the prosperity of shippers, during periods of car shortage, largely lie in the hands of the carriers on whose lines they conduct their business enterprises, whenever such carriers are disposed to and do actually favor some shippers at the i 284 AMERICAN COMMERCE ASSOCIATION expense of others. By giving^ to one manufacturer a largei proportion of cars than he is entitled to, when the volume of his traffic is compared with that of a competitor, the latter's business may be destroyed, if the Commission has no authority to intervene on his behalf. That there is need of such authority will appear from an examination of the published reports of proceedings in which the Commis- sion has found just occasion to exercise it. The power, upon complaint made, to deal with unjust, preferential, and discriminatory regulations and practices of carriers was clearly vested in the Commission under section 15 of the act as it stood prior to the amendatory act of June 29, 1906. Whether or not it still exists under section 15 of the amended act, must be ascertained by examining the whole act as it now stands with a view to gathering the general intent and purpose of the enactment, and then by examining the various provisions by which the intent and purpose are sought to be made effective. The underlying purpose of this legislation was to pu^ shippers on a basis of absolute equality; to assure to them not only equal rates but an impartial enjoyment of the facilities and services of interstate carriers. That princi- ple appears throughout the act, but nowhere more clearly than in sections 2 and 3. The former assures to shippers an equality of rates for the transportation of property uv der substantially similar circumstances and conditions; and the latter assures to them an equality in the oppor- tunity to use the rates, facilities, and services of carriers. One right supplements the other. An equality in rates without an equal opportunity to use the facilities of car- riers, would fall far short of the general objects sought to be accomplished by the Congress. On the other hand, the right to impartial treatment by carriers in the trans- portation of their merchandise would mean little to ship- INTERSTATE COMMERCE LAW 285 pers if not accompanied by an assurance of an equality also in rates. And when we approach the consideration of any special provision in the act, this understanding of its general scope and purpose must not be lost sight of. As was said by Chief Justice Marshall in The Durrouseau vs. United States, 7 Cranch, 307, 314: "The spirit as well as the letter of a statute must be respected, and where the whole context of the law demonstrates a particular intent in the legislation to effect a certain object, some degree of implication may be called in to aid that intent." But, while keeping in mind the general intent and spirit of the act, the Commission is by no means to be under- stood as indicating that its power to deal with undue pref- erences and unlawful discriminations, when accomplished by carriers through unjust regulations and practices, rests upon implication ; or that it is necessary, by impHcation, to inject into section 15 explanatory words that are not em- braced within its text. The language of that provision is entirely sufficient in itself to enable the Commission to redress wrongs of the character complained of in such pro- ceedings. In reaching this conclusion the Commission was not required to resort to ingenuity in construction or to rest the argument upon a mere matter of punctuation. The Commission held that any practice or regulation that unlawfully discriminates against one shipper and affords an undue preference to another shipper is a regulation or practice affecting rates within the meaning of that phrase as used in the clause in question. Any regulation or prac- tice that withdraws from a shipper the equal opportunity of using and taking advantage of the rates offered by a carrier to the public is clearly a regulation or practice affecting rates in the sense in which that phrase is used in the amended act. To hold otherwise, would be to put the 286 AMERICAN COMMERCE ASSOCIATION narrowest possible construction upon those words, in dis- regard of the general objects and purposes of the enact- ment. And this the Commission is not warranted in doing under any recognized rule of statutory construction, and more especially when a remedial statute is under conside- ration. After having vested in the Commission the power to redress wrongs arising out of unreasonable and unjust rates, it was not ready to accept the view that the Congress has contented itself with a mere admonition in the law against the great wrongs that may be done against ship- pers through unjust regulations and practices. Although Congress has declared such practices to be unlawful, it was insisted in the Rail & River Coal Company Case that it has omitted to give the Commission the power to correct them. Forms of discrimination which relate to the furnishing of service, facilities, car service, and the like, are prohibited by the comprehensive language of section 3 of the Act, and the power in the Commission to remedy these evils is found in sections 15 and 16. Penn. Paraffine Works vs. P. R. R. Co., 34 I. C. C. Rep. 179, 188. Vulcan Coal & Mining Co. vs. I. C. R. R. Co., 33 I. C. C. Rep. Memphis Hay & Grain Assn. vs. St. L. & S. F. R. R. Co., 24 I. C. C. Rep. 609. Mobile Chamber of Commerce vs. M. & O. R. R. Co., 23 I. C. C. Rep. 417. Arlington Heights Fruit Exchange vs. S. P. Co., 20 I. C. C. Rep. 106. Rail & River Coal Co. vs. B. & O. R. R. Co., 14 I. C. C. Rep. 86. R. R. Commission of Ohio vs. Hocking Valley Ry. Co., 12 I. C. C. Rep. 398. , See also cases holding that the whole scope of the Act to Regulate Commerce shows it to have been intended that the Interstate Commerce Commission, and not the courts, shall pass upon administrative questions, which the INTERSTATE COMMERCE LAW 287 regulation of nondiscriminatory practices in the furnishing of transportation and facilities connected therewith, mani- festly is: Mitchell Coal & Coke Co. vs. P. R. R. Co., 230 U. S. 247. Morrisdale Coal Co. vs. P. R. R. Co., 230 U. S. 242. P. R. R. Co. vs. International Coal Mining Co., 230 U. S. 184. U. S. vs. Pacific & Arctic Co., 228 U. S. 87. C. R. I. & P. Ry. Co. vs. Hardwick Elevator Co., 226 U. S. 426. Robinson vs. B. & O. R. R. Co., 222 U. S. 506. B. & O. R. R. Co. vs. Pitcairn Coal Co., 215 U. S. 481. T. & P. Ry. Co. vs. Abilene Cotton Oil Co., 204 U. S. 426. See also — section 13, this chapter, "Discrimination in Service and Facilities. §6. Car Spotting. No obligation rests upon the carrier at common law to do or to pay for the placement or spotting of cars on a shipper's switch or plant tracks, but if the carrier volun- tarily undertakes to perform for some and refuses to per- form for others such services under similar circumstances and conditions, unlawful discrimination will result. Buffalo Union Furnace Co. vs. L. S. & M. S. Ry. Co., 21 I. C. C. Rep. 620, 627, 630. In Car Spotting Charges, 34 I. C. C. Rep. 609, the Com- mission found tariffs proposing a "spotting charge" for placing cars for loading or unloading at convenient points on the tracks of industries specifically named in the tariffs not to be justified for the reason that the proposed charge would apply in many instances to services covered by the line-haul rate, and also for the further reason that to im- pose the additional charge upon the industries named in the proposed tarififs and not upon other industries for which like services are performed, would result in unjust discrimination. The line-haul covers the customary movement of cars over industry tracks, incident to the receipt and delivery of carload freight at convenient points on those tracks for 288 AMERICAN COMMERCE ASSOCIATION loading or unloading, without regard to the size or com- plexity of the industry, and the points at which the cars are to be placed by the carrier for that purpose without additional charge are to be determined by general usage. The line-haul rate covers only one placement of a car upon an industry track for loading or unloading, and an additional charge should be made for each additional placement of a car for that purpose, as also for the move- ment of cars from place to place within the plant during the processes of manufacture. In Industrial Railways Case, 29 I. C. C. Rep. 212, the Commission in holding that the line-haul rate may cover the service of spotting a car at a private door, said: "Under the common law as construed in the prac- tically unanimous decisions of the courts, a delivery of carload freight to a shipper having a private siding is made by shunting the car upon the switch, clear of the main tracks. All services upon the siding be- yond that point, in placing the car for loading or unloading at a particular spot convenient to the ship- per, are what may be called volunteered services in the sense that they are in addition to the main-line haul and in excess of any obligation of service by the carrier at common law. Nevertheless, the custom of making deliveries at the warehouse or factory door on private sidings is one of long standing in this country, and under certain language in the act it is possible that the carriers may be required, upon rea- sonable compensation, to do this spotting, as it is called. We find no authority, however, English or American, that holds or intimates that the line carrier, in connection with the main-line haul, is under any obligation to spot a car at the factory door on a private siding except upon reasonable compensation included in the rate itself or set up in the form of a special charge." The argument that while the line-haul rate may cover INTERSTATE COMMERCE LAW 289 the movement incident to the receipt and delivery of car- load freight when that movement is over an ordinary- industry spur but does not cover a Hke service w^hen the movement is over the interior tracks of an industrial plant, is founded upon the assumption that the carrier and the industry have the joint use of the industry spur while the interior tracks of the industrial plant are used exclusively by the industry. The fact is, however, that the service which the carrier renders in the movement of cars over the interior tracks of the industrial plant for the purpose of receiving and delivering carload freight of the industry is a public service, and the tracks are used both for that public service and for the private purposes of the indus- try. It is immaterial that the carrier may not use the tracks for all the purposes for which it uses the ordinary industry spur. The difference is merely one of degree and not of kind. Especially ought the tracks of the industrial plant, to the extent that they are used by the carrier for a public service, be treated as a part of its terminal facilities where the carrier does not show that it would be possible for it to provide the necessary terminal facilities in any other way. The public interest is served in many ways by permit- ting the carriers to use the tracks of industrial plants as a part of their terminal facilities. The exclusively owned terminals of the carriers arc thereby relieved of a heavy burden under which they would either break down com- pletely or be so congested as to greatly inconvenience shippers who are compelled to receive and deliver their freight in those terminals. The distribution of terminals also tends to prevent the undue concentration of indus- tries and consequent concentration of population, thus aiding the solution of one of our social problems. 17—20 290 AMERICAN COMMERCE ASSOCIATION With the growth of terminal areas and the consequent increase of terminal expenses, there may be a growing need for a separation of the charges for line hauls from the charges for terminal services, and a graduation of charges for terminal services, so that each industry within the terminal area will pay in proportion to the service it receives in addition to the line haul, if such a system should in the future be deemed to be preferable to what now obtains; but before that could be done there would have to be a separation of the cost of the reconstruction of rates. In re Muncie & Western R. R. Co., 30 I. C. C. Rep. 434. Gen. Elec. Co. vs. N. Y. C. & H. R. R. R. Co., 14 I. C. C. Rep. 237. Atchison Ry. Co. vs. U. S., 232 U. S. 199, 214. Compare : Los Angeles Switching Case, 234 U. S. 294. Los Angeles Switching Case, 18 L C. C. Rep. 310. § 7. Carrier's Convenience in Distribution of Cars. In as much as the Act to Regulate Commerce requires of the carrier that what it does for one it must do for all alike under like circumstances, many holdings of the Commission are simply in exemplification of this statutory mandate. The carrier is not free to use its equipment as may best suit its convenience or advantage, but is bound to serve all shippers alike. The carrier owes a special duty to its shippers who are entirely dependent upon it for transportation facilities. While it may make reasonable rules governing the manner in which it will receive the goods which it holds itself out to transport, it must make its equipment conserve its utmost service to its shippers. Traer vs. Chicago, etc., R. R. Co., 13 I. C. C. Rep. 451. Wagner & Co. vs. D. & M. R. Co., 13 L C. C. Rep. 160. Memphis Frt. Bu. vs. F. S. & W. R. Co., 13 I. C. C Rep. 1. Riddle, Dean & Co. vs. P., etc., R. Co., 1 L C. C. Rep. 374. INTERSTATE COMMERCE LAW 291 Compare : Cox vs. St. L.. etc., R. Co., 14 I. C. C. Rep. 464. Schwager vs. G. N. R. Co., 12 I. C. C. Rep. 521. Anthony Salt Co. vs. Mo. Pac. R. Co., 5 I. C. C. Rep. 299. Red Rock Fuel Co. vs. B. & O. R. R. Co., 11 I. C. C. Rep. 438. Parks vs. Cinn., etc., R. Co., 10 I. C. C. Rep. 47. Harp. vs. Choctaw, etc., R. Co., 118 Fed. Rep. 169, affmd. 125 Fed. Rep. 445. Thompson vs. Penna. R. R. Co., 10 I. C. C. Rep. 640. Glade Coal Co. vs. B. & O. R. R. Co., 10 I. C. C. Rep. 226, which condoned a reasonable rule prohibiting the loading of coal except at tipples. U. S. vs. B. & O. R. R. Co., 165 Fed. Rep. 113 (overruling 154 Fed. Rep. 108), held a rule allowing excess of cars in month following a month in which shippers returned cars within an average specified time, was improper, on the ground that speedy unloading of cars should be stimulated by demurrage penalties against the tardy, rather than by the allowance of special facilites to the prompt. § 8. Private Cars. It is the duty of carriers to furnish equipment. It is the policy of the law that the transportation business shall not be at all controlled or operated by those who are deal- ing in the commodities carried. Unless carriers do fur- nish equipment, shippers must. But if shippers must fur- nish equipment, discrimination is at once practically un- avoidable. Not all shippers of any commodity can furnish their own cars. To require them to do so is practically to restrict the merchandising of the commodity to those able to supply for themselves the cars which it is the duty of the carrier to supply for all. Re Demurrage Charges on Tank Cars, 13 I. C C. Rep. 378, 380. A shipper's request for cars especially suited for the transportation of his products would not be reasonable if the cars had to be prepared for shipment in a manner which is peculiarly within the technical knowledge of per- sons connected with that industry, or if the movement of the commodity is a dangerous operation which can be 292 AMERICAN COMMERCE ASSOCIATION performed safely only by men engaged in its production. All cars used by carriers, whether they be owned by the carriers themselves or leased from private car lines or from shippers, must be distributed without discrimination and whatever transportation service or facility the law requires a carrier to supply, it has a right to furnish. A. T. & S. F. Ry. Co. vs. U. S., 232 U. S. 199. Pennsylvania Paraffine Wks. vs. P. R. R. Co., 34 I. C. C. Rep. 179. Vulcan Coal & Mining Co. vs. I. C. R. R. Co., 33 I. C. C. Rep. 52. See also: Arlington Heights Fruit Exc. vs. S. P. Co., 20 I. C. C. Rep. 106. In the Paraffine Works Case, supra, the Commission held that it had the power to require carriers to furnish all necessary equipment, both ordinary and special, upon reasonable request, and required the carriers, upon rea- sonable request and reasonable notice, to furnish tank cars in sufficient numbers to move the complainants' normal production. The order of the Commission was enjoined in the courts and its power to require carriers to acquire new equipment denied by the Supreme Court. U. S. vs. P. R. R. Co., 242 U. S. 208. R. R. Commrs. of Fla. vs. So. Ex. Co., 44 I. C C Rep 645. The Commission has established the rule that the own- ers of private cars are entitled to their exclusive use and that foreign railway fuel cars assigned to a particular mine can not be delivered to another mine; but it again holds that all such cars must be counted against the distributive share of all cars of the mine receiving them. While the right to use private cars may doubtless be denied to shippers by appropriate legislation, in the ab- sence of a specific enactment to that effect their use is not in itself unlawful. Whether under a given set of cir- cumstances their use results in an unlawful advantage INTERSTATE COMMERCE LAW 293 to their owners and in an unlawful disadvantage to others, is a question which under existing legislation is clearly under the control of the Interstate Commerce Commis- sion, and may be made the basis of such relief as the facts in any particular case may justify. Bulah Coal Co. vs. P. R. R. Co., 20 I. C. C. Rep. 52, 53. Hillsdale Coal & Coke Co. vs. P. R. R. Co., 19 I. C. C. Rep. 356. Jacoby vs. P. R. R. Co., 19 I. C. C. Rep. 392. Rail & River Coal Co. vs. B. & O. R. R. Co., 14 I. C. C. Rep. 86. Traer vs. C. & A. R. R. Co., 13 I. C. C. Rep. 451. R. R. Commission of Ohio vs. H. V. Ry. Co., 12 I. C. C. Rep. 398. See also: I. C. C. vs. I. C. R. R. Co., 215 U. S. 452. I. C. C. vs. C. & A. R. R. Co., 215 U. S. 479. Chappelle vs. L. & N. R. R. Co., 19 U. S. 56. Carr vs. N.. P. Ry. Co., 9 I. C. C. Rep. 1. § 9. Demurrage on Private Cars. So long as carriers hire cars from shippers, and the latter are under compulsion to furnish their own equipment by reason of the carriers' failure, the Commission is not dis- posed to permit the carriers to treat such equipment as their own to the extent of imposing penalties for its non- use when it neither is on the tracks of the carrier nor paid for by the carrier when standing idle. Primarily demurrage is imposed by a railroad to compel prompt loading and unloading of cars. This is a proper regulation. The Commission fully recognizes the right of a carrier to secure the fullest practicable use of its equipment and to be recompensed for delays caused by the negligence and indifference of shippers and consignees. Such princi- ple, however, does not carry with it, by necessary implica- tion, the right to make a charge when no service is given. § 10. Grain Doors and Coopering. If the car furnished requires much repairing, if its door posts are shattered or broken, or if it has many holes or 294 AMERICAN COMMERCE ASSOCIATION cracks through which grain would sift in transit, the ship- per should refuse to accept it. The obligation of the car- rier is to promptly furnish a suitable car. The shipper is not bound to receive and load a car upon which he must expend labor and materials to make it suitable to transport grain. The carriers do not desire that a shipper should load a car which is not in condition. Obviously the car- riers do not wish to unnecessarily increase their expendi- tures for freight lost in transit. If, however, each carrier engaged extensively in carrying grain, for instance, would provide repair and cooperage stations at convenient points in the grain-growing and grain-shipping regions, cars properly repaired could be furnished shippers on short notice and the carrier's duty would be more fully dis- charged. Ever since grain has been shipped in bulk, shippers have been required to place the grain doors. The Commission is of the opinion that such a requirement is not unreason- able. It is an incident of loading and should properly be performed by the shipper. The marked difference in the character of cars furnished by separate carriers at different points and by one carrier at the same point, renders it impracticable to fix a maxi- mum allowance which should be paid to shippers for material furnished and labor performed. Balfour, Guthrie & Co. vs. O.-W. R. R. & N. Co., 21 I. C. C. Rep. 539. Experience has demonstrated that it is impossible to accurately check claims for material furnished and labor performed by shippers. The Commission held that it may not with propriety fix by order a maximum amount that should be paid the shipper by a carrier for labor per- formed and for materials furnished by him in installing grain doors or doing other incidental repair work on cars INTERSTATE COMMERCE LAW 295 furnished for shipments of grain in bulk. If, however, a carrier makes any allowance to shippers at country stations for work done or materials furnished, the conditions and purposes as well as the maximum allowance must be stated in its tariff and must be applied without discrimina- tion. The amount and character of the material furnished shippers for grain doors and for incidental coopering and repairing should be uniform and adequate for the purpose; just what will be furnished should be clearly stated in tariffs. It is manifest that if a carrier furnishes nothing but loose boards at one point and at another point fur- nishes sectional doors, lath, paper, or burlap, unlawful dis- crimination results. There does not appear to be unjust discrimination against shippers of grain at country elevators because cars suitable to ship other commodities are furnished other shippers. The circumstances and conditions are so different that no discrimination forbidden by the act re- sults. Farmers' Cooperative Assn. vs. C. B. & Q. R. R. Co., 34 I. C. C. Rep. 60. 65. It is the primary duty of a railroad to furnish equipment that is usable. A shipper is not to be put to the alterna- tive of either not shipping at all or of recovering from the railroad for loss of the commodity in transit. It is not a compliance with the requirements of the law that a car shall be put at the shipper's disposal; the car provided must be one that will convey the commodity safely to its destination under ordinary circumstances. In the event that the car furnished is unfit, the shipper should reject it and call for another. This, it is said, is an expensive procedure for the shipper to follow, inasmuch 296 AMERICAN COMMERCE ASSOCIATION as he is prepared at the time when the cars are placed to load them, and such rejection occasions a delay of possibly one or two days. Allowances for such defective equipment are of danger- ous character. The carrier can not tell what the actual amount of material and labor used by the shipper was. The car is loaded immediately upon being repaired and is sent to some far distant point. There is no means of ade- quately checking the expenditure of the shipper, so that it becomes extremely easy to turn such allowances into real rebates. The number so repaired in the last two years has been very small. The Commission believes that it is a safer and more reasonable practice to curtail such allowances than to extend them, since the Commission can not in any way police such repairs, and it is a far wiser policy for the carriers to repair theij own equip- ment than to farm it out to shippers. A rule of this character could not be limited to the repair of cars for a shipment in bulk of grain without establishing a prece- dent as to allowances for other commodities. § 11. Lining and Fitting Cars. In the shipment of certain commodities it frequently becomes necessary for the shipper to repair and fit cars so as to prevent loss, damage, or leakage. In some in- stances tariff provision is made by the carrier for reim- bursement for repairs to car against leakage in transit. This does not mean, however, to protect a shipper against leakage from a package in the car to the floor of the car, but against the leakage from the car and of moisture into the car. And it is an unjust discrimination to pay leakage claims to one shipper and not to another similarly situated. In the case of Southwestern Missouri Millers Club vs. St. L. & S. F. R. R. Co., 26 I. C. C. Rep. 245, 246, the INTERSTATE COMMERCE LAW 297 Commission held the carriers guilty of unjust discrimina- tion in the enforcement of certain rules governing the lining and padding of cars for flour shipments and the compensating of shippers for such preparation of the cars for use. Farmers' Cooperative Assn. vs. C. B. & Q. R. R. Co., 34 I. C. C. Rep. 60, 64, 65. See section 10, this chapter, ante. The Commission approved a car fitting rule in Western Trunk Line Rules, 34 L C. C. Rep. 554, 578, and declared a rule in the classification providing that temporary lining and flooring must be installed by the shipper at his ex- pense for shipments of potatoes not to be unreasonable. Best & Co. vs. G. N. Ry. Co., 33 I. C. C. Rep. 1, 4. See also: Boldt & Co. vs. C. R. I. & P. Ry. Co., 33 I. C. C. Rep. 8, 10. Boise Lumber Co., Ltd., vs. P. & O. N. Ry. Co., 33 L C. C. Rep. 109. 111. „ „ Kenner Truck Farmers' Assn. vs. L C. R. R. Co., 32 I. C. C. TQ 1 Q New York Shippers' Protective Assn. vs. N. Y. C. & H. R. R. R. Co., 30 I. C. C. Rep 437. Rates on Bananas from Gulf Ports, 30 I. C. C Rep. 510, 517. Dunnage Allowances, 30 I. C. C. Rep. 538, 542. The Commission holds it to be unsound in principle to encourage car fitting or the use of dunnage in order to secure minimum loads, and then to approve payment of allowances to offset expense thus incurred. Dunnage Allowances, 30 L C. C. Rep. 538, 546. See also: Break-Bulk Rates on Grain, 30 L C. C. Rep. 357. 363. Protection of Potato Shipments in Winter, 29 L C. C. Rep. 504, 505. 298 AMERICAN COMMERCE ASSOCIATION A carrier may require a shipper to partition cars for mixed shipments of live stock. Lee vs. St. L. S. W. Ry. Co., 29 I. C. C. Rep. 101, 102. § 12. Cost of Service. Rate making in the past has not been prosecuted parallel with comparative cost studies. In fact, the problem of estimatmg the cost of transporting specific commodities is at best in a developmental stage. It is the plain purpose of Congress and the impending task of the Interstate Com- merce Commission to determine the proper cost of service factor in a rate. This objective is clearly apparent in recent sv^eeping investigations conducted by the Commis- sion. The Industrial Railw^ays Case rested largely upon the principle of placing the cost of service v^here it prop- erly belongs. Cost of service is an element essential to the determina- tion of the reasonableness of a rate and may, as a condi- tion of service, become w^orthy of consideration in dis- crimination readjustments. Thus, comparison of cost of service for car-float and lighter service raises presump- tion that an allow^ance for one and not the other, freight rates being equal, would constitute unjust discrimination as between the two classes of service. The Commission has held that the words "substantially similar circumstances and conditions," in certain impor- tant particulars define the duties and rights of carriers and the rights of shippers as well. If the carrier claims to act under a compulsion of circumstances and conditions of his own creation or connivance in the making of an excep- tional rate, then it will not avail him. If the carrier claims to act under a compulsion of circumstances and conditions which he could obviate by reasonable, fair and INTERSTATE COMMERCE LAW 299 just exertion on his part, in the making of an exceptional rate, then it will not avail him. In a later case, holding that the fact that certain carriers used double-deck cars for transporting live hogs w^hile other carriers used single-deck cars could not avail the latter carriers in making a difference in rates w^hich dis- criminated against certain shippers, the Commission said : "It is one of the plain duties of the carrier to prop- erly equip its road with all such cars as experience has shown to be necessary for the right movement of freight along its line, and in like manner to have depots and arrangements for the proper and necessary receipt and delivery of freight at stations along its line. A carrier is not warranted under the statute in setting up its own omissions in these respects to justify an exceptional rate which unjustly discrimi- nates against one locality in favor of all others and against one kind of traffic in favor of another." Lighterage and Storage Regulations at New York, 35 I. C. C. Rep. 47, 62, 63. Lum. vs. G. K. Ry. Co., 33 I. C. C. Rep. 541, 556. Commodity Rates to Pacific Coast Terminals, 32 I. C. C. Rep. 611, 629. Second Industrial Railways Case, 34 I. C. C. Rep. 596, 600. Industrial Railways Case, 32 I. C. C. Rep. 129, 130, 132. Business Men's Assn. vs. Chicago, etc., R. Co., 2. I. C. C. Rep. 65, 2 I. C. Rep. 46. Board of Trade, etc., vs. C. & A. R. R. Co., 4 I. C. C. Rep. 158, 3 I. C. Rep. 233. 244. § 13. Discrimination in Services and Facilities. Transportation is a very practical public service, and laws for its regulation are intended to deal with actual rather than with constructive or imaginary things. Dis- crimination in service and facilities, properly a part of the service of transportation, is as effectively dealt with by the laws as are prejudicial rates. It is the duty of the carriers subject to the act to provide facilities of transportation 300 AMERICAN COMMERCE ASSOCIATION to all who apply, at reasonable rates and without undue discrimination, and a policy of uniformity between ship- pers should be adhered to by carriers in the rendering of transportation service and extension of facilities and privileges. In a well considered case, involving alleged discrimina- tions in coal car distribution, Judge Morris, in the Pitcairn case upheld the regulatory statute in these terms : "Under the present system of individual ownership of coal cars, it is not unreasonable that the owner shall have the exclusive use of his individual cars; on the contrary it is only just. But under the actual circumstances of the business of the coal trade on the Baltimore and Ohio Railroad, from which it is appar- ent that the great struggle of the mine operators is to get sufificient cars to ship their product during the winter months, and that their business existence de- pends upon it, it is not unreasonable to hold that the railroad shall do all that it is practicable to do to avoid subjecting the operators who do not have the use of individual cars to unreasonable disadvantage. While it is true that the existence in the trade of a larger number of individual cars does increase the total car equipment, and so far as the individual cars satisfy the requirements of their owners, does increase the number of free-equipment cars which the railroad has at its disposal, it still is a fact that in times of car shortage the demand is so great that all the mines having individual cars require and get their full percentage of the railroad equipment with- out reference to their own cars. "Under the provisions of the Interstate Commerce Act the railroad must abstain from giving any undue or unreasonable preference or advantage to any mine owner in any respect whatsoever. "The duty of the railroad under section 1 is to fur- nish transportation upon reasonable request. It is not the duty of the shipper, but of the railroad, to provide INTERSTATE COMMERCE LAW 301 the required vehicles of transportation. If for con- venience or of necessity the vehicles are furnished by certain of its shippers, and are run regularly on the road just as its own equipment is run, they are, I think, to be treated for some purposes as part of the equipment of the road. "These regularly run individual cars occupy the tracts and sidings, they are drawn by the locomotives and are operated by the employees of the railroad company and must lessen the facilities in that respect of the independent operators. Indeed an objection of the railroad company to individual ownership of cars is that they require special switching and special care to collect and classify them in order to haul them to their respective destinations. As the independent mine operators have in this manner to suffer from individual cars being transported as part of the rail- road's equipment in such large and constant numbers running regularly on the railroad's lines, it seems only reasonable that when distribution upon percentage is made, all this regular equipment then available should be taken into the calculation and not to first deduct the individual cars and give the independent mine operators only their percentage of the remaining available equipment. This taking of individual cars into calculation would not be depriving the individual car owner of the exclusive use of his cars and it would not be depriving him of any contractual right which he is entitled to retain and enjoy under the Interstate Commerce Act. The mine operator would, in any state of the car supply, continue to get the exclusive use of his individual cars as before, but when the supply was short he would not get so many of the railroad's general equipment. It would be rectifying an unreasonable disadvantage which has been shown to work a serious hardship upon the relator and the independent-mine operators in the Fairmont region. "Under the ruling in the present case it becomes unimportant to inquire under just what contractual terms as between the railroad and the mine operators 302 AMERICAN COMMERCE ASSOCIATION the individual cars are held. Some of these cars have been fully paid for by the railroad company by the working out of the mileage contracts under which they were placed on the road and are now the prop- erty of the railroad company, but the mine owners claim that under the contracts they are still entitled to their exclusive use. The exclusive use of other cars now belonging to the Baltimore and Ohio Rail- road Company is claimed by virtue of an agreement made with the Monongahela River Railroad Com- pany, the former owner. It is apparent with regard to the cars now the property of the Baltimore and Ohio Railroad Company, that these contracts would require careful scrutiny if it was necessary to go into that matter, and it might become a question to what extent the provisions of the Interstate Commerce Act would permit these cars now the. property of the railroad company to be taken out of its distributable car supply. "My finding and ruling is that the relator is entitled to have allotted to it its percentage of all the available car-supply equipment, whether of general or individ- ual cars, and that the relator and those in like situa- tion with it are subjected to an unreasonable disad- vantage by getting only a percentage of the free Baltimore and Ohio equipment, after having first eliminated therefrom the individual cars; but in no case are the owners of the individual cars or those entitled to them by contract to be deprived of the exclusive use of their individual cars, but the individ- ual cars assigned by the owner to be loaded at speci- fied mines should be charged against the specified mine as part of its pro rata distribution of cars. A carrier of interstate commerce, is not in every case under legal compulsion to furnish the same terminal facilities for all descriptions of traffic; it is sufficient if reasonable provision is made in this regard; and what is reasonable in a given instance depends largely upon the conditions and surroundings of a particular locality." INTERSTATE COMMERCE LAW 303 See : B. & O. R. R. Co. vs. Pitcairn Coal Co., 215 U. S. 481, 54. L. Ed. 292, 30 Sup. Ct. 164. Compare: Preston & Davis vs. D. L. & W. R. R. Co., 12 I. C. C. Rep. 114. A Special daily allotment of 500 system coal cars to a coal mine operator for the purpose of supplying foreign steamships with coal was declared by the Commission to be unlawfully discriminatory, so long as they were not counted against the ratings of the mines during periods of car shortage. Likewise the sale of 1,000 of its coal cars by the carrier to the same operator was condemned as unduly discriminatory. Jacoby & Co. vs. P. R. R. Co., 19 I. C. C. Rep. 392. See also: Hillsdale Coal & Coke Co. vs. P. R. R. Co., 19 I. C. C. Rep. 356. In the same way, a carrier's rule that the capacity in tons of "assigned" cars shall be deducted from the rated capacity of the mine receiving them and that the remain- der is to be regarded as the rated capacity of the mine in the distribution of "unassigned" cars, is unlawful and discriminatory. Hillsdale Coal & Coke Co. vs. P. R. R. Co., 19 I. C. C. Rep. 356. Bulah Coal Co. vs. P. R. R. Co., 20 I. C. C. Rep. 52. In a case where straight carloads of vegetables consigned to one consignee were delivered on the carrier's team tracks and unloaded by the consignees, but so-called "con- solidated" carloads consisting of shipments to numerous consignees, were unloaded by the carrier and assorted upon its platform or in its freight house for the several 304 AMERICAN COMMERCE ASSOCIATION consignees, and for such unloading and assorting, the tariff charge of 1 cent per 100 pounds was assessed, the Commis- sion condemned the practice as unduly discriminatory and unlawful. Davies vs. I. C. R. Co., 19 I. C. C. Rep. 3. As a custom, it is practically universal throughout the country for shippers to load and unload carload freight. It is not unlawful for the carrier to assess a reasonable charge for loading or unloading, or assisting in loading or unloading carload freight, provided the service and charge are specifically provided for in legally published and filed tariffs. A carrier must have the right to unload carload freight in order to release its equipment, where the consignee has failed to unload during the free time provided in the carrier's tariff, and, because of the con- signee's neglect, the carrier should not be required to per- form the unloading service except for a reasonable com- pensation therefor. Such a rule, and the practice there- under, however, must be non-discriminatory. This rule is and may be departed from at points where competitive and other conditions render it necessary, and a carrier may unload carload freight at specified points where conditions require, without charge, and not be guilty of unjust discrimination. Schultz-Hansen Co. vs. So. Pac. Co., et al., 18 I. C. C. Rep. 234. ^ Utica Traffic Bu. vs. N. Y. C, etc., R. R. Co., 18 I. C. C. Rep. 271. Wholesale Fruit, etc. vs. Atchison, etc., R. R. Co.. 17 I. C. C. Rep. 596. If an express company grants free pick-up and delivery of express packages in one part of a town, and refuses the privilege in another, it is guilty of unjust discrimina- tion. Strauss vs. Am. Ex. Co., 19 I. C. C. Rep. 112. INTERSTATE COMMERCE LAW 305 It is unlawfully discriminatory for a carrier to grant free trap-car service to and from the sidings of some con- signors and to charge other shippers therefor. Pierce Co. vs. N. Y. C. & H. R. R. R. Co., 19 I. C. C. Rep. 597. So long as the system of coal-car distribution applied by a railroad company in a given field is, under the circum- stances and conditions peculiar to that field, a reasonable one, and fair to all, and is applied to all alike, a shipper has no just cause for complaint. U. S. vs. N. & W. Ry. Co., 109 Fed. Rep. 831. It is the duty of a railroad company, in effecting coal- car distribution among mines located on and shipping coal over its line, not to discriminate or show any undue favoritism. U. S. vs. W. V. N. R. C, et al., 125 Fed. Rep. 252, aflfmd. in 134 Fed. Rep. 266 (1906). See also: U. S. vs. N. & W. R. Co., 143 Fed. Rep. 266 (1906). When the equipment of a carrier usually applied to the transportation of a particular article is not equal to the demand made upon it, it is its duty to appropriate other cars to such service or to obtain cars elsewhere. The car- rier is not justified in refusing to furnish cars for the trans- portation of coal to a certain point on its line, by the fact that it could at the time make more money by using its regular coal cars on another portion of its line, where re- turn loads were obtainable and more frequent trips could be made, thus enabling it to serve a larger number of cus- tomers with a smaller number of cars. 17—21 Riddle, Dean & Co. vs. N. Y. L. E. & W. R. Co., et al., 1 I. C. C. Rep. 594, 1 I. C. Rep. 787. 306 AMERICAN COMMERCE ASSOCIATION It is not the business of the shipper to furnish the vehi- cle of transportation. This is the duty of the carrier. Under its franchise the carrier must do more than con- struct his roadway. He must equip it with the means of transportation, and these means, of whatever style or pattern, must be open impartially to all shippers of like traffic. If the carrier hire or arrange in any manner for the use of vehicles he does not own, he has one or two things to do: He must furnish like vehicles to all com- petitors in the traffic, or must be careful to make no un- just discrimination and give no undue preference in his rates. Rice, etc., vs. W. K Y. & P. R. Co., 4 I. C. C. Rep. 131, 3 I. C. Rep. 162 (1890). Every shipper is legally entitled to fair treatment in the use of these public utilities, and any discrimination which in substantial degree deprives shippers of such use must be considered unjust, unless forced by justifying conditions. Richmond Elevator Co. vs. P. M. R. Co., 10 I. C. C. Rep. 629. Glade Coal Co. vs. B. & O. R. R. Co., 10 I. C. C. Rep. 226. The Act to Regulate Commerce is opposed to every species of favoritism, and seeks to secure like treatment for all persons in like relations to the carrier. The carrier may decline to haul private cars at all, no matter by whom owned or for what purpose used, and a uniform rule to that effect would be entirely consistent with its public obligations. A railroad may also haul private cars of a certain class, and refuse at the same time to haul others of a wholly or substantially different class. In either case, however, there should be no avoidable partiality. It is not a question of convenience, much less is it a question for arbitrary decision. A well-defined and reason- INTERSTATE COMMERCE LAW 307 able policy should be adopted, and that policy should be observed to the fullest practicable extent. Carr vs. Nor. Pac. R. Co., 9 I. C. C. Rep. 1. Chappelle vs. L. & N. Ry. Co., et al., 19 I. C. C. Rep. 56. See also : U. S. vs. B. & O. R. R. Co., et al., 165 Fed. Rep. 113 (1908). This case has to do particularly with the equal and fair dis- tribution of car equipment and involves an important ruling on the sufficiency of the act. St. Louis Terminal Case, 34 I. C. C. Rep. 453, 365. Lumber from Louisiana to North Atlantic Points, 26 I. C. C. Rep. 186, 192. Blodgett Milling Co. vs. C. M. & St. P. Ry. Co., 23 I. C. C. Rep. 448. Young & Cutsinger vs. L. & N. R. R. Co., 22 L C. C. Rep. 1, 3. Paducah Cooperage Co. vs. N. C. & St. L. Ry. Co., 22 I. C. C. Rep. 226, 231. Piano Milling Co. vs. St. L. S. W. Ry. Co., 22 L C. C. Rep. 360, 362. Scudder vs. T. & P. Ry. Co., 21 L C. C. Rep. 60, 61, 62. Anadarko Cotton Oil Co. vs. A. T. & S. F. Ry. Co., 20 L C. C. Rep. 43, 47. Onerbacker Coffee Co. vs. So. Ry. Co., 18 I. C. C. Rep. 566, 570. Wlholesale Fruit & Produce Assn. vs. A. T. & S. F. Ry. Co., 17 I. C. C. Rep. 596, 601. Douglas & Co. vs. C. R. L & P. Ry. Co., 16 L C. C. Rep. 232, 244, 245. Washer Grain Co. vs. M. P. Ry. Co., 15 L C. C. Rep. 147, 158. National Petroleum Assn. vs. L. & N. R. R. Co., 15 I. C. C. Rep. 473, 476. Rail & River Coal Co. vs. B. & O. R. R. Co., 14 L C. C. Rep. 86. 89. Eichenberg vs. S. Ry. Co., 14 I. C. C. Rep. 250, 269. Traffic Bureau of St. Louis vs. C. B. & Q. R. R. Co., 14 I. C. C. Rep. 317, 328, 331. U. S. vs. Oregon R. R. & Navigation Co., 159 Fed. Rep. 975, 984. Whether a carrier is guilty of violating the Act by refusing to afford equal facilities for the interchange of traffic is to be determined by applying all the considera- tions of equity to the case and should be found to exist 308 AMERICAN COMMERCE ASSOCIATION only when such facilities can be afforded "under substan- tially similar circumstances and conditions." It is not the purpose of the Act to require a carrier to furnish to one carrier equal facilities of traffic that it furnishes to others where the circumstances and conditions are dissimilar. N. Y. & N. R. Co. vs. N. Y. & N. E. R. Co., SO Fed. Rep. 867. K. & I. Br. Co. vs. L. & X. R. Co., 37 Fed. Rep. 567. It is not unlawful discrimination for a carrier owning dock facilities at a given point to regard it as a private wharf and refuse to permit another carrier's boats to use such wharf: for a carrier to prefer itself in its own proper business is not the discrimination condemned by the Act. Ilwaco R. & N. Co. vs. O. S. I. & U. N. R. Co., 57 Fed. Rep. 673, reversing 51 Fed. Rep. 611. See original case in 5 I. C. Rep. 627. § 14. "Like and Contemporaneous Service." While the question is not a serious one, it has arisen as to what constitutes like and contemporaneous service. It can mean but one thing, and that is a service rendered over the same line of railroad. The qualifying adjective "contemporaneous" precludes any other possible meaning being given to the premise which the statute requires before a violation can be effected — that the service must be "Hke." See Cattle Raisers' Assn. vs. Ft. W. & D. C. R. Co., 7 I. C. C. Rep. 513. A carrier can not discriminate within the meaning of the statute except as between those whom it serves or whom it may lawfully be required to serve. It is not guilty of discrimination merely because it does not afford as favorable rates as others serving a different territory, though the products carried by each are brought to the same market. The law does not deal in these matters INTERSTATE COMMERCE LAW 309 with all carriers collectively as a single unit or system, but its commands are directed to each, with respect to the service which it is required to perform. Thus, "each case must be decided upon its own merit." Chicago Lumber & Coal Co., et al. vs. Tioga S. E. R. Co., et al., 16 I. C. C. Rep. 323, 328, 332. The decision in one case against carriers operating in a different territory, under essentially different or dissimilar circumstances and conditions, affords no proper criterion in another case. However, comparison between rates and practices in one territory exhibiting reasonable similarity with another, is often resorted to in cases before the Com- mission, and is of assistance in many instances. See also: U. S. vs. Tozer, 39 Fed. Rep. 369. Cattle Raisers' Assn. vs. Ft. W. & D. C. R. Co., 7 I. C. C. Rep. 513. Compare : Coml. Club, etc., vs. A. T. & S. F. R. Co., 19 I. C C. Rep. 218. § 15. Discrimination in Distinction between Prepaid and Collect Shipments. It is the carrier's right as a public service corporation to demand prepayment on all shipments, and it may not distinguish between persons who pay in advance and those who do not. It may waive its right to demand prepayment and accept a shipment with the understanding that it will collect the charges upon delivery to the consignee, but if it does not collect such charges from the consignee, it must look to the consignor for payment. The collection of the lawful rate is a duty imposed on the carrier by law, and it is given a lien upon the property 310 AMERICAN COMMERCE ASSOCIATION transported to enforce the payment of charges. To ac- cept a shipment without prepayment is no more than to extend credit to the consignor, and this within reasonable and nondiscriminatory hmits, it may do. But neither a railroad, an express company, nor other public carrier, may lawfully make rates based upon the waiver of its rights to collect charges at the time it receives a ship- ment. For if there is any risk in the carrying of the ship- ment without payment of charges, the carrier must in ful- fillment of its own duty under the law resolve that risk against the consignor and collect in advance. Rates may not be based on a temporary waiver of a carrier's right nor may the reasonableness of a rate turn upon the as- sumption that some will pay the lawful charges and others will not, so long as the law gives the right to collect the rate in advance and demands that the carrier shall without fail collect its published charges. Boise Com. Club, etc., vs. Adams Express Co., 17 I. C. C. Rep. 115. In the Matter of Transportation of Company Material, 22 I. C. C. Rep. 439, 440. See also: ' R. R. Commission, etc., vs. S. F. & W. R. Co., 5 I. C. C. Rep. 13. 3 I. C. R. 688. Boston F. & P. Exchange vs. N. Y., etc., Ry. Co., 5 I. C. C. Rep. 1, 3 I. C. Rep. 604. § 16. Local and Through Shipments. It is the requirement of section 2 of the Act that all shippers be treated alike by the carriers in the rendition of the same service where such service of transportation is performed "under similar circumstances and conditions." This is not an impairment of the permissive authority of section 4, wherein competition may create dissimilar cir- cumstances and conditions between communities, for the INTERSTATE COMMERCE LAW 311 requirement of section 2 is as to shippers in the same locality who are to be aflforded like treatment for like services. The most elementary premise to which the require- ment of section 2 applies is that of local and through transportation service. Service of the carrier in trans- porting through traffic is different from its service in the movement of local traffic, even though both services are performed over the same rails. This distinguishment between local and through traffic was given cognizance by the Supreme Court in its opinion in C. M. & St. P. Ry. C. vs. Tompkins, 176 U. S. 167, 44 L. Ed. 417, where the court said: "It is obvious on a little reflection that the cost of moving local freight is greater than that of moving through freight, and equally obvious that it is almost if not quite impossible to determine the difference with mathematical accuracy. Take a single line of 100 miles, with ten stations. One train starts from one terminus with through freight and goes to the other without stop. A second train starts with freight for each intermediate station. The mileage is the same. The amount of freight hauled per mile may be the same, but the time taken by the one is greater than that taken by the other. Additional iuel is consumed at each station where there is a stop. The wear and tear of the locomotive and cars from the increased stops and in shifting cars from main to side tracks is greater; there are the wages of the employees at the intermediate stations, the cost of insurance, and these elements are so varying and uncertain that it would seem quite out of reach to make any accurate comparison of the relative cost. And if this is true when there are two separate trains, it is more so when the same train carries both local and through freight." In the Import Rate Case the Supreme Court in giving .312 AxMERICAN COMMERCE ASSOCIATION consideration to this requirement of the second section of the Act, had subsequently said: "Proceeding to the second section, we learn that its terms forbid any common carrier, subject to the pro- visions of the Act, from charging, demanding, col- lecting or receiving 'from any person or persons a greater or less compensation for any service rendered or to be rendered, in the transportation of passengers or property, subject to the provisions of the Act, than it charges demands, collects or receives from any other person or persons for doing for him or them a like and contemporaneous service in the transporta- tion of a like kind of traffic under substantially simi- lar circumstances and conditions,' and declares that disregard of such prohibition shall be deemed 'unjust discrimination,' and unlawful. Here again it is ob- servable that this section contemplates that there shall be a tribunal capable of determining whether, in given cases, the services rendered are 'like and contemporaneous,' whether the respective traffic is of a 'like kind,' and whether the transportation is under 'substantially similar circumstances and condi- tions.' * * * "The Commission justified its action wholly upon the construction put by it on the Act to Regulate Commerce, as forbidding the Commission to consider the 'circumstances and conditions' attendant upon the foreign traffic as such 'circumstances and conditions' as they are directed in the Act to consider. The Commission thought it was constrained by the Act to regard foreign and domestic traffic as like kinds of traffic under substantially similar circumstances and conditions, and that the action of the defendant company in procuring through traffic that would, ex- cept for the through rates, not reach the port of New Orleans, and in taking its pro rata share of such rates, was an act of 'unjust discrimination,' within the mean- ing of the Act. In so construing the Act we think the Commission erred. * * * INTERSTATE COMMERCE LAW 313 "The sixth section of the Act to Regulate Com- merce of July 1, 1862, relative to the Union Pacific Railroad Company, provided that the goverment shall at all times have the preference in the use of the railroad *at fair and reasonable rates of compen- sation, not to exceed the amount paid by private parties for the same kind of service.' In the case of Union Pacific Railw^ay vs. United States, 117 U. S. 355, 29 L. Ed. 920, 6 Sup. Ct. 772, it was, in effect held that the service rendered by a raiWay company in transporting local passengers from one point on its line to another is not identical w^ith the service rendered in transporting through passengers over the same rails." Tex. & Pac. Ry. Co. v». I. C. C. (Import Rate Case), 162 U. S. 197, 40 L. Ed. 940. U. P. Ry. Co. vs. U. S., 117 U. S. 355, 29 L. Ed. 920. § 17. Discrimination by Direct Difference in Rates. Discrimination by direct difference in transportation rates results from a variety of causes, usually arising under various forms of competition. See "Interstate Commerce Law," Chapter II, sections 1 to 8 inclusive, deahng with "Competition," post. § 18. Discrimination Caused by State Rates. See "Interstate Commerce Law," Part III, Chapter I, section 5, "Discrimination Between Localities," post. CHAPTER IX ACT TO REGULATE COMMERCE AS AMENDED (CONTINUED). Amplification of Sections (Continued). DISCRIMINATION BETWEEN PERSONS (CONTINUED). § 1. Discriminations in Services. § 2. "Under Substantially Similar Circumstances and Conditions." § 3. Differences in Services. § 4. Leased Trackage Rights. § 5. Trackage Rights Under Contracts. § 6. Special Privileges. § 7. Discriminations in Special Privileges. § 8. Discrimination in furnishing Interchange Facilities. § 9. Discrimination in Wharfage Rights. § 10. State and Municipal Regulations Governing Use of Terminals. § 11. Discriminations in Transit Privileges. § 12. Discrimination in Milling-in Transit and Export Traffic. § 13. Stoppage in Transit. § 14. Compression of Cotton in Transit. § 15. Stoppage of Cars in Transit to Complete Loading or Unloading. § 16. Transfer. § 17. Discrimination Confined to Patrons of Carriers. § 18.Long-time Credit to Proprietary Industries Constitutes Unlawful Discrimination. § 19. Carrier Extending Financial Aid to Shipper. 315 CHAPTER IX ACT TO REGULATE COMMERCE AS AMENDED (CONTINUED). Amplification of Sections (Continued). DISCRIMINATION BETWEEN PERSONS (CONTINUED). § 1. Discriminations in Services. The language of the first three sections of the Act to Regulate Commerce, as now amended, leaves no doubt as to the purpose of the* Congress to prohibit every form of undue discrimination in the interstate transportation function. The provisions of section 3 firmly clarify the intent of the inhibition against unjust discrimination. They forbid the subjection of any person, company, firm, corporation, or locality, or any particular description of traffic, to any undue or unreasonable prejudice or disad- vantage in any respect whatsoever. This language of the statute needs be given no constructive effect. It is plain and unequivocal in its terms and means that every form of discrimination perpetrated through any phase of inter- state transportation, be it in charges, service, facilities, or relationships between carriers or between carriers and shippers, is prohibited. Act to Regulate Commerce, section 3. § 2. "Under Substantially Similar Circumstances and Con- ditions." The Supreme Court of the United States has said that "it was the purpose of the section to enforce equality be- 317 318 AMERICAN COMMERCE ASSOCIATION tween shippers, and it prohibits any rebate or other device by which two shippers shipping over the same line, the same distance, under the same circumstances of carriage, are compelled to pay different prices therefor." Wight vs. U. S., 167 U. S. 512, 42 L. Ed. 258. The crux of this decision of the Supreme Court was a holding to the effect that the words "under substantially similar circumstances and conditions," found in former section 4 of the Act, may have a broader meaning or a wider reach than the same phrase found in section 2, but that in the latter instance the phrase refers merely to the carriage of the property and can not be extended to include competitive and business considerations as well. In the Alabama Midland Ry. Company Case, decided at the term following the Wight Case, the Supreme Court further em- phasized its view of this phrase by adding that it refers to the matter of carriage, and does not include competition between rival routes. But the Supreme Court added the qualification that "the competition may in some cases be such as, having due regard to the interests of the public and of the carrier, ought justly to have effect upon the rates, and in such cases there is no absolute rule which prevents the commission or the courts from taking that matter into consideration." I. C. C. vs. Ala. Mid. Ry. Co., 168 U. S. 144. In the case of P. R. R. Co. vs. Internl. Coal Mining Co., 173 Fed. Rep. 1, the phrase "under substantially similar circumstances and conditions" was held not to have sufficient scope to include matters affecting individual shippers. See also: Party Rate Case, 12 I. C. C. Rep. 95, 98 for findings of Com- mission. INTERSTATE COMMERCE LAW 319 Inasmuch as the similarity of circumstances and condi- tions under which a service of carriage is rendered, under the Act to Regulate Commerce, requiring equality of rates, relates to the circumstances and conditions which affect the service only, where different coal-mining locali- ties are grouped into a district for rate-making purposes, a carrier is not justified in making a different rate for the same or substantially similar service from a particular locality in such district, or on the product of a particular mine or vein, from that charged others because the differ- ence in the product from such locality, mine or vein and that from other mines in the district is such that it can pay a higher rate and still compete in the market. P. & R. R. Co. vs. I. C. C, 174 Fed. Rep. 687. Any discrimination which exists must not exceed that which is warranted by the differences in circumstances and conditions. Sondheimer Co. vs. I. C. R. R. "Co., 17 I. C. C. Rep. 60, 64. And each case must be decided according to the facts and conditions as they are shown to exist at the time, for changed conditions may lead to different conclusions. Sinclair & Co. vs. C. M. & St. P. R. Co., 21 I. C. C. Rep. 490, 506. See also: Capital City Gas Co. vs. C. V. R. Co., 11 I. C. C. Rep. 104. I. C. C. vs. C. R. I. & P. Ry. Co., 218 U. S. 88, 110. C. M. & St. P. Ry. Co. vs. Tompkins, 176 U. S. 167, 44 L. Ed. 417. T. & P. Ry. Co. vs. I. C. C, 162 U. S. 197, 40 L. Ed. 940. Union Pac. Ry. Co. vs. U. S., 117 U. S. 355, 29 L. Ed. 920. T. & P. Ry. Co. vs. U. S., 205 Fed. Rep. 380, 385. H. E. & W. T. Ry. Co. vs. U. S., 205 Fed. Rep., 380, 385. S. Ry. Co. vs. U. S., 204 Fed. Rep. 465, 473, 474. 320 AMERIC\N COMMERCE ASSOCIATION Langdon rs. Penn. R. R. Co^ 194 Fed. Rep. 486. 491. Mitchell Coal & Coke Co. vs. Penn. R. R- Co., 181 Fed. Rep. 403. 411. Penn. R. R. Co. ts. International Coal Mining Co, 173 Fed- Rep. 1. 4. U. S. TS. Wfells, Fargo Express Co., 161 Fed. Rep. 606. 610. U. S TS, O R. & Xav. Co., 159 Fed. Rep. 975, 978. The various rulings of the Interstate Commerce Com- mission respecting elements of undue discrimination will be found under the subsequent detailed headings. It is clearly apparent that section 2 prohibits not only discrimination when it results from direct differences in the transportation charges, but also where it is affected through a rebate or other device which changes the eflFect of an estabUshed charge. Section 3 of the Act provides "that it shall be unlawful for any common carrier subject to the provisions of this Act to make or give any undue or unreasonable preference or advantage to any particular person, company, firm, corporation, or locality, or any particular description of traffic in any respect whatsoever, or to subject any par- ticular person, company, firm, corporation, or locality, or any particular description of traffic to am- undue or un- reasonable prejudice or disadvantage in any respect what- soever. "Every common carrier subject to the provisions of this Act shall, according to their respective powers, afford all reasonable, proper and equal facilities for the inter- change of traffic between their respective lines, and for the receiving, forwarding, and delivering of passengers and property to and from their several lines and those connecting therewith, and shall not discriminate in their rates and charges between such connecting lines; but this shall not be construed as requiring any such common car- rier to give the use of its tracks or terminal facilities to another carrier engaged in like business." INTERSTATE COMMERCE LAW 321 The first paragraph of this third section of the Act prohibits the carriers from creating preferences and advan- tages by the granting of privileges, allowances, etc., while the second paragraph forbids discrimination in rates and charges between connecting railroads. Section 4 prohibits a form of discrimination resulting from the charging of a greater compensation for a shorter haul than for a longer haul over the same line of like kind of traffic under similar conditions. Although the qualify- ing phrase "under substantially similar circumstances and conditions" has been removed from the fourth section, the test of similarity of conditions is still a moral premise upon which the prohibition operates. § 3. Differences in Services. Where there is a difference in the cost of handling traf- fic, a difference in rates having proper relation to such difference in cost, is not discrimination. If a reduced rate is made in one case, for this reason, it must be applicable to all alike complying \\nth the same conditions. Where it is necessary" that the carrier should render accessorial services, such as cartage, transfer in transit, the circum- stances and conditions become dissimilar \\nthin the mean- ing of the section. See also: Detroit. G. H. & M. R. Co. vs. I. C. C. 167 U. S. 633. 42 L. Ed. 306. So, in cases where a higher rate is charged, because of additional services like refrigeration in transit, rapid transit, etc., the discrimination is justified if reasonable. 5 I. C. C. Rep. 529, 4. I. C. Rep. 205. 4 I. C. C. Rep. 588, 3 I. C. Rep. 554. 17—22 322 AMERICAN COMMERCE ASSOCIATION See also: Wilson vs. A. C. L. R. Co, 129 Fed. Rep. 774, where the right of a carrier to require special contract limiting its liability to that of a private carrier, in the transportation of a cir- cus train, was upheld. For right of carriers to make special contracts for ex- traordinary services changing their liability to that of private carriers, see : C. M. & St. P. Ry. Co. vs. Wallace, 66 Fed. Rep. 506. A preferential rate to shippers of oil in tank cars as against a higher rate imposed upon shippers of oil in barrels w^as held not to be a discrimination so long as the difference w^as reasonable and the rate itself was reason- able. Penn. Rfg. Co. vs. W. N. Y. & P. R. Co., 208 U. S. 208, 52 L. Ed. 456. See also: I. C. C. vs. C. G. W. R. Co., 209 U. S. 108, 52 L. Ed. 70S. § 4. Leased Trackage Rights. An interstate carrier desiring stone for ballast on its right of way, leased a trackage right over a short connect- ing line leading to a quarry, and proposed to purchase the stone at the quarry and haul it to its own line with its own crews and equipment. Upon presentation to the Com- mission it was held that the Commission must decline to sanction the arrangement for the reason that the carrier under the circumstances is a shipper and the proposed arrangement is a mere device to evade the payment of the lawful rates and would result in unlawful discrimina- tion. I. C. C. Confr. Rulings Bull. No. 6, Ruling No. 153. INTERSTATE COMMERCE LAW 323 See also: I. C. C. Confr. Rulings Bull. No. 6, Ruling No. 225. § 5. Trackage Rights Under Contracts. A statute requiring connections and interchange faciH- ties at railroad intersections is not an unconstitutional regulation of commerce. W. M. & P. R. R. Co. vs. Jacobson, 179 U. S. 287, 45 L. Ed. 194. U. P. R. R. Co. vs. Chicago, etc., R. R. Co., 163 U. S. 564, 41 L. Ed. 265. See also: 192 U. S. 568. 118 Fed. Rep. 113. 10 I. C. C. Rep. 173. 3 I. C. C. Rep. 519, 2 I. C. Rep. 771. Compare : Nebraska vs. M. P. R. R. Co., 164 U. S. 403, 41 L. Ed. 489. Robinson vs. B. & O. R. R. Co., 129 Fed. Rep. 753. (See also 125 Fed. Rep. 445.) Harp vs. C. O. & G. R. Co., 115 Fed. Rep. 169. Interstate Stock Yards Co. vs. R. Co., 99 Fed. Rep. 473. B. & D. Stock Yards Co. vs. R. Co., 67 Fed. Rep. 35. Chicago, etc., R. Co. vs. Suffern, 129 111., 274, 9 I. C. C. Rep. 61, 7 I. C. Rep. 194. Rates for Transportation of Anthracite Coal, 35 I. C. C. Rep. 220. 240. § 6. Special Privileges. Where an allowance of a privilege is made by a carrier to shippers in one locality or section, it must be without wrongful prejudice to the rights of shippers in another section served by the same line for it is the duty of the carrier to provide facilities to all who apply at reasonable rates and without discrimination. Lumber Rates from Louisiana to North Atlantic Points, 26 I. C. C. Rep. 186, 192. Diamond Mills vs. D. & M. R. Co., 9 I. C. C. Rep. 311. Koch vs. P. R. R. Co., 10 I. C. C. Rep. 675. St. Louis H. & G. Co. vs. M. & O. R. R. Co., 11 I. C. C. Rep. 90. 324 AAIERICAN COMMERCE ASSOCIATION Because a transit privilege is allowed at a certain point by one line is no reason why it should be ordered on an- other line, where the circumstances of inbound and out- bound shipments over the two roads are dissimilar. Nor is the inability of a shipper to reach a market on other lines owing to the failure of a carrier to grant it a milling- in-transit privilege on traffic destined to such other lines an undue discrimination for which such carrier is liable. Paducah Cooperage Co. vs. N. C. & St. L. Ry. Co., 22 I. C. C. Rep. 226, 231. Piano Milling Co. vs. St. L. S. W. Ry. Co., 22 I. C. C. Rep. 360, 362. See also: Van Natta Bros. vs. C. C. C. & St. L. Ry. Co., 23 I. C. C Rep. 1. In re Transportation of Wool, Hides and Pelts, 23 I. C. C. Rep. 151, 170. Blodgett Milling Co. vs. C. M. & St. P. Ry. Co., 23 I. C. C. Rep. 448. Southern Illinois Millers' Assn. vs. L. & N. R. R. Co., 23 I. C. C. Rep. 672, 676, 677. Young & Cutsinger vs. L. & N. R. R. Co., 22 I. C. C. Rep. 1. 3. Investigation of Alleged Unreasonableness of Rates on Meats, 22 I. C. C. Rep. 160, 174. Traffic Bureau, Merchants' Exchg., vs. C. B. & Q. R. R. Co., 22 I. C. C. Rep. 496, 505, 506. Johnson & Co. vs. A. T. & S. F. Ry. Co., 21 I. C. C. Rep. 637. Sondheimer Co. vs. I. C. R. R. Co., 17 I. C. C. Rep. 60, 70, 71. Douglas & Co. vs. C. R. I. & P. Ry. Co., 16 I. C. C. Rep. 232, 236, 244, 245. Washer Grain Co. vs. M. P. Ry. Co., IS I. C. C. Rep. 147, 158. National Petroleum Assn. vs. L. & N. R. R. Co., 15 I. C. C. Rep. 473, 476. Traffic Bu., Merchants' Exchg. vs. C. B. & Q. R. R. Co., 14 I. C. C. Rep. 317, 328, 331. Blackwell Milling & Elevator Co. vs. A. T. & S. F. Ry. Co., Unrep. Op. 483. Strasburg Steam Flouring Mills vs. S. Ry. Co., Unrep. Op. 531. § 7. Discriminations in Special Privileges. The Commission holds that a railroad company by ex- tending a privilege of value to one member of the shipping INTERSTATE COMMERCE LAW 325 public, when that privilege in the nature of things is not desired and can not be used by other members of the pub- lic, is thereby guilty of a discrimination in favor of the one who can and does use the privilege. This discrim- ination may or may not be undue, according to the circum- stances of each case. In the great majority of instances such discriminations are not in fact unlawful. Traffic Bu., etc. vs. C. B. & Q. R. R. Co., 14 I. C. C. Rep. 317, 331. Arlington Heights Fruit Exchange vs. S. P. Co., 20 I. C. C. Rep. 106, 121. See also: Re Allowances, etc., 12 I. C. C. Rep. 85. The reasoning of the Commission is well taken, for any regulation or practice that unlawfully discriminates against one shipper and affords undue preference to another ship- per is a regulation or practice affecting rates within the meaning of section 15 of the amended act. Thus, where a carrier grants one shipper over its line a lawful privilege and by a construction of its tariff rule denies the same concession to another shipper over its line under similar circumstances and conditions, the latter is subjected to undue discrimination. Ouerbacker Coffee Co. vs. S. Ry. Co., 18 I. C. C. Rep. 566, 570. Rail & River Coal Co. vs. B. & O. R. R. Co., 14 I. C. C. Rep. 86, 89. So, all transit privileges must be extended to all shippers alike and set forth in the tariffs of the carriers. All privi- leges accorded on shipments in transit, such as stoppage for treatment, sorting, or reconsignment, are in the nature of special privileges affecting the value of the transportation service, and which, while the shipper may not demand such privileges as a matter of right, when granted by the carrier must be extended to all alike and 326 AMERICAN COMMERCE ASSOCIATION excluded from none ; otherwise the carrier would be guilty of unjust discrimination between markets or individuals. Shiel & Co. vs. I. C. R. Co., 12 I. C. C. Rep. 210. St. Louis H. & G. Co. vs. M. & O. R. Co., 11 I. C. C. Rep. 90. Any regulation or practice that withdraws from a ship- per the equal opportunity of using and taking advantage of the rates offered by a carrier to the public is clearly a regulation or practice affecting rates in the sense in which that phrase is used in the amended act. Rail & River Coal Co. vs. B. & O. R. R. Co., 14 I. C. C. Rep. 86, 89. As between shippers, carriers should pursue a policy of uniformity concerning the extension of privileges, and thus avoid the charge of undue discrimination in connection therewith. Scudder vs. T. & P. Ry. Co., 21 I. C. C. Rep. 60, 61, 62. When it appears that a favored point secures an advan- tage over complaining cities by reason of a privilege not compelled by competition, there being no dissimilarity of conditions, a showing of the rate situation is as convinc- ingly a showing of a violation of section 3 as it is generally practical to make. Duncan & Co. vs. N. C. & St. L. Ry. Co., 35 I. C. C. Rep. ini, 483. Sec also: City of Nashville vs. L. & N. R. R. Co., 33 I. C. C. Rep. 76, 85. Hoyt & Bergen vs. C. & N. W. Ry. Co., 32 I. C. C. Rep. 319, 324. National Casket Co. vs. S. Ry. Co., 31 I. C. C. Rep. 678, 695. Dunnage Allowances, 30 I. C. C. Rep. 538, 545. Young & Cutsinger vs. L. & N. R. R. Co , 22 I. C. C. Rep. 1. 5. St. Louis, etc., Co. vs. M. & O. R. Co., 11 L C. C. Rep. 90. Shiel & Co. vs. I. C. R. Co., 12 L C. C. Rep. 210. The Commission does not, and never has, held a transit privilege to be condemned in so far as it is beneficial and can be properly applied. But if the granting of the privi- INTERSTATE COMMERCE LAW 327 lege lends itself to the defeating of the published rate, or to the preference of one individual or locality over another, the Commission condemns it. It does not, however, con- demn a reasonable or nondiscriminatory charge for addi- tional service rendered by a carrier in connection with a transit privilege. It must be borne in mind that milling-in-transit, and other proper transit privileges incidental to but not essen- tially a part of the transportation service, are privileges which may be granted or withheld by a carrier in its des- cretion so long as no unlawful discrimination results there- from. Nor is the fact that a transit privilege is allowed at a particular point by one line, any reason why it should be ordered in on another line, where the circumstances of inbound and outbound shipments over the two roads are dissimilar. In re Transportation of Wool, Hides and Pelts, 23 I. C. C. Rep. 151, 171. Red River Oil Co. vs. T. & P. Ry. Co., 23 I. C. C. Rep. 438, 447, 448. Young & Cutsinger vs. L. & N. R. R. Co., 22 I. C. C. Rep. 1, 3. Paducah Cooperage Co. vs. N. C. & St. L. Ry. Co., 22 I. C. C. Rep. 226. 231. And in the absence of discrimination the Commission will not establish or extend transit privileges. Anadarko Cotton Oil Co. vs. A. T. & S. F. Ry. Co., 20 I. C. C. Rep. 43, 47. See also: Duncan & Co. vs. N. C. & St. L. Ry. Co., 35 I. C. C. Rep. 477, 484. Transit Rates on Logs and Stoves at Alexandria, La., 34 L C. C. Rep. 169, 171. Indianapolis Chamber of Commerce vs. C. C. C. & St. L. Ry. Co., 34 L C. C. Rep. 267, 269, 270. Memphis Hay & Grain Assn. vs. L C. R. R. Co., 34 I. C. C. Rep. 315, 318. Saginaw Milling Co. vs. M. C. R. R. Co., 33 I. C. C. Rep. 25 27 Mixed Car Dealers' Assn. vs. D. L. & W. R. R. Co., 33 I. C. C. Rep. 133, 138, 140, 141, 142, 143, 144. Michigan Bean Jobbers' Assn. vs. G. R. & L Ry. Co., 33 L C. C. Rep. 318, 321. 328 AMERICAN COMMERCE ASSOCIATION Doran & Co. vs. N. C. & St. L. Ry. Co., 33 I. C. C Rep. 523, 526. Lumber Transit Privileges at Buffalo, N. Y., 33 I. C. C. Rep. 601. Curry & Whyte Co. vs. D. & S. R. R. R. Co., 32 I. C. C. Rep. 162, 165. Middletown Car Co. vs. P. R. R. Co., 32 I. C. C. Rep. 185, 186, 187. Hoyt & Bergen vs. C. & N. W. Ry. Co., 32 I. C. C. Rep. 319, 324 Keogh vs. M. St. P. & S. S. M. Ry. Co., 32 I. C. C. Rep. 481, 483. Pacific Fruit Exchange vs. S. P. Co., 32 I. C. C. Rep. 48, 49. Stock & Sons vs. L. S. & M. S. Ry. Co., 31 I. C. C. Rep. 150, 151. Atlanta Milling Co. vs. L. & N. R. R. Co., 31 I. C. C. Rep. 485. Douglas & Co. vs. I. C. R. R. Co., 31 I. C. C. Rep. 587, 594. National Casket Co. vs. S. Ry. Co., 31 I. C. C. Rep. 678, 686, 697. Empire Coke Co. vs. B. & S. R. R. Co., 31 I. C. C. Rep. 573, 577. Newark Grain Co. vs. S. P. Co., 31 I. C. C. Rep. 431, 433. Adams & Sons Co. vs. V. St. P. Ry. Co., 29 I. C. C. Rep. 52. Fabrication-in-Transit Charges, 29 I. C. C. Rep. 70, 82. Lumber from Louisiana to North Atlantic Points, 26 I. C. C. Rep. 186, 192. Van Natta Bros. vs. C. C. C. & St. L. Ry. Co., 23 L C. C. Rep. 1. Blodgett Milling Co. vs. C. M. & St. P. Ry. Co., 23 L C. C. Rep. 448. Southern Illinois Millers' Assn. vs. L. & N. R. R. Co., 23 L C. C. Rep. 672, Gil. Investigation of Alleged Unreasonable Rates on Meats, 22 I. C. C. Rep. 160, 174. Piano Milling Co. vs. St. L. S. W. Ry. Co., 22 I. C. C. Rep. 360, 362. Sondheimer Co. vs. I. C. R. R. Co., 17 I. C. C. Rep. 60, 70, 71. Douglas & Co. vs. C. R. I. & P. Ry. Co., 16 I. C. C. Rep. 232, 236, 244, 245. Washer Grain Co. vs. M. P. Ry. Co., 15 I. C. C. Rep. 147, 158. National Petroleum Assn. vs. L. & N. R. R. Co., 15 I. C. C. Rep. 473, 476. Traffic Bu. Merchants' Exchange vs. C. B. & Q. R. R. Co., 14 I. C. C. Rep. 317. 328, 331. Blackwell Milling & Elevator Co. vs. A. T. & S. F. Ry. Co., Unrep. Op. 483. Strasburg Steam Flouring Mills vs. S. Ry. Co., Unrep. Op. 531. I. C. C. vs. Diffenbaugh, 222 U. S. 42. U. P. R. R. Co. vs. Updike Grain Co., 222 U. S. 215. U. S. vs. Oregon R. R. & Navigation Co., 159 Fed. Rep. 975, 984. INTERSTATE COMMERCE LAW 329 The Commission has in the past frequently expressed the view that properly established transit service may be productive of much good in distributing manufactures over wider areas and in equalizing transportation condi- tions affecting competitiors. In re Transportation of Wool, Hides, and Pelts, 23 I. C. C. Rep. 151, 171, it was said: "Transit in many cases is beneficial in its applica- tion. When it can be applied without discrimination it results in the diffusion of business, in giving to rival communities the relative advantages to which they are entitled, and which can be accorded them in no other way, and, generally speaking, in the applica- tion of lower transportation charges. The Commer- cial operations of this country have in many instances grown up upon the exercise of transit privileges and could have been developed in no other way. This Commission has never held that transit was to be condemned in so far as it was beneficial and could properly be applied." And in the Transit Case, 24 I. C. C. Rep. 340, 348, the Commission used the following language: "These privileges had grown up, and the Commis- sion found them in full vigor when the act to regu- late commerce became a law. In the earlier cases we hesitated, in the absence of power to regulate transit, to lend our approval to the practice. In fact, many carriers and shippers insisted that the practice be abolished altogether and that flat rates be substituted in lieu thereof. However, today transit has become a practice of such universal prevalence upon all the railroads that it has become as much the duty of this Commission under the law as amended to supervise and regulate these rules and practices, as the rates, rules, and practices generally of all interstate car- riers." As applied to certain commodities, transit has been beneficial and its abrogation would probably result in an 330 AMERICAN COMMERCE ASSOCIATION unjustifiable destruction of property values. Grain it milled in transit, cotton is compressed, wool is sorted and graded, lumber is dressed, live stock is fed and grazed and also stopped to test the market, and structural steel is fabricated. Other illustrations could be cited. Most commodities, however, do not enjoy transit. At best transit involves rate difficulties peculiarly its own. Shall these difficulties and the confusion which frequently re- sults therefrom obscure the publication of rates and de- prive tariffs of one of their most essential qualities, name- ly, clearness? The Commission holds that considerations of this nature should be most thoroughly analyzed and weighed before transit is extended into new fields. To deal with transit as an established service in a limited field is one thing; to follow a poHcy of its indefinite exten- sion is quite another. It is obvious that ordinarily transit can only be accorded products which move at the same or very nearly the same rates as the material from which they were made. It is reasonable to withhold transit from a product that is essen- tially different from the raw material. See also "Interstate Commerce Law," Part III, Chapter I, section 5, "Discrimination Between Localities," and Chapter III, section 1, "Discrimination Between Like Kinds of Traffic," post. § 8. Discrimination in Furnishing Interchange Facilities. Section 1 of the Act to Regulate Commerce requires all carriers subject thereto to establish through routes and just and reasonable rates applicable thereto, and to pro- vide reasonable facilities for the exchange, interchange and return of traffic and cars between the lines constituting the through routes, and the second paragraph of section 3 requires such carriers to afford all reasonable, proper and INTERSTATE COMMERCE LAW 331 equal facilities for the interchange of traffic between their respective lines, forbidding discrimination in rates and charges between them. The only exception provided is that no common carrier may be required to give the use of its tracks or terminal facilities to another carrier en- gaged in like business. And the Commission, under the provisions of remedial section 15, is invested with power to control and regulate all practices on the part of the car- riers affecting these requirements. The carriers must make reasonable rules and regula- tions with respect to the exchange and return of cars and interchange of traffic. They are required under the Act to serve the through routes which they have estab- lished with other carriers without respect to the fact that in rendering such service their equipment may be carried beyond their own lines. In holding that the carriers, as between themselves, should adopt reasonable regulations to induce the prompt return of cars of foreign lines, the Commission has declared that a carrier has no right to establish regulations or rates with a view to controlling the direction in which its equipment shall be employed by the general public. Wichita Board of Trade vs. A. T. & S. F. Ry. Co., 25 I. C. C. Rep. 625, 631. Missouri & Illinois Coal Co. vs. I. C. R. R. Co., 20 I. C. C. Rep. 39, 49. See also: I. C. C. vs. I. C. R. R. Co., 215 U. S. 452. B. & O. R. R. Co. vs. U. S., ex rel., Pitcairn Coal Co., 215 U. S. 481. The inhibition of section 3 is not intended to give a carrier the privilege to accord one carrier an interchange of traffic and to deny such interchange to a competitor of such carrier, or to accord one carrier the use of a part of its terminal facilities and deny such use to another. 332 AMERICAN COMMERCE ASSOCIATION Again, in the Peoria Case, the Commission argued: "The defendant (the terminal carrier) is an instru- ment of interstate commerce and as such it is subject to the provisions of the act and to the authority of the Commission. It is essentially a terminal company and not only holds the key to commercial Peoria but practically controls the use of Peoria as a gateway for interstate traffic. It is virtually organized to fur- nish terminal facilities for carriers which lack them. Generally speaking, it has terminals but no line; while, with the exceptions noted, the twelve other carriers have lines but no terminals. It owes certain duties to the public and to other carriers. We deny its right to discriminate in the exercise of such duties and thus restrict the full and free movement of traffic between interstate points which the act was designat- ed to secure. It is not our view that the inhibition in section 3 was intended to give, or that it does give, defendant the privilege to accord one carrier an inter- change of traffic and to deny such interchange to a competitor of such carrier, or to accord one carrier the use of part of its terminal facilities and deny such use to another. That it has done these things is ap- parent from a consideration of its relations with com- plainants. What is the future of a community if a terminal company that is in practical command of the traffic situation there, as is this defendant at Peoria, may refuse to enter into traffic arrangements with carriers which are desirous of fully serving the com- munity and of using the lines entering it in the move- ment of interstate commerce?" St. Louis, Springfield & Peoria R. R. vs. P. & P. U. Ry. Co., 26 I. C. C. Rep. 235, 236. The Act to Regulate Commerce, Section 3, requires all carriers subject to its provisions, according to their respec- tive powers, to afiford all reasonable, proper, and equal facilities for the interchange of traffic between their re- spective lines, but prohibits any discrimination in the rates and charges between such connecting lines. INTERSTATE COMMERCE LAW 333 In an early case, the Court held that the Act in its then- form did not require a carrier to furnish to one carrier equal facilities for the interchange of traffic that it fur- nishes to others where the circumstances and conditions are dissimilar. K. & I. Br. Co. vs. L. & N. R. R. Co., Zl Fed. Rep. 567. In the case of N. Y. & N. R. Co. vs. N. Y. & N. E. R. Co., 50 Fed. Rep. 867 (1892), on appeal from 4 I. C C. Rep. 702, 3 I. C. Rep. 542, the court made "under sub- stantially similar circumstances and conditions" the test for the enforcement of an equity rule to govern the duty of the carrier to furnish another carrier with equal facili- ties for interchange. There can be little doubt as to the duty of the carriers under the present Act. The commerce of the country is regarded as national, not local, and the railroads are re- quired to serve the routes which they have established, or which they may have been required to establish, in connec- tion with other carriers, without respect to the fact that this may carry their equipment beyond their own lines. In the opening section of the Act is to be found this man- date: "It shall be the duty of every carrier subject to the provisions of this Act to establish through routes and just and reasonable rates applicable thereto, and to provide reasonable facilities for operating such through routes, and to make reasonable rules and regulations with respect to the exchange, interchange, and return of cars used therein, and for the operation of such through routes, and providing for reasonable compensation to those entitled thereto." It would be difficult to draft language more direct than this, or language that would more clearly express the intent of Congress that our commerce shall flow freely in established channels, without hindrance, embarrassment. 334 AMERICAN COMMERCE ASSOCIATION or delay. Supplementing this provision, the Act proceeds in the following broad and inclusive language which is here subdivided for the purpose of bringing out its meaning and its direct application to the railroad practice here under consideration: And it is hereby made the duty of all common car- riers subject to the provisions of this Act — to establish, observe, and enforce just and reason- able classifications of property for transportation, with reference to which rates, tariffs, regulations, or practices are or may be made or prescribed. and just and reasonable regulations and practices affecting classifications, rates or tariffs, the issuance, form, and substance of tickets, receipts, and bills of lading, the manner and method of presenting, marking, packing, and delivering property for transportation, the facilities for transportation, the carrying of personal, sample, and excess baggage, and all other matters relating to or connected with the — receiving, handling, transporting, storing, and delivery of property subject to the provisions of this Act which may be necessary or proper to secure the safe and prompt receipt, handling, transportation, and delivery of property subject to the provisions of this Act, upon just and reasonable terms, and every such unjust and unreasonable regula- INTERSTATE COMMERCE LAW 335 tion and practice with reference to commerce between the states and with foreign countries is prohibited and declared to be unlawful. Reading these black-faced words together, this section would read: "And it is hereby made the duty of all common carriers subject to the provisions of this Act to estab- lish, observe, and enforce just and reasonable regula- tions and practices affecting the facihties for transpor- tation and all other matters relating to, or connected with, the transporting and delivery of property sub- ject to the provisions of this Act which may be neces- sary or proper to secure the safe and prompt transpor- tation and delivery of property upon just and reason- able terms, and every such unjust and unreasonable regulation and practice with reference to commerce between the states is prohibited and declared to be unlawful." The term "transportation," as defined in a previous para- graph of the same section, includes: "Cars and other vehicles and all instrumentalities and facilities of shipment or carriage, irrespective of ownership or of any contract, express or implied, for the use thereof, and all services in connection with the receipt, delivery, elevation and transfer in transit, ven- tilation, refrigeration or icing, storage, and handling of property transported; and it shall be the duty of every carrier subject to the provisions of this Act to provide and furnish such transportation upon reason- able request therefor, and to establish through routes and just and reasonable rates applicable thereto." Further in that section of the Act making it unlawful to give any undue or unreasonable preference or advan- tage, or to subject any particular person or locality, or any particular description of trafific, to any undue or unrea- sonable prejudice or disadvantage in any respect whatso- ever (section 3), are to be found these words: "Every common carrier subject to the provisions 336 AMERICAN COMMERCE ASSOCIATION of this Act shall, according to their respective powers, afford all reasonable, proper, and equal facilities for the interchange of traffic between their respective lines, and for the receiving, forwarding, and deliver- ing of passengers and property to and from their several lines and those connected therewith, and shall not discriminate in their rates and charges between such connecting lines; but this shall not be construed as requiring any such common carrier to give the use of its tracks or terminal facilities to another carrier engaged in like business." Reading these provisions together, there can be no doubt as to the intent of Congress. The railroads are called upon to so unite themselves that they will constitute one national system; they must establish through routes, keep these routes open and in operation, furnish the neces- sary facilities for transportation, make reasonable and proper rules of practice as between themselves and the shippers, and between each other. The full burden of this great obligation is in the first instance cast upon the car- riers themselves. In compliance with these recognized requirements of the law, the carriers have undertaken to establish a body of rules and by co-operation in their en- forcement insure the fulfillment of the law's demands. The duty of the initial carrier to furnish equipment which moves on to other lines is universally recognized, and in cases where that is impracticable or deemed unwise, the carriers assume to bear the burden of the tranfser from the equipment of one line to that of the other. Missouri & Illinois Coal Co. vs. I. C. R. R. Co., 22 I. C. C. Rep 44, 45, 46, 47. L. & N. R. R. Co. vs. U. S., 216 Fed. Rep. 672. Rates on coal from L. & N. western Kentucky mines to Nashville and from N. C. & St. L. mines in Tennessee and Alabama to Nashville were found in the Nashville In- terchange Case to be unreasonable ; also that refusal of de- INTERSTATE COMMERCE LAW 337 fendants to interchange traffic to and from the Tennessee Central Railroad was found to be unjustly discriminatory under section 3. The order of the Commission was held to be valid. Traffic Bu. of Nashville vs. L. & N. R. R. Co., 28 I. C C. Rep. 533. See also: Pennsylvania Co. vs. U. S., 214 Fed. Rep. 445. Buffalo, Rochester & Pittsburgh Ry. Co. vs. Penn Co., 29 I. C. C Rep. 114. Refuge Cotton Oil Co. vs. St. L. I. M. & S. Ry. Co., 27 I. C C. Rep. 117, 120. Wichita Board of Trade vs. A. T. & S. F. Ry. Co., 25 I. C. C. Rep. 625, 631. National Lumber Exporters' Assn. vs. K. C. S. Ry. Co., 25 I. C. C. Rep. 78, 84. Spiegle vs. S. Ry. Co., 25 I. C. C. Rep. 71, 75. Colorado Coal Traffic Assn. vs. C. & S. Ry. Co., 24 I. C. C. Rep. 618. Colorado Coal Traffic Assn. vs. D. & R. G. R. R. Co., 23 I. C. C. Rep. 458, 460. Kansas City, Missouri River Nav. Co. vs. C. & O. Ry. Co., 34 I. C. C. Rep. 67, 73. City of Nashville vs. L. & N. R. R. Co., 33 I. C. C. Rep. 76, 86, 90. ^ ^ Mixed Car Dealers' Assn. vs. D. L. & W. R. R. Co., 33 I. C. C. Rep. 133, 142. Chattanooga Packet Co. vs. I. C. R. R. Co., 33 I. C. C. Rep. 384 391 Grain Rates from Milwaukee, 33 I. C. C. Rep. 417, 420. Doran & Co. vs. N. C. & St. L. Ry. Co., 33 I. C. C. Rep. 523, 530. Mobile Chamber of Commerce vs. M. & O. R. R. Co., 32 I. C. C. Rep. 272, 279. Gravel and Sand Switching Charges at Chicago, 32 I. C. C. Rep. 291, 292. Merchants & Manufacturers' Assn. vs. P. R. R. Co., 32 I. C. C. Rep. 434. Lumber Rates from Thebes, 111., 31 L C C. Rep. 15, 16. Burford vs. L. & N. R. R. Co., 31 L C. C. Rep. 182, 184. Switching at Galesburg, 111., 31 I. C C. Rep. 294, 297. Pacific Nav. Co. vs. S. P. Co., 31 I. C. C. Rep. 472, 480, 481. Jefferson Milling Co. vs. B. & O. R. R. Co., 31 I. C. C. Rep. 547, 549. Pittsburgh & Southwestern Coal Co. vs. W.-P. T. Ry. Co., 31 I. C. C. Rep. 547, 549. Rates on Lumber and Other Forest Products, 31 I. C. C. Rep. 673. 675. IT— 23 338 AMERICAN COMMERCE ASSOCIATION Hammerschmidt & Granzen Co. vs. C. & N. W. Ry. Co., 30 I. C. C. Rep. 71, 81. Lombard Brick & Tile Co. vs. C. & N. W. Ry. Co., 30 I. C. C. Rep. 84, 85. Seattle Chamber of Commerce vs. G. N. Ry. Co., 30 I. C. C. Rep. 683, 690. B. R. & P. Ry. Co. vs. P. Co., 29 I. C. C. Rep. 114, 118. The contention is frequently heard, however, that it is not unduly discriminatory, under section 3 of the Act, for an initial carrier to agree upon joint through rates with one of several connecting carriers which are competitorb among one another. Paragraph 1 of section 3 forbids undue and unreasonable discrimination between persons, companies, firms, corporations, localities, or particular descriptions of traffic in any respect whatsoever. Para- graph 2 provides as follows : "Every common carrier subject to the provisions of this Act shall, according to their respective powers, afford all reasonable, proper, and equal facilities for the interchange of traffic between their respective lines and for the receiving, forwarding, and delivery of passengers and property to and from their several lines and those connected therewith, and shall not dis- criminate in their rates and charges between such connecting lines; but this shall not be construed as requiring any such common carrier to give the use of its tracks or terminal facilities to another carrier engaged in like business." While the first paragraph of section 3 provides prima- rily for the equal treatment of shippers, the second para- graph would seem to have been directed to connecting lines, and to have been intended to regulate the terms of interchange of traffic. That paragraph 2 of section 3 gives the Commission power to regulate the interchange of traffic at terminals has been held in several cases. In Buffalo, Rochester & Pittsburgh Ry. vs. Pennsylvania INTERSTATE COMMERCE LAW 339 Co., 29 I. C. C. Rep. 114, the defendant refused to transport for complainant interstate carload shipments of freight from and to industries on defendant's lines within the switching limits of the city of New Castle, Pa., although it transported similar traffic for three other carriers serving the same point. On page 118 of the opinion it is held that : "Beyond question the refusal of the defendant to accept from and move to complainant's line carload shipments of freight within the switching limits of New Castle while performing like service in connec- tion with the said other three carriers within said switching limits, is a clear discrimination. "We conclude and find that the discrimination prac- ticed by the defendant against the complainant at New Castle, as hereinbefore stated, is undue, unreasonable, and in violation of the Act to Regulate Commerce. A suitable order will be entered requiring the defend- ant to cease and desist from said discrimination and disobedience of law." The Pennsylvania Company applied to the district court of the United States, western district of Pennsylvania, for an order to restrain the enforcement of the Commission's order in the case above cited, which motion the court denied. Pennsylvania Co. vs. United States, 214 Fed. Rep. 445. The second paragraph of section 3, however, is not con- fined to a regulation of terminal transportation. It not only provides for the "receiving" and "delivering" of traffic by connecting carriers, but also for the "forwarding of pas- sengers and property" and "interchange of traffic" in gen- eral. Pacific Nav. Co. vs. S. P. Co., 31 I. C. C. Rep. 472, 480, 481. In the Baltimore Case the Commission fixed charges for the interchange of interstate traffic at not to exceed a 340 AMERICAN COMAIERCE ASSOCIATION reasonable differential of 2 cents per hundred pounds over the flat rate to Baltimore. Merchants & Mfrs'. Assn. vs. P. R. R. Co., 32 I. C. C. Reo. 434, 436. ^ The rule is best stated in the language of the Commis- sion that "railroads are under obligation to serve through routes which they have established with other carriers, without respect to the fact that in rendering such service their equipment may be carried beyond their own lines, and that it is their duty to make reasonable rules and regulations with respect to the exchange, interchange, and return of cars used upon and for the operation of such through routes." Doran & Co. vs. N. C. & St. L. Ry. Co., 33 I. C. C. Rep. 523. 530. In the Seattle Case, the Commission decided the adverse contention of the carriers as follows: "Defendant relies principally on Public Service Commission of Washington vs. N. P. Ry. Co., 23 I C. C. 256, and Waverly OU Works Co. vs. P. R. R. Co., 28 I. C. C. 621. While these cases, in so far as they are of general application, sanction the principle that a terminal road is entitled on competitive busi- ness to something above the flat rate when the line haul is given to a competitor, we do not understand that they hold as an inflexible rule of law that there is an obligation on the Commission, assuming it to be possible, to prohibit in all cases the absorption by competitor roads of the charge which the terminal road has established for the interchange movement. Leaving aside the possible consequences as to absorp- tion following from the nature of the service or the form of the charge, it would seem that if such an obligation _upon the Commission is to be found any- where it would be alone in the concluding proviso of INTERSTATE COMMERCE LAW 341 section 3 of the Act, treating of the carriers' duty to afford it interchange. The proviso is: 'but this shall not be construed as requiring any such common carrier to give the use of its tracks or terminal facilities to another carrier engaged in like business.' "The present is a case where the carrier has estab- lished separate charges for the interchange movement over^he terminal. In a similar situation regarding switching charges at Baltimore, Merchants & Manu- facturers' Assn, of Baltimore vs. P. R. R. Co., 23 I. C. C. 474, we said that if the terminal road is allowing the use of its tracks or terminal facilities in this man- ner the proviso of section 3 can have no application, and that if a carrier holds itself out as ready to permit the use of its tracks at a certain charge it follows that having elected to perform the service the charge therefor must be reasonable. Cf., the Commutation Rate Case, 21 I. C. C. 428. The proviso consequently can here impose no obligation to prevent absorption. "In determining what is a reasonable rate for a service such as the present, the Commission should, of course, take into consideration the circumstance that the use of the rate means that the terminal road is deprived of the line haul. This, however, would seem to mean nothing more than that the charge should be an adequate one for the movement over the terminal considered by itself. The Act itself imposes no requirement upon the Commission that in deter- mining such a reasonable charge it must in some way or other take into its calculations the factor that the charge may be absorbed by a competitor road. This consideration furnishes no criterion of what is a rea- sonable rate for the service. If the Commission, after examination of a charge which has been established by the carrier, prescribes a r_ate which provides a rea- sonable return to the carrier for the service afforded, there would seem to be, so far as the law is con- cerned, no room for objection. In connection with 342 AMERICAN COMMERCE ASSOCIATION the foregoing, it is to be borne in mind that the sit- uation discussed is one where the carrier has offered the service on the terminal by establishing separate charges applicable thereto, and the problem is as to the measure of these charges. It is not a case where effort has been made to keep the terminal closed by publishing no charges or where, though charges have been established, the Commission deems it advisable, as in the Waverly Case, to exercise its jurisdiction to establish through routes and rates from points on the terminal to destination points on connecting lines." Seattle Chamber of Commerce vs. G. N. Ry. Co., 30 I. C C. Rep. 683. 690, 691. See also: Penn. Paraffine Works vs. P. R. R. Co., 34 I. C. C. Rep. 179. Vulcan Coal & Mining Co. vs. I. C. R. R. Co., 33 I. C. C. Rep. 52. Compare the following earlier holdings of the Commis- sion and the courts: Little Rock & M. R. Co. vs. St. L. I. M. & S. R. Co., 59 Fed. Rep. 400, confirmed in 63 Fed. Rep. 775. K. & I. Bridge Co. vs. L. & N. R. R. Co., 37 Fed. Rep. 567, refusing to impose order of Commission in 2 I. C. C. Rep. 162, 2 I. C. Rep. 102. In summary, attention is directed to the following deci- sions by the Commission holding that it is obviously the plain purpose of the Act that railroads cannot be required to open their terminals to traffic brought to or carried from that locality by their competitors. St. L. S. & P. R. Co. vs. P. & P. U. R. Co., 26 I. C. C. Rep. 226, 237. Morris Iron Co. vs. B. & O. R. Co., 26 I. C. C. Rep. 240, 244. Galveston Commercial Assn. vs. A. T. & S. F. Ry. Co., 25 I. C. C. Rep. 216, 228. Cham, of Commerce of New York vs. N. Y. C. & H. R. R. R. Co., 24 I. C C. Rep. 55, 74. The courts had early held that a railroad company might permit the use of its tracks and terminal facilities by one carrier and entirely exclude from such use all other car- INTERSTATE COMMERCE LAW 343 riers, and that such action was neither an undue or unrea- sonable preference or undue discrimination within the meaning of the Act. O. S. L. & U. N. R. Co. vs. N. P. R. Co., 51 Fed. Rep. 465, affirmed in 61 Fed. Rep. 158. K. & I. B. Co. vs. L. & N.. R. R. Co., 37 Fed. Rep. 567. (See same case in 2 I. C. Rep. 351.) § 9. Discrimination in Wharfage Rights. Where a carrier leased wharfage rights and facilities to a single shipper, such preference was declared to be an undue discrimination. A corporation, formed to carry on a wharfage business at a seaport, secured public shipping facilities and furnished terminal facilities for a railroad and steamship system of which it formed a part and by which it was controlled through a holding company, leased to a shipper one of the piers and improvements thereon which belonged to a terminal company, thereby relieving the shipper from the payment of all wharfage and storage charges other than such as might be represented in his yearly rental. The shipper was thereby enabled to acquire practically a monopoly of the export of cotton-seed prod- ucts which, as above stated, was held to be an unlawful preference in violation of the Act to Regulate Commerce. So. Pac Term. Co. vs. I. C. C, 219 U. S. 498, 55 L. Ed. 310. Compare : Weems S. B. Co. vs. People's S. B. Co., 214 U. S. 344, 53 L. Ed. 1024. L. & N. R. R. Co. vs. West Coast Naval Stores Co., 198 U. S. 483, 49 L. Ed. 1135. Wharves and tracks leading thereto, owned by a rail carrier engaged in interstate commerce and used for le- ceiving and delivering shipments by rail in interstate and foreign commerce, are subject to the Act to Regulate Commerce, and the regulations and practices affecting their use must be reasonable and nondiscriminatory. 344 AMERICAN COMMERCE ASSOCIATION In re Wharfage Facilities at Pensacola, Fla., 27 I. C. C. Rep. 252, 256, 258. In the Pensacola case the carriers raised the point that the wharves in question were private facilities and cited the authority of the United States Supreme Court in the West Coast Naval Stores Co. Case, supra. They also in- sisted that whether the wharves were public or private, they had a right to employ an agent to perform services for their patrons and to grant that agent the exclusive or preferential use of the facilities in the performance of such services, and in support of this contention cited the follow- ing cases : Southeastern Produce Distributers' Assn. vs. W. R. R. Co., 20 I. C. C. Rep. 458. Donovan vs. Penna. Co., 199 U. S. 279. St. L. & N. O. R. R. Co. vs. Pullman Car Co., 139 U. S. 79. Express Cases, 117 U. S. 1. In its report in the Pensacola Case the Commission analyzed these contentions as follows : "At common law the status of these wharves was definitely determined, the defendants contend, by the decision of the Supreme Court in the West Coast Case, supra. That case, however, was decided in 1905, before Congress had made the extensive changes in the law caused by the passage of the Hepburn Act and the amendments of 1910. Moreover, the facts in that case were not judicially determined, the case going off on demurrer. It is to be noted, also, that since the decision of the West Coast Case, supra, the railroad has filed with this Commission rates for the transportation of property in interstate and foreign commerce from interior points to shipside over these wharves. In Mobile Chamber of Commerce vs. M. & O. R. R. Co., 23 I. C. C. 417, the Commission consid- ered the extent of its jurisdiction over wharves under the Act as amended. As announced in that case, it is its view that where a railroad has a wharf to which certain of its tariffs offer shipside delivery at which INTERSTATE COMMERCE LAW 345 part of the shipping public is served, such terminal facilities become affected with a public interest and are subject to all the requirements of the Act. "In Southern Pacific Terminal Co. vs. I. C. C, 219 U. S. 498, the Supreme Court said : 'The reasoning of the Commission is justified by the statute. In includes in the term 'railroad' 'all bridges and ferries used or operated in con- nection with any railroad, and also all the road in use by any corporation operating a railroad, whether owned or operated under a contract, agreement, or lease, and shall also include all switches, spurs, tracks, and terminal facilities of every kind used or necessary in the transportation of the persons or property designated herein, and also all freight depots, yards, and grounds used or necessary in the transportation or delivery of any of said property.' "And on the subject of private facilities it said, in the same opinion: 'Nor does it take account of the fact that the wharves were intended for shipping facilities, a means of transition from land carriage to water carriage. It is manifest, as we have said, that to make the wharves manufacturing or concentrat- ing points for one shipper and not for all is to ■ give that shipper a preference. And, being a preference, the traffic necessarily comes under the jurisdiction of the Interstate Commerce Commis- sion.' "The Supreme Court has in other cases, notably the Union Stock Yards Case, held that the provisions of the Act to Regulate Commerce are broad enough to include all facilities of any description, used in the transportation, or in connection with the transporta- tion, of property in commerce subject to said Act. United States vs. Union Stock Yards & Transit Co., 226 U. S. 286, at 303 and 304. 346 AMERICAN COMMERCE ASSOCIATION "Since the decision in the Mobile Case, supra, was announced, Congress has enacted further legislation which evidences even more clearly the purpose of Congress to bring all such terminal facilities within this jurisdiction. The Panama Canal Act, passed at the last session of Congress, amends section 6 of the Act to Regulate Commerce by adding a new para- graph, which is quoted in part below: 'When property may be or is transported from point to point in the United States by rail and water, through the Panama Canal, or other- wise, the transportation being by a common car- rier or carriers, and not entirely within the limits of a single state, the Interstate Commerce Com- mission shall have jurisdiction of such transpor- tation and of the carriers, both by rail and by water, which may or do engage in the same, in ■the following particulars in addition to the juris- diction given by the Act to Regulate Commerce, as amended June 18, 1910. To establish maximum proportional rates by rail to and from the ports to which the traffic is brought, or from which it is taken by the water carrier, and to determine to what traffic and in connection with what vessels and upon what terms and conditions such rates shall ap- ply.' ^ ^ ^ "Since property may be transported in interstate commerce from interior points over the railroad to Pensacola, and from there by the steamship company to Mobile, Ala., or Carabelle, Fla., this amendment clearly gives the Commission jurisdiction to fix the rates to and from the port, to be applied to such traffic and to determine in connection with what vessels and upon what terms and conditions such rates shall apply. It is to be noted that this power expressly relates to domestic traffic and exists whether such traffic is to or from either competitive or noncompeti- tive points. No question is involved in this case as to INTERSTATE COMMERCE LAW 347 the amounts of rates to and from Pensacola ship- side, but the new jurisdiction granted to this Commis- sion in connection with such rates and services is clearly inconsistent with the common-law doctrine an- nounced in the West Coast Case, supra, and evi- dences the unmistakable purpose of Congress to bring the regulation of such port facilities as these within the Act if there could be any doubt that the previous amendments of the Act had already done this. "It is clear, therefore, that the wharves now in question can no longer be considered as private facili- ties, but are part of the public facilities of the rail- road, which must be administered under reasonable and nondiscriminatory regulations." In re Wharfage Facilities at Pensacola, Fla., 27 I. C. C. Rep. 252, 257. In the Flour City Case the Commission held that a rail carrier may set aside one or more of its docks for the use of particular lines so long as such practice does not conflict with its duty to give delivery at those docks to whomso- ever may apply for freight properly deliverable at that point ; that it may give up its entire dock facilities to some particular line if it so desires, but must make deliv- ery upon equal terms to other lines. Flour City S. S. Co. vs. L. V. R. R. Co., 24 I. C. C. Rep. 179, 191. Mobile Chamb. of Commerce vs. M. & O. R. R. Co., 23 I. C. C. Rep. 417. See also: Gunderson vs. G. & S. I. R. R. Co., 39 I. C. C. Rep. 747, 752. Pt. Arthur Board of Trade vs. A. & S. Ry. Co., 27 I. C. C. Rep. 388, 392. Wyman, Partridge & Co. vs. B. & M. R. R. Co., 15 I. C. C. Rep. 577. 579. Compare : Humbolt S. S. Co. vs. White Pass & Yukon Route, 25 I. C. C. Rep. 136, 140. Keckevoet vs. City of Dubuque, la., 138 N. W. Rep. 540. 545. 348 AMERICAN COMMERCE ASSOCIATION § 10. State and Municipal Regulations Governing Use of Terminals. A proper exercise of state and municipal police powers in the form of regulations governing the use of terminals has been held not to invade any rights of the carriers in interstate commerce under section 3 of the Act. The city of Dubuque, Iowa, imposed certain wharfage charges which were held to be a valid exercise of its police power. Keckevoct vs. City of Dubuque, la., 138 N. W. Rep. 540, 545. See also: Interstate Stock Yards Co. vs. Indianapolis Ry. Co., 95 Fed. Rep. 472. State of Iowa vs. C. M. & St. P. Ry. Co., 33 Fed. Rep. 391. §11. Discriminations in Transit Privileges. There is much that can be said about the irregular and discriminatory practices that are invited and possible under milling and manufacturing-in-transit privileges. There is a limit to the products which can reasonably be included in the list of those which will be transported at the raw material rate, either with or without a transit privilege. It might be reasonable to withhold a transit privilege from a product that is essentially different from the raw mate- rial and from the other products of the same raw material which are accorded transit rates, as, for example, a liquid product of grain; but it is clearly discriminatory to single out one or more of several milled products of grain and withhold from it or them a transit privilege which is granted at that or some other competitive point to other milled products of graia of substantially similar character, value, and packing, and which are transported under sub- stantially the same conditions, attended by substantially equal risks, where there is competition between the millers INTERSTATE COMMERCE LAW 349 of the grain either in marketing their product or in secur- ing their material for milling. While it has been contended that the Commission is without power to direct a carrier to grant a transit privi- lege, there is no question as to the right or power of the Commission to remove an unjust discrimination and pre- scribe such reasonable rules and regulations as will effect such removal. Douglas & Co. vs. C. R. I. & P. Ry. Co., 16 I. C. C. Rep. 232, 244. See also: American Creosote Works vs. M. L. & T. R. & S. S. Co., 37 I. C. C. Rep. 238, 239. Paducah Board of Trade vs. C. B. & Q. R. R. Co., 37 I. C. C. Rep. 743, 751, 758, 759. National Casket Co. vs. So. Ry. Co., 31 I. C. C. Rep. 678. Transit Case, 24 I. C. C. Rep. 340. Transit Case, 25 I. C. C. Rep. 130. Transit Case, 26 I. C. C. Rep. 204. Fabrication-in-Transit Charges, 29 I. C. C. Rep. 70. Anderson, etc., Co. vs. S. L., etc., R. Co., 17 I. C. C. Rep. 12. Barton, etc., Co. vs. St. Ia I. M. & S. Ry. Co., 15 I. C. C. Rep. 222. Celina Mill & Elev. Co. vs. St. L. S. W. Ry. Co., 15 I. C. C Rep. 138. Chickasaw Compress Co. vs. G. C. & S. F. Ry. Co., 13 I. C C. Rep. 187. Muskogee Coml. Club. vs. M. K. & T. Ry. Co., 12 I. C. C Rep. 312. Planters' G. & C. Co. vs. Y. & M. V. R. Co., 16 I. C. C. Rep. 131. Shield & Co. vs. I. C. R. R. Co., 12 I. C. C. Rep. 210. Transportation of Wool, Hides and Pelts, 23 I. C. C. Rep. 151, 171. Re Substitution of Tonnage at Transit Point, 18 I. C. C. Rep. 280. Southern Ry. Co. vs. St. Louis Hay & Grain Co., 214 U. S. 297, 53 L. Ed. 1004. § 12. Discrimination in Milling-in-Transit and Export Traffic. In the Hecker-Jones-Jewell Milling Company Case the Commission held that a miller in the city of New York, 350 AMERICAN COMMERCE ASSOCIATION who conducted an export business with shipments from the west, was not entitled to a milHng-in-transit privilege, but that he should have the same rate upon the grain that he ground into flour for export as the interior mills had upon flour for export. Hecker-Jones-Jewell Milling Company vs. B. & O. R. R. Co., 14 I. C. C. Rep. 356, 358. Upon review by the courts (168 Fed. Rep. 131) it was held that the Commission was an administrative tribunal and empowered, where it found that a discrimination ex- isted against a shipper or commodity, to prescribe a rela- tive rate so that the charge should be the same as for a similar service to other shippers or another similar com- modity instead of fixing an absolute maximum rate which would only have the effect of enabling the carriers to continue the discrimination by reducing the rate to other shippers or on the other commodity. See also: I. C. C. Annual Report 1909, page 30. 9 I. C. C. Rep. 411. § 13. Stoppage in Transit. The privilege of stoppage in transit is a different matter from the right of stoppage in transit. The right of stop- page in transitu may only be exercised in extraordinary instances and should not be confounded with the privilege of stoppage afforded the shipper by the carrier. The privilege of stoppage in transit, including the right of mill- ing, treating, grading, storing, testing the market, etc., which has been sustained by the Commission as a legit- imate privilege extended by carriers, must not be so ex- tended as to operate as an undue discrimination between i INTERSTATE COMMERCE LAW 351 either individuals or localities. This rule was early recog- nized by the Commission. 10 I. C C. Rep. 193. 9 I. C. C. Rep. 373. 8 I. C. C. Rep. 121. 7 I. C. C Rep. 240. 3 I. C. C. Rep. 450. 2 I. C. C. Rep. 721. 1 I. C. C. Rep. 401, 1. I. C. Rep. 703. See also: Cowen vs. Bond, 39 Fed. Rep. 54. Laurel Cotton Mills vs. Gulf & S. F. R. R. Co., 37 So. Rep. 134. Compare recent rulings : Stoppage in Transit of Farm Wagons, 39 I. C. C. Rep. 731. Stopping of Cars in Transit to Complete Loading, 36 I. C. C. Rep. 130, 133. So. Ry. Co. vs. St. Louis Hay & Grain Co., 214 U. S. 297, 53 L. Ed. 1004. § 14. Compression of Cotton in Transit. Carriers have the right to compress cotton in transit. They also have the right to grant the privilege to shippers or ow^ners of cotton to concentrate uncompressed cotton on their lines for such treatment as such shippers or ov^ners may desire to give to it, with the right of such shippers or owners to deliver the cotton back to the carriers for transportation to interstate or foreign destinations at the through rates from points of origin. Whatever charges are made must be just and reasonable and nondiscrimina- tory. They may not pay to any compress company any unjust or unreasonable charge. The compress companies are also amenable to control by the laws of the land. They are performing a public service, a service for the public, and for such services they may only charge just and reasonable rates. 352 AMERICAN COMMERCE ASSOCIATION Anderson, Clayton & Co. vs. C. R. I. & P. Ry. Co., 18 I. C. C. Rep. 340, 350. Where cotton is not shipped from one point of origin under a contract for through shipment to final destination, but where the transportation charges are assessed to the compress point, and from the compress point to final desti- nation and subsequently adjusted to the basis of the through rate from point of origin to final destination, with carriers' right of compression in transit, a rule which re- quires compression at the compress of one who is the owner of or interested in cotton grown in that district and compressed at the same point, is not free from unjust dis- crimination or undue preference. Free from conditions or practices which transgress or trespass upon the provisions or prohibitions of the law, a carrier may employ any compress company or operator as its agent, but such arrangement must also avoid and be free from unjust discrimination and undue preference. The Commission looks with disfavor upon, and will scru- tinize with extreme care, any arrangement established or sought to be established by a carrier which provides for compression at a compress that is owned or operated by one who has any interest in the cotton handled by that compress. Concentration of Cotton, 26 I. C. C. Rep. 585, 592, 594. See also: Cotton Concentrated at Weleetka, Okla., 39 I. C. C. Rep. 181, 184. ^ Merchants' Cotton Compress & Storage Co. vs. R. I. R. R. Co., 17 I. C. C. Rep. 98, 104. Commercial & Industrial Association of Union Springs, Ala., vs. C. of Ga. Ry. Co., 12 I. C. C. Rep. 375. Compare : Chicago, Rock Island & Pacific Ry. Co. vs. Dodson & Wil- liams, 25 Okla., 822, 829. INTERSTATE COMMERCE LAW 353 § 15. Stoppage of Cars in Transit to Complete Loading or Unloading. Under the practice of stopping cars in transit to be par- tially loaded or unloaded, a consignee may purchase from two different concerns or have shipped from factories located at two different points, separate lots of goods which, together, make up a carload, provided in most instances that the second shipping point is directly inter- mediate between the first shipping point and the final destination. Delivery of a carload of goods to customers located at two different points may be made by billing a solid car to the final destination and directing the carrier to stop the car at any one intermediate point to allow the nearer consignee to take out his share of the contents. If a car is stopped to finish loading it may not be halted by the shipper to be partially unloaded. Under the provisions of section 6 of the Act to Regulate Commerce, which requires the carrier's schedules to state separately all privileges or facilities which in any wise change, affect, or determine the value of the service ren- dered to the shipper, the privilege of stopping cars in transit to be partially loaded or unloaded may only be enjoyed by shippers when properly published in the tariffs of the carrier. At present this service is extended to practically all commodities that have occasion to use it, particularly on the lines operating in Central Freight Asso- ciation and Western Classification territories. The transportation charges are based upon weight at destination of the shipments in cars stopped to finish load- ing and upon the initial weight in cars stopped to be partially unloaded. The rate charged is the carload rate from the point of origin to the final destination unless the rate from the intermediate station where loading was completed or to the intermediate unloading point be 17—24 354 AMERICAN COMMERCE ASSOCIATION higher, in which event the higher rate is assessed on the full weight. The rules governing the computation of ag- gregate charges on stop-over cars are similar to those generally applicable on mixed carload shipments of differ- ently rated commodities. The stop-over charge, which is made to compensate the carrier for the service performed in dropping the car out at the intermediate point and picking it up again, is usu- ally $5, but in some instances it is as high as $10, while in others it grades down to nothing. If extra switching charges accrue in handling the car at the stop-over point they are generally assessed against the shipment, but in particular cases railroad competition has forced the ab- sorption of these charges by the line which has the road haul. The stop-over charge always accrues to the line on whose tracks the stop is made, unless that line is merely furnishing a switching service. The practice of stopping cars in transit for partial load- ing or unloading was established when the country was sparsely settled, the volume of traffic relatively light, and service infrequent and uncertain. This stop-over service was first extended to building materials and agricultural implements to encourage settlement and tillage of the soil. As time went on it was extended to other articles, until today more than 40 commodities are included in the tariffs defining the operation of the practice. The carriers con- tend that the service is no longer a necessity, and point to the fact that the carload is the common transporta- tion unit, and that both the carload and less-than-carload services are now comparatively regular and frequent. It has also been contended that the practice produces discrimination. The western carriers, in an investigation by the Interstate Commerce Commission, pointed out that a large shipper with factories located at two or more INTERSTATE COMMERCE LAW 355 points has an advantage over his rival with only one plant. The former, by use of the stop-over practice, may combine what would otherwise be two less-than-carload shipments from two different points into one carload, and by paying the stop-over charge secure the benefit of the carload rate; while the latter, having only one plant, unless he ships entirely in straight carloads at the carload rate, is at a dis- advantage in his less-than-carload shipments. The east- ern carriers contended that the carload rate should apply only on a carload shipment from one consignor at one point of origin to one consignee at one destination as re- quired by rule 5-B of the Official Classification. The ship- pers, many of whom have but one factory or ship only one line of goods, insisted on the other hand that the with- drawal of the present stop-over service would intensify the discrimination resulting from the difference between carload and less-than-carload rates. While admitting that the practice operates to the advantage of the big shipper with two factories located at two different points, they contended that the smaller shippers are also benefited be- cause, by reason of the stop-over practice, they are enabled to pool their shipments and thus meet the competition of their larger rivals. In the Western Classification Case, 25 I. C. C. 442, 471, the Commission approved mixed carload ratings and rec- ommended their extension. By the use of mixed carloads of many different commodities of the same class, a large shipper, manufacturing all the commodities permitted in a certain mixture, has an advantage over the small shipper who produces only one of these commodities. It is also pointed out that many of the larger manufacturers and shippers have established branch distributing houses throughout the country and, by shipping in straight car- loads to these branch houses and in less-than-carload 356 AMERICAN COMMERCE ASSOCIATION quantities from them, have fortified themselves with still another advanatge over the smaller manufacturer and shipper whose volume of business and capital does not warrant this method of distribution. A number of these smaller manufacturers and smaller shippers testified that without the stop-over practice they could not remain in competition with the "full line" manufacturer and large shipper who could take advantage of mixed carload ratings and who have branch distributing houses. To these smaller manufacturers and shippers the stop-over practice is the means of overcoming the special advantages enjoyed by their larger competitors. The testimony of the small retail dealer was to the same effect. The average country town generally has its large and its small retail dealer. If it became necessary, the large dealer could buy his goods in carload quantities, while the small dealer, not having sufficient business to warrant such large purchases, would have to secure his stock in less-than-carload quantities and pay the less-than-carload rates. At present, however, the small dealer by reason of the stop-over service may secure the benefit of the carload rate by pooling purchases with another small dealer in a neighboring town. Carload rates have a tendency to localize distribution, while the stop-over privilege tends to engender wholesome competition. The cancellation of the practice would in- crease rather than decrease discrimination. The carriers also contended that it was impossible to police the stop-over practice, but the record before the Commission contained no positive evidence that there had been any improper manipulation thereof. In its report on Stopping of Cars in Transit to Complete Loading, 36 I. C. C. Rep. 130, 134, the Commission, in passing upon the charge that this stop-over service was unduly discriminatory, said: INTERSTATE COMMERCE LAW 357 "This stop-over service is not without its advan- tages to the carriers; it causes to be moved in carloads shipments that would otherwise move in less-than- carload quantities in the regular merchandise service ; and it is claimed by the carriers generally that the less-than-carload business yields less profit than car- load traffic, particularly in so far as the loading and unloading in the one instance is done by the carrier, in the other by the shipper. "There are many reasons for encouraging the move- ment of commodities in carload quantities, provided the means adopted are proper and nondiscriminatory. Western Classification Case, supra; Mixed Carload Shipments of Lime, Cement, and Plaster, 34 L C. C. 124. In the Western Classification Case it was said : " 'Every consolidation of these individual pack- ages or groups of packages into carload quanti- ties saves not only storage and handling facilities, but also car space. The latter is especially im- portant during times of car shortage. * * * The consolidation of small shipments into carload lots will tend directly to a better utilization of car space and the saving of investments in railway terminals and their operation.' "Every argument in favor of the extension of mixed carload ratings supports the stop-over service. "The physical handling of a car stopped to be par- tially loaded or to unload is not different from that of a car whose journey is interrupted that it may be entirely unloaded for milling, cleaning, storing, fabri- cating, or reworking. However, on the car stopped to be partially loaded or unloaded the charges are assessed on the basis of the greatest weight in the car at any time between point of origin and final destina- tion, whereas on the car stopped for other transit purposes the charges are generally computed on the basis of the actual weight loaded to and from the transit point. The Commission said in the Wool Qase, supra: 358 AMERICAN COMMERCE ASSOCIATION " 'Transit in many cases is beneficial in its ap- plication. When it can be applied without dis- crimination it results in the diffusion of business, in giving to rival communities the relative advan- tages to w^hich they are entitled, and which can be accorded them in no other way, and, generally speaking, in the application of lower transporta- tion charges. The commercial operations of this country have in many instances grown up upon the exercise of transit privileges and could have been developed in no other way. This Commis- sion has never held that transit was to be con- demned in so far as it was beneficial and could properly be applied.' "Then, again, the stop-over practice embodies some of the elements of reconsignment. The aggregate charges on both are computed on the basis of the car- load rate from point of origin to final destination. Reconsignment affecting only a part of a particular traffic should be paid for by that part which enjoys the service, but with this limitation the Commission has approved the practice. In Detroit Traffic Asso. vs. L. S. & M. S. Ry. Co., 21 I. C. C. 257, 259, the Commission said: " 'The primary economic advantage of recon- signment is found in the increase in the fluidity and regularity of the movement of commodities; there is an important elimination of economic waste in the reduction of the handling of goods between the producer and the consumer, celerity of movement is increased, the direction of com- modities to the point of most active demand is facilitated. In other words, reconsignment in- creases the efficiency of transportation facilities in performing their most important function of bringing together supply and demand, * * * and in the economy of handling that results in the consolidation of shipments to the distributing point.' INTERSTATE COMMERCE LAW 359 "What the Commission has heretofore said in favor of transit and reconsignment applies in a large meas- ure to the stop-over service. "We are of the opinion and find that the respondents have not justified the proposed elimination of the stop- over service. This conclusion is not to be construed as approving all of the existing rules and regulations governing this service on the various commodities included in the suspended tariffs; nor as implying that the service must be continued indefinitely on all of the commodities nov^r included in the tariffs or in all localities." § 16. Transfer. See this volume, chapter VII, section 3, "Allow^ance for Elevation of Grain." §17. Discrimination Confined to Patrons of Carriers. The duty imposed by the Act to Regulate Commerce upon common carriers not to discriminate unjustly be- tw^een persons undoubtedly is owed only to the patrons of the carriers as such, and carriers owe no duty not to discriminate between customs brokers merely as brokers. Emery & Co. vs. B. & M. R. R. Co., 38 I. C. C. Rep. 636, 637. § 18. Long Time Credit to Proprietary Industries Consti- tutes Unlawful Discrimination. The Commission has held that giving long time credit to proprietary industries constitutes an unjust discrimina- tion against independent shippers who are ordinarily re- quired to pay their freight charges promptly. The practice of carriers extending credit to shippers should be non- discriminatory. Second Industrial Railways Case (Moshassuck Valley R. R. Case), 37 I. C. C Rep. 566, 568. 360 AMERICAN COMMERCE ASSOCIATION In Hocking Valley Railway Co. vs. United States, 210 Fed. Rep. 7ZS, 740, the court said: "Upon the broad and underlying question whether it is such discrimination as is forbidden by the Elkins Act, in force in 1909, for the carrier to insist that shippers generally pay cash while it gives long credit to another similar shipper, and gives such credit pur- suant to a previous contract — upon this broad ques- tion we have no doubL Such conduct, by its very terms, is discrimination. Shippers are not treated alike. Giving to one shipper four months' time in which to raise the money, even if interest is added, while the same privilege is denied to others, is plainly a 'concession or discrimination.' It also must be con- sidered a concession or discrimination 'in respect to transportation'; it can not be thought that these two words in this clause of the Elkins Act pertain only to a facility of transportation; they are used in imme- diate connection with 'rebate,' and so the clause must be intended to reach and affect the subject of freight payments. Whether, by this concession, it results that the property is 'transported at a less rate than that named in the tariffs' is not important, because the statutory condemnation extends also to concessions 'whereby any other advantage is given or discrimina- tion is practiced.' Such a discrimination might or might not be of pecuniary value to the freight payer. It is conceivable that a shipper, with sufficient work- ing capital upon which he could not otherwise earn 5 per cent, would save money by paying cash ; but it is clear that such a system of freight credits amounts to loaning money to the shipper, and is equivalent to providing for him working capital." § 19. Carrier Extending Financial Aid to Shipper. In a case where the carrier and a coal company were but the subsidiary corporate hands of a holding company, the same interests controlling and administering the af- INTERSTATE COMMERCE LAW 361 fairs of the three corporations, the holding company, out of the railway earnings that were paid into its treas- ury, furnished the coal company with its funds and work- ing capital. The holding company also assumed the bur- den of the interest charges on the capital invested in the property of the coal company, which it was enabled to do from the railway earnings. The Commission held these operations constituted an unlawful discrimination against other competitors of the coal company. Transportation of Anthracite Coal, 35 I. C. C. Rep. 220, 240. CHAPTER X ACT TO REGULATE COMMERCE AS AMENDED (CONTINUED). Amplification of Sections (Continued). DISCRIMINATION BETWEEN PERSONS (CONTINUED) § 1. Rebates and Concessions. § 2. Statutory Provisions. § 3. What Constitutes a Rebate. § 4. Method by Which Rebating Is Accomplished Immaterial. § 5. Enforcement of Prohibition against Rebates Has Operated Ad- vantageously to Carriers. § 6. Repayments by Carriers to Shippers Which Do not Constitute "Rebates" and Which Are not Unlawful. (1) Judicial Interpretation of Term "Rate" in Prohibition Against Rebating. § 7. Judicial Construction of Word "Knowingly" in the Elkins Act. § 8. Forms of Rebating. § 9. Concessions to Control Routing of Traffic. § 10. Unlawful Use of Passes to Influence Traffic. § 11. Special Passenger Services Grzuited to Large Shippers. § 12. Concessions Resulting from Alliances Between Carriers and Large Shippers. § 13. Leases of Carriers' Property to Shippers at Less than Fair Rental. § 14. Unlawful Use of Peddler Cars. § 15. Unlawful Concessions Obtained through Failure by Carrier to Observe Published Rates. § 16. Unlawful Concessions Obtained through False Claims. §17. Unlawful Concessions Obtained through Billing to Fictitious Destinations. § 18. Unlawful Concessions Obtained through Violations of the Com- modities Clause. § 19. Allowances to Shippers for Services Rendered or Facilities Fur- nished. 363 364 AMERICAN COMMERCE ASSOCIATION § 20. Allowances to Industrial or Terminal Railways or Boat Lines Owned or Controlled by Shippers. § 21. False Classification and False Billing as Methods of Rebating. §22. False Valuation as Method of Rebating. § 23. Repayment by Carrier on Account of Cost of Switch Track. § 24. Transportation of Commodities Sold and Delivered by a Carrier. § 25. Unlawful Concession Obtained through Extension of Credit to Shipper. §26. Unlawful Concession Obtained through Commissions Paid by Carrier. § 27. Unlawful Concession Obtained through Cancellation of Storage Charges. § 28. Estimated Weights Permissible, but Billing on Marked Capacity of Car or Carload Minimum Illegal. §29. Unjawful Concessions Obtained through Fictitious Transfer Slips. § 30. Unlawful Concessions Obtained through Cancellation of Demur- rage Charges. § 31. Inducing Concessions. CHAPTER X ACT TO REGULATE COMMERCE AS AMENDED (CONTINUED). Amplification of Sections (Continued). DISCRIMINATION BETWEEN PERSONS (CONTINUED) § 1. Rebates and Concessions. The Act to Regulate Commerce, supported by the Elkins Act, imposes uponj the carriers (subject to its provisions the obligation to establish and maintain just and reasonable rates, and prohibits the granting of rebates or concessions from, or offsets against, the established rates whereby interstate shipments shall, by any device, be transported at less than the lawfully established rates, or whereby any advantage is given or discrimination is prac- ticed amongst shippers. Although published rates are actually collected on the shipments transported, conces- sions and offsets may be extended by the carriers or the in- terests who control the carriers to favored shippers. These concessions and offsets are as pernicious as direct rebates and it matters little whether they are in the form of cash payments, interest charges, royalty earnings, the use of valuable property at inadequate rent, the free use of the carriers' funds or credit, the liquidation of unlawful claims, or other insidious means, if they confer concessions and advantages which place certain shippers in a position of preference and advantage over competitors who are also customers of such carriers, they are unlawful. 365 366 AMERICAN COMMERCE ASSOCIATION Rebates and concessions are subtle evils against which the inhibitions of the regulatory laws most drastically point. For many years their cankerous growth in the transportation structure of the country reeked with vicious iniquities cast upon the less powerful shippers. Nor was the process through which the rebate or con- cession was afifected alone the act of the carrier. On the contrary, the unlawful act was not only aided, abetted and participated in by the receiving shipper but in a majority of instances solicited or provoked by him. The Supreme Court, in the New York Central case, de- clared that the corporation which profits by the transac- tion of rebating, may be held punishable by fine, because of the knowledge and intent of its agents to whom it has intrusted authority to act in the subject matter of making and fixing rates of transportation, and whose knowledge and purposes may well be attributed to the corporation. The same court also held that any connecting carrier may be convicted of rebating for accepting a lower rate than the one filed with the Interstate Commerce Com- mission by the initial carrier because under the provisions of the Elkins Act, in the concluding portion of section 1 thereof, all carriers who have participated in any rate filed or published within the terms of the act, are brought within the requirements of the law, as much so as if the tariff had been actually published and filed by the partici- pating carrier. The word "rebate" is used in the Act to Regulate Com- merce in an ofifensive sense. It refers, in its full scope, to such discount, deduction or drawback as is the basis of a discrimination in favor of a particular person and against other persons in a Hke situation, and destroys that equality INTERSTATE COMMERCE LAW 367 of treatment in rates to which the pubHc are entitled and which it is the great purpose of the law to enforce/ N. Y. C. & St. L. R. R. Co. vs. U. S., 212 U. S. 481, 495. U. S. vs. N. Y. C. & H. R. R. R. Co., 212 U. S. 509, 515. American Sugar Refining Co. vs. D. S. & W. R. R. Co., 207 Fed. Rep. 72,1, 743. See also: Rates for Transportation of Anthracite Coal, 35 I. C. C. Rep. 220, 239, 243. Second Industrial Railways Case, 34 I. C. C. Rep. 596, 608. McArthur Bros. Co. vs. E. P. & S. W. Co., 34 I. C. C. Rep. 30, 31. Lum vs. G. N. Ry. Co., 33 I. C. C. Rep. 541, 546. Mfrs. Ry. Co. vs. St. L. I. M. & S. Ry. Co., 32 I. C. C. Rep. 100. 104. Joint Rates with Birmingham Southern R. R. Co., 32 I. C C. Rep. 110. Industrial Railways Case, 32 I. C. C. Rep. 129, 131, 132. Inman, Akers & Inman vs. A. C. C. R. R. Co., 32 I. C. C Rep. 146, 148. Coal & Oil Investigation, 31 I. C. C. Rep. 193, 202. Colonial Salt Co. vs. C. B. & Q. R. R. Co., 31 I. C. C. Rep. 559, 562. Industrial Railways Case, 29 I. C. C. Rep. 212, 218, 237. In re Express Rates, 24 I. C. C. Rep. 380. U. S. vs. Union Stock Yards & Transit Co., 226 U. S. 286, 57 L. Ed. 226. Duplain Silk Co. vs. American & Foreign Marine Insurance Co., 205 Fed. Rep. 724, 726. C. C. C. & St. L. Ry. Co. vs. Hirsch, 204 Fed. Rep. 849. § 2. Statutory Provisions. Section 2 of the Act to Regulate Commerce provides: "That if any common carrier subject to the provi- sions of this Act shall, directly or indirectly, by any special rate, rebate, drawback, or other device, charge, demand, collect, or receive from any person or per- sons a greater or less compensation for any service rendered, or to be rendered, in the transportation of passengers or property, subject to the provisions of this Act, than it charges, demands, collects, or re- ceives from any other person or persons for doing him or them a like and contemporaneous service in the transportation of a like kind of traffic under sub- 366 AMERICAN COMMERCE ASSOCIATION stantially similar circumstances and conditions, such common carrier shall be deemed guilty of unjust dis- crimination, which is hereby prohibited and declared to be unlawful." It is further provided in section 6 of the act: "Nor shall any carrier charge or demand or collect or receive a greater or less or different compensation for such transportation of passengers or property, or for any service in connection therewith, between the points named in such tariffs than the rates, fares and charges which are specified in the tariff filed and in effect at the time, nor shall any carrier refund or re- mit in any manner or by any device any portion of the rates, fares, and charges so specified, nor extend to any shipper or person any privileges or facilities in the transportation of passengers or property, except such as are specified in such tariffs." Section 10 of the act provides a general penalty clause which is comprehensive of any device or means employed to effect a rebate or concession not specifically prohibited in the other sections. The section provides: "That any common carrier subject to the provisions of this act, or, whenever such common carrier is a corporation, any director or officer thereof, or any receiver, trustee, lessee, agent, or person acting for or employed by such corporation, who, alone or with any other corporation, company, person, or party, shall willfully do or cause to be done, or shall willingly suffer or permit to be done, any act, mat- ter or thing in this act prohibited or declared to be unlawful, or who shall aid or abet therein, or shall willfully omit or fail to do any act, matter or thing in this act required to be done, or shall cause or will- ingly suffer or per-mit any act, matter or thing so directed or required by this act to be done not to be so done, or shall aid or abet any such omission or INTERSTATE COMMERCE LAW 369 failure, or shall be guilty of any infraction of this act for which no penalty is otherwise provided, or who shall aid or abet therein, shall be deemed guilty of a misdemeanor, and shall, upon conviction thereof in any district court of the United States within the jurisdiction of which such offense was ^committed, be subject to a fine of not to exceed five thousand dollars for each ofifense : Provided, That if the of- fense for which any person shall be convicted as aforesaid shall be an unlawful discrimination in rates, fares, or charges for the transportation of passengers or property, such person shall, in addition to the fine hereinbefore provided for, be liable to imprisonment in the penitentiary for a term of not exceeding two years, or both such fine and imprisonment, in the discretion of the Court. * * * "If any such person, or any officer or agent of any such corporation or company, shall, by payment of money or other thing of value, solicitation, or other- wise, induce or attempt to induce any common car- rier subect to the provisions of this act, or any of its officers or agents, to discriminate unjustly in his, its, or their favor as against any other consignor or consignee in the transportation of property, or shall aid or abet any common carrier in any such unjust discrimination, such person or such officer or agent of such corporation or company shall be deemed guilty of a misdemeanor, and shall, upon conviction thereof in any court of the United States of compe- tent jurisdiction within the district in which such ofifense was committed, be subject to a fine of not exceeding five thousand dollars, or imprisonment in the penitentiary for a term of not exceeding two years, or both, in the discretion of the court, for each ofifense; and such person, corporation, or com- pany shall also, together with said common carrier, be liable, jointly or severally, in an action to be brought by any consignor or consignee discriminated against in any court of the United States of compe- 370 AMERICAN COMMERCE ASSOCIATION tent jurisdiction for all damages caused by or result- ing therefrom." The Elkins Act, as amended June 29, 1906, provides: "It shall be unlawful for any person, persons, or corporation to offer, grant, or give, or to solicit, ac- cept or receive any rebate, concession or discrimina- tion in respect to the transportation of any property in interstate or foreign commerce by any common carrier subject to said act to regulate commerce and the acts amendatory thereof whereby any such prop- erty shall by any device whatever be transported at a less rate than that named in the tariffs published and filed by such carrier, as is required by said act to regulate commerce and the acts amendatory thereof, or whereby any other advantage is given or discrimination is practiced." In addition to these primary provisions of the Elkins Act, it is further provided: "That any person, or any officer or director of any corporation subject to the provisions of this act, or the act to regulate commerce and the acts amenda- tory, or any receiver, trustee, lessee, agent, or person acting for or employed by any such corporation, who shall be convicted as aforesaid, shall, in addition to the fine herein provided for, be liable to imprisonment in the penitentiary for a term of not exceeding two years, or both such fine and imprisonment, in the discretion of the court. Every violation of this section shall be prosecuted in any court of the United States having jurisdiction of crimes within the district in which such violation was committed, or through which the trans- portation may have been conducted; and whenever the offense is begun in one jurisdiction and completed in another it may be dealt with, inquired of, tried, determined, and punished in either jurisdiction in the same manner as if the offense had been actually and wholly committed therein. INTERSTATE COMMERCE LAW 371 "In construing and enforcing the provisions of this section, the act, omission, or failure of any officer, agent, or other person acting for or employed by any common carrier, or shipper, acting within the scope of his employment, shall in every case be also deemed to be the act, omission, or failure of such carrier or shipper as well as that of the person. Whenever any carrier files with the Interstate Commerce Commis- sion or pubHshes a particular rate under the provisions of the act to regulate commerce or acts amenda- tory thereof, or participates in any rate so filed or published, that rate as against such carrier, its offi- cers or agents, in any prosecution begun under this act shall be conclusively deemed to be the legal rate, and any departure from such rate, or any offer to depart therefrom, shall be deemed to be an offense under this section of this act. "Any person, corporation, or company who shall deliver property for interstate transportation to any common carrier, subject to the provisions of this act, or for whom as consignor or consignee, any such carrier shall transport property from one state, terri- tory, or the District of Columbia to any other state, territory or the District of Columbia, or foreign coun- try, who shall knowingly by employee, agent, officer, or otherwise, directly or indirectly, by or through any means or device whatsoever, receive or accept from such common carrier any sum of money or any other valuable consideration as a rebate or offset against the regular charges for the transportation of such property, as fixed by the schedules of rates pro- vided for in this act, shall in addition to any penalty provided by this act forfeit to the United States a sum of money three times the amount of money so re- ceived or accepted and three times the value of any other consideration so received or accepted, to be ascertained by the trial court; and the attorney gen- eral of the United States is authorized and directed, whenever he has reasonable grounds to believe that any such person, corporation, or company has know- 372 AMERICAN COMMERCE ASSOCIATION ingly received or accepted from any such common carrier any sum of money or other valuable consid- eration as a rebate or offset as aforesaid, to institute in any court of the United States of competent juris- diction a civil action to collect the said sum or sums so forfeited as aforesaid; and in the trial of said action all such rebates or other considerations so received or accepted for a period of six years prior to the com- mencement of the action may be included therein, and the amount recovered shall be three times the total amount of money, or three times the total value of such consideration, so received or accepted, or both, as the case may be. "That in any proceeding for the enforcement of •the provisions of the statutes relating to interstate commerce, whether such proceedings be instituted before the Interstate Commerce Commission or be begun originally in any circuit court of the United States, it shall be lawful to include as parties, in ad- dition to the carrier, all persons interested in or af- fected by the rate, regulation, or practice under con- sideration, and inquiries, investigations, orders, and decrees may be made with reference to and against such additional parties in the same manner, to the same extent, and subject to the same provisions as are or shall be authorized by law with respect to car- riers. "That whenever the Interstate Commerce Commis- sion shall have reasonable ground for belief that any common carrier is engaged in the carriage of pas- sengers or freight traffic between given points at less than the published rates on file, or is committing any discriminations forbidden by law, a petition may be presented alleging such facts to the circuit court of ■the United States sitting in equity having jurisdic- tion; and when the act complained of is alleged to have been committed or as being committed in part in more than one judicial district or state, it may be dealt with, inquired of, tried, and determined in either such judicial district or state, whereupon it shall be INTERSTATE COMMERCE LAW 373 the duty of the court summarily to inquire into the circumstances, upon such notice and in such manner as the court shall direct and without the formal plead- ings and proceedings applicable to ordinary suits in equity, and to make such other persons or corpora- tions parties thereto as the court may deem necessary, and upon being satisfied of the truth of the allegations of said petition said court shall enforce an observance of the published tariffs or direct and require a. dis- continuance of such discrimination by proper 'orders, writs, and process, which said orders, writs and pro- cess may be enforceable as well against the parties interested in the traffic as against the carrier, sub- ject to the right of appeal as now provided by law. It shall be the duty of the several district attorneys of the United States, whenever the attorney general shall direct, either of his own motion or upon the re- quest of the Interstate Commerce Commission, to in- stitute and prosecute such proceedings, and the pro- ceedings provided for by this act shall not preclude the bringing of suit for the recovery of damages by any party injured, or any other action provided by said act approved February fourth, eighteen hundred and eighty-seven, entitled "An Act to Regulate Com- merce" and the acts amendatory thereof. And in proceedings under this act and the acts to regulate commerce the said courts shall have the power to compel the attendance of witnesses, both upon the part of the carrier and the shipper, who shall be re- quired to answer on all subjects relating directly or in- directly to the matter in controversy, and to compel the production of all books and papers, both of the carrier and the shipper, which relate directly or indi- rectly to such transaction; the claim that such testi- mony or evidence may tend to criminate the person giving such evidence shall not excuse such person from testifying or such corporation producing its books and papers, but no person shall be prosecuted or subjected to any penalty or forfeiture for or on ac- count of any transaction, matter, or thing concerning 374 AMERICAN COMMERCE ASSOCIATION which he may testify or produce evidence documen- tary or otherwise in such proceeding : Provided, That the provisions of an act entitled 'An Act to Expedite the Hearing and Determination of Suits in Equity Pending or Hereafter Brought Under the Act of July Second, Eighteen Hundred and Ninety, Entitled, 'An Act to Protect Trade and Commerce Against Unlaw- ful Restraints and Monopolies,' *An Act to Regu- alte Commerce,' approved February fourth, eighteen hundred and eighty-seven, or any other acts having a like purpose that may hereafter be enacted, approved February eleventh, nineteen hundred and three, 'shall apply to any case prosecuted under the direc- tion of the attorney general in the name of the Inter- state Commerce Commission.' " The Elkins Act also further provides that: "Every person or corporation, whether carrier or shipper, who shall, knowingly, offer, grant, or give, or solicit, accept, or receive any such rebates, conces- sion, or discrimination shall be deemed guilty of a misdemeanor, and on conviction thereof shall be pun- ished by a fine of not less than one thousand dollars nor more than twenty thousand dollars." In the act, known as the Lake Erie and Ohio River Ship Canal Act, "to incorporate the Lake Erie and Ohio River Ship Canal, define the powers thereof, and facili- tate interstate commerce," it is provided: "That the said canals shall be open to the use and navigation of all suitable and proper vessels or other water craft, by whomsoever owned or operated, upon fair and equal terms, conditions, rates, tolls, and charges; and the said company may demand, take, and recover for its own proper use, for all persons and things of whatsoever description upon the said canals, feeders, and other works, or in vessels and craft using the same, just and reasonable charges, INTERSTATE COMMERCE LAW 375 rates, and tolls; but all such charges, rates, and tolls shall be equal to all persons, vessels, and goods under certain classifications to be established by the com- pany and approved by the Interstate Commerce Com- mission; and no rebate, reduction, drawback, or dis- crimination of any sort on such charges, rates, and tolls shall ever be made directly or indirectly. And the said charges, rates, and tolls for the ensuing year shall be fixed, published, and posted on or in every place where they are to be collected, on or before the fifteenth day of February of each year, and shall not be changed except after thirty days' public notice, which notice shall plainly state the changes proposed to be made in the charges, rates, and tolls then in force and the time when the changed charges, rates, and tolls will go into effect; and the proposed changes shall be shown by printing new schedules or shall be plainly indicated upon the schedules in force at the time and kept open to public inspection: Provided, That the Interstate Commerce Commission may, in its discretion and for good cause shown, allow changes upon less notice than herein specified or modify the foregoing requirements in respect to pub- lishing and posting of such schedules, either in par- ticular instances or by a general order applicable to special or peculiar circumstances or conditions." § 3. What Constitutes a Rebate. A rebate is any unlawful departure from a legally estab- lished rate or charge, whereby the shipper receives a transportation service for less than such lawful rate or charge therefor. The elementary purpose of the Act to Regulate Commerce, and of the Elkins Act as well, is to compel the carriers subject thereto to afford equal treat- ment to all shippers similarly situated and circumstanced, such a requirement being essential to the oublic nature of the common carrier. The prohibition in the statutes against rebating is suf- 376 AMERICAN COMMERCE ASSOCIATION ficiently broad to include every possible method of deal- ing by which the carrier might accomplish the result condemned by Congress. Nor does the inhibition stop with the act of the carrier alone, but it reaches to and forbids the connivance of any other person or persons with the carrier to bring about a deviation from the legally established rates, fares or charges. N. Y. C. & H. R. R. R. Co. vs. I. C. C, 200 U. S. 361. Under the provision of the Elkins Act it is unlawful for a carrier to make concessions or discriminations whereby any interstate shipments shall be transported at a rate less than that prescribed in the tariffs. And this provision is in no manner narrowed nor limited by sections 2 and 3 of the Act to Regulate Commerce relating to "un- just discrimination" and "undue or unreasonable preju- dice or disadvantage." This holding is explained by the court to mean that it is not intended in the Elkins Act to cover dififerentiations between shippers so trifling in mean- ing and inoperative in character as not to give one ship- per a real and substantial advantage over another. The court must be able to say, as a matter of law, that the differentiation ii., or might be, material and substantial, giving to the favored one a real advantage which others did not get. Hocking Valley Ry. Co. vs. U. S., 210 Fed. Rep. 735, 745. "Unjust discrimination" is an offense under section 2 of the act, regardless of the method of its accomplishment, either directly or indirectly. It will be noted that the term "rebate" as used in the regulating act and also in the Elkins Act is inclusive of the method by which the wrong is effected, while the prohibition in section 2 of the Act to Regulate Commerce is against "unjust discrimina- tion," the result of the wrongful act, rather than the m'^thod by which it was effected. The courts have held. INTERSTATE COMMERCE LAW 377 therefore, that in indictments under this section of the statute it is not necessary to aver the device by w^hich the "unjust discrimination" was perpetrated against a particu- lar shipper. U. S. vs. Tozer, Zl Fed. Rep. 635. Thus, a commission paid by a carrier for the solicita- tion of the business of a shipper has been held to be a de- vice in rebating v^hich the statute forbids. U. S. vs. Milwaukee Refrig. T. Co., 142 Fed. Rep. 247. Fundamentally, the law forbids the shipper accepting directly or indirectly from a common carrier a less rate than that specified in its legally published tariffs. U. S. vs. Standard Oil Co., 148 Fed. Rep. 719. The courts have given the broadest possible interpre- tation to the phrase "by any device whatsoever" by de- claring it to mean the accomplishment of a rebate or con- cession or the effecting of an "unjust discrimination, di- rectly or indirectly in any way whatever." Armour Packing Co. vs. U. S., 153 Fed. Rep. 1. Compare : Bibber-White Co. vs. W. R. V. Elec. Ry. Co., 175 Fed. Rep. 470, where a contract between a receiver of a railroad company and a shipper for the payment of a rebate on an intrastate shipment was held by the court not to be illegal. See also : Mutual Trans. Co. vs. U. S., 178 Fed. Rep. 664. It is also well to note in this connection that the provi- sions of the Elkins Act are not alone confined to depar- tures from established tariff rates and charges, but that 378 AMERICAN COMMERCE ASSOCIATION the statute is violated if any other undue advantage is given to a shipper whereby an unjust discrimination is practiced. U. S. vs. Vacuum Oil Co., 153 Fed. Rep. 598. The giving or receiving of a rebate or concession, whereby property in interstate or foreign commerce is transported at less than the established rate, is the es- sence of the ofTence condemned by both the Elkins Act and the Act to Regulate Commerce. Armour Packing Co. vs. U. S., 153 Fed. Rep. 1. U. S. vs. D. L. & W. R. R. Co., 152 Fed. Rep. 269, where it was held by the court that the test to be applied in deter- mining whether the law had been violated is whether the carrier has transported the property at ultimately less than the rate that is named in its tariff. See also: U. S. vs. P. R. R. Co., 153 Fed. Rep. 625. In the Lackawanna case (U. S. vs. D. L. & W. R. R. Co., 152 Fed. Rep. 269) it was also held that the offence of rebating, under the law, was not avoided by the payment of the rebate to persons other than the shipper of the property. In the abstract, the Act to Regulate Commerce itself im- poses upon the carriers subject thereto the obligation to establish and maintain just and reasonable rates and charges for their transportation services, and it prohibits the granting of rebates or concessions or offsets against such established rates and charges whereby interstate shipments shall by any device or means be transported at ultimately less than such lawfully established rates and charges, or whereby an advantage is given or discrimi- nation is created against or amongst shippers. Although INTERSTATE COMMERCE LAW 379 published rates may be actually collected on shipments •transported, concessions and offsets may be extended by the carriers or the interests which control the carriers to favored shippers. These concessions and offsets are as pernicious as direct rebates, and it matters not whether they are in the form of cash payments, interest charges, royalty earnings, the use of valuable property of the car- rier at inadequate rent, the free use of the carrier's funds or credit, or other insidious means, if such acts or devices in effect confer concessions and advantages which place certain shippers in a position of preference and advantage over competitors who are also customers of such carrier. Thus, in Rates for the Transportation of Anthracite Coal, 35 I. C. C. Rep. 220, 239, 242, it appeared that the tariffs filed with the Commission made reference to the fact that the Central Railroad of New Jersey paid a later- al allowance out of the rates to the navigation company participating in the transportation in compliance with a certain covenant of a lease and agreement with the navi- gation company. The lease and agreement had been filed with the Commission, but neither the lease nor the tariff of the carriers gave notice to the Commission of the rates assessed by the rail carrier on the shipments of anthracite coal it transported for the navigation company. In disposing of the "lateral allowance" as an unlawful device in rebating the Commission said: "Reviewing this whole series of transactions they seem merely parts of a plan to publish in tariff from rates which were excessive and which presented a barrier against the successful shipping by the small shipper, the independent operator, and then, by meth- ods which in effect were secret, to reduce those pub- lished rates on the shipments of the coal company that had railroad affiliations. / / \ 380 AMERICAN COMMERCE ASSOCIATION "The explanation offered by the Central Railroad of New Jersey is that the lateral allowances have been regarded as a part of the consideration moving from the Jersey Central, as lessee, to the navigation company, as lessor, of the Lehigh & Susquehanna Railroad and branches. This explanation would have much greater weight were it not for the fact that the lease and agreement fully set forth the rent to be paid by the Central Railroad of New Jersey to the naviga- tion company, which was to be one-third of the gross receipts from the traffic or business of the said de- mised premises; the minimum annual rent to be paid by the lessee was fixed at $1,414,400 and the maxi- mum annual rental was fixed at $2,043,000, and a fur- ther sum equal to seven per cent of the expenditures made by the lessor for improvements to the railroad properties. We have before stated that this rent was paid each year, and in recent years it has reached the maximum. As it has fully compensated the navigation company for its investment in the railroad properties, the rent stands separate and distinct from the later- al allowances, which clearly were paid for the pur- pose of affording a certain low basis of rates to the navigation company. "On the coal shipped by the navigation company through Hauto the shipper performed the gathering service — but on the shipments from Nesquehoning the Central Railroad of New Jersey performed all the transportation services and the shipper performed no gathering or other transportation services. The al- lowances paid on the coal from Nesquehoning amounted to $125,000 each year, and were 2 cents per ton higher than the allowances paid on the coal via Hauto. As the allowances are much greater than the cost of assembling the coal in the mining regions, as indicated by the exhibits computed by the Com- mission's examiners, it is apparent that the allow- ances were not paid to compensate the shipper for any transportation services rendered by the shipper, and no such contention has been made by the carrier. INTERSTATE COMMERCE LAW 381 The payment of the allowances is an unlawful discrim- ination against competing shippers who are charged the full tariff rates. *Tt is true that in the tariffs filed with this Com- mission reference was made to the fact that the Cen- tral Railroad of New Jersey paid a lateral allowance out of the rates to the navigation company in com- pliance with the tenth covenant of the lease and agreement. The lease and agreement was filed with the Commission, but neither the lease nor the car- rier's tariff gave notice to this Commission, or to ship- pers who were competitors of the navigation com- pany, of the rates assessed by the carrier on the ship- ments of anthracite coal it transported for the navi- gation company. In the case of Armour Packing Co. vs. U. S., 209 U. S. 56-81, the Supreme Court held that contract rates can not prevail against the legal, published, and filed rates. It is shown in the record that the accounting officials who were charged with the duty of assessing and collecting these rates obtained their information as to the rates they should apply on the shipments of the navigation company from letters written by the carrier's freight traffic manager. The term 'lateral allowance' in the car- rier's tariffs was and is misleading, for the reason that the allowances were not paid for the purpose of com- pensating the shipper for any service or for the use of any instrumentality connected with the transpor- tation of its shipments, as defined in section 15 of the Act to Regulate Commerce. Under these circum- stances, even if the amounts of these allowances were published, their payment is the payment of a rebate, and hence unlawful. But, since these allowances were not published, their payment is also clearly unlaw- ful as being a departure. from the published tariffs." This brings us to a consideration of the technical effect of that part of section 15 of the Act to Regulate Com- merce providing for compensation to be paid to shippers for services rendered and instrumentalities furnished in / y 382 AMERICAN COMMERCE ASSOCIATION connection with the transportation of their shipments. The Interstate Commerce Commission has declared the passing of the necessity for this provision of the fifteenth section. Speaking of this provision and its possible effect, in the Second Industrial Railways Case, the Commission said: "This legislative measure was enacted to give this Commission a means of eliminating certain unjust discriminations. The gradual elimination of discrim- inatory practices by other processes leaves this pro- vision of the law to be used as a cloak for various payments which but for it would be looked upon as rebates." Second Industrial Railways Case, 34 I. C. C. Rep. 596, 608. The provisions of this section of the Act, under which shippers may be compensated for their facilities used in the handling of their own shipments, have been involved in the several investigations pursued by the Commission into the relationships existing between trunk lines and tap lines, industrial railways, and plant facilities. The question of the propriety of this provision in the law is by no means a new one. Both the Commission and the courts have held uniformly as to its intent, purpose and scope. It is obvious in cases of subtle practices between carriers and industrial railroads or railways operating as plant fa- cilities, that the real intent of the regulating laws might be apparently subserved under the guise of technical com- pliance with the requirments of section 15. Thus, unless the shipper is lawfully entitled to compensation from the carrier for having furnished to the carrier a service or fa- cility it was the carrier's duty itself to furnish in the transportation of the shipper's property, any payment to the shipper under section 15 would amount to an unlawful concession or a rebate. INTERSTATE COMMERCE LAW 383 The test of legality of such an allowance to a shipper is not in the method, but in the consideration for such al- lowance. It is a principle of placing the cost of transpor- tation service where it belongs. If the service rendered by the shipper or the facility furnished by him is a part of public transportation, such shipper may be compen- sated, without regard to it being a private person or a common carrier. It is not required of railroads that they shall own all of the instrumentalities and facilities re- quired for the performance of the service which they are bound to undertake to perform. Common carriers may also lease or hire suitable facilities or discharge a part of their duties through agents and without restriction as to the pubHc or private status of such agents or of the owners of the instrumentalities procured. The only re- striction is that contained in the fifteenth section of the Act to Regulate Commerce to the efifect that all allow- ances to shippers for furnishing transportation or instru- mentalities thereof shall be supervised by the Interstate Commerce Commission. A. T. & S. F. Ry. Co. vs. Kansas City Stock Yards Co., 33 I. C. C. Rep. 92. Tap Line Cases, 234 U. S. 1. U. S. vs. B. & O. R. R. Co., 231 U. S. 274. I. C. C. vs. Diffenbaugh, 222 U. S. 42. I. C. C. vs. Stickney, 215 U. S. 98. Crane Iron Works vs. U. S., 209 Fed. Rep. 238. See also: Second Industrial Railways Case, 34 I. C. C. Rep. 596, 601. Car Ferry Allowance at Cheboygan, 32 I. C. C. Rep. 578. Manufacturers' Railway Co. vs. St. L. I. M. & S. Ry. Co., 28 I. C. C. Rep. 93. Cancellation of Joint Rates in Connection with C. Z. & G. R. R. Co., 27 I. C. C. Rep. 353. Crane Iron Works vs. C. R. R. of N. J., 17 I. C. C. Rep. 514. Solvay Process Co. vs. D. L. & W. R. R. Co., 14 I. C. C. Rep. 246. General Electric Co. vs. N. Y. C. & H. R. R. R. Co., 14 I. C. C. Rep. 237. Industrial Railways Case, 29 I. C. C. Rep. 212, 216. 218, 237. / 384 AMERICAN COMMERCE ASSOCIATION It was early held by the Commission that the statute "is one that may be violated without any 'device' on the part of the carrier, and it is equally true that the ingenuity of man can not invent a 'device' by which a carrier subject to its provisions can give an unlawful preference without incurring the penalties and remedies provided by this stat- ute." Scofield vs. L. S. & M. S. Ry. Co., 2 I. C. C. Rep. 90, 2 I. C. Rep. 67. The offence of "rebating" is more particularly defined in the Elkins Act — which makes the published rate the standard of lawfulness and any departure therefrom is declared to be a misdemeanor. The Elkins Act, approved February 19, 1903, supple- mented sections 2, 6 and 10 of the Act to Regulate Com- merce, and was in turn amended by the Hepburn Act of 1906 which effected the restoration of the penalty of im- prisonment, which the Elkins Act had abolished from the parent act. § 4. Method by Which Rebating Is Accomplished Imma- terial. In the contemplation of the statute, any methods, how- ever skillfully devised, by which an unlawful result is ef- fected, become devices for the end attained. In cases of this nature the law deals with the results produced, and it is not material what means may be employed for the purpose. Whether the means be direct or indirect, open or covert, is of no importance if they in fact culminate in what the law forbids. The offense is fully seen in the final result, but, the result being unlawful, the condemnation of the statute falls alike upon the result itself and the means by which it is reached. When the ultimate thing INTERSTATE COMMERCE LAW 385 done is unlawful, the steps for the purpose of its perpe- tration are equally unlawful, and the parties engaged in the transaction must be presumed to have intended by their acts the breach of the law that ensues as the neces- sary consequence. Shamberg vs. D. L. & W. R. R. Co., 4 I. C. C. Rep. 630. 3 I. C. Rep. 173. The cardinal purpose of the statute is to prohibit all preference between shippers, and the framers of the stat- ute have evidently attempted to make the language suffi- ciently comprehensive to render every sort of preference, by whatever means attempted, unlawful. Re Division of Joint Rates, etc., 10 I. C. C. Rep. 385, 400. See also : Hocking Valley Ry. Co., 210 Fed. Rep. 735, 740. § 5. Enforcement of Prohibition Against Rebates Has Operated Advantageously to Carriers. It is estimated that many millions of dollars have been saved to the carriers through the enforcement of legisla- tion directed to the suppression of rebates, their annual revenues being no longer depleted by the cost of unlaw- ful discriminations, preferences and concessions. This beneficial result to the carriers from the enforce- ment of anti-rebating legislation is further evidenced by the fact that in 1910 there were 742 industries in Official Classification Territory performing their own switching either by power owned by the industry or through an in- corporated railroad owned or controlled by the industry, and of this number 148 were paid allowances or dividends by the trunk line carriers. At the present instant there remain but a few bona fide industrial lines in this territory participating in joint rates, the former allowances and / 386 AMERICAN COMMERCE ASSOCIATION divisions having been cancelled by tariffs filed with the Interstate Commerce Commission in compliance with the regulatory laws. The conditions under which the interstate traffic is now conducted are thought to be fairly clean and free from such practices and to the extent that this is true the rev- enues of interstate carriers have necessarily been aug- mented. In using its powers to bring about a better ob- servance of the law, the activities of the Interstate Com- merce Commission have, therefore, resulted to some ex- tent in increasing the revenues of railroad companies. Much, however, remains to be done in the way of read- justing the practices of carriers that will further augment their earnings. WTestern Rate Advance Case, 25 I. C. C. Rep. 497. Five Per Cent Case, 32 I, C. C. Rep. 325. Five Per Cent Case, 31 I. C. C. Rep. 351. Re Advances in Rates (Eastern Case), 20 I. C. C. Rep. 243. Re Advances in Rates (Western Case), 20 I. C. C. Rep. 307, 353. Shoemaker vs. C. & P. Tel. Co., 20 I. C. C. Rep. 614, 618. § 6. Repayments by Carriers to Shippers Which Do Not Constitute "Rebates" and Are Not Unlawful. All refunds or concessions by carriers to shippers are not condemned by the law. The fifteenth section of the Act to Regulate Commerce contains the following provi- sion: "If the owner of the property transported under this act directly or indirectly renders any service con- nected with such transportation, or furnishes any instrumentality used therein, the charge and allow- ance therefor shall be no more than is just and rea- sonable, and the Commission may, after hearing on a complaint or on its own initiative, determine what is a reasonable charge as the maximum to be paid by the carrier or carriers for the services so rendered or for the use of the instrumentality so furnished, and fix INTERSTATE COMMERCE LAW 387 the same by appropriate order, which order shall have the same force and effect and be enforced in like man- ner as the orders above provided for under this sec- tion." This clause of the statute has perhaps, as the Commis- sion says, outlived much of its usefulness, because of the enforcement of the other regulating processes which have effected a practical suppression of the rebating and prefer- ential evils in transportation that this provision con- demned. The real value of the provision rests largely upon the principle of placing the cost of transportation service where it properly belongs. It authorizes only that to which the shipper supplying a part of his transportation service is entitled and while it may be, as it has been in the past, used as a cloak to hide the real purport of an unlaw- ful concession or payment of apparent compensation to the shipper, the supervisory power of the Commission is such that no extensive damage could long be perpetrated by the carriers. The intent of the clause is clear. If the service is pub- lic transportation, the shipper may be compensated, be it private person or common carrier. Common carriers are not required at law to own all of the instrumentalities re- quired for the performance of the service which they are bound or undertake to perform. They may also lease or hire suitable facilities or discharge a part of their duties through agents and without restriction as to the public or private status of such agents or of the owners of the instrumentalities procured. The only restriction is that provided in the fifteenth section of the Act to Regulate Commerce to the effect that allowances to shippers for furnishing transportation or instrumentalities thereof shall be supervised by the Commission. And as part of 388 AMERICAN COMMERCE ASSOCIATION such supervisory power the Commission is authorized to require such allowances to be just and reasonable com- pensation for the service rendered or the facility furnished by the shipper. The common law principle allowing compensation to shippers furnishing a necessary part of the transportation service of their property is not violated by this provision in the fifteenth section for at common law the obligation of the carrier to compensate the shipper for the expense of appliances necessary to the proper shipment of the goods was implied. The Supreme Court of the United States has held that it is lawful for a carrier to pay a shipper for services done or facilities furnished by the shipper in connection with the transportation of his property, when such services or facilities are essential to such transportation and which the shipper can as a matter of lawful right demand of the carrier as a part of its transportation service, but where the carrier had not leased tracks or cars of the shipper and the service was done entirely on the property and for the sole benefit and purpose of the shipper, any payment on account of such service would be illegal. C. & A. R. R. Co. vs. U. S., 156 Fed. Rep. 558. The billing at estimated weights, where actual weights could not be properly determined, is not unlaw- ful, and the repayment of excess charges arising there- from is not in violation of the law, but delays in settling overcharges often efifect unjust discrimination and offi- cials responsible therefor become fairly chargeable with intention to violate the law. Phelps & Co. vs. T. & P. R. Co., 6 I. C. C. Rep. 36, 4 I. C. Rep. 363. In one of its earliest cases the Commission held that the repayment to a shipper of part of the transportation INTERSTATE COMMERCE LAW 389 charges, under the name of a rebate, for the purpose only of protecting a certain route for the export trade against an excess in charge, is not unlawful. Re Export Trade of Boston, 1 I. C. C. Rep. 24, 1 I. C. Rep. 25. This, of course, is not the law today, as every departure from an established tariff rate is unlawful. If, however, overcharges accrue on account of error, the carrier may lawfully refund to the shipper the excess charges, in the way of a refund, for the purpose only of charging the tariff rate which the shipper was entitled to pay. Second Industrial Railways Case, 34 I. C. C. Rep. 596, 603. Car Spotting Charges, 34 I. C. C. Rep. 609, 617. A. T. & S. F. Ry. Co. vs. Kansas City Yards Co., 33 I. C. C. Rep. 92. Car Ferry Allowance at Cheboygan, Mich., 32 I. C. C. Rep. 578. Cancellation of Joint Rates in Connection with C. Z. & G. R. R. R. Co., 27 I. C. C. Rep. 353. Crane Iron Works vs. C. R. R. of N.. J., 17 I. C. C Rep. 514. Solvay Process Co. vs. D. L. & W. R. R. Co., 14 I. C. C. Rep. 246. General Electric Co. vs. N. Y. C. & H. R. R. R. Co., 14 I. C C. Rep. 237. Tap Line Cases, 234 U. S. 1. U. S. vs. B. & O. R. R. Co., 231 U. S. 274. I. C. C. vs. Diffenbaugh, 222 U. S. 42. I. C. C. vs. Stickney, 215 U. S. 98. See also: Rates for Transportation of Anthracite Coal, 35 I. C. C. Rep. 220, 241, 243. In re Express Rates, 35 I. C. C. Rep. 3, 410. Rules Governing Transportation of Potatoes, 34 I. C. C. Rep. 255, 256. Kansas City Live Stock Exchange vs. A. T. & S. F. Ry., 34 I. C. C. Rep. 442, 447. Grain Elevation Allowances at Kansas City, 34 I C. C. Rep. 442, 447. St. Louis Terminal Case, 34 I. C. C. Rep. 453, 459, 460. Western Trunk Line Rules, 34 I. C. C. Rep. 554, 578. Best Co. vs. G. N. Ry. Co., 33 I. C. C. Rep. 13. Manufacturers' Ry. Co. vs. St. L. I. M. & S. Ry. Co., 32 I. C C. Rep. 100, 106. 390 AMERICAN COMMERCE ASSOCIATION Joint Rates with Birmingham Southern R. R. Co., 32 I. C. C. Rep. 110, 112, 118. Industrial Railways Case, 32 I. C. C. Rep. 129, 133. Inman, Akers & Inman vs. A. C. L. R. R. Co., 31 I. C. C. Rep. 146, 148. Lumber Rates — Southern Ry. Points to Eastern Points, 31 I. C. C. Rep. 244, 247, 248, 254. Tap Line Case, 31 I. C. C. Rep. 490, 493, 494. Colonial Salt Co. vs. C. B. & Q. R. R. Co., 31 L C. C. Rep. 559, 562. Merchants & Mfrs. Assn. vs. B. & O. R. R. Co., 30 L C. C. Rep. 388, 389. In re Muncie & Western R. R. Co., 30 L C. C. Rep. 434, 435. New York Shippers' Protective Assn. vs. N. Y. C. & H. R. R. R. Co., 30 I. C. C. Rep. 437, 438, 439. Rates on Bananas from Gulf Ports, 30 L C. C. Rep. 510, 523. Onion Rates to New York, N. Y., 30 L C. C. Rep. 528, 529. Dunnage Allowances, 30 L C. C. Rep. 538, 546. Industrial Railways Case, 29 I. C. C. Rep. 212, 237. Mfrs. Ry. Co. vs. St. L. I. M. & S. Ry. Co., 28 I. C. C. Rep. 93, 101. Milwaukee Malsters' Traffic Assn. vs. G. T. W. Ry. Co., 28 I. C. C. Rep. 489, 493. Suflfern Grain Co. vs. I. C. R. R. Co., 27 I. C. C. Rep. 192, 195. Refuge Cotton Oil Co. vs. St. L. I. M. & S. Ry. Co., 27 I. C. C. Rep. 117, 120. Southern Missouri Millers' Club vs. St. L. & S. F. R. R. Co., 26 I. C. C. Rep. 245, 252, 253. In re Suspension of Western Classification No. 51, 25 I. C. C. Rep. 442, 495. Kamm & Co. vs. Pennsylvania Co., 25 I. C. C. Rep. 198, 200. In re Keystone Elevator Co., 25 I. C. C. Rep. 618. Gund & Co. vs. C. B. & Q. R. R. Co., 25 I. C. C. Rep. 326. In re Elevation Allowances, 24 I. C. C. Rep. 197, 202, 203, 204. Transit Case, 24 I. C. C. Rep. 340, 343. Alan Wood Iron & Steel Co. vs. P. R. R. Co., 24 I. C. C. Rep. 270. Tap Line Case, 23 I. C. C. Rep. 277, 292, 294, 295, 298. Tap Line Case, 23 I. C. C. Rep. 549, 650. Colonial Salt Co. vs. M. I. & I. L., 23 I. C. C. Rep. 358. In re Divisions of Joint Rates on Coal, 22 I. C. C. Rep. 555. Kaul Lumber Co. vs. C. of Ga. Ry. Co., 20 I. C. C. Rep. 450. Federal Sugar Refining Co. vs. B. & O. R. R. Co., 17 I. C. C. Rep. 408. Star Grain & Lumber Co. vs. A. T. & S. F. Ry. Co., 17 I C. C Rep. 338, 345. Nebraska-Iowa Grain Co. vs. U. P. R. R. Co., 15 I. C. C. Rep. 90. Crane R. R. Co. vs. P. & R. Ry. Co.. 14 I. C. C. Rep. 248, 253. In the Matter of Allowances for the Transfer of Sugar, 14 I. C. C. Rep. 619, 627. S INTERSTATE COMMERCE LAW 391 In the making of allowances to shippers for services rendered or facilities furnished in connection with trans- portation, the only services of the shipper that may law- fully be compensated for by the carrier under the author- ity of section 15 of the Act to Regulate Commerce are such as are rendered by the shipper after the carrier's duty to receive and transport the shipment has begun. Am. Sugar Refg. Co. vs. D. L. & W. R. R. Co.. 200 Fed. Rep. 652, 656. See also: Mitchell Coal & Coke Co. vs. P. R. R. Co., 230 U. S. 247. Federal Sugar Refining Co. vs. B. & O. R. R. Co., 20 I. C. C. Rep. 200 (see B. & O. R. R. Co. vs. U. S., 200 Fed. Rep. 779, 791, enjoining Commission's order). Mfrs. Ry. Co. vs. St. L. I. M. & S. Ry. Co., 28 I. C. C. Rep. 93, 101. I. C. C. Confr. Rulings Bull. No. 6, Rulings Nos. 19, 78, 132, 267, 292, 360. (1) Judicial Interpretation of Term "Rate" in Prohibi- tion Against Rebating. The word "rate," as used in the statute, means the net cost to the shipper of the transporta- tion of his property; that is, the net amount the carrier re- ceives from the shipper and retains. In determining such amount in a given case, all money transactions having a bearing on, or relation to that particular instance of trans- portation, whereby the cost to the shipper is directly or in- directly enhanced or reduced, must be taken into con- sideration. U. S. vs. C. & A. R. Co., 148 Fed. Rep. 646 (1906). In a case where a private stable-car company, owning cars which were in general use by railway companies and received compensation therefor from the railway com- panies computed on a mileage basis, in order to induce shippers to demand of the railway companies that their stock be shipped in the cars of the stable-car company, 392 AMERICAN COMMERCE ASSOCIATION made payments of money to shippers using its cars, the court held that the giving of any such allowances to a shipper whereby he secures the transportation of his prop- erty at a less rate than that named in the published tariff of the carrier for transportation of such property in its own cars, although from the funds of the stable-car com- pany and without the connivance or knowledge of the carrier, is a violation of the statute. I. C. C. vs. Reichmann, 145 Fed. Rep. 235 (1906). §7. Judicial Construction of Word "Knowingly" in the Elkins Act. The broadest construction by the courts that has yet been given to the word "knowingly" as used in the El- kins Act was announced by the United States Circuit Court of Appeals for the Sixth Circuit in the Grand Rap- ids & Indiana Railway Company Case. The indictment was based upon the fact that, in violation of transit rules published in the carrier's tarifif, transit privileges had been allowed at certain points and the through rate applied on outbound shipments, although inbound billing which could rightfully be used in connection with such outbound shipments was not surrendered. The inbound shipments had been consumed at the transit point, but the evidence failed to show that the particular agents of the carrier who handled the outbound shipments had knowledge of this fact. The defendant insisted that in view of this lack of knowledge as to the whole situation on the part of any one of its agents, it could not be said that the concession charged had been "knowingly" granted by the corpora- tion. In the opinion of the lower court, it was held that if the defendant actually knew, or if from all of the evi- dence the jury found that it ought to have known, the INTERSTATE COMMERCE LAW 393 facts which made the appHcation of the throvigh rate im- proper, then the jury might find that the defendant pos- sessed all the knowledge requisite to support conviction. The circuit court of appeals, in affirming this decision, de- clared that the fact that the agent of the carrier who han- dled the outbound shipment did not know that the in- bound shipment had been disposed of locally was no de- fense if records and documents showing all of these facts were on file in the office of the carrier. The opinion there- fore stands for the very important principle that carriers under the act are responsible for the act of all of their agents and that the combined knowledge and conduct of all the agents of a carrier can be imputed to the corpora- tion. A very important holding was also made as to what knowledge on the part of the defendant is necessary to sustain a prosecution for a violation of the Elkins Act. The defendant urged that the shipper had misinterpreted the transit tariff, supposing in good faith, that so long as it possessed inbound billing upon which the outbound ship- ments could go forth at the transit rate, it made no dif- ference whether the particular billing was presented or not. In dealing with this suggestion the court definitely announced that even in a criminal case the shipper's knowledge of the lawful rate will be presumed. A similar holding had previously been announced as controlling in civil cases. G. R. & I. Ry. Co. vs. U. S., 212 Fed. Rep. 577. Nicholas & Co. Lumber Co. vs. U. S., 272 Fed. Rep. 588. Chicago & Alton R. R. Co. vs. Kirby, 225 U. S. 155. I. C. C. Ann. Rep. 1914. § 8. Forms of Rebating. It must be remembered that direct rebates are pre- sumed to have been entirely removed from present day 394 AMERICAN COMMERCE ASSOCIATION transportation practices, and it is only in their more subtle and indirect form that methods of rebating are now met with. It will serve no good purpose to historically re- view the devious methods and variety of forms of rebates existing in the past. It is therefore, only essential to brief- ly consider those forms, which by their indirect nature may accomplish the forbidden result and menace the in- tegrity of the law's guaranty of equality. § 9. Concessions to Control Routing of Traffic. Payments made to influence the routing of traffic are concessions or rebates in violation of the Elkins Act al- though they do not come directly out of the freight rates. Three important decisions were handed down by the fed- eral courts in 1915 establishing the precedent that car- riers cannot escape the consequences of violating the El- kins Act merely by adopting indirect and ingenious devices. The United States Circuit Court of Appeals for the Seventh Circuit affirmed the judgment of the district court imposing a fine of $2000 against the Vandalia Rail- road Company for granting an unlawful concession. The Vandalia Railroad Company, through the medium of a subsidiary corporation, borrowed $260,000 at 4 per cent interest and loaned this amount to the Lumaghi Coal Company at 2 per cent interest in order to induce the Lu- maghi Coal Company to route all of its shipments over the Vandalia Railroad. The difference between the in- terest paid by the railroad company and the interest re- ceived by it from the shipper on this loan was charged in the indictment as a concession. The defense urged that this could not amount to a concession, since it did not come out of the freight rates applicable on any particular shipment, and since it was not shown to have resulted in a discrimination against any other shipper. INTERSTATE COMMERCE LAW 395 The court ruled that it was a device for granting a con- cession to a shipper condemned by the statute and the Supreme Court of the United States denied an appeal in the case. The United States District Court for the District of New Jersey fined the Central Railroad of New Jersey $200,000 upon conviction of granting concessions to the Lehigh Coal & Navigation Company in the form of rental paid to the Navigation Company nominally for the use of a railroad which it leased, but for the real purpose of requiring the routing of traffic over the Central New Jer- sey lines, an agreement existing that the railroad should pay an allowance to the Navigation Company on all such shipments. In 1906 when the Hepburn Act was passed the carrier put a note in its tarififs stating that these al- lowances would be paid out of the published rates, but failing to indicate the amount of such allowances. The judge, in effect, charged the jury that the note did not amount to publication of the allowance and that no pay- ments of any kind, not even allowances under section 15 of the act, could lawfully be made out of the published rates, unless such allowances are specifically published in dollars and cents. In the Lehigh Valley case the court held that the pay- ment of either a commission or a definite salary by a rail- road to a forwarding company to influence the routing of traffic controlled by such forwarding company was, in legal effect, a rebate or concession paid to a shipper in vio- lation of the Elkins Act. Vandalia R. R. Co. vs. U. S., C. C. A. 7th Cir. U. S. vs. Central R. R. of New Jersey, U. S. D. C. Dist. of N. J. U. S. vs. Lehigh Valley R. R. Co., 222 Fed. 685. I. C. C. Ann. Reps. 1913, 1914 and 1915. 396 AMERICAN COMMERCE ASSOCIATION § 10. Unlawful Use of Passes to Influence Traffic. A state pass, given to an interstate shipper who does not come within any of the excepted classes enumerated in section 1 of the Act to Regulate Commerce, is a step by the carrier toward the purchase of his traffic as fully as would be the presentation to him of any other special favor or privilege of value. Money contributed to an in- terstate shipper for his personal use and benefit, either "as such," on "personal account," or otherwise, undoubt- edly would be held by the courts to be a concession in respect of his trafifrc on account of which both the car- rier and the shipper would be amenable to severe pen- alties. A free ticket or a free pass has a value measur- able in terms of money and, to the extent that it is used by the holder, whether for pleasure or for profit, is to him the exact equivalent of the sum necessary to pur- chase a ticket for the same journey at the lawful fares in effect at the time the pass is used. There is no differ- ence in principle therefore between a contribution in money to an interstate shipper and a contribution to him for his use and benefit in a form that is equivalent to money. If made to an interstate shipper, either "as such," on "personal account," or otherwise, it is a criminal viola- tion of the law. Its purpose is to give him something of value in consideration of his traffic; and when this pur- pose is accomplished by the gift of a pass the results are no less definite than they would be if accomplished by a gift of money. Indeed it would be quite as logical for the carriers to contend that they may lawfully transport the state traffic of an interstate shipper free of charge as to contend that they may give a free state pass to such a shipper. However the transaction may be consummated, one method, it is clear, is as much an unlawful device as the other. The result in either case is the same and the INTERSTATE COMMERCE LAW 397 manner of accomplishing the result is not material. The object of the act is to prevent favoritism by any means or device whatsoever and to prohibit practices which run counter to the purpose of the act to place all shippers upon equal terms. ^ Colorado Free Pass Investigation, 26 I. C. C. Rep. 491, 495, 496. U. S. vs. Union Stockyard & Transit Co., 226 U. S. 286, 309. Five Per Cent Case, 31 I. C. C. Rep. 351, 410. Financial Investigation of N. Y. N. H. & H. R. R. Co., 31 L C. C. Rep. 324. In re Financial Relations, etc., of Certain Carriers, 31 I. C. C. Rep. 261. Tap Line Case, 31 I. C. C. Rep. 490, 494. Montana Pass Situation, 29 I. C. C. Rep. 411. Compare : Commutation Fares to and from Washington, D. C, 33 I. C. C. Rep. 428. 435. U. S. vs. Martin, 176 Fed. Rep. 110, 113. U. S. vs. Williams, 149 Fed. Rep. 310, 313. In this connection it is worthy of note that the Inter- state Commerce Commission holds it is unlawful for a carrier to issue passes to employees of other carriers not subject to the Act to Regulate Commerce, and this con- struction of the anti-pass section of the statute has been upheld by the Supreme Court. The Interstate Commerce Commission will recognize any rail or water carrier filing a tarifif, joint or local, with the Commission, as a carrier subject to the act so far as the issuance of passes to its officers and employees may be concerned. Where a carrier has no tariffs on file with the Commission, and does not acknowledge itself subject to the Commission's jurisdiction, the Commission will re- gard the issuance of passes to its officers or employees as unlawful, without, however, thereby passing upon the 398 AMERICAN COMMERCE ASSOCIATION question of the jurisdiction of the act over such carrier in so far as it may be necessary to assert such jurisdiction. I. C C. Confr. Rulings Bull. No. 6, Ruling, No. 95- (g); com- pare Rulings Nos. 196, 216, 263, and 355. U. S. vs. Erie R. R. Co., 213 Fed. Rep. 391. U. S. vs. Erie R. R. Co., 236 U. S. 259. See also: Cosmopolitan Shipping Co. vs. Hamburg-American Packet Co., 13 I. C. C. Rep. 266. In re Petition Frank Parmelee Co., 12 I. C. C. Rep. 46. I. C. C. Confr. Rulings Bull. No. 6, Ruling No. 208. I. C. C. Ann. Reps. 1914, 1915. The Supreme Court of the United States has held that the practice of holders of state passes, who are not en- titled to interstate passes, using their passes on parts of interstate journeys is in violation of the Act to Regulate Commerce. N. Y. C. R. R. Co. vs. Gray, 239 U. S. 583. §11. Special Passenger Services Granted to Large Ship- pers. An insidious form of discrimination consists in granting to individuals favors or special services in connection with passenger transportation. When the recipients of such discrimination happen to be shippers or identified with large shipping corporations, the presumption arises that such discrimination is willful and is intended to influence the routing of freight. An investigation in Texas disclosed that it was a com- mon practice for railroads which controlled subsidiary companies to select large shippers as directors for such subsidiary companies solely with a view to influencing the routing of their traffic. Each year it appeared to be the practice of several of the carriers in this territory to ascertain which of the larger shippers in the southwest were not routing their traffic via their respective lines. INTERSTATE COMMERCE LAW 399 Then, for the purpose of securing this traffic, the device was resorted to of electing such shippers as dummy direc- tors of subsidiary companies in order that free passes, good within the state of Texas, might be issued to them with a color of legality. The investigation disclosed that this practice is simply a device by which concessions from the published freight rates are indirectly granted. Such a practice, of course, involves both the carrier and shipper in violations of the Elkins act. The practice is recognized by the carriers themselves to be unjustifiable and burdensome, but it has grown up and continued as a result of competitive conditions. Several carriers have been indicted and prosecuted for deviations from established passenger fare tariffs, by per- mitting the use of a private car upon payment of a less number of fares than the published tariffs provided for the exclusive use of a private car. I. C. C. Ann. Rep. 1916, page 29. I. C. C. Ann. Rep. 1915, page 20. § 12. Concessions Resulting From Alliances Between Carriers and Large Shippers. In some instances it has been found that certain large shippers were affiliated with carriers in such a manner as to be the recipients of advantages over other shippers without tariff authorization, or of illicit dividends and re- munerations. In other instances the shipping corpora- tion and the initial carrier were controlled by a common interest which was thus enabled to exact excessive divi- sions or advantages in per diem or demurrage charges, or to secretly secure other advantages from the connect- ing carriers. These practices are unlawful and condemned as violations of the statute. I. C. C. Ann. Rep. 1914. ^00 AMERICAN COMMERCE ASSOCIATION See also: Tillman-Gillespie Senate Resolution and I. C. C. Report to Senate thereunder. § 13. Leases of Carriers' Property to Shippers at Less Than Fair Rental. The leasing of land, warehouses, and other property be- longing to carriers by interstate shippers at less than a fair rental value, or the subletting of such properties to shippers at less than the rental paid by the carriers them- selves, or the assuming of part of the rental obligations of an interstate shipper for the purpose of influencing the routing of interstate shipments, are devices in violation of the provisions of the Elkins Act. I. C. C. Ann. Reps. 1914 and 1915. U. S. vs. Union Stockyards Co., 226 U. S. 286. C. C. C. & St. L. Ry. Co. vs. Hirsch, 204 Fed. Rep. 849. I. C. C. Confr. Rulings Bull. No. 6, Rulings Nos. 94, 153, 325, and 421. § 14. Unlawful Use of Peddler Cars. For a consignor to bill shipments of packing house prod- ucts to a given point on the carrier's line and thereafter distribute such carload shipments in less-than-carload lots at stations on the carrier's line intermediate to the billed-destination thereby defeating the less-than-carload rates, is in violation of the Elkins Act and an unlawful concession by the carrier where permitted. I. C. C. Ann. Rep. 1914. § 15. Unlawful Concessions Obtained Through Failure by Carrier to Observe Published Rates. A failure on the part of the carrier to strictly observe its tariffs may result in an unlawful concession to a ship- per. The word "strictly" is not read into the tariff obser- vance sections of the statute by construction, but was expressly placed there by Congress to prevent discrimi- INTERSTATE COMMERCE LAW 401 nation. That Congress intended to require inflexible ad- herence to the terms of the tariff, numerous decisions of the courts make clear the purpose of the employment of this word in the Act. Thus, indictments have been returned for the applica- tion of a domestic rate instead of a higher import rate, or a lower state rate instead of a higher interstate rate. Again, in a case where the carrier failed to collect de- murrage charges on carload shipments detained several miles from their billed-destination, and where the demur- rage charges provided for in the carrier's tariffs applicable at the billed-destination-point should have been collected at the detention-point in accordance with the Supreme Court's construction of the law, amounted to an unlawful concession. Berwind-White Coal Mining Co. vs. Chicago & Erie R. R. Co., 235 U. S. 371. Where a carrier permits a shipper to pay less than the published rate, it is no defense that the carrier had given notice to all shippers that a lower rate would be accept- ed, when in fact such lower rate had not been filed and published as required by the act, and the higher rate was the only one lawfully in effect. U. S. vs. Merchants & Miners' Transp. Co., 187 Fed. Rep. 363,, 365. Camden Iron Works vs. U. S., 158 Fed. Rep. 561, 564. Maxwell vs. W. F. & N. W. Ry. Co., 20 I. C. C. Rep. 197, 198. See also: In the Matter of Keystone Elevator Co., 25 I. C. C. Rep. 618. Miller vs. U. S., 221 Fed. Rep. 67. § 16. Unlawful Concessions Obtained Through False Claims. The filing of fraudulent claims for loss and damage was first made an offense by the amendments to section 10 402 AMERICAN COMMERCE ASSOCIATION of the Act to Regulate Commerce in 1910. A large num- ber of shippers have been prosecuted by the Interstate Commerce Commission for filing with carriers false claims for loss and damage. The more prevalent and notable cases have been those of shippers of perishable freight and their offense has been largely that of filing excessive claims. In its Twenty-Ninth Annual Report (1915), the Inter- state Commerce Commission commented upon such claims as follows: "While prosecutions arising from this practice dur- ing the past year have been against shippers only, there have been evidences that the laxness of the carriers in recognizing and paying such false claims amounts to the granting of rebates from the lawful rates. Evidence of this kind, tending to show that carriers as well as shippers are responsible for the filing and payment of excessive damage claims, is now under review." Despite the many prosecutions in the past for the filing of false claims, many instances of this practice are con- stantly coming to light. I. C. C. Ann. Rep. 1916, page 28. U. S. vs. Laser Grain Co. (Eastern District of Missouri, unre- ported). U. S. vs. Wisconsin Auto Sales Co. and Orton-Collins (East- ern District of Wisconsin, unreported). U. S. vs. Fred C. Boreman, C. Wickham Parker, and Albert C. Nelson, Trading as Interstate Traffic Bureau (North- ern District of Illinois, unreported). § 17. Unlawful Concessions Obtained Through Billing to Fictitious Destinations. It has been the practice of certain carriers to have com- pany fuel coal originating on the lines of other carriers billed to fictitious destinations beyond the actual destina- tions and thus secure the transportation thereof at a divi- INTERSTATE COMMERCE LAW 403 sion of a through rate which is less than the local rate to the point of unloading, or less than the proper divisions of the through rate accruing to the other carrier. This prac- tice has been condemned as unlawful by the Supreme Court. I. C. C. vs. B. & O. R. R. Co., 225 U. S. 326. I. C. C. Ann. Rep. 1914. § 18. Unlawful Concessions Obtained Through Violations of the Commodities Clause. Where a carrier owns all of the securities of a coal min- ing company, which mines coal on land owned by the carrier and ships such coal over the lines of such car- rier, and the said carrier furnishes the coal company with large amounts of capital and working funds and the traf- lic officials of the carrier dictate the affairs of the coal com- pany as a shipper, the relationship is one which contra- venes the prohibition of the Commodities Clause of the Act. It is such a commingling of the afifairs of the car- rier and the shipper as has been condemned by the courts. U. S. vs. Lehigh Valley R. R. Co., 220 U. S. 257. U. S. vs. D. L. & W. R. R. Co., 231 U. S. 363. I. C. C. Ann. Rep. 1914. The Interstate Commerce Commission has not been charged with the enforcement of the commodities clause beyond the general duty, which may be inferred from its incorporation in the act that it administers, of calling at- tention to any infraction of its provisions. The law is en- forced by another department of government. Neverthe- less the Commission can, and necessarily must, take cog- nizance of the consequences of any violation of the com- modities clause when a wrong is thereby done to ship- pers who are under the protection of the Act to Regulate Commerce. Consolidated Fuel Co. vs. A. T. & S. F. Ry. Co., 27 I. C. C. Rep. 554, 557. 404 AMERICAN COMMERCE ASSOCIATION § 19. Allowances to Shippers for Services Rendered or Facilities Furnished. It is obvious from our previous consideration of the subject of allowances that such a practice bears a danger- ous relation to rebating. Not alone is the test in the case of the allowance that it does not depart from the net rate established in the tariffs of the carrier, for the allowance must be properly published in the carrier's tariffs, but the fact that the allowance is greater than the actual cost of the service performed or the facility furnished by the car- rier, determines its illegality and penetrates its guise as a rebate. The carrier may pay to the shipper the actual cost of the service rendered or the facility furnished, but any al- lowance in excess of such cost is unlawful and a rebate. An allowance to a shipper for switching as compensa- tion for the use of the shipper's private track, or tap-line, or for services done entirely on the property and for the benefit and purpose of the shipper alone, is a rebate and unlawful. Cent. Yellow Pine Assn. vs. I. C. H. Co. et al., 10 I. C. C. Rep. 505, 546. Ohio Coal Co. vs. Whitcomb, 123 Fed. Rep. 359. U. S. vs. C. & A. R. Co., 148 Fed. Rep. 646. C. & A. R. Co. vs. U. S., 156 Fed. Rep. 558. Nor is a shipper entitled to compensation from the car- riers for the movement of cars between points in their industrial plants and the carriers' interchange tracks. Genl. Electric Co. vs. N. Y. C. & H. R. R. R. Co., 14 I. C. C Rep. 237. Solvay Process Co. vs. D. L. & W. R. Co., 14 I. C. C. Rep. 246. Where a carrier refunded to a grain shipper an amount equal to elevation charges at point of shipment, but had failed to publish its absorption of elevating charges, the INTERSTATE COMMERCE LAW 405 courts held the carrier guilty of violation of the Elkins Act prohibiting rebates. W. C. R. Co. vs. U. S., 169 Fed. Rep. Id. The payment of cartage charges from a remote ship- per's factory to the depot of the carrier, and the nonpay- ment of similar charges for the cartage or drayage of a nearer shipper's freight constitutes a rebate within the meaning of the statutes. Hezel Milling Company vs. St. Louis & C. R. Co., S I. C. C. Rep. 56, 3 I. C. R. 701. It had been the practice for all except five of the car- riers bringing grain to Chicago to absorb the switching charges arising for transfer to grain elevators not located on their lines. In order to equalize the through freight charges to the Chicago receivers of grain arriving over the five non-absorbing lines, the eastern trunk lines, in 1908 published tariffs providing for the absorption of whatever inbound switching charges were assessed at Chi- cago on grain shipments subsequently forwarded east via their lines. The provision in the tariffs was generally as follows : "When a tonnage in seed, corn, sugar, grain or grain products, etc., is shipped via the P. C. C. & St. L. from industries located in the Chicago district * * * the inbound switching charges of the carriers serving the industries will be considered a part of the through rate and will be refunded by the P. C. C. & St. L. upon a tonnage of grain or seed equal to that contained in cars originally switched to such industries, etc." Investigation disclosed that under cover of the above tariff provision, the carrier was making refunds equal to the alleged inbound switching charges on outbound ship- 406 AMERICAN COMMERCE ASSOCIATION ments on presentation of inbound expense bills covering traffic that had actually moved into Chicago during the years 1900, 1901, 1902. The result was that the Chicago shipper was obtaining refunds in a connection with current shipments of grain from Chicago, based upon switching charges that had been paid on inbound shipments of grain received more than 12 years prior to the outbound move- ment and 7 or 8 years prior to the date the tariff provided for such absorptions. The investigation also disclosed that the carrier was also making refunds upon current shipments of grain to certain shippers upon inbound expense bills antedating the tariff provision permitting such absorption, many of which had already been absorbed by the inbound car- riers. § 20. Allowances to Industrial or Terminal Railways or Boat Lines Owned or Controlled by Shippers. Any allowance by a carrier to an industrial or terminal railway or a boat line operated and controlled by a ship- per as a plant facility for a service rendered or facility furnished which is not a part of the transportation serv- ice the carrier is bound to afford such shipper, is an unlaw- ful rebate. See also: Second Industrial Railways Case, 24 I. C. C. Rep. 596, 603. Car Spotting Charges, 34 I. C. C. Rep. 609, 617. A. T. & S. F. Ry. Co. vs. Kansas City Stock Yards Co., 33 I. C. C. Rep. 92. Car Ferry Allowance at Cheboygan, Mich., 32 I. C. C. Rep. 578. Industrial Railways Case, 29 I. C. C. Rep. 237. Cancellation of Joint Rates in Connection with C. Z. & G. R. R. Co., 27 I. C. C. Rep. 353. Tap Line Cases, 23 I. C. C. Rep. 277, 23 I. C. C. Rep. 549. Colonial Salt Co. vs. M. I. & I. L., 23 I. C. C. Rep. 358. Crane Iron Works vs. C. R. R. of N. J., 17 I. C C. Rep. 514. INTERSTATE COMMERCE LAW 407 Solvay Process Co, vs. D. L. & W. R. R. Co.,: 14 I. C. C. Rep. 246. General Electric Co. vs. N. Y. C. & H. R. R. R. Co., 14 I. C. C. Rep. 237. Tap Line Cases, 234 U. S. 1. U. S. vs. B. & O. R. R. Co.. 231 U. S. 274. I. C. C. vs. Diffenbaugh. 222 U. S. 42. I. C. C. vs. Stickney, 215 U. S. 98. §21. False Classification and False Billing as Methods of Rebating. By section 10 of the act as amended, the common carrier or when the common carrier is a corporation, the officer or agent thereof, who, by means of false bilHng, false classification, false weighing, or false report of weight, or by any other device or means, knowingly and willfully as- sists, suffers or permits, any person or persons to obtain transportation for property at less than the regular estab- lished rates, shall be guilty of a misdemeanor for which a penalty upon conviction is provided of a fine not ex- ceeding $5,000, or imprisonment not exceeding two years, or both, for each offense. Also a shipper acting as con- signor or consignee who, directly or indirectly, with or without the connivance or knowledge of the carrier, obtains or attempts to obtain, by means of false billing, false classi- fication, false weighing, false representation of contents of package, false statement, or by any other device or means, transportation for property at less than the regular estab- lished rates, or who shall knowingly and willfully, direct- ly or indirectly, himself or by employes, agent, officer, or otherwise, by false statement or representation as to cost value, nature, or extent of injury, or by the use of any false bill, bill-of-lading, receipt, voucher, roll, account, claim, certificate, affidavit, or deposition, knowing the same to be false, fictitious, or fraudulent, or to contain any fake, fictitious, or fraudulent statement or en- try, obtain or attempt to obtain any allowance, refund or 408 AMERICAN COMMERCE ASSOCIATION payment for damage or otherwise in connection with or growing out of the transportation of or agreement to transport such property, whether with or without the con- sent or connivance of the carrier, whereby the compensa- tion of such carrier for such transportation either before or after payment, shall in fact be made less than the regu- lar rates then established and in force on the line of trans- portation is subject, upon conviction, to like fine and im- prisonment or both. Act to Reg. Com. (Amd. 1910), section 10, paragraphs 2 and 3. In the second year of its existence (1888), the Commis- sion conducted an investigation into the then prolific prac- tice of underbilling (1 I. C. C. R. 633, 1 I. C. R. 813), and declared that underbilling the weight of property, or falsely classifying the same, whereby the compensation to the carrier paid by one shipper was less than the com- pensation paid by another, where the service was "like and contemporaneous" was a violation of the Act, and approved the methods of inspection adopted by certain railroad companies to detect and prevent underbilling and false classification, but declined to accept such methods as the requirement that every carrier should itself be held, and in turn should itself hold every station agent, responsible for the correctness of the weight and classi- fication of freight received, so far as the same could be practically ascertained. In a case where, in order to avoid the payment of the published rate on "smithing coal," a shipper falsely billed the car as "bituminous soft-coal slack," thus attempting to procure a lower combination of rates on soft-coal based on an out-of-line point ; and in this plan the carrier's agents joined, the Commission held the shipper's course was not one that could be commended and closely ap- INTERSTATE COMMERCE LAW 409 proached practices and devices repeatedly condemned by the Commission, that the false billing of the coal was an efifort on the part of the shipper to violate the law both in its letter and in its spirit, and the carrier's agents were equally reprehensible in falsely billing the shipment as bituminous soft-coal slack and then charging a rate there- on that was not lawfully applicable under the carrier's published tariffs. The Commission said: "Neither party comes before us with clean hands and we must there- fore decline to enter a relieving order." Sligo Iron Store Co. vs. A. T. & S. F. Ry. Co., 17 I. C. C. Rep. 129, 141. See also: Radinsky vs. O. S. L. R. R. Co., 21 I. C. C. Rep. 243. The Twenty-Eighth Annual Report (1914) of the In- terstate Commerce Commission contained the following comments on the subject of false billing: "Instances of false billing are difficult of detection except by the carriers themselves. The practice of false billing is widespread, and it has been stated that it results in the loss of millions of dollars annually to the carriers of the country as a whole. Many car- riers have in the past been reluctant to call to the at- tention of the Commission instances where shippers have violated this and other sections of the act, in- fluenced no doubt, by competitive considerations. The public duty, however, that carriers and their agents owe to secure for all shippers lawful rates should outweigh the private interest which has led carriers in the past to protect ofifending shippers; and it is gratifying to report that a new spirit of co-opera- tion on the part of officers and agents of numerous carriers has recently been noted, with the result that much progress is being made in stamping out the practice of false billing. 410 AMERICAN COMMERCE ASSOCIATION "Some recent false billing cases, and more espe- cially those involving transit privileges, have disclosed a curious misapprehension upon the part of certain shippers as to their duty under the law. For example, certain shippers, in answer to the charge that they had been misdescribing shipments, have replied with apparent confidence in the justice of their position, that the provisions of the classification fixing the rat- ing on the commodities shipped by them were unrea- sonable, and for this reason they did not feel obligated to observe them. Again, certain shippers, when ad- vised that they were violating the provisions of a transit tariff by substitution, have replied that the pro- visions in question were unreasonable, that there was nothing in the law forbidding substitution, and there- fore they did not feel bound by such tariff require- ments. Of co..rsc, such a position is utterly untenable. The tariffs and classifications lawfully filed with the commission are binding upon carrier and shipper alike, no matter how unreasonable any rule or rate therein may appear to any individual. The Supreme Court in the case of T. & P. Ry. vs. Abilene Cotton Oil Co., 204 U. S. 426, held that not even a Federal court may declare an interstate rate or tariff rule unreasonable, the exclusive jurisdiction over such matters resting with this Commission. It is obvious that a shipper can not on his own account, pass upon the reasonable- ness of tariff rules or regulations. If such a rule or rate is deemed to be unreasonable, the shipper should protest by formal complaint to the Commission, and pending the determination of such complaint the only lawful course is for both shipper and carrier to ob- serve faithfully the rules and rates as published." While these comments by the Commission are not di- rected to false billing as a device for rebating in which the carrier is a conspiring party, nevertheless the result to the shipper is the same and such practices are con- demned by the statute. INTERSTATE COMMERCE LAW 411 The Ray Campbell case, in Texas, illustrated a device in false billing in which the carrier conspired to effect a rebate to Campbell. The device charged in the indictment consisted of Campbell show^ing estimated w^eights on shipments of produce which Campbell made on his own account and also on account of the Southern Texas Truck Growers' Association of which he was manager. It was developed in the evidence that by the time Campbell ulti- mately paid the freight charges he had exact information that the actual weights were greater than the estimated weights which he had represented to the carrier. It was also shown that the originating carrier had knowledge of these practices. The carrier pleaded guilty and was fined $4,000. Campbell was acquited by jury trial. I. C. C. Ann. Rep. 1915. See also : I. C. C. Ann. Rep. 1916. U. S. vs. Union Mfg. Co., 240 U. S. 605. Coal & Oil Investigation. 31 I. C. C. Rep. 193, 237. Norcross Bros. vs. L. & N. R. R. Co., 29 I. C. C. Rep. 109, 112. Compare : Re Underbilling, 1 I. C. C. Rep. 663, 1 I. C. Rep. 813, 820. Nichols & Cox Lumber Co. vs. U. S., Fed. Rep. 588. § 22. False Valuation as Method of Rebating. Where transportation rates or charges are conditioned upon declared or invoice valuations, a false statement by the shipper or declaration of value of his goods transported is both an offense under the false billing section of the Act to Regulate Commerce and under the Elkins Act. And if the carrier has knowledge, or may be at law presumed to have had knowledge of the shipper's act in so falsely de- claring the value, the practice constitutes an unlawful concession and rebate under the statute. Upon an inquiry from a banking house whether it may lawfully declare a 412 AMERICAN COMMERCE ASSOCIATION value of $5,000 upon a package of negotiable bonds of the market value of $10,000 and pay the express charges on the basis of the declared value, upon the understanding that in case of the loss of the bonds the express company will be responsible only for the amount so declared, it was held that a shipper falsely declaring the value of a pack- age delivered to an express company for transportation violates section 10 of the act. I. C. C. Confr. Rulings Bull. No, 6, Ruling No. 58; see also Ruling No. 295. Pierce vs. Wells Fargo & Co., 236 U. S. 278. K. C. S. Ry. Co. vs. Carl, 227 U. S. 97. B. & M. R. R. vs. Hooker, 233 U. S. 97. Wells Fargo & Co. vs. Neiman-Marcus Co., 227 U. S. 469. Adams Express Co. vs. Croninger, 226 U. S. 491. Compare : In the Matter of Released Rates, 13 I. C. C. Rep. 550, and cases cited therein. § 23. Repayment by Carrier on Account of Cost of Switch Track. A shipper in 1895 paid $200 to a carrier as part of the cost of constructing a spur track to its warehouse. Upon application of the carrier for permission to repay the amount to the shipper, it was held by the Commission that the repayment would be unlawful unless the shipper had some equity or ownership in the track which he could transfer to the carrier in consideration of the payment. I. C. C. Confr. Rulings Bull. No. 6, Ruling No. 110. See also: U. S. vs. C. & A. R. Co. et al., 148 Fed. Rep. 646 (affmd. in 156 Fed. Rep. 558), holding that an allowance for use of a private track of a shipper was rebate, under the facts in the case. See 212 U. S. 563. § 24. Transportation of Commodities Sold and Delivered By a Carrier. In Haddock vs. Delaware, etc., R. Co., 4 I. C. C. R. 296, 3 I. C R. 732, and Coxe Bros. & Co. vs. L. V. R. R. Co., 4 I. INTERSTATE COMMERCE LAW 413 C. C. R. 535, 3 I. C. R. 460, and in Re Grain Rates, etc., 7 I. C. C. R. 33, the Commission early laid down the rule that the transportation of commodities for any company owned or controlled by the carrier at less than tariff rates, or at rates which were ultimately the profit on the commodity, was illegal and the company through which the carrier acted merely a "device" to evade the Act. In these cases, however, the carriers were authorized in their charters, prior to the passage of the Act, to deal in commodities produced along their lines. The rule in these cases is now abrogated, except in the case of lumber, by the Com- modities Clause of the Act. These cases are also distinguishable from the case of N. Y. etc., R. Co. vs. I. C. C, 200 U. S. 361, 50 L. Ed. 515, where the Supreme Court of the United States held that an interstate carrier whose charter did not authorize it, or was not empowered by legislation existing at the time of the enactment of the Act to Regulate Commerce, to mine and market coal, violated the Act by the sale and trans- portation of the coal at an agreed price insufficient to yield its published tariff rates, after deducting the cost of the purchase and delivery. See also: Re Transportation of Coal, 10 I. C. C. Rep. 473. McGrew vs. Atchison, etc., R. Co., 8 I. C. C. Rep. 330. § 25. Unlawful Concession Obtained Through Extension of Credit to Shipper. The extension of credit to one shipper for several months in pursuance of an agrement made prior to trans- portation while credit is accorded to other shippers for one month only, is a discrimination and unlawful conces- sion in violation of the Elkins Act, even though such fa- 414 AMERICAN COMMERCE ASSOCIATION vored shipper pays legal interest beyond the first month upon the amount for which credit is granted It was urged by the carrier that the prohibition against discrimination contained in the Elkins Act was qualified by the work "undue," which is employed in the prohibi- tion against discrimination in section 3 of the act to regu- late commerce. The court, however, held, that it was not necessary to find that the discrimination was undue, but merely that it was material and substantial. ■ In view of the burden that would rest upon the Government under the construction that had previously been given to the phrase "undue discrimination," the definition of this of- fense announced in the Hocking Valley case is deemed to be of much importance. It is also worthy of note that the court in this case found no merit in the contentions that before there could be a conviction for discrimina- tion there must be a finding by the Commission that such discrimination existed or that discrimination could be found to exist only where evidence was offered that other shippers had asked for and been denied the same treat- ment that was accorded the favored shipper. Hocking Valley R. R. Co. vs. U. S., 210 Fed. Rep. 735 (affirming 194 Fed. Rep. 234). Sunday Creek Co. vs. U. S., 210 Fed. Rep. 747 (affirming 194 Fed. Rep. 253). I. C. C. Ann. Rep. 1914. § 26. Unlawful Concession Obtained Through Commis- sions Paid by Carrier. It is held by the courts that the payment of either a commission or a definite salary by a carrier subject to the Act to a forwarding company to influence the routing of traffic controlled by such forwarding company is, in legal INTERSTATE COMMERCE LAW 415 effect, a rebate or unlawful concession paid to a shipper in violation of the Elkins Act. U. S. vs. L. V. R. R. Co., 22 Fed. Rep. 685. In an earlier case it was held that the fact that a re- bate was paid to one other than the shipper, was imma- terial, but a payment which is a bona fide commission for obtaining business for the carrier is not within the act. U. S. vs. D. L. & W. R. R. Co., 152 Fed. Rep. 269 (decided in 1907). Compare with this ruling: C. M. & St. P. Ry. Co. vs. U. S., 162 Fed. Rep. 835. U. S. vs. Milwaukee, etc., R. R. Co., 145 Fed. Rep. 1007 (de- cided in 1906). The payment, by carriers, of commissions to persons acting as consignees or consignee-agents for import traf- fic is condemned by the Interstate Commerce Commis- sion as a practice in violation of the law. I. C. C. Confr. Rulings Bull. No. 6, Ruling- No. 7 (see also Ruling No. 221-[a]). Compare : Re Underbilling, 1 I. C. C. Rep. 633, 1 I. C. Rep. 813. The act prohibits a carrier from demanding, collecting, or receiving a greater or less or different compensation for transportation than that named in its tariffs in effect at the time. It prohibits the rebating or refunding to any person in any manner, or by any device whatsoever, any part of the lawful charges so collected. It is there- fore manifestly unlawful for a carrier to refund to any association, committee, or person any part of the charges collected by the carrier, as a condition of the sale of trans- portation. I. C. C. Confr. Rulings Bull. No. 6, Ruling No. 221-(a); com- pare Ruling No. 7. 416 AMERICAN COMMERCE ASSOCIATION § 27. Unlawful Concession Obtained Through Cancella- tion of Storage Charges. The court held in a case where a carrier had cancelled storage charges on shipments at destination, after hold- ing the same until a substantial claim for storage had ac- crued, that such cancellation constituted a rebate in vio- lation of the statute. U. S. vs. Standard Oil Co., 148 Fed. Rep. 719. S. Ry. Co., 26 I. C. C. Rep. 245, 246, 249. Rice vs. Cincinnati, etc., Ry. Co., 5 I. C. C. Rep. 193, 4 I. C Rep. 841. Rice vs. W. N, Y., etc., R. Co., 4 I. C. C. Rep. 131, 3 I. C. Rep. 162. §28. Estimated Weights Permissible, But Billing On Marked Capacity of Car or Carload Minimum Ille- gal. A rule of a carrier subject to the Act to Regulate Com- merce, by which shipments from non-scale points are billed from such points at weights equal to the marked capacity of the cars, subject to correction when weights are taken, is not only unreasonable but an unlawful con- cession because upon such cars as are not in fact weighed before delivery the carriers proceed to collect freight charges upon such marked capacity weights, and a rule that such cars be billed at the published carload minimum is also indefensible. In such a case the carrier could not show purported weights upon its billing until such weights are ascer- tained either by weighing or by some proper method of computation from cubic contents of the car. Romona Oolitic Stone Co. vs. Vandalia R. R. Co., 13 I. C. C. Rep. 115. In re Weighing of Freight by Carriers, 28 I. C. C. Rep. 7, 9, 10. 18, 19, 21, 22, 23. 24. 25, 21, 29, 32, 34. 35, 36. INTERSTATE COMMERCE LAW 417 § 29. Unlawful Concessions Obtained Through Fictitious Transfer Slips. Where shipments have moved from a given point to destination at a division of a through rate such division being less in amount than the local rates to w^hich these shipments v^ere legally subject, by means of fictitious transfer slips issued by the originating carrier said trans- fer slips falsely conveying to the connecting carriers the statement that such shipments originated at points be- yond the actual origin point and entitled to move on such division of the through rate, the practice results in an un- lawful concession and rebate to the shipper in violation of the law. In the Matter of Rates, Practices, etc., 13 I. C. C. Rep. 212, 213. § 30. Unlawful Concessions Obtained Through Cancel- lation of Demurrage Charges. Failure of carrier to collect demurrage charges in ac- cordance with published tariffs is a violation of the act. So where it was the custom to hold cars destined to a billed destination several miles from such billed-destina- tion-point awaiting orders of consignees, and failing to collect demurrage on such detention, the practice was held to be a willful failure to observe the carrier's demur- rage tariff, if that was applicable at the hold-point as was decided in the Berwind-White Coal Mining Co. case, or else a device for granting concessions if the cars were de- tained at the hold-point to evade application of the demur- rage tariff in effect at the billed-destination-point. Berwind-White Coal Mining Co. vs. C. & E. R. R. Co., 235 U. S. 371. Compare : L. V. R. R. Co. vs. U. S., 188 Fed. Rep. 879. U. S. vs. L. V. R. R. Co., 184 Fed. Rep. 543. 418 AMERICAN COMMERCE ASSOCIATION § 31. Inducing Concessions. Section 10 of the Act to Regulate Commerce makes it a demeanor for a shipper to induce an agent of a carrier subject to the act to discriminate in his favor. The pay- ing of money or giving of a thing of value to an agent or a carrier to induce him to discriminate in favor of or afford a valuable concession to the shipper is amenable under this section of the Act. This provision of the statute reaches offenders who secure advantages in service as substantially as if they v^ere enjoying reduced rates, but who cannot be indicted under the Elkins Act. There have been but two or three such prosecutions in the history of the Interstate Commerce Commission. Such a practice is illustrated in a case where a shipper paid a small amount to a station agent to induce him to issue bills of lading prior to the receipt of the property described thereon. U. S. vs. Miller, 181 Fed. Rep. 375. U. S. vs. Hauley, 71 Fed. Rep. 672. Washer Grain Co. vs. No. Pac. Ry. Co., 15 I. C. C. Rep. 152, 153. See also: U. S. vs. Miller. 223 U. S. 599. INDEX Pago ABSOLUTE RATES (see REASONABLENESS OP RATES— Relative rates). ABSORPTION (see DISCRIMINATION). There is well defined distinction between an absorption volun- tarily made by a trunk line and the division of the joint rate prescribed by the Commission 257 ACT TO REGULATE COMMERCE (see SECTION). ADJUSTMENT (see RATE ADJUSTMENT). ADVANCED RATES (see REASONABLENESS OP RATES). Adjustment, long established, burden of justifying an advance is upon carrier 56, 57, 58, 63 Adjustment, long established, raises presumption that advanced rates are unreasonable 59 Adjustment, long standing, in nature of admission by carrier that rate maintained was a just and reasonable one 58 Burden of proof rests upon carrier to establish reasonableness of 56 Burden of proof, carrier not required to justify increase, aa under the English statute, but to establish the reasonable- ness of "increased rate" itself 60 Change of rates, carrier making same properly called upon to give good reason therefor 56 Change of rate, no presumption of wrong arising therefrom... 56 No presumption all advanced rates unjust and unreasonable... 55 No presumption can arise against, because lower rate previously existed 59 Section 15, since amendment of, of Act to Regulate Commerce burden rests upon carrier to prove reasonableness of advanced rate 60 Under authority of amended Section 15 of Act to Regulate Com- merce, Commission has not hesitated to exercise power to suspend proposed advances in rates, and sometimes reduc- tions 55 Special rates for development purposes, element of determin- ing reasonableness of advanced rates 98 AGENT. When shipper is forwarding agent 277 ALLOWANCES (see DISCRIMINATION, ELEVATION, GRAIN DOORS, "LATERAL" ALLOWANCE, REBATES AND CON- CESSIONS, SECTION 15, TAP LINES). Carrier may pay the shipper actual cost of service rendered or facility furnished, but any allowance in excess of such cost is unlawful and a rebate 404 To shippers, test of legality of not in method but In the consid- eration for such allowance 883 Power of Commission to control allowances 238 To shippers for defective equipment are of dangerous character 296 Unsound in principle to encourage car fitting or use of dun- nage in order to secure minimum loads and then to approve payment of allowances to offset expense thus incurred.... 297 Order of Commission requiring payment of allowance sliould be confined to grain passing through the elevator In ten days, upheld by Supreme Court 226 419 420 AMERICAN COMMERCE ASSOCIATION By accepting the ruling of the Supreme Court In the Diffenbaugh Case, Commission held that some sort of elevation allow- ance may be made and recommended non-discriminatory adjustment by carriers 225 Commission fixed one-quarter of a cent per bushel as allowance for each ten days or part thereof 225 Carrier may not lawfully discriminate between persons in allow- ances for elevation of grain or in the stopping of commodi- ties in transit t 274 For elevation of grain 223, 226 Supplemental report of Commission in Industrial Railway Case. 239 To industrial or terminal railways or boatlines owned or con- trolled by shippers 406 Frequently made by trunk lines to an industry 215 To industrial railways and plant facilities 235 Discrimination in lighterage allowances on sugar in New York Harbor 220 To be paid to shippers under section 15 of Act to Regulate Commerce 381 Under section 15 must be for transportation services 222 If free storage or free cartage is allowed by carrier for some shippers at given point and not for all, such allowance is an unlawful discrimination 274 Clearly demonstrated in Tap Line and Industrial Railways cases that granting of allowances to industrial roads had been carried to indefensible extremes and resulted in grossly dis- criminatory practices 239 Fifty-seven tap lines to which Commission in original and sup- plemental reports refused to sanction allowances 231 Third supplemental order of Commission in Tap Line Cases, entered January 4, 1915, extended maximum allowances or divisions fixed in order of July 29, 1914, to tap lines dis- missed as parties to the Tap Line Cases prior to that date. . 230 Order of Commission in Tap Line Cases fixed maximum allow- ances and divisions that might be paid by trunk lines named to their respective tap line connections 229 Following ruling of Supreme Court, Commission ordered trunk lines on or before October 1, 1914, on not less than five days' notice, to reopen through routes with each of the tap lines parties to the record with w^hich they had connections and publish joint rates to interstate destinations 229 Interstate Commerce Commission on allowances to tap lines... 227 To tap lines 226 Prior to the Supreme Court decision, the Commission held that if tap line is common carrier it is entitled to a division of the joint rate 218 In original tap line cases the Commission held it was unlawful for a tap line to receive divisions in excess of a reasonable switching charge 218 To or division with a tap line which is a part of or a plant facility is an unlawful discrimination 217 Forms of allowances which amount to rebating 404, 405, 406 AMENDMENT (see ITIFTH AMENDMENT). Section 4, of 1910 22 AMERICAN-HAWAIIAN STEAMSHIP COMPANY (see ISTHMUS OF TEHUANTEPEC, PANAMA CANAL). AMPLIFICATION OF SECTIONS. Section 1, continued 3 ANY QUANTITY RATES (see REASONABLENESS OF RATES — Quantity rates). In certain general section of country any quantity rates are uniformly in effect 78 Rest upon sound public policy; Commission has never required an any quantity rate to be superseded by carload basis 78 Leaves carrier with some freedom In the use of its equipment and gives shippers no right to demand car of a given size. ... 79 APPLICATION OF RATES (see REASONABLENESSS OF RATES — Movement of shipments). "ASSIGNED" CARS (see COAL CAR DISTRIBUTION). BILLING (see FALSE BILLING). BOAT LINES (see COMMODITIES CLAUSE). INTERSTATE COMMERCE LAW 421 BRANCH LINE OF RAILROAD (see SWITCH CONNECTIONS). BURDEN OF PROOF (see DISCRIMINATION, REASONABLENESS OF RATES, SECTION 4). Advanced rates, long standing adjustment, burden upon carrier to justify advance in 56, 57, 58, 60, 63 Advanced rates, now the letter of the law Is that burden rests upon carrier to prove reasonableness of advanced rate 60 Advanced rates, carrier not required to justify "the increase of the rate," as under the English statute, but to establish the rea- sonableness of "increased rate" itself 60 Advanced rates in long established adjustment; carrier not required to overcome technical weight and force of pre- sumption that previously existing lower rate or rates were reasonable 63 Always upon party to attack an existing rate, held in 14 I. C. C. Reporter 14, 398 58 CAPITAL. Private, practically entire railroad mileage of the United States, aggregating more than one-third of the mileage of the world, has been constructed with private capital 74 CAR FLOAT. Comparison of cost of service for car float and lighter service raises presumption that allowance for one and not the other constitutes unjust discrimination 298 CARLOAD MINIMUM WEIGHT (see MINIMUM WEIGHT). CARLOAD RATES (see RATES, REASONABLENESS OF RATES— Quantity rates). Carrier not required by law to establish 81 CARLOAD SHIPMENTS (see MINIMUM WEIGHTS). Western Classification definition of 81 CARRIERS. Owe to public efficient service at reasonable rates 77 Not subject to the Act to Regulate Commerce, competition of... 38 Rulings of Interstate Commerce Commission relating to ship- ments of property by carriers as shippers 247, 248, 249, 250, 251, 252, 253, 254, 255 Carrier as shipper over lines of another carrier cannot lawfully be given any preference in application of tariff rates on inter- state shipments 251 As shipper may not receive preference 245 CARS (see COMMISSARY CAR, GRAIN DOORS AND COOPERING, NEW EQUIPMENT, PRIVATE CARS). In Parafline Works Case, Commission held It had power to require carriers to furnish all necessary equipment, both ordinary and special, and to furnish tank cars in sufficient numbers to move normal production; the power of the Com- mission to require carriers to provide new equipment was denied by the Supreme Court 292 Not unjust discrimination against shippers of grain at country elevators because cars suitable to ship other commodities are furnished other shippers 295 Primary duty of a railroad to furnish equipment that Is usable. . 295 In event car furnished is unfit, shipper should reject and call for another 295 Lining and fitting 296 Lining and fitting. Commission approved rule in Western Trunk Line rules 297 Shipper's request for cars especially suited for the transporta- tion of his products would not be reasonable if the cars had to be prepared for shipment in a manner which is peculiarly within the technical knowledge with persons connected with that industry, or If the movement of the commodity is a dangerous operation which can only be performed safely by men engaged In Its production • • • • 291 Carrier may require shipper to partition cars for mixed ship- ments of live stock • '^^^ Whatever transportation service or facility the law requires a carrier to supply, it has a right to furnish '^^^ CAR SERVICE (see DISCRIMINATION). CAP SI25E (see ANY QUANTITY RATE). 422 AMERICAN COMMERCE ASSOCIATION Page CAR SPOTTING (see DISCRIMINATION). Line haul rate covers customary movement of cars and one placement of car upon industry for loading or unloading; additional charge should be made for each additional place- ment of car for that purpose 287, 288 CARTAGE (see ALLOWANCES). CLAIMS (see REBATES AND CONCESSIONS). CLASSIFICATION (see FALSE CLASSIFICATION). Arbitrary classification, because of use of packages or cases of certain kind or size Is undue discrimination against shipper. 275 Ordinary citizen knows nothing of nature or necessity of classi- fication, but traffic managers have a keen eye to the framing of such documents 73 COAL CAR DISTRIBUTION (see DISCRIMINATION, PRIVATE CARS). Discrimination in 303 Duty of carrier in effecting coal car distribution not to dis- criminate or show any undue favoritism 605 So long as system of coal car distribution in a given field, under circumstances and conditions peculiar to that field, is rea- sonable and fair to all, and applied to all alike, there Is no Just cause for complaint 305 Rule that capacity of "assigned" cars shall be deducted from the rated capacity of mine receiving them and remainder regarded as rated capacity of mine in distribution of "unas- signed" cars is unlawful and discriminatory 303 COLLECT (see PREPAID AND COLLECT SHIPMENTS). COMMERCE (see LOCAL TRAFFIC. THROUGH TRAFFIC, TRANS- PORTATION FACILITIES). COMMERCE CLAUSE (see COMMODITIES CLAUSE). COMMECIAL ELEVATION (see ELEVATION). COMMISSARY CAR. For Interstate carrier to operate commissary car from which It furnishes and sells to its employees household supplies, wearing apparel, etc., is unjustly discriminatory against dealers on its line 101 COMMISSIONS (see REBATES AND CONCESSIONS). COMMODITIES. „^ „^ Schedule C of trans continental 25, 26 Schedule C, from eastern defined territories to Pacific Coast points 30 COMMODITIES CLAUSE (see REBATES AND CONCESSIONS). Disjunctively applies for generic prohibitions — forbids carrier from transporting in interstate commerce articles or com- modities (1) which It has manufactured, mined or produced; (2) which have been so mined, manufactured or produced under its authority; (3) which it owns in whole or In part, and (4) in which it has an interest, direct or indirect 110 By amendment of 1906 it was declared unlawful for any railroad company from and after May 1, 1908, to transport any article or commodity (other than timber and the manufactured products thereof), manufactured, mined or produced by it.. 110 Constitutionality of 110 Constitutionality of, attacked as being In contravention of the fifth amendment of the Constitution 110 Supreme Court held that dissociation of railway companies prior to transportation from articles or commodities transported is common purpose of 110 Ownership by railway carrier in bona fide corporation engaged In manufacturing, mining, producing or ow^ning the com- modity carried is not the interest, direct or indirect, in such commodity which is forbidden by the statute HI Declared by Supreme Court to be valid exercise of power of Congress under Commerce Clause of Constitution Ill Exception to commodities clause covers timber and the manu- factured products thereof and such articles or commodities as may be necessary and Intended for use in the conduct of the business of the common carrier 110 Supreme Court ruling on, discussed by Interstate Commerce Commission In 1909 HI INTERSTATE COMMERCE LAW 423 Page Supreme Court clarified Its meaning In the Delaware & Hudson Case In its subsequent ruling In the Lehigh "Valley Case.... 112 Stock ownership by carrier in mining or producing company not repugnant to law, when 113 By operating and effect of, there is duty upon railroad company proposing to carry In Interstate commerce the product of a producing corporation, in which it has a stock interest, not to abuse such power so as virtually to do by indirection that which the Commodities Clause prohibits 114 Question of its prohibitions raised in the Tap Line Case 114 Seeks to divorce transportation from production and manufac- ture and to make transportation a business of and by itself unallied with manufacture and production in which a car- rier is Interested 114, 115 Declaration of public policy in Commodities Clause cannot be ignored in interpreting the power and authority of the Com- mission under the Act to Regulate Commerce 115 Prior to 1906 amendment by which Commodities Clause was in- serted in the Act to Regulate Commerce, Supreme Court held that carrier could not legally agree to sell and transport coal after purchase cost and cost of delivery beyond its lines had been deducted, at a price which would not yield in the net to the carrier the amount of the published freight rate.... 115 Not unlawful for boat lines to transport commodities owned by them 116 Congressional debates concerning 114, 115 COMMON CARRIERS (see CARRIERS, COMMON LAW, RAIL- ROAD). Duty of common carrier is to transport commodities at its tariff rates and on equal conditions for all • • • 99 Must provide prompt and safe service and not charge excessive rate ''^ Supreme Court applied incorporation test in determining status of carriers in Tap Line Cases 114 Railroad, constructing and maintaining a public highway under public sanction, performs a function of the state 74 One who devotes his property to the common use of all and upon a common charge becomes a thing of public interest and subject to public regulation 74 COMMON LAW. Discussion by Supreme Court of principles of common law applicable to common carriers prior to passage of Act to Regulate Commerce In Party Rate Case 129 Excessive rates, common carriers under obligation not to charge 75 Principles of common law applicable to common carrier before the enactment of the Act to Regulate Commerce discussed by Supreme Court in the Party Rate Case 205 Liability, common carriers held to strict responsibility for inju- ries to persons or property 75 Prohibition against unjust discrimination 204 Principles of common law, before enactment of Act to Regulate Commerce, required barely more than that carrier should carry for all persons who desired service, in the order in which the goods were delivered to the carrier, and at reason- able charges 205 Rule of, underlies practically all our constitutional and legis- lative provisions respecting common carriers 74 COMPANY MATERIAL. All divisions upon fuel coal must be made In good faith with- out respect to the fact that one of the carriers is the purchaser of such coal 250 A carrier may not, as a shipper over the lines of another carrier, be given any preference 246 Supreme Court, in B. & O. R. R. Case, held that fuel coal does not come into competition with commercial coal, although it is in competition with other fuel coal, and is not a violation of sections 2 and 3 of the Act to Regulate Commerce 252 424: AMERICAN COMMERCE ASSOCIATION Page While interstate carrier may not charge different rate for trans- portation of fuel coal to given point than for commercial coal to same point in the transportation of supplies and employees of construction contractors on its road, it does not act as common carrier and arrangements made in good faith for carrying sucli supplies or employees either free or at reduced rates, does not violate the Act to Regulate Com- merce 254 Words, "of its own property," not used with reference to tech- nical or actual ownership, but intended to refer to property actually owned by carrier or in good faith purchased or contracted for, for its use 248 COMPETITION (see COST OF SERVICE, CROSS COUNTRY, DIS- CRIMINATION, PANAMA CANAL, REASONABLENESS OF RATES — Traffic conditions). Is a public benefit 275 Carload rates have a tendency to localize distribution, while stop-over privilege tends to engender wholesome competi- tion 356 When rate for longer haul is forced unreasonably low by com- petition, the only elements that enter into the consideration of the rate for the shorter haul are its reasonableness.... 185 The courts have qualified the application of the competition rule in the elimination of certain competitive preferences, but competition may not always justify a preference, and that question must be determined under the third section of the Act as a question of fact in each case 148 Cases holding voluntary rate established to meet competition not a measure of reasonableness 64 Element in determining reasonableness of rates 59 Export, rates, carrier bound to consider intense competition to which foreign traffic is subject as one of "circumstance and conditions" affecting relative adjustment of rates 48 Export rates on traffic subject to intense competition do not mark limit of rates on traffic not subject to such competition 48 In applying sections of the Act to Regulate Commerce dealing with discriminations and preferences, Commission must determine from questions of fact how far the competition rule is controlling 147 If competition is controlling, It must be determined whether the lower rates resulting therefrom are reasonable 147 Lower rate at competing or preferred point must be remunera- tive to the carrier and reasonable itself 147 Must be controlling, in that the carrier must meet it, or loss of the business will result 147 Must be real and not created by agreements between the carriers destroying real competition 147 Commercial, and intense solicitation of traffic gradually devel- _ oped discriminatory practices 134 Commercial, effect of in rate-making illustrated in testimony in St. Louis case 7 No principle of law prohibits carrier so adjusting its rates that it may fight for the whole traffic the moment the effect of its competitor's rates are felt 8 Commercial, inclusive of cross country and market competition 4 In facilities, element affecting freight rates 4 Market, produces lower rates from interior to the coast 4 Of markets, element affecting freight rates 4 Railroad, by carriers not subject to Act to Regulate Commerce. . 38 Railroad 38 Railroad, most prevalent form of, is competiton between routes 15 Railroad, is closely inter-related with commercial competition, and is sometimes responsible therefor 16 Railroad, ever-present in the American railroad svstem 16 Carrier may for competitive reasons voluntarily do that which it may not lawfully be required to do 8, 16 Railroad, may be considered by carriers in adjusting their rates, but must be genuine, not pretential 16 Railroad, element affecting freight rates 4 INTERSTATE COMMERCE LAW 425 Page Rail-and-water, when genuine and not pretential, effect of should be considered in determining relative reasonableness of rates ^^ Rail-and-water, where existing at one point to substantially different extent than at another, rates to former point not a measure of reasonableness of rates to latter point 19 Rail-and-water, in routes Including water haul, effect of lower charge for water carriage may militate against rate of all- rail competitive route 19 Rail-and-water, element affecting freight rates 4 Of routes, element affecting freight rates 4 "Unjust and unreasonable preference," construed by Supreme Court of United States to admit, in the spirit of the entire Act, of the elimination of those necessary preferences which arise in railway and commercial competition 147 Rates reduced to meet water competition not to be raised with- out permission of Interstate Commerce Commission 156 Water, Commission recently called upon to consider, as to effect upon trans-continental rate structure 24 Water, element affecting rates 31 Water, although effect of has disappeared for time being in trans-continental rates, this condition is but temporary.... 25 Water, if rail carrier in competition with water route depresses rates, without authority of Commission, so low as to drive water carrier from the field, the rail carrier is prohibited from thereafter increasing its rates except by permission of the Commission 28 Water, potential, serves best purpose as force insuring better service and fairer treatment by competitive lines 31 Water, potential effect of at times must be considered in deter- mining reasonableness of rates 31 Water, "may compete for traffic," in connection with potential effect of water competition, does not mean vague possible though improbable competition, but probable and potential competition 31 Water, adjustment of freight rates may not overcome such natural advantage of one locality over another as water competition and climatic conditions 20 Water, never a measure of reasonableness of all-rail rate 20 Ocean, brings about lower rates from coast to coast 4 Water, element affecting freight rates 4 Water, if trans-continental carriers able to make such rates as will hold traffic to their lines with profit to themselves, they should be permitted so to do 23 Water, effect of upon trans-continental rate structure prior to opening of Panama Canal 23 Water, tends to cause fluctuation in rates, commercial competi- tion to equalize them 22 Water, determines to large extent several of our most important rate adjustments 22 Water, following 1910 amendment of section 4, Commission gave consideration to water competition only when a necessary element in making of rail rate 22 Water, Commission has had to deal with effect of both actual and potential 21 Water, to meet, rail carrier must lower rates on competitive traffic, but not in any sense, to the level of the water rates. . 21 Water, difference in character of water and rail services neces- sarily differentiates water and rail rates 21 Water, cost and potential effect of, are culpable factors in rate issues 21 Water, has been troublesome issue for Commission from incep- tion of its administration 21 Water, carrier's privilege to determine whether, it has sufficient influence on traffic to make it reduce its rates 20 Water, always introduces unsatisfactory basis of rate compari- son 21 Water, the Trang-Continental R?ite Cases 21 426 AMERICAN COMMERCE ASSOCIATION Water, while availed of by carrier as justification for lower rates than would be lawful under sections 1, 2, 3 or 4 of the Act to Regulate Commerce, existence of such competition not a ground upon which shipper may demand lower rate.. 20 Water, rule followed by Commission has been that even though there be water competition at each of two points, yet difference in rate to those points may be justified 20 Water, privilege of carrier to meet but not privilege of shipper to demand, as basis of lower rate 20 CONCESSIONS (see REBATES AND CONCESSIONS). CONDITIONS (see TRANSPORTATION CONDITIONS). CONFISCATION (see REASONABLENESS OP RATES — Non-confls- catory rate). CONNECTING CARRIER (see DISCRIMINATION). CONSTITUTION OF THE UNITED STATES (see COMMODITIES CLAUSE). CONSTRUCTION (see COST OF CONSTRUCTION). CONTRACT (see DISCRIMINATION, TRACKAGE RIGHTS UNDER CONTRACTS). COOPERING (see GRAIN DOORS). CONSTRUCTION, COST OF (see REASONABLENESS OF RATES). If railway accounts are kept according to present requirements of Commission, cost of construction can contain no factor of obsolescence, for when a thing goes out of service the value of that thing is written off 72 COST OF SERVICE (see REASONABLENESS OF RATES, REASON- ABLENESS OF RATES — Traffic conditions). Comparative cost of service not sufficient justification for dis- crimination in rates 275, 276 Comparison of cost of service for car float and lighter service raises presumption that allowance for one and not the other constitutes unjust discrimination 298 Cost of service, is an element essential to the determination of the reasonableness of a rate, and may, as a condition of service, be considered in discrimination readjustments 298 Element in determining reasonableness of rates 59 For moving local freight is greater than that of moving through freight 311 In re separating of operating expenses 103 Volume of traffic and length of haul are among determining factors in arriving at 103 Movement by water involves different elements of cost from those affecting rail transportation 21 Water carriage involves relatively high terminal costs, entire absence of highway maintenance costs, and extremely low cost of motive power 21 Cost of water transportation culpable factor in rate issues.... 21 CREDIT (see DISCRIMINATION — Credit, REBATES AND CONCES- SIONS). CROSS COUNTRY COMPETITION (see COMPETITION). Commission has given consideration to in determining relative reasonableness of rates 14 Substantial increase in rates on one road will divert traffic by wagon to other lines 14 This form of competition very intense throughout apple pro- ducing territory of New York, southern Pennsylvania, Dela- ware, Maryland, West Virginia and Virginia 14 Effected through wagon hauling frequently important factor In adjustment of parallel carriers' rates 14 COMPARISON (see DIRCRTMTNATTON, RES ADJUDICATA). COMPRESSION (see DISCRIMINATION— Transit privileges). CONSOLIDATED SHIPMENTS. Propriety of 278 COTTON. Compression in transit, discrimination in 351 COURTS. Attitude of courts toward discriminations may be summarized to the effect that discrimination may be unjust when not based upon substantial difference in commodity and kind of. service 208 INTERSTATE COMMERCE LAW 427 Page Enforcement of provisions of section 2 of Act to Regulate Com- merce by the Commission and the courts 132 Enforcement of provisions of section 3 of Act to Regulate Com- merce by the Interstate Commerce Commission and the courts 152 Enforcement of provisions of section 4 of Act to Regulate Com- merce by Interstate Commerce Commission and the courts.. 197 Federal courts have qualified unjust discrimination within the meaning of the Act by holding that a difference in charge must apply to a like kind of traffic, In a contemporaneous service rendered under substantially similar circumstances and conditions 206 Power of, over unjust discrimination Is that of review and con- fined to constitutional questions and pertinent questions as to whether action of Commission is within scope of dele- gated authority 129 DALLAS CASE 38 DELIVERY (see PICK UP, SWITCHING). DEMURRAGE (see REBATES AND CONCESSIONS). DIFFENBAUGH CASE • 224 DIFFERENTIAL (see REASONABLENESS OF RATES — Traffic con- ditions). DIRECTION (see REASONABLENESS OF RATES). DISCRIMINATION (see ALLOWANCES, ELEVATION. LONG AND SHORT HAUL, REASONABLENESS OF RATES— Preferen- tial rates, SECTION 2, SWITCH CONNECTIONS, TAP LINE, "UNDER SUBSTANTIALLY SIMILAR CIRCUMSTANCES AND CONDITIONS"). Unjust discrimination defined and forbidden • • . J^? As a term, does not necessarily mean an unjust difference. .130, 206 Not all discrimination is condemned; only that which Is undue. . 130, 140, 202, 207 Carriers, being engaged in a public employment, must serve all members of the public on equal terms — doctrine of the common law • • ^1 Term "discrimination" as employed in Act to Regulate Commerce Is used in a qualified sense ;,■■■•;■ 1 ' Principles of common law, before enactment of Act to Regulate Commerce, required barely more than that earner should carry for all persons who desired service, in the order in which the goods were delivered to the carrier, and at rea- son3.blf^ diS-TErGs ..•■>•* ••••••••••• ^"o Common law prohibition against unjust discrimination.... 204 In an equitable sense common law right of carrier to differen- tiate between its shippers Is still preserved by the statute law •/•;•■ Discrimination, more often than not, denotes effect of omission to equitably differentiate or distinguish relative results... 130 Close reading of many court decisions reveals literal meaning of proper or justifiable difference 130 Underlying purpose of regulatory legislation is to put shippers on basis of absolute equality, assure them of equal rates and impartial enjoyment of facilities and services of inter- stjitG C3,rricrs ..••«•..•••••••••••••••■•••••••••••••••"•*• ''-^» "o4 Basic principle of Act toRegulate Commerce is "fair play" 202 Vital purpose of Act to Regulate Commerce is to require carrier to serve public without undue discrimination against one of its patrons and unjust preference of another 131 Act to Regulate Commerce seeks to effect a morally equitable difference creating differences or distinctions between per- sons, localities or commodities that are just, fair and equita- ble 130 Carrier is bound to charge equally all persons using its services, regardless of their relative standing in the community 271 Unlawful for any common carrier subject to Act to Regulate Commerce to make or give any undue preference to any persons ; • • ^''■ Carriers may do many things in course of lawful competition that Commission cannot require them to do or charge them with undue discrimination for not doing 130 428 AMERICAN COMMERCE ASSOCIATIOiN Page Differences that are just, fair and equitable are sanctioned by the law 130 Obligation of common carrier to serve public is broad one and cannot always be fulfilled in way that is most advantageous to the carrier 241 Discrimination which operates to the undue advantage of one person and inflicts injustice on another comes within the prohibition of the Act 131 Facts surrounding each shipper and the conditions and circum- stances of the service rendered him are solely determinative of the justness or unjustness of any differentiation made by the carrier 202 Facts and circumstances surrounding each alleged act of undue or unjust discrimination must be determinative of degree of difference which is justified 131 To be unjust, must, in its effect, do a wrong to the just rights of one person, while at the same time favoring or advancing the same rights of another 202 Forms of, contemplated by Act to Regulate Commerce 201 Any practice or regulation that unlawfully discriminates against one shipper and affords an undue preference to another shipper is a regulation or practice affecting rates within the meaning of the statute 285 Broadly speaking, there can be a's many different kinds of dis- crimination as there are acts or omissions committed by the carriers vrhich have the effect of placing in disadvantageous or preferred positions patrons of the carrier whose relation- ship would otherwise afford them substantial equality 201 Or wrongful practice, even though applied equally to all ship- pers similarly situated, becomes unlawful and subject to severe penalty 134 Discussion by Supreme Court of principles of common law applicable to common carriers prior to passage of Act to Regulate Commerce in Party Rate Case 129 Prohibition against "unjust discrimination" as result of wrong- ful act rather than method by which effected 376 During the years in which the Commission has enforced the prohibitions of the law against undue discrimination, cer- tain acceptable methods of comparison have been developed. 209 Under the Elklns Act it is not necessary to find that discrimina- tion is undue, but merely that it is material and substantial 414 Primary jurisdiction over undue or unjust discrimination by carriers is with the Interstate Commerce Commission 129 Power of tlie courts over unjust discrimination is that of review and confined to constitutional questions and pertinent questions as to whether action of Commission is within scope of delegated authority 129 Power, upon complaint, to deal with unjust preferential and dis- criminatory regulations and practices was clearly vested in Commission under section 15 of Act to Regulate Commerce. . 284 Only necessary to prove that favored shipper has had his prop- erty transported at a rate less than that published and filed. 210 Of any degree Is a relative condition, and Commission may draw upon standards set by any carrier as a basis to assist in determining relative propriety of challenged rate or prac- tice 209 Rights and Interests of both shippers and carriers must be regarded by the Commission, under the terms of the Act to Regulate Commerce 208 Intent of Congress that whatever would be regarded by common carriers as warranting differences in charges should be con- sidered In determining whether such conditions were or were not unjust 208 Attitude of courts toward discriminations may be summarized to the effect that discrimination may be unjust when not based upon substantial difference in commodity and kind of service ..,..,. ,,.,.,,,.,,,.,.... 208 INTERSTATE COMMERCE LAW 429 Page Federal courts have qualified unjust discrimination within the meaning of the Act by holding that a difference in charge must apply to a like kind of traffic, in a contemporaneous service rendered under substantially similar circumstances and conditions 206 Prohibition against inequalities among shippers is the vital fundamental of the Act to Regulate Commerce and Its sup- port in statutes 202 It Is hardly logical to contemplate a scheme of government regulation competent to deal with discrimination which does not possess the power to fix the relation of rates and mini- mum rates when necessary to correct discriminations 185 Pact that given town has been recognized as a "trade center" and is enabled by its more favorable rate adjustment to dis- tribute in a certain territory, cannot justify continuance of relative rates which result in undue preference 149 Lower rates to large shipper than are at the same time accorded his smaller competitor clearly constitute unjust discrimina- tion in violation of section 3 .' 204, 251, 272 Difference in transportation conditions must be substantial in order to remove application of section 2 of Act to Regulate Commerce 251 Commission would not sanction arrangement for lease by inter- state carrier of trackage rights over short connecting line for purpose of hauling its own crews and equipment ballast for use on its own line, the arrangement being regarded as an unjust discrimination 101 Localities, discrimination and preferences between IBO Under the provisions of the Elkins Act the published rate became the standard of comparison 135, 210 Principle of conclusions in Import Rate Case reannounced by Supreme Court in subsequent cases 142 Section 1 of Act to Regulate Commerce condemns unreasonable rates and their correlative result of unjust discrimination.. 130 Most elementary premise to which requirement of section 2 applies is that of local and through transportation service. 311 "The effectiveness of the Act to Regulate Commerce is more distinctly expressed in the second section than any other". 133 Section 2 of Act to Regulate Commerce supported by Elkins Act 133 Purpose of section 2 of the Act to Regulate Commerce is the abstract result obtainable from the regulation as whole — the prevention of any unjust discrimination between ship- pers in any form or by any device 134 Purpose of section 2 of Act to Regulate Commerce is "to compel every carrier to give equal rights to all shippers over its own road and to forbid it by any device to enforce higher charges against one than another" 127 Section 2 defines as unjust discrimination charging or receiving by common carrier of greater or less compensation in trans- portation of passengers or property from any person or persons, (1) when service is like and contemporaneous; (2) in the transportation of a like kind of traffic; and (3) under substantially similar circumstances and conditions. . 127, 131, 132, 140, 171, 208 Under section 2 of Act to Regulate Commerce standard of com- parison was treatment accorded to shippers prior to the Elkins Act 135 Immediate effect of Elkins Act upon section 2 of Act to Regulate Commerce was change in standard of comparison by which discrimination was determined 135 Section 2, requires all shippers to be treated alike where service of transportation is performed "under similar circumstances and conditions" 310 Prohibition of section 2 is against the doing of a service by a carrier in a manner forbidden by the statute, and if no service has been done, no controvention of the Act has occurred 210 Discriminations referred to in section 2 relate to like kinds of trafllc, whereas those brought within provisions of section 3 are between different kinds of traffic as well 143 430 AMERICAN COMMERCE ASSOCIATION Page Enforcement of provisions of section 2 of Act to Regulate Com- merce by the Commission and the Courts 132 Statutory provisions of section 3 of the Act to Regulate Com- merce 139 Section 3 is sufficiently broad in its scope to include any act or omission by carrier which results in undue or unreasonable prejudice or advantage 132, 139, 315, 338 Scope of prohibitions of section 3 of Act to Regulate Commerce considered by Supreme Court in the Import Rate Case 141 Section 3 is less restrictive than section 2 in its prohibition against unjust discrimination 132 While section 3 condemns all discriminations and preferences which are unjust and unreasonable, it is in itself an admis- sion that there are discriminations and preferences that may be just and reasonable 140 Provisions of section 3 cover a form of discrimination or prefer- ence which operates to place any person, company, corpor- ation, firm, locality, or kind of traffic, at an unjust disad- vantage or prejudice with any other individual, locality or kind of traffic 148 Section 3, second paragraph, requires carriers subject to Act to Regulate Commerce to afford all reasonable, proper, and equal facilities for the exchange of traffic between their respective lines 145 Section 3 of Act to Regulate Commerce, administrative appli- cation of provisions of, by Interstate Commerce Commission 146 Enforcement of provisions of section 3 of Act to Regulate Com- merce by the Interstate Commerce Commission and the courts 152 Discrimination in export and import rates may be considered by the Commission under the provisions of section 3 of the Act to Regulate Commerce 192 Sections 2, 3 and 4 of Act to Regulate Commerce define and pro- hibit specific forms of discriminations 130 Power to remedy the evils of discrimination is found in sections 15 and 16 of the Act to Regulate Commerce 286 Relationship of section 3 with sections 2 and 4 of the Act to Regulate Commerce 143 Administrative enforcement of sections 1, 2, 3 and 4 of the Act to Regulate Commerce prohibiting unjust discrimination. Sections 1, 2, 3, 15 and 16 of Act to Regulate Commerce leave no doubt of power of Commission to determine whether or not carriers have furnished transportation service and ade- quate facilities upon just, reasonable and non-discriminatory rates Relationship of sections 2, 3 and 4 of Act to Regulate Commerce Relationship of sections 3 and 7 of Act to Regulate Commerce. Section 10 prohibits rebates and concessions Full scope of prohibitions of Act to Regulate Commerce directed against unjust discriminations is best comprehended by reading sections 2, 3 and 4 together 129 Discrimination provisions of Act to Regulate Commerce do not stop with those of third section, but proceed to the fourth section of the Act and specifically condemn a kind of description which arises out of the relation of long-and- short-haul rates 132 Relationship to section 4, the purpose of the fourth section being to narrow prohibition of section 3 down to exclusion of higher rate for nearer than for more distant point on the same line 133 Section 6 prohibits rebates and concessions 368 First four sections of Act to Regulate Commerce comprehen- sively prohibit the several kinds of discriminations and preferences which may operate among shippers in unjust and unreasonable manner 133 Purpose of sections 3 and 7 to afford the freest possible inter- change of traffic and to secure impartial treatment of connecting carriers 161 Allowances, legality of 215 Allowances to shippers, test of legality of, not In method but in the consideration for such allowance 383 201 283 129 151 368 INTERSTATE COMMERCE LAW 431 Page Allowances must be just, reasonable and non-discriminatory.... 219 An allowance is not a rebate when it does not exceed the actual cost 223 Commission scrutinizes allowances with view to prevent recur- rence of past abuses 219 To pay an allowance to one shipper while declining to pay it to another, or to pay an allowance at one point while refusing to pay it at anotlier, amounts to unjust discrimination, unless justifying circumstances and conditions exist 219, 223 Failure of carrier to observe rules of equality in granting allowances involves necessarily unjust discrimination 219 If carrier makes allowance to shippers at country stations for labor and materials furnished, such allowances must be stated in its tariffs and applied without discrimination 295 In allowances made to shippers who furnish some facility or render a certain service essential to the transportation of their property and which may as a matter of lawful right be demanded by the carrier as part of its transportation service 218 Allowances to shippers for defective equipment are of dangerous character 296 Allowances, carrier may not lawfully discriminate between persons in allowances for elevation of grain or in the stopping of commodities in transit 274 Allowance for commercial elevation an undue preference and therefore unlawful 224 Sucli privileges as allowances for elevation of grain, stopping of commodities in transit, or reconsignment, must be fur- nished on equal terms to all 275 "Lateral allowance" held to be a rebate in the Anthracite Coal case 379, 380, 381 If free storage or free cartage is allowed by carrier for some shippers at given point and not for all, such allowance is an unlawful discrimination 274 Car distribution, carrier must furnish like vehicles to all com- petitors in the traffic or must be careful to make no unjust discrimination and give no undue preference in his rates... 306 Owners of private cars are entitled to their exclusive use, and foreign railway fuel cars assigned to a particular mine cannot be delivered to another mine, but Commission holds that all such cars must be accounted against the distribu- tive share of all cars of the mine receiving them 292, 301 Rule that capacity of "assigned" cars shall be deducted from the rated capacity of mine receiving them and remainder regarded as rated capacity of mine in distribution of "unassigned" cars is unlawful and discriminatory 303 So long as system of coal car distribution in a given field, under circumstances and conditions peculiar to that field, is reasonable and fair to all, and applied to all alike, there is no just cause for complaint 305 Duty of carrier in effecting coal car distribution not to dis- criminate or show any undue favoritism 305 Distribution of cars, carrier is not free to use its equipment as may best suit its convenience or advantage, but is bound to serve all shippers alike 290 Car distribution, discrimination in 300 Distribution of cars, carrier's convenience 290 Car spotting, if carrier voluntarily undertakes to perform serv- ice of car spotting for some and refuses to perform it for others, unlawful discrimination will result 287 Carrier may decline to haul private cars at all and uniform rule to that effect is entirely consistent with public obliga- tions 306 Carrier may haul private cars of certain class and at the same time refuse to haul others of substantially different class.. 306 Private cars, to require shippers to furnish private cars is to render discrimination practically unavoidable 291 Cars, fact that certain carriers use double deck cars for trans- porting live hogs while other carriers use single deck cars did not justify difference in rates which discriminated against certain shippers 299 432 AMERICAN COMMERCE ASSOCIATION Page For interstate carrier to operate commissary car from wliich it furnishes and sells to its employees, household supplies, wearing apparel, etc., is unjustly discriminatory against dealers on its line 101 AH cars used by carriers whether owned or leased, must be distributed without discrimination 292 Lining and fitting cars zse Unsound in principle to encourage car fitting or use of dunnage in order to secure minimum loads and then to approve pay- ment of allowances to offset expense thus incurred 297 Marked difference in character of cars furnished by separate carriers at different points and by one carrier at the same point, renders it impracticable to fix maximum iillowance to be paid shippers for material and labor 294 Grain doors and coopering 298 Grain doors, if carrier furnishes nothing but loose boards at one point and at another point furnishes sectional doors, lath, paper, or burlap, unlawful discrimination results 295 Requirement that to entitle shipper to carload rating goods must be loaded at one time and place, single bill of lading issued, and shipment made from one consignor to one con- signee has been held to be a proper one 276 Between carriers 241 Arbitrary classification because of use of packages or cases of certain kind or size is undue discrimination against shipper 275 Between commodities 201 In applj'ing sections of the Act to Regulate Commerce dealing with discriminations and preferences it must be determined from questions of fact how far the competition rule is con- trolling 147 Competition must be real and not created by agreements between carriers destroying real competition 147 Lower rate at competing or preferred point must be remunera- tive to the carrier and rates must be reasonable themselves. 147 If competition is real and controlling, it creates substantially similar circumstances and conditions 147 The competition rule has been qualified by the courts 147 Competition must be controlling in that the carrier must meet it or loss of the business will result 147 Commercial competition and intense solicitation of traffic grad- ually developed discriminatory practices 134 When no other force found producing, market competition is advanced as justification 4 Neither sound in principle nor equitable in practice for carriers to create artificial differences in market conditions by an arbitrary differential in rates 149 The courts have qualified the application of the competition rule in the elimination of certain competitive preferences, but competition may not always justify a preference, and that question must be determined under the 3rd section of the Act as a question of fact in each case 148 Contract with shipper, discrimination resulting from 255 If by agreements or combinations among carriers rates are unduly influenced by suppression of competition, that fact is proper to consider in determining question of undue dis- crimination and reasonableness per se of the rates at such possible competitive points 150 Where preferences are created by ownership of otherwise com- petitive lines, or suppression by agreement of real compe- tition, or creation of artificial market conditions by carriers, such preferences are unlawful and violative of section 3.... 149 Between connecting lines forbidden 189 Connecting carrier, shipper Interested In 265 Comparative cost of service not sufficient justification for dis- crimination in rates 275, 276 Cost of service, where higher rate is charged because of addi- tional services like refrigeration in transit, rapid transit, the discrimination is justified if reasonable 821 Cost of service, where difference in rates bears proper relation to difference in cost of handling property. It is not dis- crimination 321 INTERSTATE COMMERCE LAW 433 p£LGro Cost of service is an element essential to the determination of the reasonableness of a rate, and may, as a condition of service, be considered in discrimination readjustments 298 Comparison of cost of service for car float and lighter service raises presumption that allowance for one and not the other constitutes unjust discrimination 298 Trifling differences of cost of character of the services rendered do not justify disparity of charges 207 Credit, long time credit to proprietary industries constitutes unlawful discrimination 359 Financial aid, carrier extending to shipper 360 Demurrage on private cars 293 Divisions of through rates may be means of effecting undue discriminations 253 There is well defined distinction between an absorption volun- tarily made by a trunk line and the divisions of the joint rate prescribed by the Commission 257 Re-allowances to elevators 226 Carrier has no right, under pretext of transfer which it does not require, to furnish commercial elevation, or pay an allowance therefor; if it does so, it must accord the same privilege and make the same payment to other persons and at other points 225 If carrier makes allowance to one elevator for elevation of grain so as to give that elevator payment for commercial elevation, it must extend the same privilege to all other elevators similarly situated 225 Commission expressed view in Peavey and St. Louis cases that payment of all elevation allowances and giving of all free elevation should be prohibited, for in no other way can discrimination be prevented 225 Commission's order in Peavey and St. Louis cases, declaring commercial elevation unlawful and transportation elevation a necessity, overruled by Supreme Court in the Diffenbaugh Case 224 St. Louis Elevation Allowance Case 225 Not unjust discrimination against shippers of grain at country elevators because cars suitable to ship other commodities are furnished other shippers 295 In services and facilities '. .299', 330 Forms of discriminations which relate to the furnishing of service, facilities, car service, and the like, are prohibited by section 3 of the Act to Regulate Commerce 286 Section 3 of the Act to Regulate Commerce requires every carrier subject thereto to afford equal facilities for inter- change of traffic and forbids discrimination in rates and charges between connecting carriers 139, 241 Facilities, interchange, section 3 requires carriers to furnish. 332, 336 Facilities and service. Act to Regulate Commerce is opposed to every species of favoritism and seeks to secure like treat- ment for all persons in like relations to the carrier 306 Facilities and service, every shipper is legally entitled to fair treatment in the use of public utilities 306 Railroad is justly regarded as a public facility which every person may enjoy at pleasure, a common right to which all are admitted and from which none can be excluded 204 Services and facilities, properly a part of the service of trans- portation, are as effectively dealt with by the laws as are prejudicial rates 299 Trackage rights under contracts 323 Leased trackage rights 322 Dock facilities, not unlawful for carrier owning dock facilities at given point to refuse to permit another carrier's boats to use such wharf 308 Wharves, rail carrier may set aside one or more of its docks for use of particular lines so long as such practice does not conflict with its duty to give delivery at those docks to whomsoever may apply 347 434 AMERICAN COMMERCE ASSOCIATION Page Wharves and tracks leading thereto, owned by a railroad en- gaged in interstate commerce and used for receiving and delivering such shipments are subject to the Act to Regulate Commerce and regulations and practices effecting their use must be reasonable and non-discriminatory 343 Wharfage rights 343 Wharfage rights, where a carrier leased wharfage rights and facilities to a single shipper, such preference was said to be an undue discrimination 343 Commission may condemn any discrimination in export and import rates upon comparison with those applicable on domestic interstate traffic to the extent that the same may be found unjust or unreasonable 192 If express company grants free pick up and delivery service in one part of town and refuses the privilege in another, it is guilty of unjust discrimination 304 Loading and unloading, not unlawful for carrier to assess a reasonable charge for loading or unloading, or assisting in loading or unloading carload freight, provided service and charge are legally provided for in tariffs 304 Local and through shipments 310 Burden of proof under application for relief for provisions of section 4 197 Original fourth section of the Act to Regulate Commerce 156 Statutory provisions of section 4 of Act to Regulate Commerce. 155 Provisions of section 4 are directed against specific form of discrimination of rates in different localities 132 Intent of Congress that law should require as a general rule that there should be no lesser charge to the more distant point, but that there might be justifiable exceptions to such general rule 170 The new fourth section, purpose of 168 Section 4 as amended clearly a continuance of the stringent prohibitions against discrimination found in the first, second and third sections of the Act to Regulate Commerce 171 Purpose of new fourth section to forbid carriers, "to charge any greater compensation as a through route than an aggre- gate of the intermediate rates subject to the provisions of the Act" 168 Application of new fourth section by Commission in the Nevada case 172 Prior to amendment construction of section 4 turned on the qualification as to the similarity of conditions effected by competition 156 Section 4 as originally enacted contained qualifying phrase "under substantially similar circumstances and conditions". 156 "Validity of rates under section 4 is determined by comparison of export rate with export rate and import rate with import rate 192 Fourth section of Act to Regulate Commerce applies to import and export rates 192 Enforcement of provisions of section 4 of Act to Regulate Com- merce by Interstate Commerce Commission and the courts.. 197 Case references to Commission's rulings under fourth section of Act to Regulate Commerce 193 Dissimilarity of conditions in rates at a given point caused by actual competition between carriers creates situation con- templated by provisions of section 4 and constitutes only ground of justification of lesser charge to more distant point 150 Overcharge, based on coal percentage contract, resulting in dis- crimination against shipper 272 Overcharge, discrimination by retention of 268 Determining factor is not whether the person who receives an unpublished refund is directly connected with the shipment but whether that person controls its routing 274 Actual or technical ownership of property at time shipped or during transportation are not matters of importance or concern unless resorted to as excuse for evasion of or departure from lawful tariff rates, rules and charges 245 INTERSTATE COMMERCE LAW 435 Paga If carrier accords carload rate where consignor is owner, failure to extend same privilege when consignee is owner violates sections 1, 2 and 3 of the Act to Regulate Commerce 277 Carrier may not discriminate by making test of duty to carry ownership of goods when tendered for transportation 278 Nothing in duties of common carrier by remotest implication can be held to imply power to sit in judgment on title of prospective shipper 278 Property for use in eating houses maintained by carriers for passengers and employees and intended for use of such carriers in their business not unlawful 101 Carrier may not lawfully transport free or at reduced rates materials for building or repairing a refrigeration plant built under contract with the carrier, but which also engages in commercial ice business 101 One railroad may not lawfully carry freight free for another even though one owns stock in the other 101 Carrier as shipper may not receive preference 245 Rulings of Interstate Commerce Commission relating to ship- ments of property by carriers as shippers 247, 248, 249, 250, 251, 252, 253, 254, 255 Preferential rates on property consigned to or intended for use of carrier, unlawful 248, 249, 250, 251, 252, 253, 254 Carrier as shipper over lines of another carrier cannot lawfully be given any preference in application of tariff rates on interstate shipments 99, 246, 251 If carrier is afforded special or favored rates as compared with other shippers discrimination will be injected into almost every field of commerce and nearly every locality of pro- duction or manufacture 251 Unlawful for carriers to make special and discriminatory divi- sions of joint rates on locomotive fuel as between an originating or participating carrier and a purchasing carrier 250 Coal billed to points on lines of purchasing carriers beyond where it was actually consumed is a departure from the published tariff rates and an unlawful rebate and concession 250 Supreme Court, in B. & O. R. R. case held that fuel coal does not come into competition with commercial coal although It is in competition with other fuel coal, and is not a viola- tion of sections 2 and 3 of the Act to Regulate Commerce. . . 252 While Interstate carrier may not charge different rate for trans- portation of fuel coal to given point than for commercial coal to same point in the transportation of supplies and employees of construction contractors on its road, it does not act as common carrier and arrangements made in good faith for carrying such supplies or employees either free or at reduced rates, does not violate the Act to Regulate Com- merce 254 Commission has undoubted right where a carrier Is shipper to inquire into reasonableness of divisions received by it and fix proper ones 254 Discrimination between persons 215, 271, 275, 282, 317, 365 Shipper, discrimination affecting the person of the shipper 271 Confined to patrons of carriers 359 Prohibition against, is not confined solely to the person of the shipper 202 When shipper is forwarding agent 277 Naming specific consignors and consignees as entitled to certain service is objectionable in form and may easily result in unjust discrimination 276 When shipper is owner of goods 276 Person of shipper may not lawfully be discriminated against to undue or unreasonable extent in any of the elements of rate-making or rendering of transportation service 275 Prepaid and collect shipments, rates distinguishing between unlawful 72, 309 Carrier has right to require prepayment of charges, or to trans- port freight and collect such charges on delivery, or accept part of charges in prepayment and collect the remainder upon delivery 246 Prepaid rates, Commission on special whiskey 73 436 AMERICAN COMMERCE ASSOCIATION Paare Special privileges 324, 325, 326, 327, 329, 330 Special privileges, where an allowance of a privilege is made to a carrier in one locality or section, it must be without wrongful prejudice to the rights of shippers in another section served by the same line 323 Rates, by direct difference in 313 In a discrimination in rates under sections 2 and 3 it has been held that it is immaterial whether or not the rate paid by the favored shipper was published and filed with the Com- mission 210 Existence of merely theoretical or paper rate is not sufficient to complete a violation of the long-and-short-haul clause, no shipment having ever been made at that rate 210 Section 3 of the Act to Regulate Commerce forbids carriers to discriminate in rates and charges between connecting lines. 122 Secret rates inevitably become discriminating rates 91 The law contemplates relative fair rates as between different places 149 Commission has refused to order reduction in rate to remove discrimination caused by tap line allowances 218 Rebates and concessions 365 Rebates and concessions, what constitutes a rebate 375 Rebates and concessions, statutory provisions against 367 Rebates and concessions, inducing concession 418 Rebates and concessions, forms of rebating 393 Duty of Commission to make orders which shall nullify allow- ances resulting in rebating or preferences, whatever form they take and in whatsoever guise they may appear 238 Rebates and concessions, resulting from alliancesi between carriers and large shippers 399 Rebates and concessions, false classification and false billing as methods of rebating 407 Rebates and concessions, unlawfully obtained through false claims 401 Rebates and concessions, unlawiful use of peddler cars 400 Rebates and concessions, unlawfully obtained through violation of the Commodities Clause 403 Rebates and concessions, unlawfully obtained through Com- missions paid by carrier 414 Rebates and concessions, unlawfully obtained through exten- sion of credit to shipper 413 Rebates and concessions, unlawfully obtained through cancella- tion of demurrage charges. . 417 Rebates and concessions, Elkins Act prohibits 365, 370 Rebates and concessions, offense of "rebating" more particularly defined in Elkins Act 384 Rebates and concessions, allowances to shippers for services rendered or facilities furnished 404 Rebates and concessions, allowances to industrial or terminal railways or boatlines owned or controlled by shippers 406 Rebates and concessions, leases of carriers' property to shippers at less than fair rental 400 Rebates and concessions. Lake Erie & Ohio River Ship Canal Act prohibits 374 Rebates and concessions, transportation of commodities sold and delivered by a carrier 412 Rebates and concessions, special passenger services granted to large shippers 398 Rebates and concessions, unlawful use of passes to influence traffic 396 Rebates and concessions, published rate the standard of lawful- ness and any departure therefrom is declared to be mis- demeanor 384 Rebates and concessions, judicial interpretation of term "rate" in prohibition against rebating 391 Rebates and concessions, unlawfully obtained through failure by carrier to observe published rates 400 Rebates and concessions, unlawfully obtained through cancella- tion of storage charges • 416 Rebates and concessions, repayment by carrier on account oi cost of switch track 41-J INTERSTATE COMMERCE LAW 437 Page Rebates and concesBlons, unlawfully obtained through fictitious transfer slips 417 Rebates and concessionB, false valuation aa method of rebatinff. 411 Rebates and conceastons, billing: on marked capacity of car or carload minimum illegal 416 Rebates and concessions, "rebate" as used In Act to Regulate Commerce and Elklne Act la inclusive of method by which the wrong is effected 876 Rebates and concessions, method by which rebating Is accom- plished Immaterial 884 Rebates and concessions, enforcement of prohibition against rebates as operated advantageously to carriers 3SS Rebates and concessions, to control routing of traffic 394 Reconslgnment charges, discrimination in 2i6 Reconsignment, unjustly discriminatory to withdraw reconslgn- ment privilege from one shipper while same is accorded to his competitors 256 Rulings of Supreme Court and Commission relating to unjust discrimination in rebilling and reshipping 256 Routes, by denying shipper choice of 281 System of laws regulating interstate railway transportation does not deal with carriers as unrelated corporate entitles 209 Standards of comparison 209 In services 317, 320, 821 Differences In services 321 Services, first three sections of Act to Regulate Commerce leave no doubt as to purpose of Congress to prohibit every form of undue discrimination in interstate transportation service. 317 Service, provisions of section 3 firmly clarify Intent of inhibition against unjust discrimination 317 Services, preferential rates to shippers of oil In tank cars as against higher rate imposed upon shippers of oil in barrels held not to be discrimination so long as difference was reasonable and rate Itself was reasonable S22 Same — carrier not guilty of discrimination because It does not afford as favorable rates as others serving a different terri- tory, though the products carried by each are brought to the same market 308 "Like and contemporaneous service," carrier cannot discriminate within meaning of statute except as between those whom It serves or whom It may be lawfully required to serve 308 "Like and contemporaneous" services 208, 308 In fixing rates for differing and analagous services, carrier has a right to exercise honest discretion 207 State rates, caused by 313 Interstate Commerce Commission on allowances to tap lines.... 227 Allowances to tap lines in form of divisions of Joint rates which do not bear proper relation to value of service rendered by such tap lines are unjust discriminations In the nature of rebates : 226 If tap line is entitled to division or allowance on traflic carried for strangers it is also entitled to similar division or allow- ance on traffic carried for industry for which tap line is an adjunct 228 There can be no discrimination between proprietary and non- proprietary traffic 228 Commission can fix divisions of through rates to prevent dis- crimination in rebating without establishing through routes and joint rates 288 Tap line abuses and discrim.inatory practices early shown of record before the Commission have been largely corrected.. 234 Ruling of Supreme Court in Tap Line cases did not decide that division of joint rate may be made at will of carrier without power of the Commission to control 258 Clearly demonstrated in Tap Line and Industrial Railways cases that granting of allowances to industrial roads had bean carried to indefensible extremes and resulted In grossly discriminatory practices 239 Allowances to Industrial railways and plant facilities 235 Supplemental report of Commission In Industrial Railway Case. 239 438 AMERICAN COMMERCE ASSOCIATION Page Tariffs, requirement of Act to Regulate Commerce that all rates shall be published Is perhaps the chief feature of the scheme provided for effective outlawing of all discrimination 91 Tariffs, publication In, of all rules or regulations which In any- wise change, alter or determine any part of the aggregate of the rates or the value of the service to the shipper, has for its purpose the prevention of unjust discrimination between shippers 88 "Where carriers reserve to themselves by tariff provision the right to route traffic over certain connections, thereby effecting a division of tonnage between such connections held to be undue prejudice and disadvantage 281 Passenger fare tariff offering excursion fares for schools and different fares for societies between same points is dis- criminatory 101 Where tariff limits application of rates shown therein to ship- ments handled by steam power, thus excluding shipments handled by electric power, Commission has declared such tariffs unlawful 100 Switching charges, discrimination in absorption of 257 Commission has no power to compel carrier to absorb charges for switching or other movement beyond its own rails, in the absence of discrimination 258 Absorption of switching or other charge incidental to transpor- tation service is an act which must be diligently searched for freedom from discrimination 258 Terminal charges, discrimination in 261 In early case held that Imposition of terminal charge at Chicago on live stock, while similar charges were not made at other markets, was not unlawful under section 2 of the Act to Regulate Commerce 261 Whether unjust discrimination is created when trunk line pays terminal line controlled by a shipper for its services is a question arising under section 15 of the Act to Regulate Commerce 261 Where a terminal company enjoyed preference in its division of through rates 252 Terminals, state and municipal regulation governing use of.... 348 Transfer, discrimination in 359 Trap car service, unlawfully discriminatory for carrier to grant free, to and from sidings of some consignors and to charge other shippers therefor 305 Through route requirement of section 1 of Act to Regulate Com- merce should not be subjected to too narrow a construction, but should be read in connection with latter portion of section 3 and with section 15, and with regard to the intend- ment of the Act as a whole 242 Transit privileges, discrimination in 348 Transit privileges, compression of cotton in transit 351 Transit privileges, stoppage of cars in transit to complete loading or unloading 353 Transit privileges, discrimination In milling-in-transit on export traffic 349 Transit privileges, discrimination in stoppage in transit 350 Transit privileges, while It has been contended that the Com- mission is without power to direct a carrier to grant a transit privilege there is no question as to the right or power of the Commission to remove an unjust discrimination and prescribe such reasonable rules and regulations as will effect such removal 349 Because words "undue" and "unreasonable" are used in statute does not follow that Congress attempted to lodge arbitrary power in the Commission in determining when preference is undue nor does presence of these qualifying words minimize direct declaration of Congress that there shall be no pref- erence as between localities I'l "Unjust and unreasonable preference," construed by Supreme Court of United States to admit, in the spirit of the entire Act of the elimination of those necessary preferences which arise In railway and commercial competition 147 INTERSTATE COMMERCE LAW 439 Page Words "substantially similar circumstances and conditions," in certain important particulars define the duties and rights of carriers and the rights of shippers as well 298 "Under substantially similar circumstances and conditions," any discrimination which exists must not exceed that which is warranted by the differences in circumstances and conditions 319 "Under substantially similar circumstances and conditions," prohibits any rebate or other device by which two shippers shipping over same line, same distance, under same cir- cumstances of carriage, are compelled to pay different rates therefor 317. 318 "Under substantially similar circumstances and conditions,", section 4 prohibits discrimination resulting from charging of greater compensation for shorter haul than for longer haul over the same line 321 Use, carrier may not dictate use to which shipper's commodity must be put in order to enjoy transportation rate 271, 272 DISTANCE (REASONABLENESS OF RATES — Distance). A mileage scale ordinarily yields a much higher rate In pro- portion for a short haul than for a long one 94 Element in determining reasonableness of rates 59 DIVERSION (see REASONABLENESS OF RATES — Movement of shipments). DIVISIONS (see COMPANY MATERIAL REASONABLENESS OP RATES). DOCK FACILITIES (see DISCRIMINATION— Dock Facilities). DUNNAGE. , Unsound In principle to encourage car fitting or use of dunnage in order to secure minimum loads and then to approve payment of allowances to offset expense thus Incurred 297 EATING HOUSES. Property for use in, maintained by carriers for passengers and employees and intended for use of such carriers in their business not unlawful , 101 Persons and commodities transported for use in serving others than passengers and employees of the carriers may not lawfully be carried except under regular tariff rates 101 ELEVATION (see ALLOWANCES DISCRIMINATION). Carrier may not lawfully discriminate between persons in allow- ances for elevation of grain 274, 275 Commercial and transportation elevation distinguished 224 Commission fixed one-quarter of a cent per bushel as allowance for each ten days or part thereof 225 Re allowances to elevators 226 ELKINS ACT. The published rate became the standard of comparison 135 Immediate effect of, upon section 2 of Act to Regulate Commerce was change in standard of comparison by, which discrimina- tion was determined 135 Materially reinforced section 2 of the Act to Regulate Commerce 134 Not necessary to find that discrimination is undue, but merely that It is material and substantial 414 Offense of "rebating" more particularly defined in 384 Prohibits a rebate, or unlawful discrimination 376 Prohibits granting of rebates and concessions 865 Prohibits rebates and concessions 370 Published rate the standard of lawfulness and any departure therefrom Is declared to be misdemeanor 884 Standard of comparison Is the published rate 210 Supports section 2 of Act to Regulate Commerce 133 ENGLISH REGULATING LAWS (see FOREIGN STATUTES). EQUALIZING RATES (see REASONABLENESS OF RATES). Not purpose of law to equalize rates on different lines of rail- roads ^' EVIDENCE. . ^ ^, , ^ Evidentiary factors determinative of reasonableness of rates (Cross reference paragraph) 48 EXCURSION FARES (see DISCRIMINATION TARIFFS). EXPORT (see TRANSIT PRIVILEGE). 440 AMERICAN COMMERCE ASSOCIATION Page EXPORT RATES (see REASONABLENESS OF RATES — Section 4). Carrier bound to consider Intense competition to which foreign traffic is subject as one of "circumstances and conditions" affecting relative adjustment of rates 48 Inland export and import rates are subject to the jurisdiction of the Act to Regulate Commerce 192 Rates on traffic subject to intense competition do not mark limit of rates on traffic not subject to such competition 48 EXPRESS (see PICK UP SERVICE). EXPRESS RATES CASE • • '* FACILITIES (see DISCRimNATION TRANSPORTATION FACILI- TIES). . Competition in, element affecting rates . . ,•••••• .* Relationship of sections 3 and 7 of Act to Regulate Commerce. 151 Section 3, second paragraph, requires carriers subject to Act to Regulate Commerce to afford all reasonable, proper, and equal facilities for the exchange of traffic between their respective lines ••••,••••■>.• Second paragraph of section 3 of Act to Regulate Commerce does not compel carrier to give use of Its tracks or terminal facilities to another carrier engaged in like business.. 145 Whatever transportation service or facility the law requires a carrier to supply, it has a right to furnish Z9-J FALSE BILLING (see REBATES AND CONCESSIONS). FALSE CLASSIFICATION (see REBATES AND C0N(:ESSI0NS). FALSE VALUATION (see REBATES AND CONCESSIONS). FARES (see EXCURSION FARES). ,,. FEDERAL SUGAR REFINING CO. CASE. ..... . ■■■■■■■■- ■ \\i^^r^i,\\ ^" FIFTH AMENDMENT (see CONSTITUTION OF THE UNITED STATES). FLOORING (see LINING AND FITTING CARS). FLOWER CITY CASE ^* ' FOREIGN STATUTES. ,t i -,n itr:.i Ht English Act to Regulate Railways of July 10, 1854 l" English Amplifying Act of July 21, 1873. 139 English Railway Clauses Consolidation Act of 1845 i«5 FRANKS (see FREE TRANSPORTATION PASSES). FREE TRANSPORTATION (see PASSES). ^ , j, * Carrier may not lawfully transport free or at reduced ratej materials for building or repairing a refrigeration plant built under contract with the carrier, but which also engages in commercial ice business v • • '^ :,: " • One railroad may not lawfully carry freight free for another even though one owns stock in the other iui FUEL COAL (see COMPANY MATERIAL). GALVESTON WHARF CO. CASE 25-5 GRAIN (see ELEVATION). ^^^iSio^n?5nd character of material furnished ^^}PV'>^<>^l°\Br^l't doors and incidental coopering and repairing should be uniform and adequate for the purpose. •••••• ■••••• •••■•;;;: '"" Marked difference in characters of cars furnished by separate carriers at different points and by one earner at the same point renders it impracticable to fix maximum allowance to be paid shippers for material and labor *»* GREAT LAKES (see REASONABLENESS OF RATES— Traffic con- ditions). HERRIN, WM. F. , Dialogue between, and Paul Morton • ■ • • • IMPORT RATE CASE A' • '^^ -^-^A- •^- ' I" ' .V IMPORT RATES (see REASONABLENESS OF RATES— Section 4). Inland, import and export rates are subject to the jurisdiction of the Act to Regulate Commerce 1»* Inland proportion may not apply on domestic traffic 64 INDICTMENT (see PRACTICE AND PROCEDURE). INDUSTRIAL CONDITIONS (see REASONABLENESS OF RATES— Shipper's needs). INDUSTRIAL RAILWAYS. Allowances to Industrial railways and plant facilities 286 INTERSTATE COMMERCE LAW 441 Paff« While there might be diatlnctlon as to application of Com- modities Clause, that would not affect ruling as to «,llow- ances 239 INDUSTRIAL. RAILWAYS CASE 238 Commission modified Its original findings In light of ths decision of ths Supreme Court In the Tap Line canes 289, 241 Did not differ In fundamental principles from Tap Line cases... 238 Supplemental report of the Commission 239 IN RE SEPARATION OF OPERATING EXPENSES 103 INTERCHANGE (see FACILITIES). Statute requiring connections and Interchange facilities at rail- road Intersections, not unconstitutional 823 INTER-MOUNTAIN CASES 181, 185, 190 INTERSTATE COMMERCE COMMISSION (see COMMERCIAL CON- DITIONS, COMPETITION. DISCRIMINATION, SWITCH CONNECTIONS). Administrative application of provisions of section 3 of the Act to Regulate Commerce by the Commission 146 Has povrer to determine and prescribe divisions of rates fixed by it where carriers fail to agree upon divisions 47 Is performing legislative function for Congress which the national legislature itself cannot directly exercise because of the multiplicity of its duties 169 Jurisdictional powers of, not contravened by Shipping Act 124 Jurisdiction and authority over switch connections 117 Minimum rates, Commission has power to prescribe minimum charge for any service or maximum service for any charge. 67 Not function of, to adjust rates to meet varying commercial conditions due to Increased production and keener com- petition 3 Power of, to control allowances to tap lines, and industrial railways 2S8 INVESTMENT. Many railroad Investments are exceedingly profitable to their owners 76 Public owes to private owners of railroads opportunity to earn fair return on investment 77 ISTHMUS OF TEHUANTEPEC. American-Hawaiian Steamship Company prosperous during period of operation via the Isthmus 25 JOINT RATES (see REASONABLENESS OF RATES). "JUST AND REASONABLE" (see REASONABLENESS OF RATES). LAKE ERIE AND OHIO RIVER SHIP CANAL ACT 374 LAND GRANTS (see RAILROADS). States, counties, and municipalities, have made land grants to and otherwise aided railroads 75 LANDS (see REASONABLENESS OF RATES — Lands owned by car- riers). "LATERAL ALLOWANCE." Held to be a rebate in the Anthracite Coal Case 379, 380, 381 LATERAL BRANCH LINE OF RAILROAD (see SWITCH CON- NECTION). LEASE (see DISCRIMINATION REBATES AND CONCESSIONS — Trackage rights). LEGAL. "Legar* Implies that the forms of law are observed and the rules obeyed; the word "lawful" indicates the act Is right- ful in substance 89 The word "legal" looks more to the letter and "lawful" to ths spirit of the law 89 LEGISLATIVE FUNCTION (see INTERSTATE COMMERCE COM- MISSION). LIGHTERAGE. Comparison of cost of service for car fioat and lighter service raises presumption that allowance for one and not the other constitutes unjust discrimination 298 "LIKE AND CONTEMPORANEOUS" SERVICES 208 Phrase defined 308 Qualifying adjective "contemporaneous" precludes any other possible meaning than that service must be like 308 442 AMERICAN COMMERCE ASSOCIATION 65 Page "LINE" (see "SEPARATE AND INDEPENDENT LINE." "SAME LINE"). Defined in Central Vermont Case to mean the physical line and not a mere traffic agreement 159 LINE HAUL (see CAR SPOTTING). LINING AND FITTING CARS (see CARS, DISCRIMINATION). Unsound In principle to encourage car fitting or use of dunnage in order to secure minimum loads and then to approve pay- ment of allowances to offset expense thus incurred 297 LIVE STOCK (see DISCRIMINATION — Terminal charges). Carrier may require shipper to partition cars for mixed ship- ments of live stock 298 LOADING. That shippers and receivers of carload freight are required to load and unload such shipments is an element to be con- sidered in determining reasonableness of rates LOADING AND UNLOADING (see DISCRIMINATION— Loading and Unloading). LOCAL AND THROUGH SHIPMENTS (see DISCRIMINATION). LOCAL TRAFFIC. It is character and nature of movement of traffic — whether movement is through or local — and not the mere incidents of building, that determine nature of commerce and rate applicable 245. 274 LONG AND SHORT HAUL (see DISCRIMINATION— Section 4). Existence of merely theoretical or paper rate is not sufficient to complete a violation of the long and short haul clause, no shipment having ever been made at that rate 210 Interstate Commerce Commission has authority to relieve car- riers from the operation of section 4 155 Long and short haul provision of section 4 155 Since amendment of June 18, 1910, new section 4 has provided to the effect that carrier, having once reduced its rates to meet water competition, may not increase such rates unless Commission finds that proposed increase results from changed conditions other than the elimination of the water competition 15S MANUFACTURES (see REASONABLENESS OF RATES). MANUFACTURERS RAILWAY CO. CASE 253 MARKET COMPETITION (see COMPETITION DISCRIMINATION — Section 4). Competition of, element affecting rates 4 Congress has not left to carriers determination of what markets shall be brought into competition 5 Congress has not seen fit to say that this economic force shall not be allowed to have its play In rate-making 5 Euphemism for railroad policy 5 History of fourth section makes clear Intent of Congress to restrict force and effect of .6 Phrase "market competition," railroad traffic managrep too often conjures w^ith * MARKETS (see MARKET COMPETITION). MEEKER CASE 278 "MEETING THE RATE" (see REASONABLENESS OF RATES — Tariffs). MILEAGE (see DISTANCE — Railroad Mileage). MILLING IN TRANSIT (see TRANSIT PRIVILEGES). MINIMUM RATES (see REASONABLENESS OF RATES — Minimum rates — Relative rates). Applicable to parts of a combination of rates may be higher or lower than minimum applicable to joint through rate, does not overcome presumption of unreasonableness in joint rate and minimum in excess of some of the locals and resulting from the respective minima applicable thereto.. 52, MINIMUM WEIGHTS. Carload minimum weight should be arrived at by equalizing commercial nature of traffic and carrying capacity of freight car Carload minimum weight should be so fixed as to give highest efficiency, in commercial use, loading and physical move- ment of cars 8 531 83J INTERSTATE COMMERCE LAW 443 Page If permitted to make differing minima on local and through shipments, carriers could carry all through traffic via selected gateways at higher charges than combinations of local rates through same gateways 63 On carload shipments to be conside~ed as part of rates 62 MISDEMEANOR (see REASONABLENESS OF RATES— Tariffs). MISROUTING (see REASONABLENESS OF RATES — Movement of shipments). MORTON, PAUL. Dialogue between, and Wm. F. Herrin 8 MUNICIPAL FACILITIES (see TERMINALS). NATIONAL RAILWAY SYSTEM (see REGULATORY STATUTES). NEW EQUIPMENT. Power of Commission to require carriers to acquire new equip- ment denied by Supreme Court 292 OBSOLESCENT FACTORS (see REASONABLENESS OF RATES — Obsolescent factors). OCEAN COMPETITION (see COMPETITION). OPERATION. COST OF (see COST OF SERVICE). OVERCHARGE (see DISCRIMINATION — Overcharge). OWNERSHIP. Nothing in duties of common carrier by remotest implication can be held to imply power to sit in judgment on title of prospective shipper 278 If carrier accords carload rate where consignor is owner, failure to extend same privilege when consignee is owner violates sections 1, 2 and 3 of the Act to Regulate Commerce 277 PANAMA CANAL (see SWITCH CONNECTIONS— With water car- riers). Agency of transportation between east and west but not neces- sarily sole carrier 23 Advent of, gave further impetus to effect of water competition upon trans-continental rates -. 23 Extraordinary rise in ocean freights 29 Obstructions to canal traffic from September, 1915, to April, 1916 24 Present transportation conditions via are temporary 26 But little effective water service at present 31 Withdrawal of steamship lines 31 Primary purpose of government in constructing 24 Steamship rates on Commission's schedule C commodities during six months following opening of canal, corresponded closely to divisions of through rates of the American-Hawaiian Steamship Company 26 Subsequent obstructions to and international situation tended to nullify effect upon trans-continental rates 23 PANAMA CANAL ACT (see SWITCH CONNECTIONS— With water carriers). PARAFFINE WORKS CASE 292 PARTY RATE CASE 205 PASSES. Anti-pass clause of section 1 of Act to Regulate Commerce must be construed in connection with illustrative section 22 of the Act 109 Prior to 1906 no specific prohibition against free transportation of persons and property 109 •Section 1 of Act to Regulate Commerce as amended in 1906 permits free tickets, passes or transportation to certain classes of persons 109 Section 22 of Act to Regulate Commerce Illustrative and per- missive rather than restrictive 109 Unlawful use of, to influence traffic 896 PEAVEY & CO. CASE 223 PEDDLER CARS (see REBATES AND CONCESSIONS). PENSACOLA CASE 844 PEORIA TERMINAL CASE 242 PER TON PER MILE. Is not the generally accepted basis for making up rates 97 Revenue, over other lines and to other destinations often sug- gestive of proper estimate of reasonableness of a rate, but not conclusive 88 444 AMERICAN COMMERCE ASSOCIATION Page PICK UP SERVICE. If express company grants free pick up and delivery service in one part of town and refuses the privilege in another, it is guilty of unjust discrimination 304 PLANT (see REFRIGERATION PLANT). PLANT FACILITIES( see TAP LINES). Allowances to industrial railways and plant facilities 235 Rulings of the Commission in the General Electric Co. and Solvay Co. cases 237 Whether a tap line is a plant facility or a common carrier is a question of fact 217 PRACTICE AND PROCEDURE. An indictment under section 2 is defective in not alleging that other shippers were required to pay more than those speci- fied; mere proof of a railroad rule, without evidence of Ite practical working, does not establish unfair competition... 210 Where a rate is attacked under section 3 the issue is as to its relative reasonableness only, but proceedings may be brought raising the issue of discrimination in the rate under all of the first four sections of the Act to Regulate Com- merce 144 PRECEDENT (see RES ADJUDICATA). PREFERENCE (see DISCRIMINATION — Reasonableness of rates — Preferential rates). PREPAID AND COLLECTION SHIPMENTS (see DISCRIMINA- TION — Prepaid and collect shipments — Prepayment). PREPAYMENT (see DISCRIMINATION). Credit, for carrier to accept shipment without prepayment of freight charges Is merely extension of credit to consignor. . 72 Prepayment of freight charges, carrier has right to demand on all shipments 72 PRESUMPTION (see REASONABLENESS OF RATES). Adjustment, long continued, raises rebuttable presumption of its reasonableness but not conclusive 61 Adjustment long established, raises presumption that advanced rates are unreasonable 69 Adjustment, long standing, fact that lower rate long remained undisturbed has strong probative value 64 Advanced rates, no presumption can arise against, because lower rate previously existed 68 Advanced rates in long established rate adjustment raises pre- sumption that advanced rate is unreasonable, but not conclusive 64 Change of rate, no presumption of wrong arising therefrom.... E6 Filing tariffs with Commission not presumption of reasonable- ness of rates therein S9 No presumption of law against particular rate springs from advance over some previous rate 58 Of right doing attaches to act of carrier in initiating rates 57 Of unreasonableness of rates, offset by increasing prosperity... 87 PRIVATE CARS (see COAL CAR DISTRIBUTION). Carrier may decline to haul private cars at all and uniform rule to that effect is entirely consistent with public obligations. 306 Carrier may haul private cars of certain class and at the same time refuse to haul others of substantially different class. . . 306 Commission is not disposed to permit carriers to treat private equipment as their own to the extent of imposing penalties for its non-use when it neither is on the tracks of the carrier nor paid for by the carrier when standing idle 293 Not the business of shipper to furnish the vehicles of transpor- tation 306 Owners of private cars are entitled to their exclusive use, and foreign railway fuel cars assigned to a particular mine cannot be delivered to another mine, but Commission holds that all such cars must be accounted against the distribu- tive share of all cars of the mine receiving them 292, 301 PRIVILEGES (see SPECIAL PRIVILEGES). PROSPERITY (see REASONABLENESS OF RATES — Standards). PUBLIC (see COMMON CARRIERS). Rftlations of carriers and the — public policy 74 INTERSTATE COMMERCE LAW 445 Page PUBLICATION (see REASONABLENESS OF RATES — Tariffs; TARIFFS). PUBLIC CONTROL (see RAILROADS). PUBLIC INTEREST (see TRANSPORTATION FACILITIES). PUBLIC POLICY. Relations of the carriers and the public 74 RAIL AND WATER (see COMPETITION). RAILROAD COMPETITION (see COMPETITION). RAILROAD MILEAGE. Entire railroad mileage of the United States, aggregating more than one-third of the mileage of the world, has been con- structed with private capital 74 RAILROADS (see COMPETITION; LAND GRANTS; TRANSPORTA- TION FACILITIES). Land grants, national government, in many instances, has donated rights of way for railroads and made them other large grants of land 74 Private capital, although constructed with, are public highways subject to public control 74 Railroad is justly regarded as a public facility which every person may enjoy at pleasure, a common right to which all are admitted and from which none can be excluded 204 The real railroad question — the just balancing of mutual rights of public and carriers under national policy permitting performance of public function of transportation by private interests 77 RAILROAD SECURITIES. Investors in, like investors in other securities, must bear con- sequences of dishonesty or inefficiency in management of railroad properties 75 RATE ADJUSTMENT (see REASONABLENESS OF RATES — Relative rates). Disturbance of. fear of does not justify unreasonable rate 61 Long continued, raises rebuttable presumption of its reason- ableness, but not a conclusive one 61 Of long standing presumed to be reasonable 55 RATE RELATIONSHIP (see REASONABLENESS OF RATES— Relative rates). RATES (see COMMERCIAL CONDITIONS; EQUALIZING RATES. COMPETITION; INTERSTATE COMMERCE COMMISSION; MINIMUM RATES; REASONABLENESS OF RATES; STANDARDS; TRAINLOAD RATES). Adjustment of, not always influenced by adjustment of rates on another commodity 4 Carload rates have a tendency to localize distribution while stop over privilege tends to engender wholesome competition... 356 English and American methods of stating for publication 262 Judicial interpretation of term "rate" in prohibition against rebating 391 Railways authorized to initiate rates, and presumption of right . . doing attaches to their acts in the establishment of those rates 57 Right of carrier to initiate recognized by Act to Regulate Com- merce 67 Word "rate" as used in the statute means the net cost to the shipper of the transportation of his property 391 "REASONABLE AND JUST" (see REASONABLENESS OF RATES). REASONABLENESS OF RATES (see COMPETITION, "PREPAID AND COLLECT SHIPMP^NTS," SECTION 4). "Reasonable" and "just," applied to rates, do not mean that the rates upon every railroad shall be the same or even about the same i~: ''"•,' 1' '/^' ' ' Statutory requirements, section 1 of the Act to Regulate Com- merce requires that all charges for transportation service shall be just and reasonable • • • ■ ^" Elements in, — length of haul, competition, cost of service,, value of service, density or volume of tonnage, and general trans- portation conditions surrounding, affect reasonableness or rates Whatever tlie practice of carriers in the past of "meeting the rate," the Act and decisions of the Commission require tar- iffs must now be adhered to *' 446 AMERICAN COMMERCE ASSOCIATION Page Test, alone of the reasonableness of rate that traffic moves freely under it not sufficient; shipper's needs must be con- sidered 71 Mismanagement, public should not pay higher rates because once prosperous railroad properties may be in need of additional funds as a consequence of mismanagement 76 Problem of, more complex today than before passage of Act to Regulate Commerce 133 Purpose of section 2 of Act to Regulate Commerce is the abstract result obtainable from the regulation as a whole — the pre- vention of any unjust discrimination between shippers in any form or by any device 134 No requirement imposed upon Commission in determining rea- sonable charge for interchange that it must take into its calculations the fact that charge may be absorbed by com- petitor 258 Evidentiary factors determinative of (cross reference para- graph) 48 Historv of rate, Commission gives evidentiary value to 58 Disturoance of rate adjustment does not justify maintenance of unreasonable rate 61 Long standing adjustment of rates presumed to be reasonable.. 55, 64 Adjustment, long established, burden of justifying an advance is upon carrier. . 56, 57 Adjustment, long continued, raises rebuttable presumption of its reasonableness, but not conclusive 55, 61 Adjustment of rates, long standing, is in nature of admission by carrier that rate maintained was a just and reasonable one 58 Advanced rates. Commission must consider and weigh all facts of record before determining increase in rates unreasonable 64 Advanced rates, in long standing adjustment raises presumption that advanced rates are unreasonable 59 Advanced rates, no presumption all advanced rates unjust and unreasonable 55, 59 Under authority of amended section 15 of Act to Regulate Com- merce, Commission has not hesitated to exercise power to suspend proposed advances in rates, and sometimes reduc- tions 55 Burden of proof rests upon carrier to establish reasonableness of advanced rate 56 Long maintenance of rates shifts burden of proof to carrier to Justify increase 58 Burden of proof, now upon carrier to prove reasonableness of advanced rates 60 Burden of proof, carrier not required to justify increase, as under the English statute, but to establish the reasonable- ness of "increased rate" itself 60 Canal tolls. Lake Erie and Ohio River Ship Canal Act required to be reasonable 374 Commercial conditions, element in determining 3 Fact that given town has been recognized as a "trade center" and is enabled by its more favorable rate adjustment to distribute in a certain territory, cannot justify continuance of relative rates which result in undue preference 149 Competition, commercial, when of controlling force considered by Commission 3 Competition, commercial and transportation responsible for vast majority of freight rates 3 Competition, not controlling or exclusive element in determining ' 3 Competition, lower rate at competing or preferred point must be remunerative to the carrier and reasonable itself 147 Competition, cases holding that voluntary rate established to meet, not a measure of reasonableness 64 Competition, must be real and not created by agreements between the carriers destroying real competition 147 Competition, if controlling, it must be determined whether the lower rates resulting therefrom are reasonable 147 Competition, must be controlling, in that the carrier must meet it or loss of the business will result 147 INTERSTATE COMMERCE LAW 447 Paga Commercial competition, inclusive of cross country and marliet competition 4 Cross country competition effected througii wagon hauling fre- quently important factor in adjustment of paralleling car- riers' rates It Commission has given consideration to cross country competi- tion in determining relative 14 Competition in facilities, element affecting 4 Competition of markets, element affecting 4 Competition between railroads with different termini, element in determining 3 Railroad competition, element affecting 4 Rail and water competition, element affecting 4 Competition of routes, element affecting 4 Rates reduced to meet water competition not to be raised with- out permission of Interstate Commerce Commission 156 Potential effect of water competition at times must be consid- ered in determining 31 Water competition, clement affecting 3, 4 If by agreements or combinations among carriers lates are unduly influenced by suppression of competition, t^'at fact is proper to consider in determining question of ui. .ae dis- crimination and reasonableness per «e of the rates at such possible competitive points 150 Operating expenses, in re separation of 103 In fixing rates for differing and analogous services, carrier ha.s a right to exercise honest discretion 207 Trifling differences of cost of character of the services rendered do not justify disparity of charges 207 Cost of service, is an element essential to the determination of the reasonableness of a rate 298 Direction — route rates of actual movement governs shipment; not applicable in opposite direction unless so published.... 36 Distance alone is not controlling in determining 3, 37 Distance, whether or not it may become a conclusive factor, depends upon facts in the case 37 Distance, axiomatic that ordinarily carriers are entitled to charge a reasonably higher per-mile rate for shorter hauls than for longer distances 37 Distance, extent to which a factor in rate-making may be con- sidered in determining 36, 37 Distance, length of haul and volume of traffic are among deter- mining factors of 103 Distance, charging of same rate for short as for long haul raises question of reasonableness of shorter rate 37 Distance, carrier with long route not obliged by law to meet rate of short line competitor 47 Distance is a general basis rather than a detail of rate-making. . 36 Distance, while almost an axiomatic principle in rate-making is quite as susceptible to test for reasonableness as rate itself 37 Distance always a factor to be taken into consideration in determining 37 Distance, well established* that as distance increases, difference in distance becomes relatively less important 37 Distance, a mileage scale ordinarily yields a much higher rate in proportion for a short haul than for the long one 94 Distance, constructive mileage is frequently applied in making rates to afford adequate basis for divisions 46 Distance, rates made by shorter and competing lines to same points of destination factors to be considered in determining 38 Distance, Supreme Court has held that 't does not follow, as a matter of law, that rates should be .Me same for the same distance over two different roads 95 Distance, varying conditions on different linos of necessity jus- tify differences in rates for hauls of the same 39 Distance, extent to which mileage is factor in determining, must be answered in light of all the facts surrounding the exaction of the rate 37 Distance, Commission early held it was not the purpose of the Act to compel the establishment of rates solely according to mileage 33 448 AMERICAN COMMERCE ASSOCIATION Page Failure of carriers to agree upon divisions of rates fixed by Commission affords Commission jurisdiction to determine and prescribe just and reasonable divisions 47 Division — failure to agree does not relieve carriers from observ- ance of published rates 46 Commission has undoubted right where a carrier is shipper to inquire into reasonableness of divisions received by it and fix proper ones 254 Earnings, while right to demand higher rate may be denied when existing rate is reasonable, even though carrier be in need of additional earnings, so carrier may be entitled to higher rate for particular service because existing rate is unreasonably low, although carrier may not be in need of additional revenues 76 Public owes to private owners of railroads opportunity to earn fair return on investment 77 Equalizing rates, carrier via long route not obliged by law to reduce rate because short line competitor reduces its rate, where rates were formerly the same via both routes 47 Equalizing rates, rate for long route not obliged as matter of law to meet rate of short line competitor 47 Equalizing rates, an offense under the statute to rebate differ- ence between rates in one carrier's tariffs and publish rates of another carrier between same points 47 Equalizing rates, voluntary reduction of rate not conclusive presumption prior rate "was unreasonable 47 Equalizing rates, not purpose of law to equalize rates on differ- ent lines of railroad 47 Export rates, different export rates to Liverpool and Bristol, England, distinguished from other European ports held not justified by substantial dissimilarity of circumstances and conditions 54 Fourth section' of Act to Regulate Commerce applies to import and export rates 192 Comparison of inland proportion of through foreign rate with domestic rate not sole basis for determining 48 Reasonableness of export and import rates may be considered by Commission under the provisions of section 1 of the Act to Regulate Commerce 192 Validity of rates under section 4 is determined by comparison of export rate with export rate and import rate and import rate 192 Export rates, carrier bound to consider intense competition to ■«-hich foreign traffic is subject as one of "circumstances and conditions" affecting relative adjustment of rates 48 Export rates, rates on traffic subject to intense competition do not mark limit of rates on traffic not subject to such com- petition 48 Import rates, inland movement of traffic from foreign origin to American destination not a "like service" to transportation of domestic traffic starting at such port of entry and bound for the same destination 54 Import rates, inland proportion may not apply on domestic traffic 54 Import rates, inland proportion of, import or expert rates may be less than rates on like domestic traffic 53 Import rates, to make through charge from foreign point of origin absolute measure of domestic rate would establish a rule difficult, if not impossible, for the carriers to comply with 53 Joint rate in excess of sum of local rates prima facie unreason- able; burden of proof upon carrier to defend reasonableness of joint rate 49 Joint rates, specific through rate only lawful rate on through shipment even though combination might make lower 49 Joint rates — less than sum of intermediate rates 51 Joint rate, not exceeding sum of reasonable local rates, not con- clusive presumption of reasonableness of joint rates 51 Joint rate, higher than combination of local rates extremely rare in railroad transportation 51 Joint rates, higher than combination of local rates approved by Commission only when occasioned by extraordinary and peculiar circumstances 51 INTERSTATE COMMERCE LAW 449 Page Joint rates, as affected by minimum carload weights b'i Joint rates, carriers have right to advance the separate locals.. BO Joint rates. Commission has not ruled that joint through rate exceeding sum of locals is conclusively presumed to be unreasonable BO Joint rates, circumstances and conditions might justify higher through rates and it is for the carrier to demonstrate their potency 50 Lands, owned by carriers, but operated through independent agencies not competent factor in determining 66 Loading, shippers and receivers of carload freight required to load and unload such shipments is an element to be consid- ered in determining 55 Manufactures, differential rates on products of, carrier may make reasonable differential between rates on raw material and rates on manufactured products thereof 66 Manufactures, cognizable transportation difference between raw material and its manufactured product 66 Minimum rates, minimum package charge in Official Classifica- tion territory 67 Minimum rates, minimum weight and charge for L. C. L. ship- ments are reasonable and justified by expense of handling.. 67 Minimum weights on carload shipments to be considered as part of rates 52 Minimum weights applicable to part of a combination of rates may be higher or lower than minimum applicable to joint through rate, does not overcome presumption of unreason- ableness in joint rate and minimum in excess of some of the locals and resulting from the respective minima applica- ble thereto 52, 53 Movement of shipments, rate must apply according to 69 Movement of shipments, permissible diversions, and causes therefor 69 Non-confiscatory rate, not necessarily a reasonable one 72 When rate for longer haul is forced unreasonably low by com- petition, the only elements that enter into the consideration of the rate for the shorter haul are its reasonableness.... 185 Obsolescent factors, there is always an element of obsolescence In the development of a railway; otherwise when a thing goes out of service the value of it must be v/ritten off the books '^^ Preferential rates, Commission has declined in notable instances to allow economies of carriage to control in the matter of fixing preferential rates S4 "Prepaid" and "collect" shipments, rates distinguishing between unlawful ^2 Prepaid and collect shipments, special whiskey prepaid rates ^ considered in the Express Rates Case 1 3 Prepayment of freight charges, rates based upon waiver of right to collect freight charges at time of shipment are unlawful, and therefore no question of reasonableness may arise from such grounds •. • • • ' ^ Change of rate by carrier, no presumption of wrong arises therefrom 56 Change of rates, carrier making same properly called upon to give good reason therefor :' \1' L\' Presumption, from long continuation of rate arises a rebuttable presumption of its reasonableness, but not conclusive 61 Presumption, carrier not under the necessity of overcoming technical weight and force of presumption that previously existing rate or rates were reasonable 63 Public policy — relations of carriers and the public 74 Quantity rates, any-quantity rates approved • • . • • 78 Quantity rates, reasonableness of proposed less-than-carload rates in 1915 Western Rate Advance Case 85 Quantity rates, trainload rates Illegal ■ • 84 Quantity rates, effect of following the economic proportlonrncnt of carrier's cost of handling in establishing proper relation- ship between L. C. L. and C. L. rates j V " >; ' ; ' ^^ Quantity rates, replacing any quantity rate by C. L. and L.. c. Li. rate, not unlawful '^ Quantity rates, justification for carload rates s4 450 AMERICAN COMMERCE ASSOCIATION Page Quantity rates, if any quantity rate Is reasonable no necessity for C. L. rate 79 Quantity rates, carload rates, relation to less-than-carload rates 81 Quantity rates. Commission has regard for common unit of ship- ment in establishment of carload rates 81 Commission has declined to order different rate for carloads from that applied to less-than-carloads, especially when such differential will have tendency to increase the L. C. L. rate and prevent small dealers from purchasing at distant markets in less-than-carload lots 78 Quantity rates, carload rate should not be based on any quan- tity rate 78 Quantity rates, throughout entire field of rate-making exists the problem of determining proper relationship between C. L. and L. C. L. rates 82 Trainload rates, lower rates for trainload quantity or any num- ber of carloads unlawful 80 Carrier, is free to fix rates without reference to rates of other carriers; that it meets other rates is a business policy, not a statutory requirement 48 Rate not unreasonable simply because low rate in effect via other lines between same points 48 Relative rates, readjustment of rate relationship in regional rate structures 64 Relative rates, where relationship of rates, even in regional rate structures of long standing, are repugnant to the law. Commission, upon affirmative showing has not hesitated to correct wrong irrespective of consequent disturbance of related rates 64 Relative rates, relation which a rate bears to other rates most frequently determines its reasonableness 144 The law contemplates relative fair rates as between different places 149 Rate reasonable for one railroad may not be reasonable on another 38 Relative rates, if fixing of relation of rates impliedly determines minimum rate, then logical effect is to establish absolute rates 184 In prescribing the relation of trans-continental rates, the Com- mission in effect prescribed minimum rates 184 Revenue per-ton-per-mile over other lines and to other destina- tions often suggestive of proper estimate of reasonableness of a rate, but not conclusive 38 Rules, regulations and practices affecting rates, are competent of inquiry when question of reasonableness of the rates themselves is raised 87, 88 Service, carriers owe to public efficient service at reasonable rates 77 Shipper's needs as a condition pertinent to be considered in determining 71 Standards, of reasonableness for carriers, it must be the needs of neither the most prosperous nor the least profitable car- rier affected, but it must inure in average benefits to average- conditioned carriers 88 Standards, reasonable rate may become unreasonable 86 Standards, no absolute maximum of reasonableness; imprac- ticable for Commission to determine exact time in gradual process of changes when rate becomes unreasonable 86 Standards, no higher rate should be imposed upon territory than adequate for typical railroads 87 Standards, increasing prosperity offsets presumption of unrea- sonableness 87 Standards, la"w of increasing returns 87 Standards, the per-mile ratio of rates on two different railroads cannot be regarded as a necessary standard of reasonable- ness 98 Carriers may not segregate terminal service, heretofore treated as part of transportation service covered by rate, and assign to it a separate charge without taking into consideration the entire through service of which it forms a part 267 Tariffs, filing with Commission not presumption of reasonable- ness 89 INTERSTATE COMMERCE LAW 451 Page Tariffs, effect of failure to file with Commission 90 Tariffs, carrier sliall not collect or receive a great or a less com- pensation than the rate specified in the tariff 89 Tariffs, provisions of the law make it a misdemeanor for a car- rier to depart from the published rate 89 Traffic conditions, "length of haul and the volume of traffic are among the determining factors in arriving at cost" of trans- portation 103 Conditions, reasonableness of rates must depend upon conditions surrounding traffic at time it moves 59, 91 Traffic conditions, relative lower rates on long haul traffic... 93, 98 Circumstances and conditions of each road — cost of service, vol- ume or lightness of traffic, expense of construction and operation, competition of carriers, space occupied by freight, value of freight and risk of carriage as well as distance, must be considered in determining 38 Traffic conditions, expressive of the principle that volume of traffic justifies lower rates, it has been shown that the greater the differential, the greater the tonnage over the lakes 103 Traffic conditions, volume of traffic may excuse lower rate partly because freight can be handled more cheaply in large quan- tities than in small and partly because carrier is justified in making low rate to induce large volume of traffic 102 Traffic conditions, however small the volume of traffic is entitled to reasonable rates 102 Traffic conditions, carrier making exceptionally low competitive rates on comparatively small volume of traffic in order to secure any part of the traffic, is not estopped from charging reasonably remunerative rates to other points to w^hich It handles the bulk of traffic from which it must derive the principal part of its revenue 102 Traffic conditions, volume of traffic element affecting 101 Traffic conditions, duty of a common carrier is to transport commodities at its tariff rates and on equal conditions for all 99 Traffic conditions, rates conditioned upon use of commodity are unlawful '8 Traffic conditions, special rates for development purposes, an element in determining "8 Traffic conditions, property must be carried at rates It will bear, and the limit Is reached when the rates charged are so low that further reduction necessitates increase on other traffic in order to make up loss caused by reduction 94 Trafflc conditions, when two short hauls are combined, It Is usually unjust to require the two carriers to accept com- pensation at the rate per mile applied for the entire long haul • • • ** Traffic conditions, since special service, extra care, incurring greater expense, is required of the carrier In the transpor- tation of perishable property, the carrier is entitled to charge a higher rate than for ordinary freight 92 Traffic conditions, lower rates on low grade traffic 92 Wages, Commission has not given definite consideration to ele- ment of wages in determining 105 REBATES AND CONCESSION (see DISCRIMINATION). Are subtle evils against which the inhibitions of the regulatory laws most drastically point 866 Method by which rebating is accomplished immaterial 384 "Rebating," offense of, more particularly defined in the Elkins Act l°l Inducing concessions ^^° What constitutes a rebate 1 • j' ' V • • • ' Enforcement of prohibition against rebates as operated advan- tageously to carriers • • • • ••,•,•,• ••';■; "Rebate," as used in Act to Regulate Commerce and Elkins Act is inclusive of method bv which the wrong is effected 376 Concessions resulting from alliances between carriers and large shippers Allowances to ' Industrial or terminal railways or boat lines owned or controlled by shippers • • • • • • • ■•.•••• •»o» Allowances to shippers for services rendered or facilities rur- nished *"* 452 AMERICAN COMMERCE ASSOCIATION Page Carrier may pay the shipper actual cost of service rendered or facility furnished, but any allowance in excess of such cost is unlawful and a rebate 404 Unlawful concessions obtained through false claims 401 False classification and false billing as methods of rebating.... 407 Unlawful concession obtained through commissions paid by car- rier 414 Unlawful concessions obtained through violation of the Com- modities Clause 403 Unlawful concession obtained through extension of credit to shipper 413 Unlawful concession obtained through cancellation of demurrage charges 417 Leases of carriers' property to shippers at less than fair rental. . 400 Transportation of commodities sold and delivered by a carrier. . . 412 Special passenger services granted to large shippers 398 Unlawful use of passes to influence traffic 296 Unlawful use of peddler cars 400 Published rate the standard of lawfulness and any departure therefrom is declared to be misdemeanor 384 Judicial interpretation of term "rate" in prohibition against rebating 391 Word "rate" as used in the statute means the net cost to the shipper of the transportation of his property 391 Unlawful concessions obtained through failure of carrier to observe published rates 400 Repayments by carriers to shippers which do not constitute "rebates" and are not unlawful 386 All refunds and concessions by carriers to shippers are not unlawful 386 Repayment by carrier on account of cost of switch track 412 Forms of rebating 393 Concessions to control routing of traffic 394 Unlawful concession obtained through cancellation of storage charges 416 Unlawful concessions obtained through fictitious transfer slips.. 417 False valuation as method of rebating 411 Billing on marked capacity of car or carload minimum Illegal 416 REBATES (see ALLOWANCES, DISCRIMINATION). REBILLING (see DISCRIMINATION). RECONSIGNMENT (see DISCRIMINATION). Carrier may not lawfully discriminate between persons in the reconsignment of freight 274, 276 Discrimination in reconsignment charges 256 REFRIGERATION (see DISCRIMINATION— Cost of service). REFRIGERATION PLANT (see FREE TRANSPORTATION). REGIONAL RATES (see REASONABLENESS OF RATES— Relativa REGULATIONS (see REASONABLENESS OF RATES— Rules, regu- lations and practices). REGULATORY STATUTES. System of regulatory laws looks upon lines of railways as con- stituting a national railway system with a national purpose and national integrity 209 RENO CASE 4, 28 REPAYMENT (see REBATES AND CONCESSIONS). RES ADJUDICATA. Decision in one case against carriers operating in a different territory, under essentially different circumstances and con- ditions, affords no criterion In another case 809 RESHIPPING (see DISCRIMINATION). RESTRICTED RATES 248 REVENUE (see PER-TON-PER-MILE). RISK (see REASONABLENESS OF RATES). ROUTES (see COMPETITION, REASONABLENESS OF RATES — Movement of shipments). Actual movement governs shipment; rates not applicable in opposite direction unless so published 86 Competition of, element affecting freight rates 4 Determining factor is not whetner the person who receives an unpublished refund is directly connected with the shipment but whether that person controls its routing 274 INTERSTATE COMMERCE LAW 453 Page In the absence of routing instructions by shipper the duty of the carrier is to forward the shipment via the cheapest available route 281 Concessions to control routing of traffic 394 Discrimination by denying shipper choice of routes 281 Shipper is given right to designate in writing route via which he desires his shipment to move 281 RULES (see REASONABLENESS OP RATES — Rules. Regulations and practices). ST. LOUIS CASE 7 ST. LOUIS ELEVATION ALLOWANCE CASE 225 "SAME LINE" (see SECTION 4). SCHEDULE C (see COMMODITIES). SECOND INDUSTRIAL RAILWAYS CASE 382 SECTION 1 (see DISCRIMINATION). Of Act to Regulate Commerce declares all charges for transpor- tation service shall be reasonable and just 90 Anti-pass provisions 109 While not defining specific form of discrimination, must be con- sidered since It forbids the imposition of an unreasonable transportation charge or practice, the result of which In the aggregate must be discriminatory 129 Condemns unreasonable rates and their correlative results of unjust discrimination 130 Section 3 requiring carriers to afford equal facilities for exchange of traffic, broadens the requirement of section 1. .. 145 Reasonableness of export and import rates may be considered by Commission under the provisions of section 1 of the Act to Regulate Commerce . , 192 Administrative enforcement of sections 1, 2, 3 and 4 of tlie Act to Regulate Commerce prohibiting unjust discrimination... 201 If carrier accords carload rate where consignor is owner, failure to extend same privilege when consignee is owner violates sections 1, 2 and 3 of the Act to Regulate Commerce 277 Analysis of provisions of 333, 334, 335 Through route requirements should be construed in connection with sections 3 and 15 and with regard to intendment of Act to Regulate Commerce as a whole 241 Section 1, Act to Regulate Commerce, amplification of, continued 8 SECTION 2 (see COMPANY MATERIAL, DISCRIMINATION— Terminal charges, PRACTICE AND PROCEDURE). Effectiveness of, early demonstrated 128 Hffectiveness of, referred to by Commission In first annual report. . . 128 Underlying principle of "fair play" is inculcated into the section 128 "A like and contemporaneous service in the transportation of a like kind of traffic under substantially similar circumstances and conditions," relates solely to transportation and haulage 128 Unjust discrimination defined and forbidden 127 Statutory provisions of 127 Purpose of section 127 Language of section has never been changed since original enactment 127 Objective of, is destruction of rebates and unequal charges between different shippers 128 Conditions antedating enactment of section 128 Is molded on similar section in English Railway Clauses Con- solidation Act of 1845 128 Relationship of sections 2, 3 and 4 of Act to Regulate Commerce 129 Section 2 defines as unjust discrimination charging or receiving by common carrier of greater or less compensation in transportation of passengers or property from any person or persons than it charges or receives from any other per- son or persons, (1) when service is like and contempo- raneous; (2) in the transportation of a like kind of traffic; and (3) under substantially similar circumstances and con- ditions 131, 182 Prohibition of, is a.nrainst discrimination In rates and charges. . 132 Immediate effect of Elkins Act upon section 2 of the Act to Regu- late Commerce was change in standard of comparison by which discrimination was determined 136 454 AMERICAN COMMERCE ASSOCIATION Page Under section 2 of Act to Regulate Commerce standard of com- parison was treatment accorded to shipper prior to the Elkins Act 135 Materially reinforced by Elkins Act 134 Early history of, influenced by efforts of evasion by both car- riers and shippers 134 Purpose of section 2 of the Act to Regulate Commerce Is the abstract result obtainable from the regulation as whole — the prevention of any unjust discrimination between ship- pers in any form or by any device 134 Discriminations referred to in. relate to like kinds of traffic, whereas those brought within provisions of section 3 are between different kinds of traffic as well 143 Relationship of, with sections 3 and 4 of the Act to Regulate Commerce 143 Amplification of section 127 Forbids carriers to prefer one individual over another In the matter of rates 171 Administrative enforcement of sections 1, 2, 3 and 4 of the Act to Regulate Commerce prohibiting unjust discrimination... 201 Principal purpose of section 2 of the Act to Regulate Com- merce is to prevent unjust discrimination between shlpjiers. 208 In a discrimination in rates under sections 2 and 3 it has been held that it is immaterial whether or not the rate paid by the favored shipper was published and filed with the Com- mission 210 Prohibition of section 2 is against the doing of a service by a carrier in a manner forbidden by the statute, and if no service has been done, no contravention of the Act has occurred 210 If carrier accords carload rate where consignor is owner, fail- ure to extend same privilege when consignee is owner vio- lates sections 1, 2 and 3 of the Act to Regulate Commerce.. 277 Underlying purpose of regulatory legislation is to put shippers on basis of absolute equality, assure them of equal rates and impartial enjoyment of facilities and services of inter- state carriers /. 284 Section 2 requires all shippers to be treated alike where service of transportation is performed "under similar circumstances and conditions" 310, 812 Most elementary premise to which requirement of section 2 applies is that of local and through transportation service. . 811 Prohibition against "unjust discrimination" as result of wrong- ful act rather than method by which effected 376 Prohibits unjust discrimination 376 Statutory provisions against rebates and concessions 367 Difference in transportation conditions must be substantial in order to remove application of section 2 of Act to Regulate Commerce 251 SECTION 3 (see COMPANY MATERIAL, DISCRIMINATION, FACILI- TIES). Relationship of sections 2, 3 and 4 of Act to Regulate Commerce 129 Section 3 is less restrictive than section 2 in its prohibition against unjust discrimination 132 Section 3 is sufficiently broad in its scope to include any act or omission by carrier which results in undue or unreasonable prejudice or advantage 132 Relationship to section 4, the purpose of the fourth section being to narrow prohibition of section 3 down to exclusion of higher rate for nearer than for more distant point on same line 133 Of Act to Regulate Commerce has never been amended since original passage 1*0 Section 3 of Act to Regulate Commerce prohibits the making or giving of any undue preference or advantage to any person, company, firm, corporation, or locality, or to any particular description of traffic 140 Amplification of section 139 While section 3 condemns all discriminations and preferences which are unjust and unreasonable, it is in itself an admis- sion that there are discriminations and preferences that may be Just and reasonable 140 INTERSTATE COMMERCE LAW 455 statutory provisions of 139 Third section of Act to Regulate Commerce bears strong resem- blance to second section of English Act to Regulate Rail- ways of July 10, 1854, and eleventh section of English Amplifying Act of July 21, 1873 139 Scope of prohibitions of section 3 of Act to Regulate Commerce considered by Supreme Court 142 Requiring carriers to afford equal facilities for exchange of traffic, broadens the requirement of section 1 145 Section 2, discriminations referred to in, relate to like kinds of traffic, whereas those brought within provisions of section 3 are between different kinds of traffic as well 143 In a discrimination in rates under sections 2 and 3 it has been held that it is immaterial whether or not the rate paid by the favored shipper was published and filed with the Com- mission 210 If carrier accords carload rate where consignor is owner, failure to extend same privilege when consignee is owner violates sections 1, 2 and 3 of the Act to Regulate Commerce 277 Underlying purpose of regulatory legislation is to put shippers on basis of absolute equality, assure them of equal rates and impartial enjoyment of facilities and services of interstate carriers 284 Service, provisions of section 3 firmly, clarify intent of inhibition against unjust discrimination 317 Relationship of, with sections 2 and 4 of Act to Regulate Com- merce 143 Administrative application of provisions of, by Interstate Com- merce Commission 146 The courts have qualified the application of the competition rule in the elimination of certain competitive preferences, but competition may not always justify a preference, and that question must be determined under the third section of the Act as a question of fact in each case 148 "Where preferences are created by ownership of otherwise com- petitive lines, or suppression by agreement of real competi- tion, or creation of artificial market conditions by carriers, such preferences are unlawful and violative of section 3.... 149 Relationship of sections 3 and 7 of the Act to Regulate Com- merce 151 Discrimination in export and import rates may be considered by the Commission under the provisions of section 3 of the Act to Regulate Commerce 192 Forbids discrimination 335, 338 Administrative enforcement of sections 1, 2, 3 and 4 of the Act to Regulate Commerce prohibiting unjust discrimination... 201 Prohibits discrimination 320, 321 Prohibits unjust discrimination 376 Forms of discrimination which relate to the furnishing of serv- ice, facilities, car service and the like, are prohibited by section 3 of the Act to Regulate Commerce • 286 Section 3 of the Act to Regulate Commerce requires every carrier subject thereto to afford equal facilities for interchange of traffic and forbids discrimination in rates and charges between connecting carriers 241 Through route requirements should" be construed in connection with sections 3 and 15 and with regard to intendment of Act to Regulate Commerce as a whole 241 If carrier has the right to absolutely refuse use of terminals and facilities to another carrier, it has the right similarly to refuse them to every other carrier. 243 Theory of regulation rests upon assumption that private prop- erty devoted to public use to the extent devoted to public use is not private but quasi-public 243 Lower rates to large shipper than are at the same time accorded his smaller competitor clearly constitute unjust discrimina- tion in violation of section 3 251 Facilities, Interchange, section 3 requires carriers to furnish.... 332 456 AMERICAN COMMERCE ASSOCIATION Pas« SECTION 4 (see DISCRIMINATION; LONG AND SHORT HAUL; "UNDER SUBSTANTIALLY SIMILAR CIRCUMSTANCES AND CONDITIONS"). Section 4, prior to 1910 amendment had become emasculated by Judicial construction 22 History of, makes clear the intent of Congress to restrict fore* and effect of market competition 6 Section 4, infirmity of, prior to amendment of section 22 Prior to 1910 amendment efforts of Commission to determlno similarity or dissimilarity in competitive transportation affected by water competition were without effect 22 Prohibition against higher rate for shorter haul requires carrier to establish before Commission that its market competition policy will not impose unreasonable rates upon intermediate points 6 Following 1910 amendment, Commission gave consideration to water competition only when a necessary element in making of rail rate 22 Must be construed in light of other sections and in view of purpose and intent of the section itself 28 Contemplates certain flexibility in rates to competitive points. . 30 Discrimination provisions of Act to Regulate Commerce do not stop with those of third section, but proceed to the fourth section of the Act and specifically condemn a kind of de- scription which arises out of the relation of long and short haul rates 132 Provisions of section 4 are directed against specific form of discrimination of rates in different localities 132 Relationship of section 3, purpose of fourth section being to narrow prohibition of section 3 down to exclusion of higher rate for nearer than for more distant point on same line... 133 Charging same rate for short as for long haul raises question of reasonableness of shorter rate, instead of running to a violation of section 4 37 Relationship of sections 2, 3 and 4 of Act to Regulate Commerce 129 Rates made by shorter and competing lines to the same points of destination 38 Amplification of section 155 Statutory provisions of 155 Long and short haul provisions 155 Interstate Commerce Commission has authority to relieve car- riers from operation of fourth section 155 "Separate and Independent Line" case defined the word "line" by holding that the "joint line" formed by two or more roads was wholly Independent of the individual lines and that the total "joint rate" over two or more mads, not being over the "same line" might for anything contained in section 4 not only be as low or even lower than the local rate of either .' 159 Judicial construction of original fourth section 156 New fourth section, purpose of 169 Summary of rulings by Interstate Commerce Commission upon applications for relief under the fourth section prior to ruling of Supreme Court 167 Rates reduced to meet water competition not to be raised with- out permission of Interstate Commerce Commission 158 Recouped section accom.plished two things: — (1) elimination of the destructive similarity clause; and (2) substantial strengthening of fore pa rt of section 170 Intent of Congress that law should require as a general rule that there should be no lesser charge to the more distant point, but that there miglit be justifiable exceptions to such general rule 170 Relationship of, V\nth sections 2 and 3 of the Act to Regulate Commerce 143 Fourth section of Act to Regulate Commerce applies to export and Import rates 192 Supreme Court in sustaining validity of Commission's orders in the Trans-Continental Case considered the new fourth section from a four-fold viewpoint 185 Fourth section Board of the Interstate Commerce Commission... 191 INTERSTATE COMMERCE LAW 457 Page In prescribing the relation of trans-continental rates, the Com- mission in effect prescribed minimum rates ISl A new constitutional question ISl Constitutionality of new fourth section 177 Intent of Congress in revising fourth section referred to by Commission in Spokane Case 176 Since amendment ot 1910, section is more simple and entirely consonant with power of Congress and with theory of entire Act to Regulate Commerce 171 As originally proposed in the report of the Cullon Committee in 1886 174 History of, since 1887 171 Case reference to Commission's rulings under fourth section of Act to Regulate Commerce 193 Application of new fourth section by Commission in the Nevada Case 172 Burden of proof under application for relief for provisions of section 4 197 The new fourth section 168 Enforcement of provisions of section 4 of Act to Regulate Com- merce by Interstate Commerce Commission and the courts. . 197 Administrative enforcement of sections 1, 2, 3 and 4 of the Act to Regulate Commerce prohibiting unjust discrimination... 201 Prohibits discrimination 321 SECTION 6 (see TARIFFS). Carrier shall not collect or receive a greater or less compensa- tion than the rate specified in the tariffs 89 Prohibits rebates and concessions 368 Publication of rate in manner and form prescribed by section 6 of the Act to Regulate Commerce is test only of its legality and must not be confused with its lawfulness 89 SECTION 7. Relationship of sections 3 and 7 of the Act to Regulate Com- merce 161 SECTION 10. Prohibits rebates and concessions 868 SECTION 15 (see ALLOWANCES). Power to remedy the evils of discrimination is found in sections 15 and 16 of the Act to Regulate Commerce 286 Allowances to be paid to shippers under section 15 of Act to Regulate Commerce 381 Of Act to Regulate Commerce, Commission has not hesitated to exercise power to suspend proposed advances in rates, and sometimes reductions 55 Statutory provisions governing allowances to shippers 219, 220 Since amendment of 1910, no constructive latitude left to Inter- state Commerce Commission in determining reasonableness of advanced rates 60 Prior to amendment of, burden upon carrier of Justifying advance in rate long maintained 56 Allowances made by trunk lines to industries 215, 216, 220 Through route requirements should be construed in connection with sections 3 and 15 and with regard to Intendment of Act to Regulate Commerce as a whole 241 Power, upon complaint, to deal with unjust preferential and discriminatory regulations and practices was clearly vested in Commission under section 15 of Act to Regulate Com- merce 284 "Whether unjust discrimination is created when trunk line pays terminal line controlled by a shipper for its services is a question arising under section 15 of the Act to Regulate Commerce 261 SECTION 16. Power to remedy the evils of discrimination is found in section* 15 and 16 of the Act to Regulate Commerce 2S6 l!«:C7riON 22. Anti-pas.-i provisions of. illustrative and permissive rather than restrictiva _ 2Q9 458 AMERICAN COMMERCE ASSOCIATION Page SECURITIES (see RAILROAD SECURITIES). "SEPARATE AND INDEPENDENT LINE" (see SECTION 4). SERVICE (see DISCRIMINATION — Service; INTERSTATE COM- MERCE COMMISSION^Minimum rates; TRANSPORTATION SERVICE). Carriers owe to public efficient service at reasonable rates 77 SHIPPING ACT. Of September 7, 1916, does not' "affect the power or jurisdiction of Interstate Commerce Commission, nor confer upon the Board concurrent power or jurisdiction over any matter within the power or jurisdiction of the Commission 124 Shipping Act not to be construed to apply to intrastate com- merce 124 SPECIAL PRIVILEGES (see DISCRIMINATION). STANDARDS (see STANDARDS OP COMPARISON; REASONABLE- NESS OF RATES — Standards). STANDARDS OF COMPARISON (see DISCRIMINATION; ELKINS ACT). STATE (see TERMINALS). Railroad, constructing- and maintaining a public highway under public sanction performs a function of the state 74 STATION TERMINALS (see TARIFFS). STATUTES (see FOREIGN STATUTES). STOPPAGE IN TRANSIT (see DISCRIMINATION— Transit privl- To complete loading or unloading, discrimination in 353 Privilege of stoppage in transit is a different matter from the right of stoppage in transit 350 STOPPAGE IN TRANSITU. Privilege of stoppage in transit is a different matter from the right of stoppage in transitu 350 STOPPAGE OF CARS IN TRANSIT TO COMPLETE LOADING 356 STOP OVER CHARGE (see RATES) 364 STORAGE (see ALLOWANCES; REBATES AND CONCESSIONS). SUSPENSION OF RATES (see SECTION 15). Unlike English statutes Act to Regulate Commerce places burden upon carrier to justify reason for making an Increase in rates 65 SWITCH CONNECTIONS. Amendment of 1910 inserted the words "or owner of such lateral, branch line of railroad," thereby giving to such owner the same rights as the shipper possessed 120 As now amended, law permits owners of lateral branch lines as well as shippers to make complaint to Commission of carrier's failure and authorizes Commission to Investigate and determine existing conditions and order carrier to comply with the Act 118 Applicant must be a branch before it applies; that some shippers may be accommodated by a switch connection is not enough 121 Commission is empowered to require establishment of physical connections between lines of rail carriers and docks of water carriers, w^here "connection is reasonably practicable" and "can be made with safety to the public and where the amount of business to be handled is sufficient to justify the outlay" 123 Common carrier .subject to Act to Regulate Commerce required, upon application of any lateral branch line of railroad, or of any shipper tendering interstate traffic for transportation, to construct, maintain and operate upon reasonable terms.. 116 Carriers required to furnish switch connections, must furnish cars for the movement of such traffic to best of ability without discrimination in favor of or against any shipper. . 116 Interstate Commerce Commission, jurisdiction and authority over 117 Exception as to tracks and terminal facilities in section 3 of the Act to Regulate Commerce does not prevent Commission in justifiable cases from compelling a carrier to accept cars from connecting line 122 'Tiateral. branch line," construction of phrase 117 "Lateral, branch line of railroad" Interpretation of phrase by Supreme Court 118, 119 INTERSTATE COMMERCE LAW 459 Page Power of Commission does not extend to ordering a connection wherever it sees fit, but Is limited to a certain and some- what narrow class of lines 121 Prior to amendment of 1906, state statutes had been upheld by the Supreme Court where right of the state had been exer- cised through administrative bodies requiring railroads to make reasonable track connections 120 Required where connection is reasonably practicable, can be put in with safety, and will furnish sufficient business to justify construction and maintenance 116 Supreme Court held in Grand Trunk Case that requirement of third section of Act to Regulate Commerce relating to tracks and terminal facilities, when the haul is "a sub- stantial part of a continuous transportation routing" does not amount to an appropriation of terminal facilities 122 Not intention of the Act to give a roving commission to every road that might see fit to make a descent upon a main line, but to provide for shippers seeking an outlet either by a private road or a branch 119 Since the 1910 amendment to Act to Regulate Commerce, Supreme Court has uniformly held that carriers subject to the Act are required to establish switch connections with the lines described in the statute on conditions named 118 The Traction Line Case, U. S. vs. B. & O. S. W. Ry. Co 121 Third section of Act to Regulate Commerce provides that car- riers subject thereto must afford according to their respec- tive powers, reasonable, proper and equal facilities for the interchange of traffic between the respective lines 122 Susmary of requirements 11 ? Under third section of Act to Regulate Commerce carriers are forbidden to discriminate in rates and charges betweea con- necting lines 122 Under construction given to words "or otherwise" Commission has held its jurisdiction sufficient to establish through routes and joint rates between rail and water carriers with necessary construction and maintenance by physical con- nections 123 Under the third section of the Act to Regulate Commerce car- rier is not required to give the use of its tracks and terminal facilities to another carrier engaged in like business 122 Words "lateral, branch line" do not refer to what tlie applicant may become or be made by order of the Commission, but to what it already is when it applies 121 With water carriers, under the provisions of Panama Canal Act jurisdiction of the Commission has been extended over inter- state transportation "by rail and water to the Panama Canal or otherwise" and "of the carriers, both by railroad and by water" 123 SWITCHING CHARGES (see DISCRIMINATION). Additional charge should be made for movement of cars from place to place within plant during processes of manufacture 288 American method of stating charges for 262, 263, 264 English cases relating to charges for 263 SWITCH TRACK (see REBATES AND CONCESSIONS). TAP LINES (see ALLOWANCES; DISCRIMINATION). Cannot be held that assumption of form or character of common carrier by tap line is mere device to shield rebates, when by public policy of the state and national governments, tap lines are recognized to be common carriers 228 Following ruling of Supreme Court, Commission ordered trunk lines on or before October 1, 1914, on not less than five days' notice, to reopen through routes with each of the tap lines parties to the record with which they had connections and publish Joint rates to interstate destinations 229 460 AMERICAN COMMERCE ASSOCIATION Page Railroads built and owned by same persons who owned th« timber were regarded as essential to the development of the timber regions in the southwest 116 Rulings affecting participation of tap lines and Industrial rail- ways in through routes and joint rates 234 Supreme Court did not enter the domain of defining abuses created by tap lines, but gave common carrier status to many tap lines held by the Commission to be plant facilities 218 TAP LINE CASES 253 Commerce court annulled the Commission's order in 228 Commission held tap lines involved, with respect to proprietary lumber industries, mere plant facilities and not common carriers . . i : 227 Involved certain divisions of through rates demanded by tap lines and declared unlawful by Commission 227 Orders entered by Commission prior to ruling by Supreme Court in, were vacated and set aside, on July 29, 1914 229, 231 Second supplemental report of the Commission 230 Supreme Court held five tap lines to be common carriers. 231, 237, 238 Third supplemental report of the Commission 230 57 tap lines to which Commission in original and supplemental reports refused to sanction allowances 231 TARIFFS (see REASONABLENESS OF RATES— Rules, regulations and practices; TARIFFS). REBATES AND CONCESSIONS. Commission has declared tariffs unlawful which limited the application of rates shown therein to shipments handled by steam power, thus excluding shipments handled by electric power 100 Direction — route of actual movement governs shipments; rates not applicable in opposite direction unless so published 86 Failure of carriers to agree upon divisions of rates does not relieve them from observance of published rates 46 Failure of carrier to properly file and publish rates Is quite as serious a violation of the Act as failure to observe published rates 91 Import rates — inland proportion may not apply on domestic traffic 54 Joint rates, higher through rate may not be reduced except by lawful amendment to tariffs 49 Joint rates, specific through rate only lawful rate on through shipment even though combination might make lower 49 Passenger fare tariff offering excursion fares for schools and different fares for societies between same points is dis- criminatory 101 Persons and commodities transported for use in serving others than passengers and employees of the carrier may not law- fully be carried except under regular tariff rates 101 Publication, of rate in manner and form prescribed by section 6 of the Act to Regulate Commerce Is test only of its legality and must not be confused with its lawfulness 89 Rates conditioned upon use of commodity. Commission has repeatedly condemned such tariffs and declares that the carrier has no right to attempt to dictate the uses to which commodities transported by it shall be put 99 Requirement of section 6 that terminal charges shall be sepa- rately stated in tariffs does not mean that rates shall be fractionally divided into station terminal and haulage charges 261, 262 Whatever the practice of carriers in the past of "meeting the rate," the Act and decisions of the Commission require tariffs must now be adhered to 47 TERMINAL FACILITIES (see FACILITIES; SWITCH CONNEC- TIONS). TERMINALS. Terminals, state and municipal regulation governing us« of 848 INTERSTATE COMMERCE LAW 461 Page THROUGH ROUTES AND JOINT RATES (see SWITCH CONNEC- TIONS). THROUGH SHIPMENTS (see LOCAL AND THROUGH SHIPMENTS). TIMBER (see COMMODITIES CLAUSE). TITLE (see OWNERSHIP). THROUGH ROUTES AND JOINT RATES (see TAP LINES). THROUGH TRAFFIC. It Is character and nature of movement of traffic — whether movement is through or ?ocal — and not the mere incidents of billing tliat determine nature of commerce and rate appli- cable ^45, 274 TONNAGE (see REASONABLENESS OF RATES — Traffic conditions). TRACKAGE RIGHTS (see DISCRIMINATION). Commission would not sanction arrangement for lease by inter- state carrier of trackage rights over short connecting line for purpose of hauling its own crews and equipment ballast for use on its own line, the arrangement being regarded as an unjust discrimination 101 TRACKAGE RIGHTS UNDER CONTRACTS (see DISCRIMINATION). TRACKS (see FACILITIES; SWITCH CONNECTIONS), 'TRADE CENTER" (see DISCRIMINATION). TRAFFIC (see LOCAL TRAFFIC; REASONABLENESS OF RATES — Traffic conditions; THROUGH TRAFFIC; VOLUME OF TRAFFIC). TRAFFIC CONDITIONS (see REASONABLENESS OP RATES — Traffic conditions). TRAINLOAD RATES. Lower rates for tralnload quantity or any number of carloads unlawful 80 TRANSFER SLIPS (see REBATES AND CONCESSIONS). TRANS-CONTINENTAL RATE CASES (see COMPETITION) 23, 181, 185, 190 Rate adjustment established after exhaustive hearing and care- ful study by Commission of each commodity 26 TRANSIT (see DISCRIMINATION — Special privileges). Carrier may not lawfully discriminate between persons in transit of commodities for treatment 274, 275 TRANSPORTATION (see FACILITIES). Term defined 335 A common carrier is bound to accept a car for transportation whenever such car is offered at places where it can reason- ably receive it 245 TRANSPORTATION CONDITIONS (see REASONABLENESS OF RATES — Manufactures). Element in determining reasonableness of rates 59 TRANSPORTATION FACILITIES. Public interest demands adequate maintenance of existing rail- roads and increase of transportation facilities to keep pace with growth and requirements of commerce 77 TRANSPORTATION SERVICE (see DISCRi:nNATJON; FREE TRANSPORTATION). Whatever transportation service or facility ihe law requires a carrier to supply, it has a right to furnish 292 "UNDER SUBSTANTIALLY SIMILAR CIRCUMSTANCES AND CON- DITIONS" (see SECTION 4). In certain important particulars define the duties and rights of carriers and the rights of shippers as well 298 Judicial construction of phrase 156, 15S, 160, 161, 162, 163, 164, 165, 166. 168, 169 "Under substantially similar circumstances and conditions," pro- hibits any rebate or other device by which two shippers shipping over same line, same distance, under same cir- cumstances of carriage, are compelled to pay different rates therefor 317, 318 "UNJUST AND UNREASONABLE PREFERENCE" (see DISCRIM- INATION). USE. Carrier has no right to attempt to dictate uses to which com- modities transported by it shall be put 99 Rates conditioned upon use of commodity are unlawful 99 462 AMERICAN COMMERCE ASSOCIATION VALUATION (see FALSE VALUATION). ^*^* VALUE (see REASONABLENESS OF RATES). VALUE OF SERVICE. Element in determining reasonableness of rates B9 VOLUME OF TRAFFIC (see REASONABLENESS OF RATES: TRAF- FIC CONDITIONS). ' Or density of tonnage, element In determining reasonableness of rates 59 WAGES (see REASONABLENESS OF RATES— Wages). WATER COMPETITION (see COMPETITION). Element affecting freight rates 4 WEIGHTS (see MINIMUM WEIGHTS; REBATES AND CONCES- SIONS). Estimated, permissable; but billing on marked capacity of car or carload minimum illegal 4ifi WEST COAST NAVAL STORES COMPANY CASE '..." 244 WESTERN CLASSIFICATION CASE 355 357 WHARFAGE RIGHTS (see DISCRIMINATION). WHARVES (see DISCRIMINATION).