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It was found that the Hutchinson & Arkansas River Railroad Company owns between 4,000 and 5,000 feet of railway siding adjoining one of several plants belonging to the Hutchinson (Kans.) Salt Company, in Hutchinson, Kans., designated as so-called “trust mills.” This railroad company does not own any equipment or rolling stock, nor is it in any way engaged as a common carrier. Three railway companies entering Hutchinson made joint tariffs with the Hutchinson & Arkansas River Railroad Company, which, on salt shipped to Missouri River points, gave the latter 25 per cent of the rate, but not exceeding 50 cents per ton. The Hutchinson & Arkansas River Railroad Company is controlled by officers of the Salt Company, and the earnings of the railroad company are subject to that control. Since this division was allowed to the Hutchinson & Arkansas River Railroad Company the Salt Company has sold salt at Missouri River points at prices with which the independent salt mills in Hutchinson could not compete. The declared purpose of making this joint rate with the Hutchinson & Arkansas River Railroad Company was to enable the salt manufacturers to meet competition from other quarters, and the division of the joint rate to the Hutchinson & Arkansas River Railroad Company could not have that effect unless it inured to the benefit of the salt producer. The ruling of the Commission was that granting the division of the rate to this so-called railroad was a mere subterfuge to give a concession in the rate and was therefore unlawful.
Another investigation involving the transportation of salt from points in Michigan to Missouri River points and intermediate localities was decided by the Commission on March 12 of the present year (10 I. C. C. Rep., 148). It seems that Manistee and Ludington are salt producing points in Michigan, and salt shipped from those points to places on the Missouri River is carried by a boat line on Lake Michigan to Chicago and by railroads from Chicago to the Missouri River. Out of a through rate of 53 cents per barrel the boat line receives, according to the destination, from 30 to 33 per cent, amounting to from 16 to 18 cents per barrel. Established vessel lines on the lake formerly carried the salt to Chicago for from 8 to 11 cents per barrel; but additional services are rendered by the boat line, including stowage at points of shipment and unloading, cooperage, docking, storage, insurance, handling and loading in cars at Chicago, representing a cost of about 84 cents per barrel. The boat line and the salt are owned by distinct corporations, though the same persons own a controlling interest in both corporations. Salt interests at Detroit complained that this division to the boat line amounted to a rebate from the tariff to the salt shippers from Manistee and Ludington and enabled them to undersell Detroit salt in the Western markets. It further appeared that coal used in producing Detroit salt costs on the
average about 75 cents to each ton of salt, while Manistee and Ludington salt producers also operate lumber mills and use the refuse from lumber manufacture for fuel in the salt works. Upon the facts elicited in this investigation the Commission decided that it is no part of its duty to equalize differences in the natural advantages of localities through the adjustment of tariff rates, and that upon the facts shown in the investigation it did not appear that the share of the througb rate allowed to the boat line was so grossly disproportionate to the value of the entire through service as to amount to a rebate to the salt interests of Manistee and Ludington, which also controlled the boat line.
A case presenting some novel questions was that of the Central Yellow Pine Association against the Vicksburg, Shreveport & Pacific Railroad Company and others, which was decided in March of this year (10 I. C. C. Rep., 193). It arose upon the complaint of the Central Yellow Pine Association, composed of individuals, firms, and corporations engaged in manufacturing and handling yellow pine lumber in Mississippi and Alabama. The defendant roads are engaged in hauling yellow pine lumber manufactured in Arkansas, Louisiana, and Texas, which competes in markets north of the Ohio River with the lumber produced in Mississippi and Alabama.
The carriers operating west of the Mississippi grant divisions in rates to lumber mills owning or controlling short orignating roads called tap lines," while like concessions were refused to members of the complaining association in Mississippi and Alabama by lines leading from those States to the common markets. The Commission held that the third section of the act to regulate commerce, which prohibits undue preference between individuals or localities, was not violated by the defendants in the granting of divisions in rates to lumber mills owning the tap lines in Arkansas, Louisiana, and Texas, and which do not handle lumber produced in Mississippi or Alabama. It was also held that the second section of the act, which prohibits a rebate or other concession in rate whereby one shipper is preferred to another, refers to a like and contemporaneous service performed under similar circumstances and conditions, and it was not shown in the case that lumber mills served by defendants were so located that differences in divisions allowed by them to tap lines used for such mills, or the failure of one of the defendants to allow any division to some mills, violated this section.
The question presented was whether divisions or allowances from published tariff rates made by the defendants to tap lines owned or controlled by lumber mills constituted a departure from such published rates in violation of the act to regulate commerce, or of that act as amended by the so-called Elkins Act of February 19, 1903, and the
Commission held that while the complainant had no direct interest in the determination of that question it had such an indirect interest as entitled it under the statute to maintain the proceeding.
The carriers published a certain rate on lumber from stations upon their lines which must be strictly observed and charged to all shippers alike, and it was held by the Commission that they were not entitled, under the act, to grant a division of the rate to the owner of a lumber mill as compensation to him for the cost of bringing his logs to the mill by steam railroad, horse railroad, wagon, or any other means of conveyance.
As held in the decision, under the act to regulate commerce, a common carrier subject to its provisions can allow a division of rates only to another common carrier which, participating in the particular traffic to which the rate is applied, is also subject to the act to regulate commerce. The two lines may by contract or agreement establish a joint rate from the point of origin on the one road to the point of destination on the other and agree between themselves as to divisions of the rate.
The Commission said that the transportation of the log to the mill by the one line and the transportation of the lumber from the mill by another line might, under the circumstances of the case, be treated as in the nature of a through shipment from the point where the log is received to the point where the lumber is finally delivered, and the carrier of the lumber might, by joint arrangement with the log carrier, make such allowance toward the cost of moving the log as would be fairly involved in moving the lumber from the point where the log is received for carriage, provided always that the carrier of the log is a common carrier by rail. This holding, it was stated, extended the application of the principle of milling in transit to the extreme limit.
Treating the transportation first of the log and then of the lumber as a through shipment involves, of course, the right to mill in transit, and when that privilege is granted the tariff should show upon its face that the transportation covers carriage of the log to and the lumber from the mill, and the division allowed to the tap line, or carrier of the log, should be named in all cases.
Another investigation disposed of by the Commission during the year was “In the Matter of Allowances to Elevators by the Union Pacific Railroad Company” (10 I. C. C. Rep., 309). The Union Pacific had entered into contracts with Messrs. Peavey & Company, under which the latter erected grain elevators at Council Bluffs and Kansas City, for the transfer of grain at these terminals of the Union Pacific system; and for the service of transferring the grain by elevator at these points the Union Pacific agreed to pay Peavey & Company 14 cents per 100 pounds. Corporations controlled by Peavey & Company were formed to conduct the elevators at each point. It appeared that Peavey & Company were large buyers and shippers of grain in
Northern and Western grain-producing States, and controlled a large number of country elevators. The Commission found that in making this arrangement the Union Pacific acted in good faith, and the facts indicated that the 14 cents per 100 pounds was not an excessive charge for the service as conducted by the elevator companies. The real complainants in the proceeding were carriers competing with the Union Pacific, who declared if this arrangement were not declared illegal they would be compelled to make similar allowances at transfer points on their lines. No shipper in competition with Peavey & Company appeared to complain or protest in any manner against this arrangement between that firm and the Union Pacific Railroad Company. The Commission held that the compensation paid for the elevator or transfer service by the Union Pacific Company was not unreasonable; that the Union Pacific was entitled to perform the work itself or hire it done by others, and was not legally at fault or guilty of wrongdoing because incidentally those employed to transfer the grain were aided more or less in another line of business in which they were engaged; and that any injury or detriment resulting to rival carriers under the arrangement is something which the law does not seek to prevent.
PRIVATE CAR LINES AND REFRIGERATION OF FRUIT IN TRANSIT.
In another part of this report reference is made to a recent investigation by the Commission concerning the use of cars not owned by common carriers, and some of the results of that investigation are there stated, together with matters involved in another investigation conducted by the Commission during the year in the matter of charges for the transportation and refrigeration of fruit shipped from points on the Pere Marquette and the Michigan Central Railroads. The lastmentioned investigation was made by the Commission and decided in June last (10 1. C. C. Rep., 360). The inquiry was undertaken by the Commission upon its own motion in consequence of numerous complaints from various shippers and growers of fruit to the effect that the Pere Marquette and the Michigan Central Roads had, by requiring the exclusive use of Armour cars, materially increased the cost of moving the fruit to the market. The two railroad companies and the Armour Car Company, which owns and operates the cars in question, were made parties to the proceeding. These railroad companies entered into contracts with the Armour Car Lines, under which the latter furnish refrigerator cars for use by the railroads in the transportation of fruit to points in Michigan and refrigerate the cars when used for such transportation. By these contracts the use of other cars in that business is prohibited and the service of refrigeration performed exclusively by the Car Lines Company. The railroad companies formerly furnished refrigeration without any charge in addition to the freight rate, and they subsequently made a charge for refrigeration substantially equal to the cost of the icing.
Acting under the contracts, the Car Lines Company exacted charges for the refrigeration which greatly exceeded those formerly made to cover the cost of icing by the railroad companies, and ranged from 50 to 150 per cent above those made prior to the contracts with the Car Lines Company itself. The total cost of transportation to the shipper was thereby largely increased. The ruling of the Commission was that the railroad companies, by making these exclusive contracts, in effect imposed upon the shippers exorbitant charges for the transportation of Michigan fruits to markets in other States, in violation of section 1 of the act to regulate commerce. The Commission suggested that in consideration of the more complete service afforded by the Car Lines Company, the charges for refrigeration might properly be somewhat increased over the actual cost of the icing; that the railroad companies, in consideration of the fact that the Armour Company performed part of the service which was formerly rendered by the railroad companies as a part of the rate, ought to contribute to the payment of a portion of these refrigeration charges unless the car mileage already paid is more than a fair compensation for the use of the refrigerator car, and that the Car Lines Company does, in many instances certainly, exact less for this service than the charges shown by the investigation. Action was withheld to allow readjustment of charges by the respondent companies, but up to the date of this report no notice of any such readjustment has been received by the Commission. The other questions involved are shown in the following statement of additional rulings by the Commission in the case.
It is the duty of the respondent railroad companies engaged as common carriers in transporting fruits from points in Michigan to furnish refrigerator cars for such service; but such duty arises out of their common-law liability, not under the act to regulate commerce. Redress for failure to fulfill it must be sought in the courts. The respondent railroad companies may provide refrigerator cars by purchase or by lease, and if the latter plan is adopted they may make contracts with one company which exclude the use of cars owned by other companies. Carriers should, in the opinion of the Commission, be legally compelled to furnish ice for the refrigeration of refrigerator cars used upon their lines; but if it is not a part of the obligation of a common carrier to provide such refrigeration, when it does furnish it and at the same time prohibits the shipper from obtaining it from any other source, the charge for refrigeration is part of the total charge for transportation furnished by the carrier and must be reasonable. When the charges for refrigeration are applied in the transportation of perishable freight such charges should be published and adhered to exactly as all other charges for transportation are published and