ceeding before the Commission, a significant extract from which is subjoined; speaking of an outlying division which was part of a consolidated system it was said: 89 "They are feeders to the main lines and help swell the revenues of those lines. Their profitableness is not to be measured solely by what they earn themselves, but by the increase of business and revenue they bring to the main lines. For book-keeping purposes it is proper enough to keep their accounts separately, but for their usefulness to the system of which they form a part, these accounts are slight evidence and these feeders are entitled to a much larger credit. A selected fractional part of any great railroad might be taken and a showing made by an apportionment of earnings and cost of operation and fixed charges, that it is unprofitable, but this would furnish no indication of its value and profitableness as an important part of the whole property. For purposes of rates the several auxiliary roads should not be looked upon as wholly independent lines, which may separately establish rates, looking only to a satisfactory ledger account of each separate road. These subordinate and branch roads are, for all purposes of control and operation, parts of one great system." 90

§ 372. Unprofitable portions of the line not considered.

In Steenerson v. Great Northern Railway 91 the court considered at length the subject of unprofitable lines; and held that the profitable portions of the system could not be compelled to pay the loss on lines built through a newly and sparsely settled country. The reasoning of Mr. Jus

89 Per Commission in Delaware State Grange v. New York, P. & N. Ry., 3 Int. Com. Rep. 554.

90 To divide a railroad system into its constituent elements and to require that each shall show a surplus commensurate with that yielded by the business of the system as a whole in justification of a particular rate on

one commodity, is not the proper basis upon which to measure the justness of such rate. Board of Trade of Winston-Salem v. N. & W. Ry. Co., 16 I. C. C. 12.

91 79 Minn. 353, 72 N. W. 713. See also Chicago & G. T. Ry. v. Wellman, 143 U. S. 339, 36 L. ed. 176, 12 Sup. Ct. 400.

tice Canty is as follows: "If," he said, "the road was profitable a certain reasonable rate would be fixed. If then a new and unprofitable extension were made, and the accounts covered the whole system, the rates on the older portion of the road would necessarily be raised, and that portion would bear the burden of the new extension. But why should the older portion of the line bear a loss due to the mistaken management of the company? A portion of a line that is not self-supporting is not a feeder, but an incumbrance; and in determining what are reasonable rates on the rest of the line or system, any State has a right to reject such portion from the line or system. Of course, in rejecting the same all benefit to the rest of the line or system from traffic passing over such portion must also be rejected, and nothing can be allowed to the rest of the line or system on such traffic, except the operating expenses on the same, including the additional wear and tear on the rest of the road caused by such traffic. Whether this rule would apply where such a portion of a line or system ceased to be self-supporting by reason of some temporary cause, such as an unusual drought or a pestilence, we need not consider." It is perhaps fair to point out that in a later portion of the same opinion this radical court, apparently inconsistently, expressed the opinion that the whole system should be entitled to share the prosperity of each constituent part of it.92

§ 373. Systems considered as wholes.

Specific illustrations of the various matters which have been discussed under this topic may help to an appreciation of the general problem. For example, in one proceeding, not long ago, it was held that cost of a bridge ought

92 Assigning costs of system as between several divisions thereof, dividing passenger and freight costs, separating cost of moving coal and coke as distinguished from other freight

involves a complicated division of accounts, and gives only suggestion as to actual cost. Louisville & Nashville Railroad Coal and Coke Rates, 26 I. C. C. 20.

not to be charged to the traffic on one section of the road.93 In a later case, it was held that the fact that the line in question, although separately operated, was by stock ownership a part of the Rock Island system could not be ignored, since it afforded an opportunity for shorter hauls, and reduced operating expenses, with correspondingly increased revenue per ton-mile.94 A road is built and

operated as a whole; and local rates are not to be made altogether with reference to difficulties of each particular portion, although heavy grades and tunnels add to cost of operation.95 The Pennsylvania lines west of Pittsburg are controlled or operated by the Pennsylvania Company, the entire stock of which is owned by the Pennsylvania Railroad; and they may have terminal arrangements which they need not share with other lines.96 The Commission recognizes that it is just and reasonable for two or more independent roads, not parts of same system, making up a through line, to charge more for the through transportation than would be deemed reasonable for transportation, if performed wholly by a single road.97 But where there is a system in question the profit on a particular division is not controlling, as the benefit to other portions of the system may much more than offset any loss upon the particular division.98

§ 374. Treatment of branch lines.

The typical railroad system has trunk lines with ramifying branches. To a certain extent it is plain that the main lines with their denser traffic can be operated at less cost per ton per mile than the lateral branches. At the same

93 Traffic Bureau of Merchants' Exchange of San Francisco v. S. P. Co., 19 I. C. C. 259.

94 Kansas-Iowa Brick Rates, 28 I. C. C. 285.

95 Traffic Bureau of Merchants' Exchange of San Francisco v. S. P. Co., 19 I. C. C. 259.

96 28 I. C. C. 621.

97 Sheridan Chamber of Commerce v. C., B. & Q. R. R. Co., 26 I. C. C. 638.

98 Louisville & N. C. & C. Rates, 26 I. C. C. 20.

time, if in a total haulage the distance upon the branch is short relatively to the distance upon the main line, it may not be unjustifiable to make the same proportionate rate for the whole distance. This was one of the many points brought out in a case before the Commission concerning rates upon milk from the tributary territories about New York brought daily to the city itself.99 In that opinion it was said: "Ordinarily, the branch line traffic should pay more, but most of the branch lines in the nearby section are short, all of them have heretofore been given main line rates on this traffic, and some of them pass through main line stations of other roads or lead to or near the Hudson River where the traffic is affected by the competition of a line of steamers. Again, with an additional charge over main line rates from nearby branch line points, applying the same rate on main and branch lines in the distant region, which the long-distance carriers will doubtless deem necessary, would hardly be consistent. In view of these facts, we think that the group distances and rates for this traffic should be made to apply on branch as well as on main lines." 1

§ 375. Constituent roads operated under separate charters. It is held in some cases that the fact that the constit

See also Northwestern Ia. Grain & S. Assn. v. Chicago & N. W. Ry., 2 Int. Com. Rep. 431.

What might perhaps have been proper, as between companies operating separate and distinct short lines, may become unreasonable and unjust when both are absorbed by a large system, which serves an extensive territory. Black Mountain Coal Land Co. v. So. Ry., 15 I. C. C. 286.

The Commission is inclined to the doctrine that branch lines are operated as part of a great system. Billings Chamber of Commerce v. C., B. & Q. R. R., 19 I. C. C. 71.

2

uent roads still preserve their original charters and are theoretically operated under them is sufficient to justify the requirement that each shall be treated by itself in rate regulation. Thus in one case, where the propriety of a reduction in rates ordered by the railroad commission of Florida was in question, it was shown that the Pensacola & Atlantic division of the Louisville & Nashville Railroad System was in reality a separate corporation. It was shown that the rates enforced would not give an adequate return upon the Pensacola & Atlantic Railroad itself, although the Louisville & Nashville System was shown to be profitable. Upon these facts Judge Pardee granted an injunction to prevent the enforcement of these rates, saying in substance: "The fact that a line of railroad is operated in connection with other lines owned by the same company, but under separate charters, whereby the earnings of such line are increased and its operating expenses reduced, does not prevent its being considered as a separate and independent line for the purpose of determining the reasonableness of rates thereon, fixed by the State; full consideration of the joint operation being given when the road is credited for the increased business and reduced expenses." 3

2 Louisville & N. R. R. Co. v. Brown, 123 Fed. 946.

Where traffic originates upon a branch line the main line should accept for its haul from the junction point something less than it receives upon business originating at the junction point. R. R. Com'rs of Fla. v. A. C. L. R. R. Co., 28 I. C. C. 356.

The fact that a rate is made applicable to certain destinations, irrespective of whether most of them are located on branch lines, does not justify an unreasonable rate to any of the destinations involved, but the reasonableness of the rate is to be tested as a whole. League of South

ern Idaho Commercial Clubs v. O. S. L. R. R., 18 I. C. C. 562.

3

Compare State ex rel. v. Seaboard A. L. Ry., 48 Fla. 129, 37 So. 314.

Commission rates are usually the same for all lines, both main lines and branches. It is fair that the main lines should in a degree contribute to the support of the branch line, for the branch-line business when it reaches the main line is surplus traffic from which there is a larger profit. Receivers & Shippers Ass'n of Cincinnati v. C., N. O. & T. P. Ry., 18 I. C. C. 440.

The contention that such rates should be applied as would be rea