is double the east-bound movement,' and the goods shipped west as 'emigrants' moveables' are 'materially lower in value' than those shipped east. It may be conceded that the much greater volume of the traffic moved west than east is to some extent attributable to the lower rate west, but the tide of emigration is naturally from a comparatively old and thickly populated country like the east to a new and sparsely settled country like the west. No evidence as to the unreasonableness of this rate in itself has been offered."

In this case it will be noticed that the reason given for justifying the greater rate eastward was the fact that the volume of traffic was less. It is characteristic of the inexact character of rate-making that this fact might also justify a lower rate, if the railroad chose to make it.

629. Low back freights justifiable.

Thus, where in the direction of lighter traffic a railroad is carrying many empty cars, it will be justified in lowering the rate in order to fill the cars. "When the preponderance of freight is so largely in one direction that the supply of empty cars exceeds the demand for return loads at full rates, it is not unlawful to encourage business by affording transportation on less profitable terms." 17 Of course this making of low back freights is subject to the limitation that the rate must not be so low as not to recoup the railroad for the additional expenses in hauling back loaded cars which must receive due protection during transit.

§ 630. Creation of a market by preferential rates.

Only to a certain extent the carrier may be allowed to favor a new town, and thereby create a new market and stimulate com

17 James v. East Tennessee V. & G. R. R., 2 Int. Com. Rep. 609, 3 I. C. C. Rep. 225 (1889); New Orleans Cotton Exch. v. Illinois Cent. R. R., 2 Int. Com. Rep. 777, 3 I. C. C. Rep. 534 (1890); Macloon v. Boston & M. R. R., 9 I. C. C. Rep. 642 (1902); Hewins v. New York, N. H. & H. R. R., 10 I. C. C. Rep. 221 (1904).

petition. "The Louisville & Nashville insists that the nearby market of Pensacola is entitled to all of this great advantage. It claims that the lower rates to Pensacola were necessary to create a market there for these stores, and, further, that the carriage to Pensacola is only part of its haul on the great majority of the shipments, while on shipments to Savannah it can only have the short haul to River Junction, where it must turn the traffic over to one of its connecting roads. Whatever difference in rates may have seemed necessary at the outset to create a demand in the Pensacola market, it is apparent now, after several years' trial, that the rates to Savannah as compared with the Pensacola rates give an unwarranted advantage to Pensacola. In endeavoring to build up a nearby market at Pensacola, and so furnish these products with a market in addition to the one existing at Savannah, the Louisville & Nashville was acting in the interest of producers of and dealers in naval stores on its Pensacola & Atlantic division. It went beyond this, however, and so controlled the adjustment of rates to the two markets as to give Pensacola a practical monopoly of the trade. A carrier cannot lawfully establish and maintain an adjustment of rates which in practice prevents shippers on its line from availing themselves of a principal market which they have long been using, and confers a substantial monopoly upon a new market in which, for reasons of its own, it has greater interest. That is what has been done in this case.

" 18

§ 631. Equalizing manufactures in different localities.

To a certain extent also, but subject to many limitations discussed elsewhere, a railroad management may equalize the access of manufacturers in different nearby localities to their sources of supply so that all may compete upon equal terms in common markets. That this tends to promote distribution of manufacturing industries, which has its advantages, may be

18 Savannah Bureau of Freight & Transportation v. Louisville & N. R. R., 8 I. C. C. Rep. 377, 404 (1900), affirmed in 118 Fed. 613 (1902).

admitted, but the extent to which the common carrier may be permitted to play the part of a beneficent despot is a question. Yet the courts do not insist too much upon a mileage basis where the advantages of equalization are plain and the results are more or less fair to all concerned. In one such case it appeared that the Allegheny Valley Railroad crosses the Pennsylvania Railroad at Allegheny Junction. To compete more successfully with the river transportation, the Allegheny Valley Railroad carried crude oil to the refineries at Pittsburgh, and the manufactured product back to Allegheny Junction, at a uniform rate, thus giving to the refiner at Pittsburgh as favorable terms as if located at Allegheny Junction, and thereby securing a uniform rate on oil from the oil regions to the seaboard. It was held that to deny the right to make such an arrangement would be an unwarranted interference with the management of the business of the railroad, and deprive the public of the benefit of the competition to which it is justly entitled.19

632. Passenger fares generally on a mileage basis.

No such principles generally prevail in establishing pas senger fares-these are usually made upon a mileage basis, and do not decrease inversely with the distance as in freight rates. This was brought out in a remarkable case before the Interstate Commerce Commission,20 where the through interstate rate was found to be more than the combined local intrastate rates. The Commission expressed no great disapprobation of this, saying simply: "From the local passenger tariff and distance table in effect on the Charleston & Savannah Railway on and after September 1, 1896, it appears that interstate passenger fares between Savannah and South Carolina points commence with 3 cents per mile to or from Sand Island, S. C., 20

19 Munhall v. Pennsylvania R. R. Co., 92 Pa. St. 150 (1879).

20 Savannah Bureau v. Charleston & Savannah Ry., 7 I. C. C. Rep. 601 (1898).

miles from Savannah, and with slight variations increase with distance up to a mileage rate of 3.86 cents to Fetteressa, 105 miles from Savannah and 10 miles from Charleston. The mileage rate between Savannah and Charleston, as stated above, is 3.826 cents. While in freight service the general rule is that the rate per ton per mile should decrease as distance increases, in passenger service a single mileage rate for all distances is often found to prevail. It is unusual to find either freight or passenger rates per mile increase with distance."

TOPIC B- -GROUPING OF STATIONS.

§ 633. The system of grouping.

The railroad might make a separate rate for each station on its line, so that a charge must be established for each possible combination of two termini. This is the natural rule, and not an unreasonable one. But for various reasons it has become usual to group together for the purpose of fixing rates a number of neighboring stations, and make a uniform charge for any station in the group.

So common has this practice become, that it is often looked upon as natural; and one city has sometimes demanded as a right that it should be grouped with a neighboring city. For instance, Omaha applied to the Interstate Commerce Commission to be grouped with Council Bluffs (which is situated at the other end of a long and expensive bridge over the Missouri River), and to be given identical rates from Iowa points. The Commission held that there was no legal right to have stations grouped, and that a difference in rate was justified.1

§ 634. Grouping by reason of competition in the articles transported.

Grouping is often justified in order to preserve competition in commodities carried to market where a strict mileage rate would

1 Commercial Club of Omaha v. Chicago & N. W. Ry., 7 I. C. C. Rep. 386 (1897).

give too great an advantage to the commodities produced at the nearest point to the market. Upon broad grounds of public policy, this is permitted in order to best develop the resources of the country. Upon these principles it was held reasonable to group all the mines in a certain locality, such as the Lehigh anthracite coal region.2 The principles upon which this is done are well set forth in the following quotation: "Occasions have arisen when the competition of business interests, as urgent in its stress and as imperative in its demands as competition between carriers, has been relied upon by shippers as sufficient to constrain the grouping of rates from different points. A considerable extent of territory containing a large number of mines, quarries, or manufacturing establishments, has frequently been given identical freight rates upon the ground that otherwise the more distant points would be driven from the market and thus important industries might be ruined, resulting indirectly in serious loss of revenue to the road. This argument has even been pressed to the extent that manufacturers, for example, 150 miles from a common terminus, have claimed that they should receive the same rate given to others only 50 miles from the same point." 8

§ 635. Grouping must be reasonable.

While grouping is permissible in a proper case, it must nevertheless be reasonable; and if distant points are grouped without some peculiar reason justifying it, the rate to the nearest of the grouped points must be deemed unreasonable.*

Even when grouping is resorted to in order to preserve competition in commodities, as where railroads entering New York grouped the stations which supplied the city with milk, it was

2 Coxe v. Lehigh Valley R. R., 3 Int. Com. Rep. 460, 4 I. C. C. Rep. 535 (1891).

3 Walker, Com. in Howell v. New York, L. E. & W. R. R., 2 Int. Com. Rep. 162, 2 I. C. C. Rep. 272 (1888).

4 State v. Minneapolis & S. L. Ry., 80 Minn. 191, 83 N. W. 60 (1900).