« ForrigeFortsett »
(8 I. C. C. Rep., 110), decided by the Commission on March 7, 1899, involved the question whether rates to the seaboard on export and domestic traffic are required to be the same. In this case it appeared that the carriers from Chicago made two rates on grain and sixthclass freight to Boston. On local shipments the rate was 2 cents above the rate to New York, but if the commodity should be for export the rate to Boston was the same as the New York rate. The export traffic was delivered to the ocean carrier at East Boston, a few miles more distant than Boston from Chicago, and the export rate only applied to East Boston. The relation of rates from the west to Boston as compared with those to New York was substantially as fixed by the Commission in a former proceeding, and a reconsideration of the matters then determined was not warranted by the facts in this case. The United States Supreme Court held in the Import Rate case (162 U. S., 197) that carriers are not, as matter of law, prohibited from making rates from points in the United States to destinations in foreign countries, or from points in foreign countries to places in the United States, of which the inland division or share accruing to carriers within the United States is less than the tariff rate of such carriers on domestic shipments of similar commodities. Applying that decision, the Commission held that, as matter of law, it is not in violation of the act to regulate commerce to make a lower rate to the port of export on traffic which is exported than upon that which is locally consumed, for the export rate is in essence the division of a through rate. The point was made by the complainant that the lower rate to East Boston on export traffic than the domestic rate for the shorter distance to Boston violated the fourth section, but this contention was not sustained. Carriers in various sections of the country had insisted that import and export traffic were removed from the jurisdiction of the Commis. sion by the decision of the Supreme Court in the Import Rate case. It was held by the Commission in the Kemble case that such was not by any means its scope or effect. That decision broadened the power of the Commission in reference to such traffic, and the Commission has full authority to consider and pass upon grievances resulting from import or export rates to any individual or locality. The Commission said further that, as a matter of fact, the rates imposed by the defendant carrier in the Import Rate case had never been upheld by any tribunal; that it had never been decided that such defendant carrier might transport boots and shoes for the English manufacturer from New Orleans to San Francisco for one-sixth the amount charged the American manufacturer for the same service, but merely that in determining whether such rate constitutes unjust discrimination or undue preference the interest of the carrier and consumer should be taken into account as well as that of the producer.
In the Export Corn case, which was decided in April, the following facts prominently appeared:
In 1898 defendants’ rates to New York on export corn were 19 cents per hundred pounds from Peoria and 174 cents from Chicago, and from the Mississippi River the 174-cent Chicago rate applied as a proportional rate on export corn coming from west of that river. In January and February, 1899, the proportional rate from the river was made 13% cents, a reduction of 4 cents, the Chicago rate was made 16 cents, and the Peoria rate 17% cents, a reduction of 1% cents. This rate from the river had always been higher, or at least no lower, than the rate from Chicago. Higher rates were put in effect on export corn originating at the river crossings, and local and proportional rates considerably above the proportional export rate were also in force from river points on domestic shipments. Under former rates Illinois corn went forward freely for export through Atlantic ports, but under the rates involved it was stored in elevators or cribbed upon the farms, while Iowa corn moved in large quantities across Illinois farms and through Illinois markets on its way to the seaboard and foreign points.
Large quantities of corn were held in store at Chicago and Peoria. Through rates to the Atlantic seaboard applied from a large number of points in Illinois, but from numerous other localities in that State the corn had to be shipped under local rates to and from points like Chicago and Peoria. Some of these through rates and many of the combination rates were higher than through or combination rates on export corn from points in Iowa. The carriers alleged that the low export rates were necessary to meet the competition via the Gulf ports. It appeared that such competition was a factor of importance, but it was also demonstrated that the competition was much greater between the Atlantic ports and the lines of railway leading thereto than between them and the Gulf ports. The Commission said that the rate system under consideration had removed the basis for export rates from Chicago farther west to the Mississippi River, and that by depressing the rate from that river and leaving it relatively higher at Chicago and other Illinois points the shipment of TransMississippi corn had been stimulated to a greater degree perhaps than ever before known, while the movement of Illinois corn for export through Eastern ports had become comparatively stagnant. On the other hand, it was claimed that Illinois corn still had control of the domestic market. Upon this point it was held:
It is neither sound in principle nor equitable in practice for railway lines to create artificial differences in market conditions by an arbitrary differential in rates whereby the product of one section of the country is assigned to one market and the product of another section of the country to another market.
It did not appear that the rate discrimination complained of applied in an unjust degree to all Illinois points that had through rates and through billing to the seaboard. There were through rates from a large territory in Illinois and from points of initial shipment which were lower, perhaps not proportionately so on a mileage basis but still lower than from Iowa, and there was nothing to show why corn originating at these points, or in this territory, should not go forward in the export trade in free and fair competition with Iowa corn. The Commission decided that through or total combination tariff rates on export corn from points in Illinois which were higher than the through or combination rate on corn from any point in Iowa were unlawful under section 3 of the act; that the evidence was not sufficient to enable the Commission to determine what, if any, other correction should be made in the relative rates, and that the complaining boards of trade should have leave to apply for further hearing in regard to the effect of the changes made by the defendants in the general rate adjustment. A further ruling was that when rates established to apply between points within a single State are applied as part of combination rates on transportation between different States, such State rates, as well as the interstate rates with which they are combined, must be published at stations and filed with the Commission as provided in section 6 of the act to regulate commerce. The decision in this case seems to have been complied with through subsequent rate changes from Illinois points. In the investigation of “Relative Rates Upon Export and Domestic Traffic in Grain and Grain Products,” carriers from the Mississippi River to Atlantic ports and from St. Louis and Kansas City to Gulf ports were made respondents. Three principal questions were raised in this proceeding: (1) Whether grain for export may lawfully be given lower rates than those on grain shipped for domestic use, and if so, how much disparity in favor of export grain is permissible; (2) whether grain for export may lawfully be given lower rates than those on grain products shipped for export, and if so, how much disparity in favor of export grain is permissible; (3) whether export tariffs upon grain and grain products should be published at shipping stations and filed with the Commission. The Commission had already held in the Kemble case that the carriers were not, as matter of law, prohibited from participating in a through rate on export traffic of which the division received by the inland carrier is less than its rate for like service in transporting domestic merchandise between the same points in the United States, and that a lower rate to the port of export upon traffic which is exported than upon that which is locally consumed is in essence the division of a through rate. This ruling was made upon the authority of the decision of the United States Supreme Court in the Import Rate case above cited. In the Import Rate case the Commission held that the law did prohibit the inland carrier from taking a share of a through import rate which would be less than its published rate on domestic shipments from the port of entry, but the Supreme Court decided that such a construction of the law was wrong because it excluded consideration of all conditions, whether at home or abroad, which bore upon the reasonableness of the rate adjustment. The court held that the act did not prescribe such a hard and fast rule. It follows, therefore, as the Commission held both in the Kemble case and in this Export Rate case, that whether rates on export or import traffic, as well as those upon domestic traffic, are in violation of the statute must be a question of fact in each case. The Commission also repeated its ruling in the Kemble case that the jurisdiction of the Commission over export and import traffic is not denied, but is distinctly affirmed and rather enlarged by the decision of the Supreme Court in the Import Rate case. The carriers themselves with one voice stated that the abnormally low rates on grain were entirely the result of competition between American railways. Since January 1 export rates on grain had been reduced in many cases almost one-half. Under such reduced rates enormous quantities of traffic had moved. No market conditions abroad required these reductions, and the American producer was not materially benefited by them. Our railways had sacrificed millions of dollars without producing any substantial effect upon the flow of traffic, for the relative rate remained about the same and the low rate did not apparently increase the total volume. This depletion in revenue amounted to a donation to the foreigner. It is impossible to more strongly emphasize the folly of this whole proceeding than by the mere statement of it. And yet, said the Commission, in what way does it violate the act to regulate commerce? Put in another way, the question was whether in this warfare domestic as well as export rates ought not to be reduced; whether the American as well as the foreigner ought not to have the benefit of this competition. The Commission would have been inclined to take this view of the matter and to make an order which would at least limit the extent to which export rates might be lower than domestic rates were it not for two circumstances: First, that there may be cases where a difference should properly exist, and the conditions prevailing at Boston and other more northerly Atlantic ports and also the Gulf ports as compared with New York were referred to; and, second, the existence of water competition. Our conclusion on this branch of the case was that market conditions—sometimes in case of wheat, but seldom in case of corn—may justify an export rate lower than the domestic rate through the port of New York, and that water competition may have the same effect. During the period of closed lake navigation the export and domestic rates should be the same through the port of New York; and Philadelphia, Baltimore, Norfolk, and Newport News should take rates which are certain differentials below the New York rate on both domestic and export traffic. Rates to other ports, including Boston and ports on the Atlantic north of Boston, and Galveston, New Orleans, and other Gulf ports, may perhaps be properly made lower on export than on domestic traffic to enable them to compete for the export business. Such an adjustment of rates would be to the advantage of the carrier, and just alike to the American consumer and the American producer. With the opening of navigation on the Great Lakes water competition introduces a new element which may necessitate, in the fair interest of the carriers, two rates at New York, and consequently at all other ports. The problem is primarily one for the carriers rather than for this Commission, and we did not think that any interference on our part would contribute to its solution. In coming to this conclusion we were largely influenced by the fact that no individual and no community was actively complaining or claiming to show any special damage as a result of the rates in question. There are perhaps two kinds of injury which follow from the maladjustment of freight rates. One is, so to speak, an indirect injury to the community as a whole; the other, a direct injury to some particular individual or industry. The act to regulate commerce was undoubtedly intended to cover both classes, still it is the direct injury which appeals more strongly to the sense of right and wrong and demands more loudly some immediate redress. In this case we held it would not be right, in the absence of some justifying reason, for American railroads to permanently transact business for foreigners at a less rate than that for which they render a corresponding service to American citizens. Such a course is wrong none the less if no individual and no community can say it is injured and point out the extent of that injury. No such permanent condition should be tolerated. Some rate changes had been made by the carriers during the progress of the proceeding, and the testimony indicated that the existing disparities between domestic and export rates would not become permanent. For the reasons above stated no order was made in relation to this branch of the case. In regard to the disparity in rates on export wheat and export flour we found that a discrimination, and a most grievous one, did exist. The profit to American millers i manufacturing flour for export appeared to be from 1 to 3 cents per 100 pounds, while the freight rates on wheat and flour for export showed a difference in favor of the English miller of from 4 to 11 cents per 100 pounds; and, other things being equal, such discrimination was clearly prohibitive upon the American manufacturer. The published railroad rates on both