demand in large quantities for construction, building, manufacturing, and other purposes. Reasonable freedom of such movement and distribution stimulates the growth and development of the country and thereby promotes all interests. The general prevalence of such lower rates on this character of freight is due to the carriers' usual policy of making rates that will fairly permit the traffic to move, if of such value that it will bear reasonable charges. Rates on steel rails and other low-grade freights of the character stated, yielding per ton per mile the average received on all freight, would be unjust. The value of the goods, the cost of the service, the degree of risk to the carrier, among other considerations, have important bearing upon the relation of rates on different kinds of traffic as well as the reasonableness of the rate on a specific article." 90 § 544. High-grade commodities should not be overcharged. On the other hand, just because high-grade commodities will stand a rate relatively very much higher, it is not justifiable to charge them outrageously disproportionate rates. This was set forth in a most striking manner in one report of the Commission, where it said: 91 "Fur hats, for example, move at first-class rates, and six dozen of these ready for shipment weigh, approximately, 100 pounds. The cost of transporting that 100 pounds from New York, where these hats are manufactured, to Chicago, is 75 cents, or about 1 cent per hat. Evidently the number of hats worn in the city of Chicago would not be appreciably diminished if this freight rate were to be 90 The Commission finding that on sawdust, in carloads, a commodity rate of 20 cents was exacted, held that sawdust, being a low-grade commodity and valued at about $1.50 per ton, the rate should not exceed 8 cents per 100 lbs., minimum 24,000 lbs., so as to correspond with the rate on fuel wood and that on saw dust on the lines of other carriers in the territory in question. William Plummer Co. v. N. P. Ry., 18 I. C. C. 530. 91 Re Advances in Freight Rates, 9 I. C. C. Rep. 382. Nitro-cellulose-wet should be classified first-class, L. C. L. U. S. v. W. & N. R. R., 26 I. C. C. 309. doubled. If such hats were manufactured both at New York and at Baltimore, and the rate from New York were to be increased, while that from Baltimore remained the same, this might shut up the New York factory; or, if the rate were too high, the establishment of a factory in Chicago might be induced; although this would not be true in case of hats, since the raw material, which moves at the same rate, originates on the Atlantic Seaboard. Probably the first-class rate throughout all Official Classification territory could be advanced 50 per cent without appreciably reducing the volume of traffic." 92 § 545. Proportionate difference between the classes. The principle to be deduced, from the cases which have just been discussed, is that the differences in rates between the classes in a classification should not be disproportionate. It has often been remarked that a relation of rates, when once established on sound grounds, has a more permanent basis than a rate.93 The classification being made, a rate must be fixed for each class; and the difference in rates between the different classes must be reasonable, in addition to the requirement that the rates in themselves should be reasonable.94 In one recent case, where the complainant contended that the Official Classification ratings were unjust and unreasonable, in comparison with those in the Southern and Western classifications, it was held that a comparison of the ratings in the different classifications is by no means a guide to the relative transportation charges, unless the class rates under the several classifications are also considered.95 In an earlier case it 92 Advance in bicycle rating from second to first class found unreasonable. Davis Sewing Machine Co. v. P. C. C. & St. L. Ry., 26 I. C. C. 282. The application of one and onehalf first-class rating on bottle-washing machines shipped from Lynn, Mass., to San Francisco, Cal., found unreasonable. Western Traffic Ass'n 94 Business Men's Legaue v. Atchison, T. & S. F. R. R., 9 I. C. C. 318. 95 Milburn Wagon Co. v. L. S. & M. S. Ry., 22 I. C. C. 93. was said that while an alignment on a universal percentage basis between the classes might bring about more logical and consistent adjustment, the adjustment attacked in these proceedings, being the outgrowth of actual conditions and the result of a gradual development, was not unjustly discriminatory, nor was it shown to yield unreasonable earnings. An increased rate on raw material argues for higher rate on finished product to keep the relative proportions in effect. The general principle is now well established that shippers are entitled to rates both relatively and inherently reasonable.98 96 § 546. Principles in making commodity rates. In one investigation the Commission went into the relative rates upon different commodities to determine whether they were justifiable. Comparing these they said: 99 "Dressed beef loads about 22,000 pounds to the car. Refrigeration is necessary, and this requires a car of peculiar construction and of unusual weight-about 36,000 pounds. The ice and salt weigh, approximately, 5,000 pounds, making in the aggregate for the entire load, 63,000 pounds, of which but 22,000 pounds are paying freight. At 45 cents a hundred this would amount to $99 per car. Packing-house products, or provisions, load somewhat heavier than dressed beef, on the average about 30,000 pounds. This, upon a basis of 30 cents, would yield a revenue of $90 per car. The average loading of grain cars upon standard lines at the present time is probably 65,000 pounds. It was said by all witnesses inquired of that grain is now loaded to the full capacity of the car. Within the last three years railroads have added 96 Indianapolis Freight Bureau v. C., C., C. & St. L. Ry., 15 I. C. C. 504. 97 Rates on Linseed Oil, 26 I. C. C. 205. 98 Coke Producers' Ass'n v. B. &. O. Ry., 27 I. C. C. 125. 99 See Re Advances in Freight Rates, 9 I. C. C. Rep. 382. Other conditions being equal, the rate per ton-mile from ice traffic ought not to equal the average from all sources. Mountain Ice Co. v. D., L. & W. R. R., 15 I. C. C. 305. largely to their equipment of freight cars, and the addition has been almost entirely in cars of large capacity. The traffic manager of the Michigan Central testified that the cars upon his system are from 60,000 to 80,000 pounds capacity. A grain load of 65,000 pounds would yield $113.75, as against $99 for dressed meats and $90 for provisions. The total weight of the grain and car would be greater than either the dressed beef or provisions, but testimony in previous cases showed that in the operation of these railways the tendency is to regard the loaded car as the unit; a train-load, consisting of a certain number of cars without much reference to the loading of those cars." 1 § 547. Reasonableness tested by comparison. Where the same rate was given to the class containing finished cheap bedroom sets of furniture and to another class containing unfinished sets of the same sort, which were of less value and could be packed in smaller bulk, it was held that the failure to make a distinction in rates was unfair; and upon consideration the rate on the unfinished class was fixed at eighty-five per cent of that on the finished furniture. Upon similar principles a classification which puts into different groups "steam coal," which is coal that can be used only for manufacturing purposes, and soft or lump coal, which is of higher value and is used for domestic purposes, is proper.3 Where rates on a particular commodity bear a uniform relation to rates of a certain class, any inequalities in those rates, as between different places, are those peculiar to that class. A finding, therefore, that rates on such commodities made to conform to a class are relatively unjust would inferen 1 Potter Mf'g Co. v. Chicago & G. T. R. R., 4 Int. Com. Com. 223, 5 I. C. C. Rep. 514. The extensive application voluntarily by other carriers than defendant of fourth-class rates on oils is evidence of the unreasonableness of higher rates in the same general territory. Bartles Oil Co. v. C., M. & St. P. Ry., 17 I. C. C. 146. 2 Potter M'fg Co. v. C. & G. T. Ry., 5 I. C. C. 514. 3 McGrew v. Missouri Pac. Ry., 8 I. C. C. Rep. 630. tially condemn the adjustment with respect of the entire class, and this is also true of the reasonableness of the rates. Owing to differences in bulk and weight, there must of necessity be marked variations in revenue per car produced by articles in the same and other classes, and a disparity either way is not conclusive of the propriety of an adjustment." § 548. Slight differences between similar commodities. 6 In one proceeding before the Commission the complainant claimed that beans and tomatoes should go in the same class, and that the defendant railway, by putting beans in the second class at a rate of 70 cents per hundred, while tomatoes went third class at a rate of 44 cents per hundred, had discriminated against the complainant as a shipper of beans. The Commission, however, said: "An exact classification is impossible. Unless the number of classes is infinitely increased there must always be articles in respect to which it will be very difficult to determine into which of two classes they should fall. If the elements which fix the class are substantially the same in case of two articles, then those articles should, as a matter of law, be classified alike, and to put one in one class and another in another class would be a discrimination and a violation of the Act, no matter what the purpose of doing it might be. It appears here that beans and tomatoes are both shipped in peck boxes and that the defendant's agent at Verona was accustomed to receive and bill the same number of boxes for one hundred pounds whether of beans or of tomatoes, so that the complainant, as a shipper of Acme Cement Plaster Co. v. L. S. & M. S. Ry., 17 I. C. C. 30. Kiser Co. v. C. of G. Ry., 17 I. C. C. 430. Rea v. Mobile & O. Ry., 7 I. C. C. Rep. 43. The rate on burlap bags ought to be somewhat higher than upon the burlaps, but there is no theory upon which the carriers could justly establish this and Commission approved a rate upon burlap bags twice as great as that upon the raw product. Kent Co. v. N. Y. C. & H. R. R. R., 15 I. C. C. 349. |