Since the order made on the 8th instant a large number of petitions and protests have been received from shippers in various parts of the territory above described, and such petitions have continued to be received down to the present time. These petitions and protests will be transmitted to you at any time upon your request, and the Commission will promptly furnish any further information which can be supplied from the records and files in its possession.

While it is not the province of this Commission to determine whether the testimony above referred to shows a violation of the antitrust law, and no opinion is expressed upon that point, there are certain features of the case to which we deem it proper to call your attention.

With some unimportant exceptions the general fact appears to be that the class rates at present in force, and which will presumably be applied to the new classification, are now the same as or higher than they were in 1887, when the act to regulate commerce was passed.

Almost all the changes shown in the new classification are from lower to higher classes. The result will be, if the present class rates are continued, that charges on any article advanced to a higher class will be increased by the difference between the rates applied to the class in which the article was formerly placed and the higher rates of the class to which it has been advanced. This increase is considerable in all cases and very great in many cases, amounting in some instances to 100 per cent or more.

These changes in classification are to be made for the conceded purpose of increasing the rates on the articles advanced and thereby increasing the revenue derived by the carriers [from the transportation of such articles. The number and variety of articles advanced is shown by a list of the same annexed hereto as above stated.

The protesting shippers assert that increases in rates, to the extent effected by these changes in classification, are without justification and will result in excessive charges upon most, if not all, of the articles in question. They also allege that hardship and injustice will further result from the changes which will be made in the relation of rates, and especially from the increases in the difference between carload and less than carload charges. If their contention in these respects is well founded, as to which we express no opinion, a wrong is about to be accomplished which the Commission is powerless to prevent and for which the act to regulate commerce affords no adequate redress. The facts above set forth are submitted for your consideration.

Very respectfully,
MARTIN A. KNAPP, Chairman.

Hon. JoHN W. GRIGGs,
Attorney-General, Washington, D. C.

On December 30 the Attorney-General sent the Commission the following reply: DEPARTMENT of JUSTICE, WASHINGTON, D.C., December 30, 1899.

GENTLEMEN: I am in receipt of your communication of the 28th instant, and have given the matter such careful consideration as the limited time at my command has permitted.

It appears that, on the 8th instant, the Interstate Commerce Commission ordered an inquiry with respect to certain changes in freight classification, made by “Official Classification, No. 20,” which is to take effect January 1, 1900. At the conclusion of the testimony taken at the hearing on the 21st and 22d instants, certain protesting shippers requested that a transcript of the proceedings be transmitted to the AttorneyGeneral, claiming that a violation of the antitrust law had been shown. Accordingly, you have transmitted copies of “Official Classification, No. 19 and No. 20,” a copy of the order for the hearing, a transcript of the proceedings, and a copy of the resolution and petition of certain shippers. You express no opinion upon the matter, but properly leave me to determine whether the facts shown warrant me in applying for an injunction to restrain the operation of the new classification on the ground tha in adopting it the railroad companies violated the antitrust law.

The interstate commerce act went into effect in 1887. To comply with its provisions, it was necessary for railroad companies operating in the same territory, to simplify their freight classification. Accordingly, at a convention of the railroads, a committee was appointed to prepare an official classification and submit it to the companies for their adoption. This was done, and an official classification was adopted which was filed with the Interstate Commerce Commission and went into effect April 1, 1887. Since that time nineteen official classifications have been prepared, submitted to the railroad companies, adopted, and filed. During the current year two classifications were filed, No. 18 on February 1, 1899, and No. 19 (now in force) on July 1, 1899. It appears from the testimony taken before you that this official classification is used, substantially, by the carriers operating in that part of the United States north of the Ohio and Potomac rivers and east of the Mississippi River. There is an official classification committee composed of some fourteen railroad officers from different sections. This committee meets on the call of its chairman, or upon the request of three members. At its meetings, suggested changes are considered. Such changes as the committee with substantial unanimity recommend, are noted by the chairman and incorporated into a new official classification which is then submitted to each company for its individual action. Some sixty railroad companies thus independently pass upon the classification. They signify their adoption to the chairman, who, after the official classification has been thus adopted, files it with the Interstate Commerce Commission in compliance with the law.

The legality of the method of preparing, adopting, and filing the official classificacation has never before been questioned, nor, indeed, was it questioned in the complaints leading to your order of the 8th instant, which were that the changes made are “discriminating and wrongful,” and will subject shippers and shipments in the territory affected “to unreasonable charges and unjust discrimination and undue prejudice and disadvantage.” The hearing was had to permit the carriers to explain to the shippers the reasons for the proposed changes, with a view to an amicable adjustment of the differences. During the course of the testimony it was repeatedly suggested that your Commission had no power to take official action at that time, but that after the classification had gone into effect it would be open to shippers to make formal complaint invoking the remedy provided for unreasonable rates and unjust discrimination by the interstate commerce law. During the course of the hearing the shippers who were present protesting against the changes requested the carriers to postpone the time for the official classification to take effect for sixty or ninety days. This request was refused, the carriers insisting that the effect of the changes could only be determined by experience, and stating that they would be quite willing to consider complaints and correct changes which practical operation should prove to be unjust. It was after this request for a postponement had been refused that some of the shippers presented to the Commission the resolution and petition which you have transmitted.

This resolution recites that whereas the changes made by the new official classification, by increasing less than carload rates over carload rates, will greatly inure to the benefit of the large shippers and to the detriment of the small shippers; and whereas, a postponment of their operation has been refused; therefore the shippers petition the Commission to lay the testimony before the Attorney-General in order that he may take action under the anti trust law to prevent the official classification from going into operation.

H. Doc. 298—2

In your communication, after transmitting the testimony and papers which show the facts above detailed, you say:

These changes in classification are to be made for the conceded purpose of increasing the rates on the articles advanced and thereby increasing the revenue derived by the carriers from the transportation of such articles. The number and variety of articles advanced is shown by a list of the same annexed as above stated.

The protesting shippers assert that increases in rates, to the extent effected by these changes in classification, are without justification and will result in excessive charges upon most if not all of the articles in question. They also allege that hardship and injustice will further result from the changes which will be made in the relation of rates, and especially from the increases in the difference between carload and less than carload charges.

It is apparent from the protests originally filed, from the terms of your order of the 8th instant, from the resolution and petition presented by the shippers, and from your own communication, that it is the changes made, and not the method of making them, which is complained of. Under the classification which has obtained for many years all freight is divided into six classes. For these classes the railroad companies fix graded rates. A change from a lower to a higher class would increase the rate if the existing rates are maintained. It is against the increased rate thus produced that the shippers protest. They claim: (1) The changes will result in unreasonable rates; (2) in unjust discrimination against the small in favor of the large shippers; (3) in charging more for a short than a long haul. Obviously, these are matters for the consideration of the Interstate Commerce Commission. A railroad company may raise its rates to an unreasonable point; it may discriminate among its shippers; it may charge more for a short than for a long haul, but none of these acts, however unjust and wrongful, amounts to a violation of the antitrust law.

To authorize the Attorney-General to direct an injunction proceeding under this law, it must be shown that there is a “contract, combination, * * * or conspiracy in restraint of trade or commerce among the several States.” In the first place, there is no contract, combination, or conspiracy shown. There is consultation by representative railroad men in committee respecting suggested changes in classification. There is subsequent independent action by railroad companies in the adoption of the new classification recommended by the committee. The testimony taken does not show that any railroad company acted under compulsion of a combination in adopting the official classification. It must be conceded that a common classification by railroad companies operating in the same territory is a desirable thing. Will it be insisted that railroad companies can not consult respecting freight classification? Or that, because one railroad company adopts a certain classification, another can not? The antitrust law says there must be a contract or combination or conspiracy. This must be shown. And it must be shown to restrain individual action. This is not shown in the testimony submitted.

Moreover, there must not only be a contract, combination, or conspiracy, but it must be in restraint of interstate commerce. As applied to carriers, this means a combination to suppress competition. It is only by suppressing competition and arbitrarily fixing rates that a restraint can be put upon interstate commerce. The filing of an official classification does not fix the rates. It places articles in certain classes, but the rates for the classes are determined by the railroad companies outside the classification. If a railroad company maintains the existing rates, the change of an article from a lower to a higher class will increase the rate, but, from aught that appears in this testimony, every railroad company using the classification is at liberty at any time to change the existing rates upon giving the notice required by the interstate-commerce act. Moreover, each railroad company is free to take any article out of the existing classification by making a commodity rate. In other words, no suppression of competition, no arbitrary fixing of rates, no restraint of interstate commerce is shown.

The Trans-Missouri and Joint Traffic Association cases afford no precedent for the action requested in this case. Each of those associations was formed by a contract, under which the companies selected a central authority to fix and maintain rates. There was an absolute suppression of competition. The power of independent action was destroyed. No company could change a rate fixed by the managers of the association, without subjecting itself to a penalty.

If the testimony submitted showed a combination among the railroad companies to restrain commerce among the several States, I would not hesitate to invoke the remedy provided by the antitrust law, but to take such action upon the faith of the facts submitted would not only be futile but absurd. If there be a remedy for the complaining shippers, it lies in an appeal to your Commission under the interstate commerce law.

Respectfully, John W. GRIGGs,

Attorney-General. The INTERSTATE CoMMERCE CoMMISSION.

Many complaints and protests were also filed at and after the hearing. The complaints received by the Commission in regard to this action of the carriers, which became effective January 1, 1900, came from 73 cities and towns in 14 states, and were signed by 334 persons, firms, companies, corporations, or associations. It was deemed important that this large number of protesting shippers, representing so many diverse business interests in practically all portions of the northern and eastern sections of the United States, should be officially informed of the limited powers of the Commission, the necessarily general character of the inquiry, and the result of the investigation. The following letter was accordingly prepared and sent to each of the complainants:

INTERSTATE CoMMERCE CoMMIssion,
OFFICE of THE SECRETARY,
Washington, January 6, 1900.

The Commission has received the communication forwarded by you protesting against changes in the official classification, and consequent advances in freight rates, by carriers using that classification.

Numerous complaints of a similar character were filed with the Commission prior to December 8, on which date an order was made reciting the substance of such complaints and directing certain carriers to appear before the Commission for investigation on December 21. Before the hearing various commercial organizations and many of the protesting shippers were notified that the investigation had been instituted and that they would have an oportunity to be heard on the day appointed, but that no order correcting the classification or rates in question could be issued in such proceeding, as the same was necessarily limited under the statute to the purposes of a general inquiry. This announcement was also made at the hearing.

Toward the close of the hearing a committee of the shippers presented a petition alleging that the testimony disclosed a violation of the antitrust law by the carriers, and asking the Commission to transmit such testimony to the Attorney-General of the United States. The Commission has no power and is not charged with any duty of applying or enforcing the antitrust act; but it complied with this request and its letter of transmittal set forth the main features of the case, though without recommendation or expression of opinion. The Attorney-General replied in a communication, dated December 30, in which he held, after reviewing the testimony, that the carriers in agreeing upon this classification were not acting in restraint of trade or commerce, and he therefore declined to bring suit for violation of the antitrust law as requested by the shippers. If desired, a copy of this correspondence between the Commission and the Attorney-General will be furnished.

A formal complaint against a carrier or number of carriers, alleging the act to regulate commerce to be violated by the change in classification or increased rate on any commodity, may be filed with the Commission by any person, firm, company, mercantile society, or voluntary association, and will have prompt attention. It should be stated, however, that while the Commission can order the discontinuance of wrongful discriminations and unreasonable rates, it is without authority, as the act now stands, to prescribe reasonable rates for future observance by the carriers, or to secure prompt enforcement of any of its decisions.

Very respectfully,
EDw. A. Moseley, Secretary.

CASES DECIDED BY THE COMMISSION.
EXPORT RATES.

A considerable portion of the time between the first part of February and the middle of August was necessarily devoted to investigations of export rates. On February 27, upon complaint previously filed by the Chicago Board of Trade, the Commission instituted the proceeding entitled “In the Matter of Export Rates from Points East and West of the Mississippi River,” and in which export rates on corn were chiefly involved. The Peoria, Ill., Board of Trade also appeared as a complainant. The case was heard in Chicago on March 13 and 14, and decision was rendered on April 12 following (8 I. C. C. Rep., 185).

While that case was pending, the carriers had also made large reductions in the export rates on wheat, but without corresponding change in export rates on flour, and numerous complaints against this disparity were made to the Commission. It appeared in the corn case that the rates for export were greatly below the rates on domestic shipments between the same points, and later the wheat rates on export shipments were reduced far below the rates on wheat consigned for domestic purposes. These great rate advantages in favor of foreign shipments and foreign millers and dealers plainly called for immediate investigation and prompt determination of the legal questions involved, and accordingly, on April 13, a proceeding was begun by the Commission on its own motion. This investigation bore the title “In the Matter of Relative Rates Upon Export and Domestic Traffic in Grain and Grain Products and of the Publication of Tariffs Relating to Such Traffic.” Hearings were had in New York City on May 15 and 16, Chicago June 12, 13, and 14, St. Louis June 15 and 16, and Washington July 15. Decision was rendered by the Commission on August 7 (8 I. C. C. Rep., 214).

The case of Kemble v. Boston & Albany Railroad Company et al.