which charged that the rates established by defendant railroad companies from New Orleans to La Grange, as compared with their lower rates from New Orleans to cities beyond La Grange, unjustly discriminated against La Grange and its merchants, gave undue and unreasonable preference and advantage to merchants in such other cities, yielded greater compensation for transportation for a shorter than for a longer distance over the same line, and were in violation of section 4 and other sections of the act to regulate commerce.11

The Circuit Court sustained the order of the Commission. The Circuit Court of Appeals reversed the decree.

*

WHITE, J.12 * * The record convinces us that the appellate court correctly decided that there was no legal foundation for the contention that the third and fourth sections of the act to regulate commerce had been violated. It was and is conceded that the rates on through freight from New Orleans to Atlanta were the result of competition at Atlanta, and that there was, hence, such a dissimilarity of circumstances and conditions as justified the lesser charge for the carriage of freight from New Orleans to Atlanta, the longer distance point, than was exacted for the haul from New Orleans to La Grange, the shorter distance point.

The sum of the rate to La Grange was arrived at by charging the low rate produced by competition at Atlanta, and adding thereto the sum of the local rate back from Atlanta to La Grange. The same rule was applied to the stations between La Grange and Atlanta, each of those stations receiving, therefore, à somewhat lower rate than La Grange, although they were located a greater distance from New Orleans and nearer Atlanta.

* *

When the situation just stated is comprehended, it results that the complaint in effect was that a method of rate making had been resorted to which gave to the places referred to a lower rate than they otherwise would have enjoyed. In this situation of affairs, we fail to see how there was any just cause of complaint. Clearly, if, disregarding the competition at Atlanta, the higher rate had been established from New

11 Sec. 4. That it shall be unlawful for any common carrier subject to the provisions of this act to charge or receive any greater compensation in the aggregate for the transportation of passengers or of like kind of property, under substantially similar circumstances and conditions, for a shorter than for a longer distance over the same line, in the same direction, the shorter being included within the longer distance; but this shall not be construed as authorizing any common carrier within the terms of this act to charge and receive as great compensation for a shorter as for a longer distance: Provided, however, that upon application to the Commission appointed under the provisions of this act, such common carrier may, in special cases, after investigation by the Commission, be authorized to charge less for longer than for shorter distances for the transportation of passengers or property; and the Commission may from time to time prescribe the extent to which such designated common carrier may be relieved from the operation of this section of this act. U. S. Comp. St. 1901, p. 3155.

12 The statement of facts has been rewritten, and parts of the opinion are omitted.

Orleans to the noncompetitive points within the designated radius from Atlanta, the inevitable result would have been to cause the traffic to move from New Orleans to the competitive point (Atlanta), and thence to the places in question, thus bringing about the same rates now complained of. It having been established that competition affecting rates existing at a particular point (Atlanta) produced the dissimilarity of circumstances and conditions contemplated by the fourth section of the act, we think it inevitably followed that the railway companies had a right to take the lower rate prevailing at Atlanta as a basis for the charge made to places in territory contiguous to Atlanta, and to ask, in addition to the low competitive rate, the local rate from Atlanta to such places, provided thereby no increased charges resulted over those which would have been occasioned if the low rate to Atlanta had been left out of view. That is to say, it seems incontrovertible that in making the rate, as the railroads had a right to meet the competition, they were authorized to give the shippers the benefit of it by according to them a lower rate than would otherwise have been afforded.. True it is, that by this method a lower rate from New Orleans than was exacted at La Grange obtained at the longer distance places lying between La Grange and Atlanta, but this was only the result of their proximity to the competitive point, and they hence obtained only the advantage resulting from their situation. Affirmed.13

*

13 The Act of Congress, approved June 18, 1910, beside making unimportant changes in the phrasing of section 4 of the interstate commerce act, amended the section by striking out the words "under substantially similar circumstances and conditions," and by adding the following: "Provided further, that no rates or charges lawfully existing at the time of the passage of this amendatory act shall be required to be changed by reason of the provisions of this section prior to the expiration of six months after the passage of this act, nor in any case where application shall have been filed before the commission, in accordance with the provisions of this section, until a determination of such application by the commission. Whenever a carrier by railroad shall in competition with a water route or routes reduce the rates on the carriage of any species of freight to or from competitive points, it shall not be permitted to increase such rates unless after hearing by the Interstate Commerce Commission it shall be found that such proposed increase rests upon changed conditions other than the elimination of water competition."

In. Int. Com. Com. v. Chicago Gt. Western Ry., 209 U. S. 108, 28 Sup. Ct. 493, 52 L. Ed. 705 (1908), it appeared that, as a result of competition to secure the carriage to Chicago of dressed beef from packing houses in Kansas City and St. Paul, the rate on dressed meat had been reduced below the rate for live stock. Shippers of live stock and Chicago packers complained of the higher rate on live stock as unjustly discriminating against them. It was found that the rate on live stock was not of itself unreasonably high, and that the lower rate on dressed meat had not caused a diminution in shipments of live stock. Brewer, J., said: "It must be remembered that railroads are the private property of their owners; that while, from the public character of the work in which they are engaged, the public has the power to prescribe rules for securing faithful and efficient service and equality between shippers and communities, yet in no proper sense is the public a general manager. As said in Int. Com. Com. v. Ala. Mid. R. R. Co., 168 U. S. 144, 172, 18 Sup. Ct. 45, 42 L. Ed. 414, quoting from the opinion of Circuit Judge JackGREEN CARR.-38

son, afterwards Mr. Justice Jackson of this court, in Int. Com. Com. v. B. & O. R. R. Co., 43 Fed. 37, 50: 'Subject to the two leading prohibitions that their charges shall not be unjust or unreasonable, and that they shall not unjustly discriminate so as to give undue preference or disadvantage to persons or traffic similarly circumstanced, the act to regulate commerce leaves common carriers, as they were at the common law, free to make special rates looking to the increase of their business, to classify their traffic, to adjust and apportion their rates so as to meet the necessities of commerce and of their own situation and relation to it, and generally to manage their important interests upon the same principles which are regarded as sound and adopted in other trades and pursuits.' * * It is insisted that 'the making

of the live stock rate higher than the product rate is violative of the almost universal rule that the rates on raw material shall not be higher than on the manufactured product.' This may be conceded, but that the rule is not universal the proposition itself recognizes, and the findings of the court give satisfactory reasons for the exception here shown. The cost of carriage, the risk of injury, the larger amount which the companies are called upon to pay out in damages, make sufficient explanation. They do away with the idea that in the relation established between the two kinds of charges any undue or unreasonable preference was intended or secured. * * An honest and fair motive was the cause of the change in rates; honest and fair on the part of the Great Western in its effort to secure more business, and equally honest and fair on the part of the other railway companies in the effort to retain as much of the business as was possible. In other words, this competition eliminates from the case an intent to do an unlawful act, and leaves for consideration only the question whether the rates as established do work an undue preference or discrimination; and as the findings of the court show that the result of the new rates has not been to change the volume of traffic going to Chicago, or materially to affect the business of the original complainant, it would seem necessarily to result that the charge of an unlawful discrimination is not proved."

Compare Cin., etc., Ry. v. Int. Com. Com., 206 U. S. 142, 27 Sup. Ct. 648, 51 L. Ed. 995 (1907).

APPENDIX

IN THE MATTER OF BILLS OF LADING

(Before the Interstate Commerce Commission, June 27, 1908. No. 787. 14 I. C. C. Rep. 346.)

KNAPP, Chairman. This is a proceeding of investigation and inquiry instituted by the Commission on November 21, 1904. Shortly before that date numerous petitions were received from the Illinois Manufacturers' Association and other commercial organizations in Official Classification territory, complaining of the proposed adoption, by railroad companies operating in that territory, of certain changes in the so-called uniform bill of lading then generally used in the transportation of freight over their respective lines.

To inform itself concerning the controversy brought to its attention by these petitions the Commission ordered an investigation, and the first hearing was had on the 5th and 6th days of December, 1904. It appeared at that time that the matters in question were the proper subject for negotiation and settlement between the various conflicting interests, and upon the suggestion of the Commission a joint committee of shippers and carriers was appointed to formulate a suitable bill of lading and report the same to the Commission. During the year 1906 and the first months of 1907 this committee held numerous conferences and gave to the subject most careful attention. On June 14, 1907, they made a report to the Commission, and submitted a bill of lading which appears to have been agreed upon and consented to by the original petitioners and by substantially all carriers in Official Classification territory. The Commission was thereupon asked to approve this bill and direct its adoption.

In order that the matter might be more fully considered and other shippers and carriers have opportunity to be heard before taking action, the Commission on July 8, 1907, made a supplemental order, reciting the proceedings up to that time, providing for a further hearing on the 15th of October following, and requiring carriers to whom it was sent to show cause on that day why the proposed bill of lading should not be approved and prescribed by the Commission to be used on and after January 1, 1908. A copy of the order, with copies of the proposed bill of lading and of the petition of the Illinois Manufacturers' Association (the other petitions being similar thereto), was thereupon mailed to all railroad companies subject to the act to regulate commerce, so far as they were known, and they were directed, if they desired to object to the adoption of this bill of lading, to file their GREEN CARR. (595)

objections in writing with the Commission on or before the 16th day of September, 1907. * * *

The Commission has been measurably relieved from a task of great difficulty, because the bill as now submitted represents in most, if not in all, of its principal features a virtual agreement between shippers and carriers.

In its general scope as well as its detailed provisions this bill does not differ materially from the one assented to and proposed to the Commission in June, 1907, as above stated. Such changes as have been made, and they are quite numerous, have all been in the direction of greater simplicity and are all believed to be in the interest of the shipping public. Aside from these modifications of the bill as submitted a year ago, another change has been made which is regarded. of great practical value. This change consists in the provision of two forms or kinds of bills of lading in place of the single form now and heretofore in use; one to be used for "order consignments" and the other for "straight consignments," as those terms are understood in commercial dealings. These two forms will be distinguished by different colors and each will contain provisions suited to its separate. purpose. They will differ only on the face side, the conditions printed. on the back being the same in both cases. These differences will appear upon inspection and need not here be enumerated. The main point in this connection is that the "order" bill will possess a certain degree of negotiability, while the "straight" bill will be nonnegotiable and is to be so stamped upon its face. Moreover, and this is a matter of consequence, the order bill of lading will be required to be surrendered upon or before the delivery of the property to the consignee. It is believed that this plan will in large part meet the requirements of the banking concerns of the country which advance vast sums of money upon bills of lading and are entitled to a reasonable measure of protection.

This proposed bill of lading-for the two forms may be considered as one in what we have further to say-is submitted for adoption by the carriers and use by the shipping public with considerable confidence. It is not claimed to be perfect, and experience may develop the need of further modifications, but it represents the most intelligent and exhaustive efforts of those who undertook its preparation to agree upon a bill of lading which should be reasonably satisfactory to the railroads and the public. It is, of course, more or less a compromise between opposing interests, because on the one hand it imposes obligations of an important character which carriers have not heretofore assumed, and on the other retains exemptions to which some shippers may object, and perhaps not without substantial reason. As we are advised, it is in some respects less favorable to the shipper than the local laws or regulations of one or more states, but is more favorable to the shipper than the local laws or regulations of most