[Water competition.]

Whenever a carrier by railroad shall in competition with a water route or routes reduce the rates on the carriage of any species of freight to or from competitive points, it shall not be permitted to increase such rates unless after hearing by the Interstate Commerce Commission it shall be found that such proposed increase rests upon changed conditions other than the elimination of water competition.

§ 289. History of the section and its amendment.-This section was not based upon any provision in the English statute, and it was the subject of more thorough discussion in congress, and more divergent opinions than any other. The original bill in the house, known as the Reagan Bill, contained an absolute prohibition of charging more for a shorter than for a longer distance, and even when the longer distance included the shorter; while the senate bill, known as the Cullom Bill, contained a similar prohibition, qualified by the allowing of the granting of exceptions by the commission in special cases. The section was reported by the conference committee, and contained the words "under substantially similar circumstances and conditions," qualifying the prohibition of the greater charge for a shorter than for a longer distance over the same line. In this form the section was enacted. These words "under substantially similar circumstances and conditions," were taken from the second section. See 1 I. C. C. Rep. 4, and 1 Int. Com. Rep. 278.

The bill with these words "under substantially similar circumstances and conditions," became a law and continued unchanged until the amendment of June 18, 1910, when these words were stricken out; so that now the section contains the prohibition unqualified of a greater compensation for a shorter than for a longer haul, with the same authority in the commission upon application to grant relief from the operation of the section which had existed in the original act. The amendment contains the further qualification that rates lawfully existing at the time of the passage of the amendatory act, shall not be required to be changed prior to six months after the passage of the act, nor in case of any pending application for relief until its determination by the commission.

The amended act contains the further new proviso that where a carrier by railroad reduces its rates in competition with a water

route, it shall not be permitted to increase the rates unless the commission finds that the proposed increase rests upon changed conditions other than the elimination of the water competition.

§ 290. Construction of the section prior to the amendment of 1910.-The judicial construction of the section prior to its late amendment really turned upon the real meaning of the words "under substantially similar circumstances and conditions," and upon the effect of competition in determining dissimilarity of circumstances and conditions. The commission at first ruled (see opinion by Cooley, J., 1 I. C. C. Rep. 6, and 1 Int. Com. Rep. 278), that the existence of actual and controlling competition in respect to traffic important in amount might make out dissimilar circumstances and conditions, in effect leaving it with the railroads to determine in the first instance the existence of peculiar cases of competition which would constitute a dissimilarity of circumstances and conditions under the act. Subsequently, in 1892, the commission ruled that the carrier could not judge of this emergency for itself, but should apply to the commission when, after investigation, the exceptions could be made. See 5 I. C. C. Rep. 324, 4 Int. Com. Rep. 121; 5 I. C. C. Rep. 596, 4 Int. Com. Rep. 267.

These rulings were contested in the courts, and five years later, in 1897, the supreme court overruled the commission and established the rule that competition of any kind, whether from railroads subject to the act or not, was an effective circumstance that made substantially dissimilar circumstances and conditions; and that such competition when controlling, should justify the carrier in making a lower rate for the longer haul, not as a matter of grace or favor of the commission, but as a matter of right. Import Rates Case, 162 U. S. 197, 40 L. Ed. 940 (1896); Commission v. Alabama & Midland R. Co., 168 U. S. 144, 42 L. Ed. 414 (1897); L. & N. R. Co. v. Behmler, 175 U. S. 648, 44 L. Ed. 309; East Tenn., Va. & Ga. R. Co. v. Commission, 181 U. S. 1, 45 L. Ed. 719 (1900); Commission v. L. & N. R. Co., 190 U. S. 273, 47 L. Ed. 1047 (1902).

The effect of the amendment of 1910 is to restore the jurisdiction of the commission as it was exercised prior to this ruling of the supreme court. That is, the carrier cannot now judge for itself, but must apply to the commission under its power to grant

relief, and the commission then determines, not whether the circumstances are dissimilar, but whether the facts and conditions constitute a special case for the authorization of a lower charge for a longer than for a shorter distance.

As to the relation of this ruling of the supreme court to the prohibition of undue preferences under section 3, and as to the power of the commission to determine the reasonableness of rates, see supra, §§ 230 et seq. See also rulings of the commission in 9 I. C. C Rep. 534; 9 I. C. C. Rep. 569, and 10 I. C. C. Rep. 460.

§ 291 (223). “Over the same line."-The view was expressed in the opinion in the United States court of appeals, Osborne v. R. R. Co., 3 C. C. A. 347, 52 Fed. 912 (1892), that when two railroad companies owning connecting lines of road unite in a joint through tariff with the view of making the connecting roads a new and independent line, the through tariff on the joint line is not a standard by which the separate tariff of other companies is to be measured in determining whether the fourth section was violated. In the Social Circle Case, 162 U. S. 184 (1896), 40 L. Ed. 935, a Georgia railway company whose road lay wholly within the state of Georgia and exacted and received its regular local rate for the transportation on its line, on a through bill of lading, the rate of which was fixed by adding that local rate to the through rate from Cincinnati to Atlanta, was held subject as to the through bill from Cincinnati to Social Circle to the federal act and to the control of the Interstate Commerce Commission. The court distinguished the Osborne Case, supra, upon its special facts, and said that when goods shipped under a through bill of lading from a point in one state to a point in another are received in transit by a state common carrier on a conventional division of the charges, such carrier must be deemed to have subjected the road to an arrangement for a continuous carriage or shipment within the meaning of the act to regulate commerce. Having elected to enter into the carriage of interstate freights and thus subjected itself to the control of the commission, the carrier could not withdraw that control with respect to foreign traffic to certain points on its road and exclude other points. The court added: "When we speak of a through bill of lading, we are referring to the usual methods in use by connecting com

panies, and must not be understood to imply that the common control, management or arrangement might not be otherwise manifested."

§ 292. Application to the commission.-Under the original act, after the ruling of the supreme court as to the right of the carrier to judge for itself in the first instance of the controlling effect of competition in authorizing a greater charge for a shorter than for a longer haul, the occasion for a resort to the discretionary power of the commission under the proviso, was very materially effected. During the period when a different rule prevailed such applications were comparatively numerous, as may be seen from the reports of the Interstate Commerce Commission. For a summary of the commission's rulings upon applications made for relief, made prior to this ruling of the supreme court, see annual report of 1892, pages 18 to 21; 1893, page 22; 1894, page 18, and 1895, page 24.

Petitions for relief were asked on other grounds than that of controlling competition. Thus the World's Fair at Chicago was held, in 6 I. C. C. R. 323, and 6 I. C. C. R. 328, to be a case of an exceptional and special nature justifying relief from the operation of the section. The same ruling was made in the case of an application on account of crop failure and the necessity of reduced rates for the transportation of food for the people and their animals. These cases however were exceptional and nearly all the applications for relief were on the ground of controlling competition. It was said by the commission in its report of 1897 that the effect of the decisions of the supreme court was to eliminate the fourth section from the act.

§ 293 (225). The burden of proof.-Although the judicial construction of the term "under similar circumstances and conditions" had a very profound effect upon the administration of the act, it is not strictly correct to say that its effect was to eliminate the fourth section. It put upon the carrier the burden of proving the existence of dissimilar circumstances and conditions for its justification when the fact of the greater charge for the shorter haul over the same line appears.

Under the section as amended, the jurisdiction of the commission will be invoked, not to determine whether the circumstances

are dissimilar, as those qualifying words are now omitted from the section, but whether under the circumstances the carrier presents a case for the exercise of the discretion of the commission in relieving it from the prohibitions of the section.

§ 294. Construction of section by commission and application to different classes of rates.-The long and short haul provision of this section did not take effect as to the existing rates until six months after the passage of the act, that is, until Dec. 18, 1910. Prior to this date, in October, 1910, the commission, acting under its general authority under the section, extended the existing rates until February, 1911, providing, however, that the discrimination against intermediate points should not be greater than in existence August 17, 1910, except under certain described competitive conditions. Carriers desiring relief from section 4 were directed to make separate application for freight rates and passenger rates and also for long and short hauls. This extension order was made with the statement that the commission reaffirmed its express view that a through rate or fare that was higher than combination of intermediate rates was prima facie unreasonable.

On March 13, 1911, applications for relief having been filed by the transcontinental and other lines the commission made the following ruling as to the application of the amended section to different classes of rates:

(1) The fourth section applies to all rates and fares, but in determining whether its provisions are contravened, rates and fares of the same kind should be compared with one another; that is, transshipment rates should be compared with transshipment rates, proportional rates with proportional rates; excursion fares with excursion fares and commutation fares with commutation fares. It would not be in violation of the fourth section, for instance, if a proportional rate to or from a given point were lower than a regular rate to or from an intermediate point, nor if a commutation fare to or from a more distant point were lower than a regular fare to or from an intermediate point.

"A proportional rate is defined as one which applies to part of a through transportation which is entirely within the jurisdietion of the act to regulate commerce; that is, the balance of the transportation to which the proportional rate applies must