experience which showed a through rate charge over connecting roads in excess of the combination charges applying to and from an intermediate point on the through line.

As to the competition rule, see also Commission v. L. & N. R. Co., 46 C. C. A. 685, and 108 Fed. 988, affirmed by the supreme court in 190 U. S. 273 and 47 L. Ed. 1047 (1903).

For application by the commission of the competition rule to alleged preference, see 10 I. C. C. R. 29. Where the preference in rate exceeds the competitive rate, there is as to such excess a case of undue preference under this section. 10 I. C. C. R. 342.

233 (178). Discrimination between domestic and foreign traffic in import and export rates not unjust preference.-An order was made by the commission in March, 1889, requiring that imported traffic transported to any place in the United States from a port of entry or place of reception, whether in this country or in an adjacent foreign country, should be taken on the inland tariff covering other freights.

Later, in June of the same year, in 3 I. C. C. R. 137, and 2 Int. Com. Rep. 553, the commission ruled that in export rates the proper method was to add to the established inland rates from the interior to the seaboard the current ocean rates. The commission ruled that as ocean rates were not subject to the control of the act, they were not proper for consideration in creating a dissimilarity in circumstances and conditions within the meaning of the act. The parties to the Export Rate case complied with the order of the commission, but the import rate ruling was contested by the Texas & Pacific Railroad Company. The commission ruled that the competition of ocean lines or circumstances affecting the movement of foreign commerce before reaching our own country did not constitute a dissimilarity of circumstances and conditions within the meaning of the act. Their ruling was sustained by the circuit court in a proceeding to enforce the order of the commission, 52 Fed. 187, and also by the circuit court of appeals, 6 C. C. A. 653, 57 Fed. 948. The latter court thought that some discrimination in rates might be justified under the circumstances, but that the rates imposed were unreasonable. The supreme court in 162 U.

S. 197, 40 L. Ed. 940 (1896), reversed both courts and directed the dismissal of the bill (Justices Harlan, Brown and Fuller, C. J., dissenting). The court said that the purpose of congress was: to facilitate and promote commerce, and not to reinforce the provisions of the tariff laws, and that the effort of the commission to deprive inland consumers of the advantage of through rates seemed to create the mischief which it was one of the objects of the act to remedy, and that among the circumstances and conditions to be considered, as well in the case of traffic originating in foreign ports as in the case of traffic originating within the limits of the United States, was competition at the seaports, and in deciding whether rates and charges, made at a low rate to secure foreign freights which would otherwise go by competitive routes are or are not undue and unjust, the fair interest of the carrier companies and the welfare of the community which is to receive and consume the commodities, are to be considered. The supreme court said that the fact that there was a considerable disparity between other and local rates did not warrant the circuit court of appeals in finding that the disparity constituted an undue discrimination, as no such issue was made before the commission, and the defendant was entitled to have the reasonableness of the rate considered, in the first instance at least, by the commission upon a full consideration of all the circumstances and conditions upon which a legitimate order could be based. Especially was this true when there was no person, firm or corporation claiming that he or they had been aggrieved by the disparity in the rates, the party complaining being the commission itself.

This decision was construed as applying to export rates as well as to import rates. The commission in its report of 1897 said that the carriers insisted that this decision controlled the rates for inland carriage to the seaboard of traffic for export, and recommended that congress amend the act giving the commission power to control inland rates, both import and export, but no such amendment has been enacted.

It is therefore a question of fact whether rates upon export or import traffic as well as those upon domestic traffic are unreasonable and unjustly preferential, but as a matter of law, it is not any violation of the act for the carrier to make a lower

rate to the point of export or from the port of import upon the traffic which is exported or imported than upon that which is locally consumed. See 8 I. C. C. R. 214.

§ 234. Milling in transit and export trade.-In 14 I. C. C. Rep. 356, the commission considered the case of a miller in the city of New York who competed in export business with shippers from the west, and it was ruled that as he was not entitled to a milling in transit privilege, that he should have the same rate upon grain which he subsequently ground into export flour that the carriers accorded to interior mills upon export flour.

The ruling of the commission in this case was affirmed by the circuit court, S. D. of N. Y., three judges concurring, 168 Fed. 131 (1909), which denied a temporary injunction against the enforcement of the ruling. The court said in its opinion that the commission was an administrative tribunal dealing with practical problems, and as long as parties affected by its orders appear and are fully heard, it has power to grant such relief as the facts shown upon the investigation call for, even though such facts may be presented by evidence technically outside of the issues raised by the pleadings, but were germane to the subject matter of the investigation. The commission was therefore empowered, where it found that a discrimination existed against a shipper or commodity to prescribe a relative rate so that the charge should be the same as that for its similar services to other shippers or another similar commodity, instead of fixing an absolute maximum rate, which would enable the carriers to continue the discrimination by reducing the rate to other shippers or on the other commodities.

See comments on this decision by the commission in the annual report of 1909, p. 30.

§ 235 (179). Application of the import rule to intermediate points on the line. It was ruled by the commisssion, 8 I. C. C. R. 214, after the decision in the Import Rate case, that in the application of export grain rates the carrier should in no case make the rate from any point to the seaboard less than from any intermediate point on the same line, and that a rate on export flour from Minneapolis which was one and one-half cents less than the domestic rate to the port of export, with no correspond

ing concessions to intermediate millers, was an unlawful discrimination, and that any line participating in any such lower export rate on flour from Mnneapolis must make a corresponding reduction on the same article from all intermediate points. See also 9 I. C. C. R. 534.

As to the publication of rates on export traffic, see infra, section 6. See also 8 I. C. C. R. 185, and 8 I. C. C. R. 110. The commission said in the case first cited that the Import Rate decision did not bar the import and export traffic from the purview of the commission, although it did require that conditions abroad as well as at home should be considered, and that the interests of classes, and not a single class, should be taken into account. See 8 I. C. C. R. 304.

§ 236 (180). Competition created by carriers.-In the Nashville and Chattanooga Rate case, supra, the circuit court of appeals in an opinion by Judge Taft, 1. c. 424, commented upon the fact that the competition at Nashville was between railroads. under the same control, the Louisville & Nashville railroad owning the majority of the stock of the Nashville, Chattanooga & St. Louis Railroad Company, and that but for the restriction of normal competition by the Southern Traffic Association the situation of Chattanooga would win for her certainly the same rates as Nashville. The supreme court in its opinion reversing the case, held that the commission and the circuit court and circuit court of appeals had proceeded upon an erroneous construction of the act, in holding that a preference enforced by controlling competition could be unjust, and that the assertion that the road from Chattanooga to Nashville, growing out of the stock ownership, was in effect the Louisville & Nashville, was necessarily antagonistic to the express finding of the commission that the carriers through Chattanooga and Nashville were placed in position where they must meet the competition to Nashville or abandon all traffic to that point. The court said that it could not undertake the duty of weighing the evidence and determine the issues of fact, which the statute required the commission in the first instance to pass upon, and the case was therefore directed to be re-committed to the commission for that purpose.

In. Commission v. Southern Railway Co., 117 Fed. 741, the railroad company had acquired the ownership of the only

road which had previously competed for the business to a certain point, but it was held that this could not affect the question whether its rates unjustly discriminated against such point in favor of another point where competition existed, where it affirmatively appeared that the rates to the non-competitive point had not been increased since the purchase of the com peting road.

In the later case of Interstate Commerce Commission v. L. & N Railroad Co., 190 U. S. 273, 1. c. p. 283, 47 L. Ed. 1047 (1903), the supreme court said that if by agreement or combination among carriers it was found that at a particular 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 to such possible competitive points. It must be an actual and not possible competition. See also infra, section 4. It therefore is a question of fact to be determined by the commission whether the preference is induced by the competition, and whether competition is forced upon the carrier or whether the preference is effected through an agreement or combination stifling competition. But if the preference is compelled by the competition, then it is not unjust, under section 3, though the rates may still be unreasonable per se and on this ground violative of section 1 of the act.

8 237 (181). The "Basing Point System" not illegal.—The commission in several cases had condemned what had been called the "Basing Point System" prevailing in the south. 4 I. C. C. R. 686, 3 Int. Com. Rep. 482 and 6 I. C. C. R. 342; 6 I. C. C. R. 361; 8 I. C. C. R. 142. This system consisted in basing local rates according to the relative distance of the local points by the distance of such points from the competitive points, the rate being ascertained in each case by adding to the through rate to the basing point, the local rate from that point back to the local point, the result being that the local points were given an advantage resulting from their proximity to the basing point in proportion to the degree of such proximity. The Interstate Commerce Commission on the complaint of a merchant of La Grange, Alabama, made an order upon the railroad to desist from charging upon this basing rate to La Grange based upon its rate to Atlanta,