3. It is said that competition is not trade, but a mere incident of trade; that what prevents competition does not necessarily injure trade; on the contrary to restrict competition may benefit trade; that the whole world is now groaning under competition; that the hard rule of the survival of the fittest bears heavily upon the masses of the people; that there is a spirit of unrest, of dissatisfaction, and that, to avoid the effects of a ruinous competition among employers and employees, combination is the rule.

It may be conceded that the law of the survival of the fittest is a hard one; that the necessity of competition under existing circumstances presses heavily upon the weak. But, after all, competition is not only the life of trade, but the underlying basis of our social and industrial life. There may be a better way, but we have not yet found it.

Competition goes along with freedom, with independent action. This country was founded on the principles of liberty and equality. It sought to secure to every citizen an equal chance under the law. That is all the people have demanded or do demand, -a fair show in the race of life. Undoubtedly there is unrest, dissatisfaction, tendencies to anarchy and socialism, but these result, not from competition, but the throttling of competition by trusts and combinations, which seek to control the production and transportation and dominate both workingmen and consumers. Against these the individual citizen protests. He does not demand no competition, but fair competition. Combinations of workingmen accompany aggregations of capital. Thus the masses are arrayed against the classes. If combinations of capital were prevented, if competition among employers of labor were enforced, the independent demand for labor from competing sources would tend to fair wages, such as prices might warrant.

4. It is insisted that this agreement among railroads to prevent competition is not only innocent, but wise and salutary, because in the case of railroads competition is ruinous; that if competition reduces rates below the point of profit for any line, it must ultimately be bankrupted, for it cannot stop running nor can the capital invested in it be withdrawn.

But this argument applies to all great modern industries, in manufacture as well as transportation. Capital fixed in a valuable plant cannot be withdrawn. nor can labor skilled in one industry be readily shifted to another. Both manufacturers and workingmen are subject to the contingencies of competition. The establishment of a new plant with modern improvements may destroy some old one, in which both have virtually risked their all.

Why are not men who put their capital or skill into a manufacturing plant just as much entitled to protection against ruinous competition as those who put their money or skill in a transportation plant? Why should the railroads be singled out from all the great interests of this country, and alone

Competition drives the weak to the wall; the fittest survive; but the greatest good to the greatest number results. The opening of new mines, the construction of new plants, the establishment of industries with improved methods of production and greater natural advantages, lower the cost of production of the commodity to the benefit of the public; but the person or corporation or region which cannot lower its cost of production to meet the new competition must suffer. Under competition the most improved plant, the best trained labor, the most economical management, the wisest business sagacity and foresight, is not only encouraged but demanded for success.

The best railroad, the one constructed and equipped and managed in the best way, will get the bulk of the competitive business, and it ought to. It can afford to carry the traffic at lower rates than the poorer roads, and it cught to be allowed to in the public interest. The poorer reads can get the business by putting themselves in shape to do the business. Roads equally fitted to the work will naturally divide the competitive business in equitable proportions. Competition for traffic by improved service and lower rates will result naturally, not in ruining the roads, but in building them up. Under ccmpetition the best road fixes the rate; under combination the poorest road.

Is it just to make the public pay rates from Chicago to the east fixed by the poorest system protected by the Joint Traffic agreement?

5. It is contended that there is no re-. straint on trade, because the railways still exist, with all their facilities for transportation, ready and willing to serve the public, and with no inducement for service weakened; that competition in every desirable aspect remains, the railroads being permitted to compete, but compelled to do it openly, under the provision that a deviation from the association rate cannot be made except by resolution of the board of managers and after thirty days' notice to the managers.

It is true that railways exist, with their original facilities, but the inducement for improvement by cheaper methods of transportation is weakened, the motive for competition removed, the means of competition destroyed, and competition itself absolutely forbidden. The natural result of preventing competition is to keep up rates. An excess in rates over what would obtain under competition amounts in effect to a tax on the things transported. This operates as a burden upon commerce and a restraint of trade.

If a state should levy a tax on goods transported through it, this court would hold such an act unconstitutional because it has laid a burden upon interstate commerce. Moreover, to increase rates and maintain them at a point above what would obtain under competition, decreases the business of railroads, but enhances the cost of it, and thus restrains trade or commerce. Lower rates mean more traffic, both freight and passenger. Higher rates mean less traffic. It

It is obvious the manufacturer or dealer must not only take into account the rates he will have to pay to market, but the rates his competitors from every quarter by land and water will have to pay. It is impracticable to attain a cast-iron uniformity of this kind, and neither the interstate commerce law nor the Joint Traffic agreement attempts

it.

Moreover, the agreement does not assume to prevent a change of rates. It virtually takes the power to change from the companies, but gives it to the managers of the association. For natural it substitutes arbitrary change. The protest against any change in rates is a protest against progress. The history of railroads shows a constant tendency towards cheaper rates. This has resulted from improvements forced by competition. The interest of the public lies, not in maintaining but in reducing rates, and to effect such reduction competition is essential.

7. Uniformity in rates is declared to be essential, and it is urged that the provisions of the interstate commerce law favoring uniformity cannot be enforced except by suppressing competition through this agreement; and, to illustrate the need of uniformity, it is said that without it an industry in Michigan equidistant from market with a similar industry in Indiana might be wiped out of existence by reduced rates in favor of the Indiana industry.

But neither the Interstate Commerce Act nor this agreement would prevent the alleged injustice suggested. The case instanced involves a reduction of rates on local traffic, and the agreement only applies to competitive traffic. There is nothing in the agreement to prevent any member of the association from changing the rates from local points; the jurisdiction of the association is restricted to competitive traffic.

Suppose two similar industries located in Pennsylvania, each supplying the New York market, and each equally distant from New York, but one located on the Pennsylvania and the other on the Lehigh Valley system. For one industry the Lehigh Valley is the only line to New York; for the other the Pennsylvania. There is nothing in the Interstate Commerce Act, or in the Joint Traffic Agreement, to prevent the Pennsylvania from reducing the rate to New York; nothing to prevent the Lehigh Valley from reducing Buch rate.

The uniformity demanded by the Interstate Commerce Act is uniformity in the treatment by each railroad of its own patrons. The 2d section prohibits a common

The interstate commerce law declares that all charges must be just and reasonable. It provides no means for securing this de sideratum except competition. The only method of stifling competition when the law was passed was the pooling agreement, and this was prohibited. Competition between railroads was preserved, and to secure the benefit of competition to all patrons of each road it was provided that the competition should be open and above board, so the people might be advised of the existing rates, and each railroad was required to treat its patrons with uniformity, without discrimination and without preferences.

The object of the law was to secure the benefit of competition to all, and not permit a road to charge those shippers for whose patronage it does not have to compete excessive rates, while secretly granting lower rates to those shippers for whose patronage it does have to compete. The competition was to be restricted to where it belongs; between the railroads, and not between the shippers. If a railroad can afford to carry freight of one shipper for a certain rate, it can afford to carry for the same rate like freight under similar conditions for every other shipper.

Chicago & N. W. R. Co. v. Osborne, 10 U, S. App. 430, 52 Fed. Rep. 912, 3 C. C. A. 347, 4 Inters. Com. Rep. 257.

8. It is contended that uniform rates should be maintained on the trunk lines in order to keep the weaker roads in operation for the benefit of the sections through which they run.

As I have pointed out, the agreement does not apply to local traffic. As to it each road has a monopoly, with power to fix its own rates. The agreement applies only to competitive traffic between great centers. The argument, then, amounts to this, that rates on through traffic are to be kept up in order to preserve the weak roads as going concerns for the benefit of the sections through which they run. What is this but to tax the many for the benefit of the few? It is not the function of the government to neutralize the advantages of locality. The people pay for these and are entitled to them. If I settle in a flourishing region on a good line, I pay for the privilege in the cost of land, in taxes, etc. If I settle in an undeveloped region on a poor road, I pay little for either the privi lege or the land, and must expect to help bear the cost of development.

9. It is said that the Interstate Commerce Act was passed to suppress competition and secure uniformity in rates.

It was not passed to suppress competition,

but to preserve it and secure its benefits to all. Competition between independent lines was preserved, and uniformity enforced to secure the benefit of this competition to all. Each carrier was required to treat its patrons with uniform fairness, without preference and without discrimination. The only effective arrangement used at that time by the trunk lines to stifle competition was the pooling agreement, and this was prohibited. It was recognized that competition would keep the rates reasonable, and the long and short haul provision was intended to secure to all points on each road the benefit of such competition. Unjust discrimination and undue preferences by a railroad among its patrons was prohibited. Thus the benefits of open competition were insured to all. The policy was, among the patrons of each road, uniformity, but between the roads open competition.

First Report of Interstate Commerce Comission 1887, p. 33.

391; Freight Bureau Ceses, 167 U. S. 479, 42 L. ed. 243; Southern P. Co. v. Railroad Commissioners, 78 Fed. Rep. 236.

11. If the railroads are not to be permitted to combine and prevent ruinous competition, and establish and maintain reasonable rates by arbitrary methods, then, it is said, they must either abandon transportation, or consolidate, or persistently violate the law. There is a virtual consolidation now of these roads under the agreement. The public is not interested in consolidation except as it affects competition. The Constitutions and laws of many states prohibit the consolidation of railroads, but only of competing railroads. Lines which do not compete may consolidate, and the public thus gains the benefit of broader and more economical administration. Railroads which compete may not consolidate, because it prevents competition and keeps up rates.

rates.

It may be conceded that the furnishing of railroad transportation is a public function, and therefore the government may regulate it. Government, state and Federal, has done this by forbidding the consolidation of competing lines, by prohibiting pooling contracts, and by making illegal all agreements in restraint of trade.

The absolute uniformity demanded is neither practicable nor desirable. Absolute uniformity extending to every rate, from every point, on every railroad, means absolute consolidation of control and absolute arbitrary rates, and this is absolutely inconsistent with competition. It admits of no competition. The desirable uniformity is that which goes along with competition, and supplements it, and secures its benefits to all shippers without distinction. Each railroad should be required to treat its patrons-persons and places-with fairness and equality, without preference or discrimination. It should not be required, however, to treat its shippers no better than other lines treat theirs. On the contrary it should be induced to treat its shippers the very best it can, and thereby make it incumbent upon competing lines to treat their shippers as well. It should be induced to do this, not only in rates, but in service. The rigid, cast-iron, arbitrary rule of absolute uniformity as between railroads, contended for, would logically prevent all competition, whether in rates or service.

Public policy has demanded the prohibition of the consolidation of competing lines; for the same reason Congress enacted the anti-pooling section of the Interstate Comdivision of earnings is not bad in itself. It is bad because used to stifle competition. Equally bad is the Joint Traffic Agreement before the court, which operates as effectually as any pooling arrangement ever devised. The people have not stopped to inquire whether consolidation would result of necessity in unreasonable rates; neither have they stopped to inquire whether pooling would result necessarily in unreasonable rates. It is the tendency, not the absolute result, which has operated to prohibit consolidation, to prohibit pooling, to prohibit contracts in

restraint of trade.

Pearsall v. Great Northern R. Co. 161 U. S. 646, 676, 40 L. ed. 838, 848; Louisville & N. R. Co. v. Kentucky, 161 U. S. 677, 698, 40 L. ed. 849, 858.

The railroads say that if they are not permitted to prevent competition they will compete, and in doing so will violate the interstate commerce law; that they should be per mitted to combine for the purpose of preventing violations of the law, even if in doing so competition be prevented.

But to prevent competition is in itself to violate the law. Better the chance to violate one law than the certainty of violating another. Better the motive to violate one law than the mandate to violate another. If the ability the railroads employ to circumvent the law were used to observe it, neither this agreement nor the arguments in support of it would be before the court. The railroads promise to obey one law if the court will permit them to violate another. Would they keep the compact, if made? Respect for the law based solely on self-interest is delusive and evanescent.