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A case involving rates on cross-ties in carload lots from Bainbridge, Ohio, to Girard, Pa., was dismissed because the initial carrier was not a proper defendant in the proceeding.
Another case, arising at Kearney, Mo., involving rates on live stock in carloads, was dismissed on motion of counsel for defendant, complainant concurring. Counsel asserted that a mistake had been made, and the slight financial differences between the complainant and the defendant had been settled to the satisfaction of the former.
A case originating at Blanchester, Ohio, involving rates on hay from points in Ohio to Wilmington, N. C., was likewise dismissed after having been assigned for hearing at Cincinnati, Ohio, the carrier having readjusted the rates to the satisfaction of the complainants.
Another case originating at Leadville, Colo., involving freight rates to Leadville from Missouri River points and points east thereof, was dismissed on motion of complainant after evidence had been submitted at Leadville in 1902. Complainant said that since the suit was instituted all the carriers have made numerous concessions in rates to the satisfaction of the complainant.
A case involving rates on flour from Aurora, Mo., to Marked Tree, Ark., was dismissed by stipulation of counsel after having been assigned for hearing at St. Louis, Mo., the carrier having made settlement to the satisfaction of the complainant.
A case involving the rate on smoked fish from Seattle, Wash., Ogden, Utah, was dismissed at the request of complainants.
, Another case originating at Terre Haute, Ind., involving the rate on baled hay, was settled by the carriers adjusting the rates to the satisfaction of complainant.
A case originating at Lebanon, Nebr., alleging discrimination in the matter of supplying cars for the shipment of grain, was dismissed on motion of complainant, the matters involved therein having been settled to the satisfaction of complainant.
In addition to the above, 15 cases have been dismissed for want of prosecution.
DECISIONS OF THE COMMISSION. The important questions decided by the Commission since its organization, as set forth in its reports and opinions in contested cases, are summarized and indexed in Appendix B to this report, and these include the principal rulings of the Commission during the past year. In addition, a separate and more extended statement of the decisions rendered in formal proceedings since our last report will be found below.
ADVANCES IN FREIGHT RATES FROM THE MISSISSIPPI RIVER TO THE ATLANTIC SEABOARD
During the last of November, 1902, tariffs were filed with the Commission giving notice of advances in rates of general application.
About the same time, owing largely to published interviews of railway traffic officials, the impression grew up that other general advances were to be made. This was widely commented upon by the press and was the subject of considerable informal complaint to us. eral advance in transportation charges is a matter of great public concern, and it seemed especially appropriate that the Commission, in the discharge of its duty, to keep informed touching the methods and practices of railway carriers subject to the act to regulate commerce, should ascertain the reason for these advances. An order was accordingly entered on December 1 respecting rates upon grain and grain products, dressed meats, and provisions from the Mississippi River to the Atlantic seaboard, by which the leading lines of railway engaging in this traffic were required to appear at Washington on December 16, 1902, for the purpose of giving information touching the advances which had been made or were contemplated in these rates. The rates were afterwards advanced on iron and steel articles, and these commodities were also embraced in the investigation.
On the date named the hearing was begun and continued on February 26 and 27, 1903.
On April 1, 1903, the Commission rendered its decision (9 I. C. C. Rep., 382).
It appeared that the rates on iron and steel articles had formerly been reduced on account of commercial conditions and it seemed to the Commission that the advances in those rates might have been proper owing to subsequent change in such conditions.
The Commission also found that the advance in the rate on packinghouse products resulted from the withdrawal of a lower export rate and that this was not properly an advance. The Commission said:
An increase which results solely from the withdrawal of a lower export rate, or from the maintenance of a published tariff, can not ordinarily be condemned as unlawful. Railways are entitled to share in the general prosperity of the country; they have suffered severely in the past and should be allowed to recuperate while that prosperity continues; but it does not follow necessarily that they are entitled to advance former rates which were not reduced on account of financial depression.
Under peculiar circumstances surrounding the traffic in dressed meat it was held that the advances in rates on that article ought not to be condemned. As in the case of packing-house products, the published rate on dressed meat had not been collected during a greater part of the time. The reductions in tariff on these articles during the four years preceding this proceeding resulted from attempts to bring the actual and published rates into harmony. Testimony showed that during the year 1901 the actual rate had been approximately 40 cents when the published schedule was 45 cents, and had fallen to 36 cents after the reduction of that schedule in July, 1901. It seems probable that during the last ten years the amount actually received has not equaled,
certainly not exceeded, 40 cents on the average. At the time of the decision the tariffs were said to be observed, and if this was so an actual advance over recent years of 5 cents per 100 pounds was effected. The rates referred to were those from Chicago to New York. Rates from the Mississippi River and other points in that territory bear certain defined relations to the rate from Chicago. The Commission found that there had been both a nominal and actual advance. and is well understood that dressed meats and provisions are mainly furnished for transportation by some half dozen great packing houses. The traffic is, therefore, highly concentrated, and these shippers have been able, owing to that fact, to play off railroad against railroad in a way that has enabled them to secure unusual concessions. Competition forced down these rates, but it can hardly be termed legitimate competition. In view of these peculiar conditions we concluded, with some hesitation, that the increase is to be regarded as a restoration or maintenance of rates rather than as an advance within the meaning of the investigation, especially in view of the fact that while the rate is high tbe service is expensive to the carriers.
The advances in the rates on grain and grain products constituted the principal subject of the investigation. We held that the act to regulate commerce provides that all interstate rates shall be filed with the Commission and requires annual reports of the operations and financial condition of all interstate carriers; that when a schedule is filed announcing an advance of general application, for which no apparent reason exists, such action is a proper subject of investigation, and if it thereupon appears that the advance is unwarranted, the Commission should exhaust whatever power it has to correct the injustice; that transportation by rail is a quasi-public service not to be sold to the highest bidder, and the charges therefor are not controlled by the law of supply and demand; that freight rates do not in fact rise and fall with changes in the market prices of commodities, though they are often affected by commercial conditions, and that when reductions have been made on account of commercial depression it is difficult to see why corresponding advances may not properly be made with the return of business prosperity. It appeared that under the competitive conditions which had prevailed tariff rates on grain and grain products from Chicago to New York had not exceeded 177 cents during the four years previous to this proceeding, except for a brief period, while the actual rates had been materially and sometimes greatly below that figure. The legality of the advance of that rate to 20 cents depended, in the opinion of the Commission, upon two considerations: First, whether the increased rate was reasonable, having reference to the cost and value of the service, and as compared with rates on other commodities; and, second, whether it was reasonable in the absolute, regarded as essentially a tax upon the people who ultimately pay the transportation charge.
The rate of 174 cents on grain and grain products from Chicago to New York was not shown, though so alleged by the carriers, to be unremunerative or disproportionate as compared with other rates. Whether tested by cost of movement, by what the carriers have voluntarily accepted in the past, or by comparison of the rate upon somewhat similar kinds of traffic, the 177-cent rate was not unprofitable or unreasonably low. It was from 2 to 5 cents—10 to 40 per centhigher than the rates actually received in recent years; and nothing appeared in the financial condition of the carriers—and this was discussed at considerable length in the decision--to justify a greater advance.
We held, therefore, upon this branch of the investigation that the advance in the domestic rate on grain and grain products from 174 to 20 cents per 100 pounds from Chicago and the other advances made in consequence of the increased rate from Chicago to New York, the same being an advance over the highest published rate in effect for most of the four years previous to this proceeding and a great advance over actual rates received for the preceding fifteen years, were not justified.
The proceeding was in the form of a general investigation, and although the respondent carriers had been fully heard by their traffic representatives, and in some instances through their attorneys, the proceeding was in a manner ex parte, and the Commission realized that facts not brought in the inquiry, with further discussion of the subject, might lead to a different conclusion. No order, therefore, was made, but its was stated that further proceedings would be commenced unless the respondent carriers readjusted their rates on grain and grain products in accordance with the views expressed by the Commission on or before May 15, 1903. About that date the rate on grain and grain products from Chicago to New York was' reduced by the respondent carriers from 20 to 18 cents per 100 pounds.
GREATER CHARGES FOR SHORTER THAN FOR LONGER DISTANCES.
A number of decisions have been rendered during the year involving greater charges for shorter than for longer distances over the same line in the same direction, the shorter being included within the longer distance. These cases involve the consideration and application of the long and short haul clause, or fourth section of the act, and also the third section, relating to undue preference and prejudice, and the first section, which forbids unreasonable rates.
Several cases of this description arose upon complaint of the mayor and city council of Wichita, Kans., and on such complaints four decisions were rendered during the year.
In the case entitled Mayor and City Council of Wichita against the Atchison, Topeka & Santa Fe Railway Company et al., in which the Kansas City Board of Trade intervened on behalf of the defense (9 I.
H. Doc. 253 --4
C. C. Rep., 534), the Commission rendered its decision on October 24, 1903. This case related to export rates on grain to the port of Galveston, Tex., and it was alleged that the higher rates charged by the defendant carriers from Wichita than from Kansas City, Mo., were unlawful. The questions in this case were as follows: Were the Santa Fe and Rock Island systems violating the fourth section in charging to Galveston a lower rate from Kansas City than from Wichita, an intermediate point? Were all the defendants violating the third section in making a less charge from Kansas City than from Wichita, the distance from the latter being much less than from the former point? Was defendants' rate on export grain from Wichita to Galveston unreasonable under the first section? The Commission cited several cases in which the Supreme Court of the United States has construed the meaning of the third and fourth sections, and said the Supreme Court clearly holds that where actual competition exists at the more distant point which does not obtain at the intermediate or nearer point, and where such competition has actually produced a lower rate at the more distant point which the carrier can not control and must meet to obtain a share of the business, these sections do not prohibit the disparity in rates so long as the low competitive rate is remunerative to the carrier and the noncompetitive rate is reasonable in itself.
The Commission found in this Wichita case that competitive conditions do actually exist at Kansas City which do not exist at Wichita, and that these conditions have actually produced the low rate from Kansas City. It also found that the rate from Kansas City was remunerative.
The Commission further found, however, that the rate from Wichita was somewhat too high, but said if that rate be reduced in accordance with its findings it was difficult to see how these defendants could be said to be in violation of the third and fourth sections of the act, and that if the Wichita rate should not be so reduced the order should be directed against the reasonableness of the Wichita rate and not against the adjustment of rates.
The Commission did not at first take that view of the third and fourth sections which has been adopted by the United States Supreme Court, but the holding of that court is, of course, conclusive upon the Commission, and it must apply the law as interpreted; and if such ruling by the court is not adequate to the proper correction of these transportation abuses the remedy lies in an amendment to the act itself.
The Commission found as a fact that any charge in excess of 287 cents per 100 pounds for the transportation of grain from Wichita to Galveston was unreasonable, and directed that order should issue to require the defendants to ceașe and desist from maintaining the exist