certain business may be in comparison with others low.20 The construction of rates is pertinent in an inquiry only in the opportunity afforded to the Commission more minutely to examine the rate by consideration of its parts.21 Where the spread between the local rates and the division of through rates between the same points is large, the local rates should be carefully scrutinized.22 But further examination of the local rate fabric between certain points may indicate that the local rates are reasonably aligned. 23 However, the fact that the rates were advanced to preserve the relationship of rates, and not with the purpose of securing more revenue, has been held not to justify an advance.24 For further examples of rate structure see the case holding that in banana rates in territory served through that port, the axis is New Orleans. 25 And note also the recent case on the concentration of cotton by a rate system designed to bring about that result.26

$ 586. Different cost of haulage.

A difference in the ton-mile may be justified by varying cost of service on different parts of the line. Thus a higher ton-mile rate is justified on a haul which includes heavy grades. 27 In one recent proceeding it was pointed out that the general grade on Santa Fe from Gallup to Arizona points is downward, Gallup being 6,498 feet above sea level, and Phoenix, the southern terminus of the Prescott & Phoenix branch, 1,200 above sea level and this would justify differences in the rates in and out.28 The uniform mileage rate may also be modified by the proximity of

20 Ohio River Hay Rates, 27 I. C. C. 465.

21 Kansas v. A., T. & S. F. Ry., 27 I. C. C. 673.

22 Railroad Commission of Nev. v. N. C. O. Ry., 22 I. C. C. R. 205. 23 Omaha Grain Exchange v. C., R. I. & P. Ry., 28 I. C. C. 680.

24 Rates on Coal from Iowa to the Dakotas, 26 I. C. C. 144.

25 Rates on Bananas from Gulf Ports, 30 I. C. C. 510.

26 Re Concentration of Cotton, 26 I. C. C. 585.

27 Rice v. Western N. Y. & P. R. R., 2 Int. Com. Rep. 319; Brockway v. Ulster & D. R. R., 8 I. C. C. Rep. 21.

28 Arizona Corp. Com. v. A., T. & S. F. Ry., 28 I. C. C. 428.

30

fuel to one portion of the road. 29 In a peculiar case decided some time ago, a rate on cattle in carload lots was attacked as too high. The defendant's road had a heavy grade on the western portion, but a very easy grade on the eastern portion; only 30 cars could be handled on the western portion, while on the eastern portion 60 cars could be handled. The defendant claimed therefore that the most economical method of carrying would be to run only half as many freight trains over the eastern portion; but as cattle trains must go directly through, this could not be done in the case of cattle. The Commission said, however, that the defendant seemed to claim that it ought to be allowed to charge a higher rate because if it sends this live stock through in proper time it cannot consolidate its trains at Boyce; but it was a novel idea that the rate should be advanced because the cost of operation over a part of the line is decreased. 31

§ 587. Divisions built through a difficult territory.

When a road or part of a road is built through a mountainous country or other country which requires expensive construction, the charge may be greater than on other portions of the road or other roads where the cost of construction per mile is less. So where different rates were prescribed for railroads on the lower and on the upper peninsula of Michigan, this difference was held proper. 32 The distinction between the roads of the upper and lower peninsulas was considered, in the absence of any showing to the contrary, to be a reasonable one. The court took judicial knowledge, for it is a matter of general knowledge, that the cost of building and running railroads in the upper peninsula is much greater than that in the lower,

29 New Orleans Cotton Exch. v. Illinois Cent. R. R., 2 Int. Com. Rep. 777, 3 I. C. C. Rep. 534.

30 New Orleans Live Stock Exchange v. T. & P. R. R., 10 I. C. C. Rep. 327.

31 Compare Bellsdyke Coal Co. v. North British Ry., 2 Ry. & Can. Tr. Cas. 105.

32 Morse, J., in Wellman v. Chicago & G. T. Ry., 83 Mich. 592, 47 N. W. 489.

owing to the marked physical difference between them in the character and face of the country. And in many cases the Commission has had occasion to point out that it is not possible to compare the ton-mile charge in the territory complained of with the charge in other territory, where traffic is more dense and the cost of operation is less, 33 The real question in any such complaint is the reasonableness of a particular rate on the particular line between the particular points in question. In testing such a rate the rates on the same or adjacent lines in the immediate territory where the same conditions exist are of much greater significance and afford a much more accurate basis for the Commission's action.34 The fact that tonnage out of the Twin Cities southward is heavier than that of Sioux City northward was strongly urged in justification of a lower rate, but under the circumstances it was held that this fact would not suffice to overcome the firmly established principle of applying equal rates for equal distances under similar operating conditions, no substantial dissimilarity in this respect having been shown.35

§ 588. Factors modifying distance rates.

It is well settled that, under the Act, competition may be considered in fixing the particular rate; and, if it may be considered under the Act, a fortiori it may influence the rate at common law. 36 This general problem is discussed elsewhere; it is enough, therefore, to give at this place one of the important limitations upon making a through rate less than a local rate. An intermediate local rate should never exceed the through rate to the terminus of the line plus the local rate back to the intermediate point. 37 A carrier may not properly or lawfully engage in transportation at a rate less than the cost of the service, since to do

33 Acme Cement Plaster Co. v. C. G. Ry., 18 I. C. C. 19.

34 Dallas Freight Bureau v. G. C. & S. F. Ry., 12 I. C. C. 223.

35 Sioux City Commercial Club v.

C. & N. W. Ry., 22 I. C. C. 112.

36 See Texas & P. Ry. v. I. C. C., 162 U. S. 197, 40 L. ed. 940, 16 Sup. Ct. 666.

37 Martin v. So. P., 2 I. C. C. 1.

so would place an improper and unlawful burden upon other traffic. 38 The future may compel greater recognition of distance in the making of rates, but the present business structure was not developed on that principle; and if a change is to be made, such change perforce must be a gradual one.39 Competitive conditions, when shown to exist, may justify the fixing of rates, which are not in line with the rates to points where such competition does not obtain. 40 Taking the country as a whole, it is still true that rates are not made primarily upon considerations of mileage, but chiefly in view of competitive forces focused at certain points where the paths of commerce and the routes of transportation meet.41 Competition in commodities alone is not a circumstance that will entitle a selling point to have an already low rate made still lower to equal one at a more distant point, which was made to meet competition of carriers and of rates as well as of markets and products.12 The Commission should not, however, be understood as holding that a railroad must under all circumstances meet the rate of its competitor. 43 Carriers cannot be compelled, as a matter of law, to meet water competition; they do it of their own volition, or whenever the same is potent enough to compel them to do so in order to secure the traffic; in each instance the carrier determines for itself whether such water competition has sufficient influence on the traffic to make it reduce its rates.44 But, while it is proper to consider the effect of a decision upon the general rate adjustment applying over a wide scope of territory, rates which discriminate against one locality on a particular road cannot be justified on the

38 Burnham, Hanna, Munger Co. v. C., R. I. & P. Ry., 14 I. C. C. 299.

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

40 Rainey & Rogers v. St. L. & S. F. R. R., 18 I. C. C. 88.

41 Columbia Chamber of Commerce v. S. Ry., 28 I. C. C. 339.

42 Bovaird Supply Co. v. A., T. &

S. F. Ry., 13 I. C. C. 56.

43 North Bros. v. C., M. & St. P. Ry., 15 I. C. C. 70.

44

Bainbridge Board of Trade v. L. H. & St. L. Ry., 15 I. C. C. 586.

ground that they are part of a general scheme, adopted by several roads entering the same territory and hauling from different and unassociated districts. 45

§ 589. Comparison of through rates and local rates.

A through rate may properly be less than the sum of the locals, although the cost of the service is the same, if the lower through rate is forced by competition which does not affect the local rates. 46 This is the reason that a continuous haul cannot ordinarily be as expensive as combined local hauls with their additional terminal services. 47 A carrier may even accept less for through service than a reasonable local rate. 48 In general, joint through rates are lower than the sum of the locals between two points; and obviously there can very seldom be any transportation reason why such should not be the case.49 A joint through rate in excess of combination is, therefore, presumed unreasonable.50 And a carrier cannot attempt to recoup itself by putting high locals on goods having low through in-bound rates.51 Higher rates may be made to points on a branch line, with proper limitations, than to main-line points. 52 There is a material difference between a reasonable amount to be added for additional mileage on a straight-away long haul, and a reasonable allowance to be added for an out-of-line haul which involves two and probably three terminal services. 53 The fact that rates on other parts of the carrier's system are forced down by competition to a very low point, does not justify a higher rate to a point located on a branch line, since such point is

45 Black Mountain Coal Land Co. v. S. Ry., 15 I. C. C. 286.

46 R. R. Com. of Nev. v. N. C. O. Ry., 22 I. C. C. 205.

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

48 Boston Chamber of Commerce v. A., T. & S. F. Ry., 28 I. C. C. 230. 40 Laning-Harris Coal & Grain Co. v. Missouri P. R., 11 I. C. C. 154.

50 Lull Carriage Co v. C. K. & S. Ry., 19 I. C. C. 15, 16.

51 R. R. Comm. of Louisiana v. St. Louis S. W., 23 I. C. C. 31.

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

53 Kansas City Transportation Bureau v. A., T. & S. F. Ry., 15 I. C. C.

491.