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published rate, but frequently extends to t2 ability to carry on trade in great lines of business. Though the law is extremely defective, aggrieved shippers have no other recourse than to appeal to the Commission, in the hope, as was said in our last report, “of some relief from conditions which they regard as intolerable."
No procedure for reparation or damages resulting from unjust rates can ever afford an adequate remedy. This is so because, first, in respect of many articles of freight the rate is an important factor in determining the cost thereof and in fixing the limits of distribution and sale. The mere difference between the just rate and the unjust one on actual shipments would seldom, if ever, approximate the real damage to a business injuriously affected. Generally the most serious injury in such a case, though potent and substantial, is not even approximately measurable. In the second place, the shipper, who alone is known to the carrier in the transaction, is often a dealer or middleman who has protected himself in buying and selling on the basis of the rates charged, yet he alone could maintain a suit against the carrier on account of the unjust rate paid, although the hardship had fallen on the producer from whom he bought or the consumer to whom he sold, or both. In the very nature of the case adequate
otection can be found alone in prevention of the wrong; hence, the vital importance of just rates upon which to move traffic at the time when or before it moves.
This is also true in respect of tariff rates, however strictly enforced, which operate with discriminating effect as between rival localities or competing articles of traffic. The resulting disadvantage in such cases is not measured by the difference between relatively equal and relatively unequal rates, but by the command of markets and the ability to undersell which are secured by those who are favored by inequitable rate adjustments. The injury thus inflicted is beyond calculation and can be redressed only by the exercise of sufficient authority to readjust rate schedules to be observed in the future on the basis of relative justice.
It is conceded by all that it is right that rates should be reasonable and just. It is clear that when they are not so there is now no adequate means of making them such unless the carrier at fault can be convinced and persuaded to do so. The interests of one party can not be safely relied upon to determine and protect the rights of another. It must surely be possible to devise a method of procedure whereby practical effect can be given to the concededly fair demands of law that rates shall be reasonable and just without sacrifice of the rights or just interests of either party to the controversy.
If authority is to be conferred upon any tribunal, upon complaint and hearing, to correct rates found to be unreasonable or unjust, there is good reason for apprehension that the purpose to do so could in
many cases be thwarted unless there is also authority to require the establishment of joint through rates over connecting and continuous lines, and to fix the divisions thereof in case the carriers fail or refuse to do so.
No more appropriate language can be used in concluding our remarks upon this subject than that employed by the President in his annual message to the Congress:
“The Government must in increasing degree supervise and regulate the workings of the railways engaged in interstate commerce; and such increased supervision is the only alternative to an increase of the present evils on the one hand or a still more radical policy on the other.
“The most important legislative act now needed as regards the regulation of corporations is this act to confer on the Interstate Commerce Commission the power to revise rates and regulations, the revised rate to go at once into effect, and stay in effect unless and until the court of review reverses it.”
PRIVATE CARS IN FREIGHT TRAFFIC.
The use of private cars at the present time may be divided into two general classes, those in which the property of the owner of the car is transported, and those in case of which the owner is not interested in the contents of the car.
In the first class the shipper owns the car, and the car is ordinarily only used for the carriage of the property of the owner.
In the second class the cars are usually owned by some private car company, which constructs or purchases the car, keeps it in repair, and leases it to the railroad company.
The advantages, disadvantages, and evils growing out of the use of private cars may be summarized as follows:
The use of the private car originated in the necessity for special equipment to serve a particular purpose. Live stock, for example, is transported over long distances. In the course of such transportation the animal shrinks in weight and deteriorates in selling quality, besides suffering from want of water, and from crowding and trampling. Hence, the dictates of both interest and humanity require that the animal should be transported as comfortably as possible. And this has led to many attempts to devise a car in which stock could be fed, watered, and carried without injury.
When the inventor of such a car has in the past approached the railroad manager with his invention he has generally been informed that the railroad had no money with which to experiment, but that if this car when constructed and ready for use would fulfill his representations the railroad would be glad to hire it for a fair rental. This has brought about the organization of a number of companies for the construction and operation of stock cars.
The same thing has been true of the refrigerator car. When the necessity for such a car first became evident various designs were brought forward. Here again railroad managers were reluctant to invest their money in what was largely in the nature of an experiment. The result was that these cars came to be constructed by private companies, which leased the cars to the railroads in the same manner that the stock cars were provided.
The causes which led to the original production of the private car do not operate to the same extent to-day. Railroads which have occasion to use, to any considerable extent, stock or refrigerator cars are willing to provide these as a part of their equipment, provided that the use of such cars is reasonably constant. But there are still conditions where large amounts of equipment are required for limited periods in which the private car is still found advantageous by carriers. For example, in the spring of each year large quantities of cattle move from the ranges of Texas to northern ranges. This movement, while extremely large, only continues for about six weeks. The lines handling it may have no use for that equipment during the remainder of the season. It is evident that these railroads might hesitate to supply themselves with the necessary equipment if that equipment must remain idle to a great extent for ten months in the year. Upon the other hand, the car company can well afford to supply these cars, since when not in use here they will probably be required in some other part of the country to meet similar temporary requirement, thus being in reasonably continuous service.
The same thing is true of the movement of fruit. The last season some 26,000 cars of citrus fruits were moved out of southern California, and this movement was mostly between the 1st of December and the 1st of May. The Georgia peach crop is said to have amounted to upward of 4,000 cars during the season of 1904, and these peaches are mainly shipped in a period of six weeks, beginning about the middle of June. Most of the movement is handled by the Southern Railway. The Pere Marquette Railroad moves from points in Michigan along its line approximately 2,000 carloads of fruit under refrigeration, the movement covering, between the extremes, three months, but most of it moving in six weeks. To move the peaches of Georgia would probably require 3,000 cars. For its movement of Michigan fruits the Pere Marquette would need, reasonably, 1,000 cars. Now these lines might well hesitate to invest the enormous sums which would be required to provide the necessary equipment, when that equipment must lie idle the greater part of the year, but this could be well done by a car company whose cars could be employed in the orange traffic
during the winter, in the Georgia peach traffic in June and July, and in the Michigan fruit business during the fall.
The private car may, therefore, in our opinion, be of advantage to the carrier by enabling it to provide its equipment, needed for special purposes during limited periods, at a less cost than it otherwise could, and to the public in that the equipment thus provided is likely to be more adequate than if the carrier itself undertook to own the cars or secure them from its connections.
Some of the evils attending the use of private cars are the following:
(1) Concessions are made to particular shippers in refrigeration charges which amount to the payment of a rebate.
(2) A practical monopoly has been created in the use of private cars for the movement of certain commodities, especially fruit, which has enormously increased to the public the cost of transportation.
(3) When the owner of the car becomes a dealer in the cominodity transported, the fact of ownership gives him an important advantage over his competitor.
(4) When the owner of the car is also the owner of the commodity transported, an excessive rental for the car may amount to a preference in the freight rate as against the shipper who does not own his car.
The connection of the owner with the stock car ceases when that car is furnished to the railroad company. The railroad, in the use of the car, controls it exactly as it would its own car. No special charge is made to the shipper for its use. Formerly the rental paid for the use of stock cars was three-fourths of a cent per mile for the actual run of the car, loaded or empty. Some years ago this allowance was reduced to six-tenths of a cent per mile, which is the present rental. It was said, in the course of our investigations, that in some instances the companies owning these stock cars would pay shippers a certain suin per car upon condition that such shippers would call upon the railroad companies for this particular car. If done, this would of course benefit the shipper by the amount paid him per car and would reduce the cost of transportation to him by that amount. It would have the same practical effect as a rebate paid by the carrier.
While we have no doubt that when the mileage was three-fourths of a cent this practice was very common, and while it seems reasonably settled that the same practice prevails to some extent at the present time, it is our impression that this is not so serious an evil. The present rate of 6 mills per mile apparently leaves very little margin for payments of this character. We have never received any complaint from shippers of live stock in reference to the use of private
stock cars, and we are inclined to think that there is not to-day any great injustice to the shipping public growing out of the use of these cars, nor do we think that the furnishing of such cars at the present rate is attended with undue profit to the companies which supply them.
The use of the refrigerator car introduces a new element, due to the fact that the car must be kept supplied with ice. The initial icing is sometimes done by the shipper himself. Ordinarly, when the railroad furnishes a refrigerator car of its own equipment it provides the icing also. Railroads at the present time usually handle dairy products in their own cars, and many railroads have a sufficient refrigeration equipment for their entire use. Almost all lines east of the Mississippi River certainly have the facilities for icing cars en route. The tariffs in official classification territory, as a rule, provide that ice will be furnished at $2.50 per ton. When the railroad company does not furnish the car,
the car company which does furnish it generally provides the icing, for which it makes some specified charge. These charges, whether made by the railroad company or by the private car company, are claimed to be compensation for a private service which is not a part of the transportation which the common carrier furnishes. In other words, it is contended that there is no obligation resting upon either the railroad or the private car company to publish for general information these icing charges, nor to adhere to the charges when made. It has been very customary in the past, and the practice still prevails in some quarters, to allow to particular shippers a reduction in these refrigerator charges. Testimony recently taken at Chicago shows that one large shipper of California to various eastern destinations was allowed concessions of this kind which probably aggregated, in a series of seven or eight years, several hundred thousand dollars.
It should be carefully observed that whatever the local quality of the icing service may be, as a practical matter the charge made is in all respects to the shipper a part of the transportation rate. The owner of a carload of fruit can not market that fruit in Chicago without certain transportation facilities. He must have the use of a railroad; he must have a refrigerator car, and that car must be supplied with ice; and as a practical matter he is obliged to pay whatever charge is made for the icing of his car; and this is clearly so when, as in shipments from California, the railroad will only allow him to use a refrigerator car of a particular description. The effect upon the shipper of California fruits is exactly the same if his competitor receives a concession in the icing charge as it is if he receives a corresponding preference in the freight rate. No reason can be assigned why the freight rate should be published and maintained which does not apply with equal force to the refrigeration charge.