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of importance, and due regard to distance and proportions are to be observed in connection with other considerations. They are material in fixing transportation charges. 3 I. C. C. R. 252, 2 Int. Com. Rep. 604; 8 I. C. C. R. 377.

A rate is none-the-less a through rate in law, because the initial carrier charges its local rate as part of the through rate and the remaining lines charge an agreed rate made by percentage.

While there is no mileage requirement in the act other than what may be required in the long and short haul rule in sec. 4 and the general requirement of reasonableness, as a rule in the transportation of freight of railroads, while the aggregate charge is continually increasing the further the freight is carried, the rate per mile is constantly growing less, making the aggregate charge less in proportion every hundred miles after the first, arising out of the character and cost of the service; and thus staple commodities and merchandise are enabled to bear the charges. from and to the most distant portions of the country. 1 I. C. C. R. 480 and 1 Int. Com. Rep. 764; 2 I. C. C. R. 315 and 2 Int. Com. Rep. 199. On this general rule as to local rates, 3 I. C. C. R. 450, and 2 Int. Com. Rep. 721; 1 I. C. C. R. 152 and 1 Int. Com. Rep. 356; 6 I. C. C. R. 488; 8 I. C. C. R. 277; 2 I. C. C. R. 584, and 2 Int. Com. Rep. 414; 7 I. C. C. R. 323.

This admitted right of carriers to fix through rates on a lower relative basis than local rates has led not only to the allowance of the through rate for commodities manufactured enroute, as in milling in transit and compressing in transit privileges, but also to illegitimate devices to secure such lower through rate. See milling in transit, infra, sections 2 and 3 of the act.

While the commission has uniformly said that the through rates should not exceed the sum of the locals, it has made no general rule on the subject, see 12 I. C. C. R. 498; and each case must be disposed of upon its merits.

§ 181. Reasonableness in commutation rates.-In what is known as the Communation Rate Case (21 I. C. C. R. 428), the commission in an interesting opinion considered the origin and history of commutation fares and the distinction between such traffic and other passenger traffic, and reached the conclusion that the commutation traffic stands by itself as a special and distinct kind of service for which the carrier may demand no

more than a reasonable compensation. The case involved the commutation rates on the different railroads doing a commutation business in the vicinity of New York. All the railroads denied the authority and jurisdiction of the commission over the reasonableness of commutation fares, basing their contention on the language of section 22 of the act, which provides that "nothing in the act shall prevent the issuance of mileage, excursion and commutation passenger tickets." It was admitted. however, that such fares were subject to secs. 2, 3 and 4 of the act. The commission said that commutation rates were peculiar, in that suburban homes had been established and communities built up in reliance upon reasonable commutation service. The commission reached the conclusion that while the service was peculiar, it was a special and distinct kind of service for which the carrier could demand no more than a reasonable compensation. The new commutation fares of the Pennsylvania Railroad Company were held to be excessive, but those of the other railroads were not found to be unreasonable, except in particular cases specified.

§ 182 (139). Relation of interstate to state rates.-The relation of the interstate to state rates, where the carrier is doing business with the same track and equipment under the regulations of two sovereignties in our complex form of government, has been considered, see supra, Part I, Chapter VII. The act to regulate commerce contains no provision, whereby interstate rates must be reduced because intrastate rates are lowered by state commissions (7 I. C. C. R. 601); nor are state rates required to be lowered because of the reduction of interstate rates. It was said by the commission (15 I. C. C. R. 29) that no greater sanctity is presumed in favor of rates established by state railroad commissions than of those voluntarily established by the carriers themselves; but when the commission is asked to examine an interstate rate, similar rates established by state authority in that territory must have great influence, especially when they have been long acquiesced in by the carriers. (14 I. C. C. R. 376.) Still, those state rates have no binding force upon the commission. They are standards of greater or less value, according as they appear to be just and reasonable. As to the competitive effect of state

imposed rates upon interstate traffic, and the diverse rulings of the federal circuit courts thereon, see Part I, supra, § 110.

§ 183. Rates as affected by the development of the country.In a rapidly developing territory, the changed conditions created by the growth of population and business may necessitate changes in rates to meet these altered conditions. This has been illustrated in the recent rulings of the commission reducing the Interstate Class Rates from Seattle, Tacoma and Portland to Idaho, Washington and Montana, 19 I. C. C. R. 265; and also the rates between Mississippi river and Missouri river to Utah points, 19 I. C. C. R. 218. See also 19 I. C. C. R. 238, where points in the western defined territory to points in Nevada were unreasonable. Some of these cases involved the long and short haul rule, see fourth section, infra. Rates to the coast had been fixed by water competition, and the rates to the interior were made by adding locals to these through rates. The commission said in 19 I. C. C. R. 238, that the manufacturing center of the country had moved westward, and the Atlantic routes which were once necessitated are now almost unused. The commission said the time had come in their opinion when the carriers west of the Rocky Mountains must treat the intermountain country upon a different basis from that which had theretofore obtained. See also 19 I. C. C. R. 162, holding the rates from Spokane to St. Paul and Chicago were unreasonable. See 15 I. C. C. R. 376.

These cases involve not only the reasonableness of the rates per se, but also the alleged preference in violation of sections 3 and 4, see infra, § 294.

§ 184. The commission on the interdependence of rates.The commission has also considered the position of strong companies with good credit and weak companies with embarrassed credit, competing for business between the same points, and it was held that it would be unjust to the shipper to base rates upon the needs of the weaker road. In 11 I. C. C. R. 238 (1905), in an investigation of the class and commodity rates from St. Louis to Texas points, it declined to interfere with the advance made by the railroads, on the ground that their financial condition at that time was not favorable. It was said in the Utah cases, 19 I. C. C. R. 218, where expensively built mountain roads

were under consideration, that in fixing a rate the commission would not look exclusively to that line which could handle the business cheapest or which was the strongest financially, but would consider the weaker rival; but it did not consider that the rates should be fixed with reference to the weakest line, and it would certainly be unjust to the public in deciding these rates to consider merely the expensive and circuitous routes.

§ 185. The commerce court on the interdependence of rates. The newly established United States commerce court in one of its earliest opinions, in Receivers & Shippers Association of Cincinnati v. The Commission (July 1911), in sustaining the commission in its refusal to declare unreasonable a rate from Cincinnati to Chattanooga, 188 Fed. 242, declared its full concurrence in the view of the commission that in the determination of the reasonableness of a rate, it should not consider only the particular carrier making the same; but on the contrary, should consider the rates in a particular territory or the rates of other carriers to be affected by the change of the particular rate or rates in question, and the court added: "We think this court may take judicial knowledge of the fact that the interstate rates prescribed for the transportation of freight by common carriers must necessarily be more or less interdependent, or at least be so related to each other that the rate-making power will not, simply because it has the power, fix the rate upon a single line of railroads which will necessarily disorganize the established and reasonable rates on other roads in the same territory. All rates established in accordance with law are presumed to be just and reasonable. It is for this reason that the rates for the transportation of freight by other carriers in the same territory may be looked into, as evidence of what each paid as just and reasonable rate, provided the conditions are the same. We cannot as a court not vested with the power to fix rates, say, beyond question, that the elements which the commission took into consideration in fixing the schedule complained of were not improper for the commission to consider, and therefore cannot conclude that the commission fixed a schedule of rates upon improper grounds.'

It seems that in this case the commission had admitted in its opinion that if they took the defendant railroad by itself, that is,

the Cincinnati Southern, and determined the reasonableness of the rates by reference to cost of construction, cost of mainten. ance and profit upon the investment, that the rate would be found to be unreasonably high; but that in view of the interdependence of other rates, the commission hesitated to take action which would make widespread and far-reaching reductions of rates on other lines, when there was no special occasion for it. This case has been appealed to the supreme court,-the complainant contending, that while the commission could lawfully consider the interdependence of rates it could not make that consideration conclusive.

§ 186 (136). Reasonableness of rates as dependent on character of the traffic.-The commission has uniformly recognized that the character of the traffic is material in determining the rates and that the rates must be varied according to the value of the commodities as well as the cost of handling and the degree of risk to the carrier. Thus to make the rates on metals, coal, and other low grade freights yield per ton the average received on all freight would be unjust, and these considerations are the basis of classification. See infra, section 3. Thus coal is one of the most desirable kinds of traffic, with a small hazard of loss, and the cost of receiving and delivering is less than that of most other kinds of freight, and at the same time it is an article of universal necessity in daily life and the basis of industries. See 10 I. C. C. R. 337.

In 14 I. C. C. R. 23, the commission said that lumber was a low grade commodity and should move at low rates, especially when the haul is long, as it moved in large quantities, was loaded by the shipper and unloaded by the consignee, was shipped in both closed and open cars, was loaded to a high enconomic car load rate didn't require special or expedited movement, was not easily injured in transit and caused few damage claims. In such commodities it is also true that their comparatively low value as compared with weight necessitated low rates to enable them to be carried any distance. On the other hand, the increased hazard to the carrier in transporting live stock is properly taken into account in fixing the tariff. 10 I. C. C. R. 327. See also 5 I. C. C. R. 514 and 4 Int. Com. Rep. 223; 6 I. C. C. R.

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