that the fact that because of the likelihood of water competition, a carrier makes a rate which may not be compensatory, does not of itself render unreasonable and unjust an increase to a remunerative basis. 20 The effect of this amendment is to shift from the carrier to the Commission the power to decide as a primary question whether circumstances justifying a discriminatory long-haul rate exist. This construction of the section was attacked by the carriers, who also set up that if it was correct then this section as amended was unconstitutional. But in June, 1914, the Supreme Court decided against the carriers on both points, 21 and it may now be taken as established that a less charge for a long haul than for a short one included therein is absolutely prohibited unless first authorized by the Commission.22 Notwithstanding this change in the provisions of the fourth section it would seem that decisions of the Commission and of the courts previous to 1910 as to when the carrier would be justified in departing from the provisions of the Act would still be of value in ascertaining the rules of law by which the Commission must be governed in giving effect to this clause. Dissimilarities alleged by the carriers and sustained by the Commission or the courts prior to the amendment of 1910 will presumably be sufficient to convince the Commission that a less charge for a longer haul should be allowed. This is all the more true since the Commission in making an order under the fourth section is not exercising a new and additional authority over undue discrimination, but is only using a power which it already had under section 3.23 The significance of the fourth section lies not in any increase in the author

20 Scrap-Iron Rates between Duluth and Chicago, 28 I. C. C. 467. 21 Intermountain Rate Cases, 234 U. S. 476, 58 L. ed. 1408, 34 Sup. Ct. 986.

22 Colorado Coal Traffic Ass'n v. C. & S. Ry., 19 I. C. C. 478; Railroad

Commission of Nevada v. So. Pac. Ry., 21 I. C. C. 329; City of Spokane v. No. Pac. Ry., 21 I. C. C. 400.

23 City of Spokane v. No. Pac. Ry., 21 I. C. C. 400.

ity of the Commission, but in the rigid limitation placed upon the carriers in the making of rates.

§ 784. General principles governing the Fourth Section. It was the intent of Congress to put a stop to this form of discrimination prohibited in section 4 in so far as that could properly be done. 24 An absolute prohibition of that kind of preference is within the power of Congress, 25 and could not be complained of unless the carrier's property was being confiscated. 26 But the Commission itself, although the opportunity has frequently been presented to it, has never indorsed a rigid long-and-short-haul section. Indeed, the present provision is drawn along lines which received its tentative approval.27 As the Act now stands, discrimination in rates in favor of a more distant point and against a less distant intermediate one is absolutely forbidden until it has been authorized by the Commission. But the power of the Commission is confined to authorization. Such discriminations, even though in the public interest, cannot be required. They can be made only on the initiative of the carrier. 28 But the fourth section of the Act, unlike the second and third sections, applies only to discriminatory charges for transportation. Demurrage and similar charges are not included in it.29 No question can arise under section 4 unless the rate to the farther distant point is less than the rate to an intermediate point. 30 Inasmuch as section 4 deals only with the one form of discrimination, which is governed by rules peculiar to it, it may be violated under a state of facts not con

24 In re Lumber Rates, 25 I. C. C. 50.

25 In re Application of Southern Pacific Ry., 22 I. C. C. 336.

26 Railroad Commission of Nevada v. South. Pac. Ry., 21 I. C. C. 329. 27 Ib. 335.

28 Thatcher v. Fitchburg Ry., 1 Int. Com. Rep. 356.

29 Pennsylvania Millers' State Ass'n v. P. & R. Ry., 8 I. C. C. Rep. 531.

30 Milk Producers' Ass'n v. D., L. & W. Ry., 7 I. C. C. Rep. 92; Wheeling Corrugating Co. v. B. & O. Ry., 18 I. C. C. 125; League &c. v. Oregon Short Line, 18 I. C. C. 562.

stituting a violation of section 3.31 The Act permits but does not authorize the carrier to make the same charge for a long haul as for a short one included in it.32 But it expressly provides that the aggregate charge for the long haul shall never be greater than the sum total of the intermediate rates.33 In determining whether this provision of the Act has been observed, the Commission does not look at the lowest possible combination of intermediate fares, but at the lowest combination of fares that are published and filed as available for interstate travel or in making up interstate fares. If a carrier wishes to exclude from this consideration any of its purely intrastate fares, it must refrain from publishing and filing them as available for use in making up interstate fares.34 The charge for the long haul must not be unreasonably low,35 nor must that for the short haul be unreasonably high.36

§ 785. Relation between long-haul and short-haul rates. As rates to the long-distance point are frequently determined by factors beyond the carrier's control, it is difficult to fix any exact relation between such rates and those to an intermediate point. This element in the situation is, however, not to be altogether disregarded, and the Commission has tried to meet it by holding that the intermediate rate should not exceed the long-distance rates plus a reasonable local charge from the more remote point back to the intermediate point, and should perhaps, in

31 In re Suspension of Rates on Packing-House Products, 21 I. C. C.

68.

32 Kellogg Toasted Corn Flake Co. v. M. C. Ry., 24 I. C. C. 604.

33 Arabol Mfg. Co. v. S. B. Ry., 25 I. C. C. 429.

34 Conference Ruling, 298.

35 Kimberly v. C. & O. Ry., 17 I. C. C. 335. A rate otherwise reasonable is not shown to be unduly low by the presence in the carrier's tariff of

a higher rate for a shorter distance involving a violation of the Fourth Section. Adjustment should be made with respect to the latter rate. Iowa-Minnesota Cement Rates, 28 I. C. C. 477.

36 Southern Timber & Land Co. v. So. Pac. Ry., 18 I. C. C. 232.

37 Monroe Progressive League v. St. L., I. M. & S. Ry., 15 I. C. C. 534; Valley Flour Mills v. A., T. & S. F. Ry., 16 I. C. C. 73.

some cases, be even less. 38 This may be determined largely by the amount of the traffic involved. Differentials above rates to basing points may be higher where long-haul traffic to local stations is meager. 39 Especially is the carrier estopped from complaining when the Commission, in establishing a new schedule of rates, merely maintains the same ratio of difference which the carrier itself had made. 40 Under the fourth section as amended in 1910 the Commission may prescribe the maximum difference in rates which may be made against the intermediate point, or may fix a rate at the more distant point below which the carrier must not go, or may define the territory from which a higher intermediate charge may be made. 41 When the Commission has established an inherently reasonable rate to a given point, a carrier may not charge a higher rate to an intermediate point.42 Likewise if a carrier publishes for interstate use a combination of local State rates which in the aggregate is lower than the through charge authorized by the Commission, the rule of section four must be observed unless permission to the contrary has been obtained from the Commission. 43 The carrier must make changes in its schedule with due regard to the provisions of the fourth section. Hence an increase of rates to intermediate points may necessitate advances in rates to more distant points in order to avoid a violation of the fourth section.44 But a carrier may not bring its schedules into conformity with the fourth section by changes in classification, nor by cancellation of a commodity rate leaving a class rate or a combination rate

38 Bluefield Shippers' Ass'n v. N. & W. Ry., 22 I. C. C. 519.

39 Board of Trade of Carrollton

v. C. of G. Ry., 28 I. C. C. 154.

40 Interstate Commerce Commission v. Un. Pac. Ry., 222 U. S. 541, 56 L. ed. 308, 32 Sup. Ct. 108.

41 City of Spokane v. N. P. Ry., 21 I. C. C. 400.

42 City of Spokane v. N. P. Ry., 19 I. C. C. 162.

43 Iowa State Board of R. R. Commissioners v. A. E. Ry., 28 I. C. C. 563.

44 Transcontinental Rates from Group F., 28 I. C. C. 1; KansasIowa Brick Rates, 28 I. C. C. 285; Nassau Advancement Ass'n v. C. & N. W. Ry., 28 I. C. C. 459,

to apply, nor by cancellation of a rate with provision that in lieu thereof a rate in some other tariff shall apply, nor by correction of error in the tariff, nor by addition or elimination of routes without change in the list of participating carriers, nor by any other change which does not leave the rate, fare, or charge in substantial compliance with the law. 45

§ 786. Interpretation of the Fourth Section.

In applying the fourth section to the cases that come before it for adjudication, the Commission is obliged to determine many questions of fact. The primary purpose of the fourth section is to protect intermediate points against discrimination growing out of the giving of relatively more favorable rates to points farther distant. The interests of the more remote point were thought to be sufficiently protected by the competitive conditions which it enjoyed, and the prohibition of a higher rate to the intermediate point it was hoped would automatically give that point a share in the competitive advantages of its more distant rival. Such being the object of this provision, it is obvious that if a point is not an intermediate one, it cannot avail itself of the protection of the fourth section. It is also clear that the Commission cannot exercise jurisdiction unless all the points involved lie in the United States. If either the intermediate or the more remote point is in a foreign country, the fourth section cannot apply.46 The usual case presents no difficulty, but it has been held that a point on a branch line is not an intermediate one," while a point on a lateral line 48 or on a subsidiary line of the same system but without physical connection with the main line may be.49 But a com

45 Conference Ruling, 293.

46 Conference Ruling, 318.

47 Baer Brothers Mercantile Co. v. Mo. Pac. Ry., 13 I. C. C. 329; Milwaukee Electric Co. v. C., M. & St. P. Ry., 15 I. C. C. 468. See also Conference Ruling, 304, e. f.

48 American Coal Co. v. B. & O. Ry., 17 I. C. C. 149.

49 Nebraska State Railway Commission v. C., B. & Q. Ry., 23 I. C. C. 121; Lewis v. C., B. & Q. Ry., 25 I. C. C. 97.