standpoint, not revenue standpoint, is that ordinarily to be considered in determining rates. 17 Commercial conditions may be considered in connection with other factors that determine the reasonableness of a particular rate; but the adequacy of the revenue for the service performed by the carriers must take precedence over market conditions affecting the commodity transported.18 The alleged necessities of a certain traffic cannot be urged as a reason why the carriers should be required to maintain rates which were established to meet other conditions, and which the Commission finds to be unduly low to-day.19 Thus the difference in cost of production cannot be recognized as a basis for the adjustment of freight rates between different localities. 20 And it is not within the province of the Commission to adjust rates, merely to equalize market conditions.21 Indeed, it may be said that every city is entitled to advantages of its location, and cannot be deprived of it by differential rates.22 Subject to these qualifications, carriers are still permitted to adjust their rates, regulations, and practices with due regard to the circumstances and conditions confronting them and the natural currents and laws of trade and commerce.23 The future may compel greater recognition of distance in the making of many rates, but the present business structure was not developed on that principle, and if a change is to be made it must be a gradual one.24 But it is at least clearly established that a road should not carry the traffic of one city at less than the cost of service and thus unduly burden other traffic. 25

17 In re Advances in Rates, Eastern Case, 20 I. C. C. 243.

18 Lindsay Bros. v. P. M. R. R., 25 I. C. C. 368.

19 In re Advances on Flaxseed, 25 I. C. C. 337.

20 Sheridan Chamber of Commerce v. C., B. & Q. R. R., 26 I. C. C. 638. 21 Omaha Grain Exchange v. C., R. I. & P. Ry., 28 I. C. C. 680.

22 Corporation Commission of N. C. v. N. & W. Ry., 19 I. C. C. 303. 23 Chickasaw Compress Co. Gulf, C. & S. F. Ry., 11 I. C. C. 187.

V.

24 Chamber of Commerce of New York v. N. Y. C. & H. R. R. R., 24 I. C. C. 55.

25 Boileau v. P. & L. E. R. R., 24 I. C. C. 129.

§ 468. No right to build artificial markets.

It has been said again and again that the public interest is the first consideration in determining the reasonableness of a rate; but the rate must be reasonable with respect to the service actually performed, and not with respect to the service that could be performed, if the shipper permitted the carrier to select a market for him.26 Where a plant has been established, and money invested on faith of certain rates and conditions, the carrier may not increase those rates to the serious disadvantage of such investment, without good cause or reason.27 The mills, the industry and the investments, which have been induced by a rate adjustment, should not be destroyed by a rate adjustment, unless such action is absolutely necessary.28 Rates long in effect as the result of experimenting ought not to be disturbed, unless the Commission is certain that justice requires it.29 Where a particular industry has grown up under rates voluntarily established by carriers, these rates cannot be advanced without considering the effect upon that industry. 30 Rates cannot be estab

lished to shut out foreign products, for the purpose of protecting American industries. 31 And, where it is the manifest purpose of an advance to secure to a railroad practical monopoly of the coal business for the mines on its line, the advance will not be allowed.32 And in general it may be said that the Commission has no power to equalize natural advantages or adopt policies directed to that end. 33 No order can be issued to overcome natural ad

28 Pacific Coast Lumber Co. v. N. P. Ry., 14 I. C. C. 51; Chamber of Commerce of Milwaukee v. C., R. I. & P. Ry., 15 I. C. C. 460. 27 Douglas & Co. v. C., R. I. & P. Ry., 16 I. C. C. 232.

28 Commercial Club of Superior v. G. N. Ry., 24 I. C. C. 96; In re Transportation of Wool, Hides and Pelts, 25 I. C. C. 185; Mountain Ice Co. v. D., L. & W. R. R., 15 I. C. C. 305.

29 Florida Fruit & Vegetables Shippers v. A. C. L. R. R., 14 I. C. C. 476.

30 Joint Coal Rates to Clinton, Iowa, 25 I. C. C. 179.

31 Rates on Linseed Oil, 26 I. C. C. 265.

32 Meridan Fertilizer Co. v. V. S. & P. Ry., 26 I. C. C. 224.

33 Sioux City T. E. Co. v. C., M. & St. P. Ry., 27 I. C. C. 457.

vantages, by making differential rates designed to equalize advantages and disadvantages of location or manufacture. 34

§ 469. No equalization of patrons.

The profits of shippers are not a test of reasonableness of rates.35 A railway may not impose unreasonable rates because the business of a shipper is so profitable he can pay it.36 To base rates upon shipper's ability to pay is to base rates upon cost of production not cost of carriage; this is regulation of industries and commerce by railroads."7 Investment made in an industrial enterprise in reliance upon an existing rate cannot act as a bar to the readjustment of rate structure.38 The Commission cannot limit its view to operations of a single plant in passing upon a transportation charge.39 Carriers cannot increase their revenues and foster industries reached by them, without regard to interests of patrons. 40 The contention sometimes is made, to be sure, that carriers should adjust their rates in a way to produce equality between the competitors in all markets. It must be apparent that it would be a useless task for the Commission, even if it had the power, to attempt to accomplish such a result. It would involve a careful research into all the circumstances surrounding the business of each locality, as questions of rent, rates of taxation, cost of labor, and many other things which suggest themselves. The evident result would be that there would have to be as many differently constructed rates as there are different localities.

§ 470. Equalization of advantage as a factor.

A theory of fixing rates which appeals to many econ

34 W. Va. R. Co. v. B. & O. R. R.,

26 I. C. C. 622.

35 Truck Growers Ass'n v. A. C. L. R. R., 20 I. C. C. R. 190.

36 R. R. Com. of Kans. v. A., T. & S. F. Ry., 22 I. C. C. R. 407. re Advances in Rates,

37 In

Western Case, 20 I. C. C. R. 307. 38 Michigan Upper Peninsula Pigiron Rates, 26 I. C. C. 284.

39 Robinson Land & Lumber Co. v. M. & O. R. R., 26 I. C. C. 427. 40 Wichita Falls System Joint Coal Rate Cases, 26 I. C. C. 215.

omists, which is in fact a modification or special application of the rule for charging what the traffic will bear, is the theory that rates should be so fixed as to equalize the advantage of shippers and thus establish the conditions of business for the good of the whole country.41 It is in substance a sort of legal protection to struggling industries. Thus if wheat cannot be raised in Wyoming as cheaply as in Iowa, the rates from Wyoming to the seaboard should be correspondingly reduced; unless indeed it does not seem to the rate-fixers to be for the country's good that wheat should be raised in Wyoming. A practical objection to this doctrine will at once appear. It calls on the private individuals who happen to have power over rates to act in such a way as to subserve the public good, rather than their own advantage; and thus without election as legislators and without the responsibility of office, to perform one of the most difficult of legislative functions. Nor is it practically possible to fix rates entirely or principally on this theory.42 Rates for the transportation of property should be arrived at and based so far as practicable upon permanently continuing, fixed facts and conditions. The fluctuations of the markets of the country are so frequent, especially as to competitive articles, and oftentimes unexpected, that commercial considerations alone would not furnish a sufficiently stable and fixed rule for guidance in making a rate which ought to remain substantially permanent through all fluctuations.

§ 471. Passenger fares slightly affected by this principle. Passenger schedules are usually made upon a mileage basis; there is little attempt in making them up to minimize the disadvantages of distances. But the principle is applied

41 The Act is not designed to give the Commission power to equalize opportunity. Fort Arthurs B. of T. v. A. & S. Ry., 27 I. C. C. 403

42 The rates necessary to permit

growers to market their product at a reasonable profit are not the test of the justness of a transportation charge. Florida Fruit & Vegetables Ass'n v. A. C. L. R. R., 17 I. C. C. 552.

to a very limited extent by the railroads; for example, suburban stations are sometimes grouped in zones. The principal illustration of this policy, if it be such, of equalizing passenger fares is the five cent fare customary in American municipalities for transportation in street cars whether the passenger rides for one block or ten miles. By this policy most land within a metropolitan district is brought within the benefit of this uniform fare, whatever may be its distance from the commercial centers. In justifying a consolidation of street railways, one Judge said: 43 "As a result, at the time the ordinance was adopted, the mileage of tracks increased from the previous aggregate of 110 miles to 142 miles, reaching every section of the city, with shorter and better routes, and furnishing 38 transfer points, with a universal transfer system, a feature of especial value to the public, as a single fare of five cents gives a maximum length of ride more than double the old arrangement."

43 Milwaukee Electric Ry. v. Milwaukee, 87 Fed. 577. See also Washington Suburban Rates, 26 I. C. C. 398, and cases cited.

See the Commutation Rate Cases, 21 I. C. C. 428, 27 I. C. C. 549.