able relation to the amount of difference and cannot be so great as to produce an unjust discrimination."

This was a case of alleged discrimination in telegraph rates which were then not subject to the Interstate Commerce Act.

§ 199 (150). Circumstances and conditions of through traffic and local traffic are dissimilar.-While competition between carriers cannot justify discrimination between individuals, competition may and does have an influence in determining the through rates, thus making them under essentially different circumstances and conditions from the local rates to other points on the same line. In such cases the reduced rate affected by competition is controlled by circumstances and conditions substantially dissimilar within the meaning of the act. But whether so controlled or not, it must be the same to all shippers under the same conditions. It has been uniformly held both by the commission and by the courts, that a local rate to a given point and the pro rata part of a through rate to the same point on the same line are not under similar circumstances and conditions.

The phrase "under similar circumstances and conditions" is found in sections 2 and 4. As hereafter seen, competitive conditions may create dissimilar circumstances and conditions between localities under section 4, but when the rates are thus fixed under dissimilar conditions, section 2 requires that shippers in any given locality must be treated alike for the same service. But through traffic is a different "kind of service" from local traffic. This was held in Union Pacific Railway Co. v. United States, 117 U. S. 355, 29 L. Ed. 920, in the construction of the act of congress of July 1, 1862, relative to the Union Pacific Railway company, and applied to the construction of the second section of the Interstate Commerce Act in the Import Rate case, 162 U. S. 197, 40 L. Ed. 940. It is not only in the presence of competition, but also in the increased cost of service, resulting from stoppages, that the conditions of through and local traffic are substantially dissimilar. Chicago, etc., R. R. Co. v. Tompkins, 176 U. S. 167, 44 L. Ed. 417. See supra, § 180.

§ 200 (151). Competition of carriers does not make circumstances dissimilar under section 2.-These words as used in section 2 refer to the matter of carriage, and do not include compe

tition, that is, discrimination between individuals is not justified by the fact of competition with other carriers influencing the lower charge. Thus in Wight v. United States, supra, the court sustained the conviction of a railroad agent for making to a consignee, who had a siding connection with a competing railroad, an allowance or rebate for the expense of cartage from its own station. It was urged that the party who did not have this connection would have to go to the expense of cartage by whichever road he transported, and that therefore the traffic was not under the same circumstances and conditions within the terms of section 2. But the court said that the wrong prohibited by the section was a discrimination between shippers, and that the service in transporting to the station from the point of shipment was precisely the same to each shipper. The court concluded: "It may be that the phrase 'under substantially similar circumstances and conditions,' found in section 4 of the act, and where the matter of the long and short haul is considered, may have a broader meaning or wider meaning than the same phrase found in section 2. It will be time enough to determine that question when it is presented. For this case it is enough to hold that that phrase, as found in section 2, refers to the matter of carriage, and does not include competition." It was determined in other cases before the court construing section 4 that the term "under substantially similar circumstances and conditions" in the latter. section did have a broader meaning, and did include competition as creating dissimilarity of circumstances and conditions. See section 4, infra.

The construction of the section in the Wight Case prevents a carrier from making a concession to secure a business, which it could not otherwise secure, if that concession makes an inequality in rates between shippers for the same service. Competing shippers in this case were not in fact injured by the concession, as they were compelled to pay for cartage in any event. The only effect was to give the shipper two competing lines at the same rate, and to give the carrier an opportunity to handle traffic from which otherwise it was cut off. While it could have been contended that the circumstances were substantially dissimilar, and that such a discriminative rate for the purpose of securing business was not within the intent of the section, the construction declared in this case makes such a concession un

lawful, although extended to all "similarly circumstanced," that is, to all making the same shipment.

§ 201 (152). The party rate case. It was ruled by the commission, 1 I. C. C. R. 208, 1 Int. Com. Rep. 611, that under this section reduced land explorers' tickets and settlers' tickets, and special rates to immigrants, 3 I. C. C. R. 652, 2 Int. Com. Rep. 804, were illegal as discriminating under this section. The same ruling was made in the case of party rate tickets, that is, tickets sold at reduced rates and entitling a number of persons to travel together on a single ticket or otherwise, were an unjust discrimination against other passengers and illegal. This ruling however was disapproved by the circuit court, 43 Fed. Rep. 37, and also by the supreme court in what is known as the Party Rate Case, 145 U. S. 263, 36 L. Ed. 703. The latter court said that party rate tickets, which were used principally by theatrical and operatic companies for transportation of their troupes, would hardly fall within the meaning of mileage or excursion or commutation tickets within the exception of section 22, but that did not make the tickets unlawful. The unlawfulness defined by section 2 consisted in an unjust discrimination. It was the object of section 22 to settle beyond all doubt that the discrimination between certain persons therein named should not be deemed unjust; but it did not follow that there might not be other classes of persons in whose favor such discrimination was made without such discrimination being unjust, and that the section was illustrative rather than exclusive. The object of such party rate tickets was to induce more people to travel, and to secure patronage that would not otherwise be secured. After a review of the English cases construing the English act of 1854, the court said that the substance of all those decisions was that the railroad companies were only bound to give the same terms to all persons alike under the same circumstances and conditions, and that any fact that produced change in condition and different circumstances and conditions justifies an inequality of charge.

§ 202 (153). Wholesale and retail rates in freight traffic.In the case of Hoover v. Pennsylvania Railroad Co., supra, the court based its ruling upon this Party Rate decision, and applied the principle to a discrimination in favor of manufacturing in

dustries which would contribute to the business of the railroad. In one of the early cases before the commission, the Providence Coal Company Case, I. C. C. R. 107, 1 Int. Com. Rep. 363, decided in 1887, soon after the organization of the commission, it was held in an opinion by Judge Cooley, that the analogy of wholesale and retail purchasers of merchandise could not be extended to a discrimination in freight rates based solely upon the amount of shipment. The cases were not analogous, since the naming of the quantity of freight which should be compared to wholesale purchasers must necessarily be altogether arbitrary. In this case a discount of ten per cent was allowed on 30,000 tons, and it seemed there was only one dealer who could make that shipment. Judge Cooley added: "A railroad company if allowed to do so might in this way hand over the whole trade along its road to a single dealer, for it might at law make a discount equal to or greater than the ordinary profit in trade, and competition by those who would not get the discount would then be out of the question. The 30,000 ton limit was unreasonable and unlawful because necessarily resulting in unjust discrimination. It was said also that the distinction between carload and less than carload lots was readily understood and appreciated, but that discrimination to be valid must be based on the distinction involved in the cost of handling.

This ruling of the commission, it will be seen, is in harmony with the recent trend of judicial opinion as to the common law right of discrimination; that is, that it must be based upon a difference of the cost of service, and not upon the mere fact of a larger shipment. This was directly ruled in United States v. Tozer, 39 Fed. 369, eastern district of Missouri, in a case where the defendant, a railroad agent, was indicted for paying rebates in violation of section 2 of the act. The court, Thayer, J., charged the jury that the fact that the defendants received much more traffic from one shipper than from another did not make the circumstances and conditions under which the two services were rendered substantially dissimilar.

It will be observed however that the discrimination in favor of the larger shipper could in some cases be justified on the ground of a difference in the cost of service, as it is recognized that as a rule the proportionate expense of handling and carriage is

reduced with the increase of quantity. Divested of all considera tions of public policy, a carrier might well afford to give a special rate in view of the assurance of a certain quantity for shipment. This was recognized in the Nicholson v. G. W. R. Co. case, supra. The really controlling consideration is that of public policy in this refusal to apply the analogy of wholesale and retail sales to freight rates. It is because the power to discriminate in favor of a larger shipper, whatever the business inducement, is necessarily injurious to business competitors who cannot make such shipments, and therefore tends to monoply.

§ 203 (154). Wholesale rates in freight and passenger traffic distinguished. There is another ground however for the clear differentiation of discrimination in passenger rates on the basis of the number carried in party rate tickets, from a like discrimination in the case of freight rates. No one is injured or can be injured by the issue of passenger tickets at a reduced rate, whereas in the case of freight rates based upon the amount of shipment, the effect might be to put out of business all but the favored shipper whose business was large enough to ship the requisite amount. This distinction was commented upon by the supreme court in the Party Rate case, where the court said at page 280: "If for example the railroad makes the public generally a certain rate of freight and to a particular individual residing in the same town a reduced rate for the same class of goods, this may operate as an undue preference, since it enables the favored party to sell his goods at a lower price than his competitors, and may enable him to obtain a complete monoply of that business. Then if the same reduced rate be allowed to everyone doing the same amount of business, such discrimination may if carried too far operate unjustly upon the smaller dealers engaged in the same business, and enable the larger ones to drive them out of the market. The same result however does not follow from the sale of tickets for a number of persons at a less rate than for a single passenger; it does not operate to the prejudice of the single passenger, who cannot be said to be injured by the fact that another is enabled at a particular instance to travel at a less rate than he. If it operates unjustly toward any one, it is the rival road which has not adopted corresponding rates; but