rates very much greater, it seems to us that the conduct of the carrier, in the absence of some explanation more conclusive than any that was made, was sufficient basis for a reasonable inference that the special rates in force prior to March 25 upon the distillery supplies were reasonable and adequate compensation for that and other similar traffic, and that the rates thereafter charged were unreasonably high to the extent of being extortionate."

§ 104. Voluntary Reduction of Rates. Where a carrier voluntarily reduces its rates, that fact under the principle applicable to presumptions would be evidence that from and after the date of the reduction the resultant rate was reasonably high. Such a presumption, however, should not be indulged to the extent of holding that the act of the carrier is proof sufficient that the rate in force prior to the reduction was unreasonably high. To hold such a presumption to be conclusive would make it dangerous for carriers ever voluntarily to reduce rates. On this subject the Commission has said: "The subsequently established lower rate is now a just and reasonable rate over the defendant lines; but the Commission is unwilling to subscribe to the theory that the voluntary reduction of a rate by a carrier conclusively shows that the former rate was unreasonable and that reparation should be granted on all shipments moving thereunder within the period of the statute of limitations.

133

97134

§ 105. Same Subject-Act June 18, 1910.—By Act of June 18, 1910, it was provided: "Whenever there shall be filed with the Commission any schedule stating a new individual or joint rate, fare or charge, or any new individual or joint classification, or any new individual or joint regulation or practice affecting any rate, fare or charge," the Commission may, as provided in the amendment "enter upon a hearing concerning

134. Ottumwa Bridge Co. v. C., M. & St. P. R. Co., 14 I. C. C. 121, 125; Commercial Coal Co. v. B. & O. R. Co., 15 I. C. C. 11; Menefee Lumber Co. v. T. & P. Ry. Co., 15 I. C. C. 11; Penn To

bacco Co. v. Old Dominion Steamship Co., 18 I. C. C. 197; Baltimore Butchers Abattoir v. P. B. & W. R. Co., 20 I. C. C. 124.

135. Post, Secs. 398, and 399.

the propriety of such rate, fare, charge, classification, regulation or practice," and "after full hearing, the Commission may make such order in reference to such rate, fare, charge, classification, regulation, or practice" as it might make in an ordinary proceeding complaining of an existing rate. It is further provided that, "At any hearing involving a rate increased after January 1, 1910, or of a rate sought to be increased after the passage of this Act, the burden of proof to show that the increased rate or proposed increased rate is just and reasonable shall be upon the common carrier."

The Transportation Act 1920 substitutes "lawfulness" for "propriety" in the quotation above from the Act of 1910; and after the word rate italicized above adds "fare or charge or proposed increased rate, fare or charge." This Act changes the language, but adds nothing to the meaning of the former Act as enforced by the Commission.1 "Rate, fare or charge" are used although the clear meaning of the whole section is that when any change is made in any classification, regulation or practice affecting and increasing a rate, the burden of justifying the change is upon the carrier. A change that did not increase the rate would not, as to the burden of proof, be affected by the amendment.

This statutory rule as to burden of proof does not lessen the force of the rules of evidence stated in the preceding two sections. The Commission, in speaking of a rate in force for a quarter of a century and which had been materially advanced in the last seven years, held that the reason justifying a further advance "must be even more cogent," and that the history of the rates, "was evidence which bears strongly upon the propriety of the increase.'' 187 In a still more recent case the rule was stated with its proper limitations as follows: "Undoubtedly a presumption of reasonableness arises from the long existence of a rate; but if this presumption were conclusive, necessary and proper changes in rates would be prohibited.

?? 138

136. Section 399, post.

*

137. United States Leather Co. v. Southern Ry. Co., 21 I. C. C. 323, 327.

138. Robinson Land & Lumber Co. v. Mobile & O. R. Co., 26 I. C. C. 427, 429. For illustrative application of the principle see,

140

The Commerce Court," citing the Great Western case,' gave that case a somewhat wider meaning than was meant by the opinion therein. In reversing the Commerce Court, the Supreme Court cited the Great Western case, but said: "Under the circumstances the maintenance of these low rates, after the water competition disappeared, tends to support the theory that by an increase of business or other cause they had become reasonable and compensatory." So, the presumption may or may not arise and all the facts must be considered. The syllabus of the opinion is as follows: "The value of evidence in rate proceedings varies, and the weight to be given to it is peculiarly for the body experienced in regard to rates and familiar with the indicias of rate-making."

poses.

99 141

"When rail rates are advanced with the disappearance of water competition, no inference adverse to the railroads can be drawn, but when the old rates had been maintained for several years after such disappearance there is a presumption if the rates are raised that the advance is made for other purThe italics do not appear in the syllabus. The railroad situation is radically different since Federal control, the 1920 Amendment proposes at least two new and untried experiments, the elimination of competition and a partial guaranty of fair returns; and issues hereafter presented must be "determined, at least to a great extent, in the light of present conditions."

142

§ 106. Grouping Territory and Giving Each Group Same Rate Legal under Some Circumstances.-It has been and is yet a practice with carriers to group contiguous territory and

Ocheltree Grain Co. v. St. Louis & S. F. R. Co., 13 I. C. C. 46; Millar v. New York C. & H. R. R. Co. 19 I. C. C. 78; Audley, Hill & Co. v. Southern Ry. Co., 20 I. C. C. 225; Commercial Club of Omaha v. Southern Pac. Co., 20 I. C. C. 631.

139. Louisville & N. R. Co. v. Interstate Com. Com., 195 Fed. 541, 557, Opinion Commerce Court No. 4, pp. 325, 375, and see same styled case, 184 Fed. 118, denying

give the same rate to all points within a particular group. This practice is called "blanketing." The Commission in 1888, speaking of this practice, said:"4"

143

"This is a practice which prevails very largely in the making of rates and results in giving to some towns rates which are relatively lower than are charged to others. It is probably a convenient practice to the railroad companies or it would not be so often adopted; and it may sometimes tend to equalize railroad advantages as between towns without wronging any one. The system is not necessarily illegal, it only becomes illegal when it can be shown that illegal results flow from it."

The practice is not approved by the Commission, however, when the difference in the transportation expense from the various parts of such district is considerable and substantial." 144

Texas is arranged in groups for rate-making purposes, and when the parties to the case are satisfied with the system, the Commission will not disturb it.'

But in referring to the holding in the Farmers, Merchants & Shippers Club case, supra, the Commission said: "In so holding we said that the reasonableness of these rates must be determined not by considering the rate from the point of origin to a particular station in the group, but rather as applicable to the entire group. It is evident that every system of group rates must occasion more or less discrimination. The rate to the nearer edge of the group as compared with that to the more distant edge is of necessity discriminatory."

143. LaCrosse Manufacturers' & Jobbers' Union v. Chicago, M. & St. P. R. Co., 1 I. C. C. 629, 631, 2 I. C. R. 9, 10. See also Business Men's Asso. of Minnesota v. Chicago, St. P., M. & O. Ry. Co., 2 I. C. C. 12, 52, 2 I. C. R. 41, 46; Lippman & Co. v. Ill. Cent. R. Co., 2 I. C. C. 584, 2 I. C. R. 414; Howell v. New York, L. E. & W. R. Co., 2 I. C. C. 272, 2 I. C. R. 162; Imperial Coal Co. v. Pittsburg & L. E. R. Co., 2 I. C. C. 618, 2 I. C. R. 436.

144. Newland v. N. Pac. R. Co.,

6 I. C. C. 131, 4 I. C. R. 474, 480; Merchants' Union of Spokane Falls v. N. Pac. R. Co., 5 I. C. C. 478, 4 I. C. R. 183; Rea v. Mobile & O. R. Co., 7 I. C. C. 43.

145. Farmers, Merchants & Shippers Club v. Atchison, T. & S. F. Ry. Co., 12 I. C. C. 351, 365. Although when such grouping results in unjust discrimination it will be changed. Kaufman Commercial Club v. T. & N. O. R. Co., 31 I. C. C. 161.

146. Mitchell v Atchison, T. & S. F. Ry. Co., 12 I. C. C. 324, 325.

In concluding the opinion of the Commission, Mr. Commissioner Prouty said: "It is impossible to pass abruptly from the group system."

There are many cases in the reports of the Commission recognizing the group system of rates, some of which will be discussed in the chapter on Equality in Rates. In this section the reasonableness of rates is under discussion and the group system is opposed to the distance basis.

Considering distance and the group system, the Commission said: "Distance is, of course a factor to be considered in determining the reasonableness of rates, and when rates are constructed upon this basis, and other things are equal it may become a very important factor. When, however, as in this case, rates are constructed and maintained upon the group system and the subject matter is a heavy commodity like coal, and the differences in distance are relatively inconsiderable, such differences do not of themselves compel differences in rates." 147

As a general rule in establishing the boundary lines of groups. some measure or principle, such as radial or operating is possible, it should be tolerated. In giving such reasons, tures of the country, and the location of transportation lines should be followed.148

§ 107. Grouping Producing Points, and Making Zones Taking Same Rates. The principles discussed in the foregoing section have been applied by the Commission to cases where a more or less contiguous territory is given the same rate to the markets. In speaking of such system already in existence the Commission said:

"When the United States Government transports a package 10 miles for one citizen for 10 cents, while it charges his neighbor the same amount for transportng a like parcel 3,000 miles, a clear discrimination is made, but it is a discrimination of that character which by universal consent is in the public interest.

For a discussion and history of the Teaxs common point territory and a comparison with the transcontinental group, see Texas Common Point Case, 26 I. C. C. 528, 529.

147. Victor Manufacturing Co. v. Southern Ry. Co., 27 I. C. C. 661, 663.

148. Humphrey Brick & Tile Co. v. P. R. R. Co., 50 I. C. C. 457, 462.