to point out in this place that it is a principle in ratemaking subject to all of the limitations which have been brought out in this chapter, and that it has therefore a very limited operation. However much this theory may have appealed to some economists who have applied their theories of what is for the best interests of society to the railroad problem, it has very little weight with the lawyers who have had to do with the question." "It is not the duty of a carrier to regulate markets. If by reason of competition in transportation or the condition of markets a carrier sees fit to move traffic at very low rates in order to participate in the business, that may be done and often is done, but that is a very different matter from compelling it to reduce all its rates to equalize competition between shippers from different fields of supply and by different and unrelated routes." 3 § 463. Limitations upon the Commission. The Commission has no power to substitute a new and differing rate for a just and reasonable rate on the ground that it seems to it a wise policy to do so, or that the railroad had so conducted itself as to be estopped in the future from being entitled to receive a just and reasonable compensation for the service rendered.* The authority 2 Schoonmaker, Com., in Rice v. Western N. Y. & Pa. R. R., 2 Int. Com. Rep. 298. It is not the province of the Commission to overcome nature. National Refining Co. v. Mo. P. Ry., 24 I. C. C. 315. In comparing the transportation charges on wheat and on flour from Minneapolis to New York, in a controversy between Minneapolis and Buffalo millers, the commercial profits of the parties are neither controlling nor important. Jennison Co. v. G. N. Ry., 18 I. C. C. 113. It is not the function of the Com mission to make all producers on a parity in markets which they have in common. Slider & Co. v. So. Ry., 24 I. C. C. 312. 4 Southern P. Co. v. I. C. C., 219 U. S. 433, 55 L. ed. 283, 31 Sup. Ct. 288. In a few States the courts have apparently adopted the theory of the economists, that a railroad should so fix its rates as to equalize the advantages of its patrons in so far as this will be for the good of the country. In State v. Minneapolis & St. L. Ry., 80 Minn. 191, 83 N. W. 60 it was held that a commission in granted to the Commission does not confer absolute or arbitrary power to act on any considerations which the Commission may deem best for the public, the shipper, and the carrier; its order must be based on transportation services, and it must disregard as well the demand of the shipper for protection from legitimate competition, domestic or foreign, for unlimited markets, or for the enforcement of equitable estoppels arising from a justifiable expectation that past rates will be maintained. And it should be said that the Commission has often insisted that it is not its function to equalize the profit and loss resulting from competing operations in different localities, by overcoming natural and commercial conditions with rate adjustments. The Commission has not recognized the right of a carrier to fix its rates to or from a given point on a higher level than they otherwise should be, in order to prevent one community from competing with another, or to keep the products of one community out of a territory, the wants of which may be fully supplied by another community.7 § 464. Rates made from a commercial standpoint. It is sometimes maintained by a shipper of one product fixing rates might act upon the business policies which the railroads themselves have been accustomed to pursue in making rates. And in Southern Ry. V. Atlanta Stove Works, 128 Ga. 207, 57 S. E. 429, it was held that a commission is not precluded from considering the conditions affecting the markets it serves. 5 Atchison, T. & S. F. v. I. C. C., 231 U. S. 736, 34 Sup. Ct. 316. The general principle which the majority of courts are now laying down as the guide for all concerned seems to be that what is a reasonable rate depends upon the significance of that phrase at common law. South ern Indiana R. R. v. Railroad Com- L. & T. R. R. & S. S. Co. v. Railroad 6 Louisville Cotton Seed Products Co. v. L. & N. R. R., 26 I. C. C. 607. 7 Indianapolis Freight Bureau v. C., C., C. & St. L. Ry., 26 I. C. C. 53. 8 which is competitive with another product that the rates should be adjusted so as to equalize the standing of the competitors. This has been argued before the Commission with great insistence several times, but never with real success. Thus in one case the contention was made that the rates upon live stock and dressed beef should be so adjusted that a packer in one part of the country might compete upon equal terms with a packer in another part. The Commission in its opinion pointed out that this was not a basis upon which the carrier could be compelled to make rates, if indeed the railroad ought ever to act upon such a principle to any extent. "It is evident, therefore, that relative rates cannot be adjusted from a purely commercial standpoint. In saying this it is not to be understood that the increased value of the product is not legitimately to be taken into account in fixing the rate, which is altogether a different proposition from that advanced by the complainants that the rates should be such as to equalize the standing of different producers in the business in the respective markets of the country. We are of opinion that in the fixing of relative rates upon articles strictly competitive, as these are, the proper relation should be determined from the cost of the service, and if the difference in this respect between two competitive articles can be ascertained, such rate should be fixed for each as corresponds to the cost of service. This is fair to the carrier, and we believe the manufacturer has a right to demand of the companies that such a relation of rates as to these articles should be maintained." 9 § 465. Rates should not equalize differences in value. The railroad cannot by its rates equalize qualities of the same article between different producers. In McGrew v. 8 Squire v. Michigan Central Ry., 3 Int. Com. Rep. 315, 4 I. C. C. Rep. 611. 'Carriers are under no duty to equalize rates, and, therefore, shippers have no right to demand that this shall be done. W. Va. R. Co. v. B. & O. R. R., 26 I. C. C. 622. Missouri Pacific Railway, 10 the defendant contended that as coal from its mines at Rich Hill has less value for domestic purposes than Myrick coal it might equalize such difference in value by making a lower rate on Rich Hill coal. The complainant's cost of mining coal at Myrick is nearly 50 cents a ton more than it costs defendant to mine its coal at Rich Hill. The Commission, however, held that this difference in quality would not justify a difference in rate: "If difference in quality is to be equalized in favor of the defendant, why should not difference in cost of mining be equalized in favor of the complainant? When this complainant acquired his mine he knew that the value of this coal was greater for domestic purposes than that of Rich Hill, and the price of his mine may well have been fixed in view of that fact, but such an adjustment of rate as that put in force by the defendant entirely eliminates this element of value and might destroy the worth of complainant's property. If any such process of equalization is permissible defendant may absolutely dictate the comparative value of every mine and industry upon its road; and that such rates should be examined with closest scrutiny when resorted to by the carrier in its own favor." 11 And recently in Philadelphia & Reading Railway v. Interstate Commerce Commission, 12 when similar facts came before the federal courts for decision, it was laid down that a carrier is not justified in charging for the same or substantially similar coal-carrying service a higher rate for coal because, being of better quality and more easily mined, it can bear a higher rate. 13 § 466. Carriers not obliged to equalize disadvantages. But while the equalization of advantage cannot be a chief factor in rate-fixing, it may legitimately be con 10 8 I. C. C. 630. 11 Equalization by rates for freights of costs of production condemned. Pittsburg Steel Co. v. L. S. & M. S. Ry., 27 I. C. C. 73. 12 174 Fed. 687. 13 Attempt to equalize assembling costs in competing districts also condemned. Coke Producers' Ass'n v. B. & O. R. R., 27 I. C. C. 125. sidered as one of the subordinate factors tending to lower the particular rate, and may be taken into account with the other factors enumerated in this chapter. A railroad company may have nothing to do with the principle of equalization, and shippers whose original disadvantages remain have no legal redress. "The complainants introduced considerable testimony to show the cost of producing corn and wheat in northwest Iowa, for the purpose of demonstrating that at the present rate it was not possible for the farmer in that section to embark in this industry at a profit. Very little has been said in reference to this aspect of the case upon the argument, and probably very little could be consistently said. If the farmer cannot, in a given locality, raise and ship produce to market at a profit upon the existing freight rate, that is usually no reason why the carrier should be compelled to accept less than a reasonable sum for its service." 14 "It seems plain," said the Commission in a later case, duty of the Commission is to establish just and fair transportation charges in so far as it can be done and allow rival creamery methods to operate under those charges; it should not establish a scale of rates with a view and for the purpose of fostering or discouraging either form of this industry." 15 § 467. Protection of natural advantage. "that the It is, therefore, not the function of the Commission to equalize commercial or economic conditions.16 The traffic 14 Prouty, Com., in Grain Shippers' Ass'n v. Illinois Cent. R. R., 8 I. C. C. Rep. 158. The interest of the consumer must be considered, as well as that of the producer. Andy's Ridge Coal Co. v. So. Ry., 18 I. C. C. 405. 15 Beatrice Creamery Co. v. I. C. Ry., 15 I. C. C. 109. Commercial conditions considered in determining the question of the relation of rates on flaxseed and linseed oil. In re Advances on Flaxseed, 25 I. C. C. 337. 16 Boileau v. P. & L. E. R. R., 24 I. C. C. 129; Chamber of Commerce of New York v. N. Y. C. & H. R. R. R., 24 I. C. C. 55; Slider v. S. Ry., 24 I. C. C. 312; In re Advances on Cooperage, 24 I. C. C. 656; Oklahoma Portland Cement Co. v. M., K. & T. Ry., 24 I. C. C. 158. |