should be indictable for criminal violations of the act, as we have heretofore expressly recommended.

In the more recent reports of the Commission the question of legalizing that class of contracts between carriers which are now prohibited by the fifth section of the act has been discussed at considerable length, and such further comments upon that subject as are deemed suitable at this time will be found in this report under the head of "Traffic agreements."

WORK OF THE COMMISSION.

RELIEF GRANTED то CARRIERS FROM THE OPERATION OF THE LONG AND SHORT HAUL CLAUSE.

The fourth section of the law prohibits common carriers from charging greater aggregate compensation for transportation, under substantially similar circumstances and conditions, for a shorter than for a longer distance over the same line, in the same direction; but a proviso adds:

That upon application to the Commission appointed under the provisions of this act, such common carrier may, in special cases, after investigation by the Commission, be authorized to charge less for longer than for shorter distances for the transportation of passengers or property; and the Commission may from time to time prescribe the extent to which such designated common carrier may be relieved from the operation of this section of this act.

Upon application for relief from the operation of the fourth section as to passenger traffic to and from Chicago during the World's Fair, temporary relieving orders were granted to the applying carriers, and reports setting forth reasons for the issuance of such orders were filed. The principles laid down in these reports are set forth here as prelimi nary to a statement of other relieving orders issued on application and investigations made during the present year. Our report on the application for relief to the Cincinnati, Hamilton and Dayton Railroad Company contains the following general statement in regard to the fourth section of the law:

It may be assumed that when first enacted the fourth section was widely, if not generally, understood by the legal profession as establishing an inflexible rule prohibiting any greater charge for a shorter than for a longer distance, except as such greater charge might be authorized by the Commission on application made to it in accordance with this proviso; for within five days next after its organization numerous railroad companies, operating roads in widely separate sections of the country, and represented by learned counsel, petitioned the Commission to be relieved from the operation of "this section of this act," and to be authorized to charge less for longer than for shorter distances. Upon investigation the petitioners were by the Commission temporarily, and during further investigation, authorized to charge less for longer than for shorter distances. Afterwards the Commission sanctioned, and the carriers made, without previous application, lower charges for longer distances under certain circumstances-notably, when necessary to meet the competition of cheaper water transportation to longer distance points, as to freight which, if not carried to longer distance points over the line of the competing road, would reach such destination by water transportation.

The principal rules announced in the Cincinnati, Hamilton and Dayton case were: (1) That under the proviso it is left to the Commission, in the exercise of a reasonable and lawful discretion, to determine the description or exceptional character of the "special cases" in which the Commission may grant relief to carriers after investigation; (2) that the exceptional and special nature of the cases in which such discretion may be exercised renders application of any general rule impracticable, and every case must be determined upon its own facts and special circumstances, in view of the objects for which the law was enacted.

The Cincinnati, Hamilton and Dayton Company had provided a new route to meet the increased demands for transportation facilities during the World's Fair, but this route could only be utilized by the carrier accepting the low rate from Lima, Ohio, to Chicago and return, which had been established by a competing carrier over a more direct route, and such acceptance, without relief from the fourth section, would have compelled the reduction by it of reasonable rates from shorter distance points. It also appeared that the lower rate would give the carrier more than the service cost, and that it would not add to the cost of other transportation service over the same route. It was believed that, under conditions like these, the securing of additional guarantees for the safety and convenience of the public, by authorizing the lesser charge for the longer distance, would be in accord with the spirit and purpose of the act.

A similar situation was presented on the petition of the Rome, Watertown and Ogdensburg Railroad Company, with the additional circumstance that the companies competing with the petitioner for World's Fair business were carriers over Canadian lines. A temporary order of relief from the operation of the fourth section was also granted in that case.

In February, 1895, an order of relief from this section, to remain in force until March 31, 1895, and limited to rates on grain and feed in carloads, was granted to the Chicago and Northwestern, Sioux City and Pacific, and Fremont, Elkhorn and Missouri Valley Companies, upon the following showing:

That in the crop year of 1894 there was at Humphrey and Norfolk, and points west thereof in Nebraska, along the line of said Fremont, Elkhorn and Missouri Valley Railroad, such a failure of crops that the people of that locality are in a measure destitute, and without the necessary food for themselves and their domestic animals.

On April 24, 1895, an order of relief from the operation of the fourth section, limited to sixty days' duration, was, after application and investigation, granted by the Commission to the Southern Pacific, Atchison, Topeka and Santa Fe, Union Pacific, Rio Grande Western, and Denver and Rio Grande Railway Companies and their eastern connections, authorizing them to charge less on oranges from California points to Atlantic ports than for shorter distances over the same line in the same direction, provided that the longer-distance rate should not be less than

60 cents a box, or 833 cents per hundred pounds. The application in this case was based upon the existence of severe market and water competition in the supply and transportation of oranges from Mediterranean and other foreign ports to the Atlantic Seaboard, and the fact that the orange crop of Florida, the only other important orangegrowing region in this country besides California, had been rendered almost a total loss by the heavy frosts of December and February last. It also appeared that the rate then charged by the foreign carriers was so low as, even with the duty on the foreign product added, to prevent the California growers of similar quality of fruit from marketing their oranges in the extreme East under the all-rail rates then in force, which the California shippers conceded to be reasonable; and that, without being able to reach these Atlantic Seaboard markets, a large portion of the California crop on hand, amounting to about three-fourths of a million boxes, would be left to rot. No special exigency appeared to exist for the reduction of rates from California to intermediate markets, as the foreign fruit must bear rail rates from the Eastern Seaboard to such markets which would equal, if not exceed, the reduction sought to be made in the rate to the Atlantic Coast.

Upon application of the Southern Railway Company, and after full hearing accorded to carriers and localities interested, the following situation was presented: The Southern Railway Company and the Pennsylvania Railroad Company operate a through line of railroad from New York to Atlanta and other points, the two roads connecting at the city of Washington, D. C. The Seaboard Air Line extends northeasterly from Atlanta, and connects with other carriers at various points, whereby several routes are formed between New York and Atlanta and other points. One of such routes is by rail to Portsmouth, Va., and thence by the Old Dominion Steamship Line to New York; another route is by rail to Portsmouth, thence by water to Cape Charles, Virginia, and thence by rail to Delmar, Del., where connection is made with the Pennsylvania system; another route is by rail to Portsmouth, and thence by steamer to Baltimore; where connection is also made with the Pennsylvania system; and still another route is by rail over the Seaboard Air Line and its connections to Quantico, where connection is again made with the Pennsylvania system, the latter constituting an all-rail line between Atlanta and New York.

Prior to March 6, 1895, the first-class passenger rate between Atlanta and New York was $24 by all the routes above named. On that date the Seaboard Air Line put the following rates into effect between Atlanta and New York: Via Portsmouth and the Old Dominion Steamship Line, $14; via Portsmouth, Cape Charles, and Delmar, $14; via Portsmouth and Baltimore, $14; and via Weldon and Quantico, $19. While such rates applied north-bound, the $14 rate south-bound applied only to the Old Dominion Steamship Line to Portsmouth and the route through Baltimore and the Bay Line of steamers to Portsmouth, the rate by way of Delmar and Cape Charles being $16.30, and

by way of Quantico and Weldon $19.10. The Pennsylvania Railroad had not reduced its rates between New York and any of the junction points above named, and the Seaboard Air Line had reduced rates to and from intermediate points wherever necessary, so as to conform to the rule of the fourth section.

The reduced rates so established by the Seaboard Air Line and its connections, other than the Pennsylvania system, applied over part rail and part water routes, except the route via Quantico, and were so much below the reasonable rates which might lawfully be charged for the service rendered as to afford an insufficient and inadequate basis for the adjustment of relative rates over the all-rail routes of the Southern Railway Company. The relief prayed for by this company was granted under the following limitations: That higher rates for the shorter distances should not in any case exceed the lower rates for longer distances by more than $5; that lower rates for the longer distances should not in any case be less than those previously published by the Seaboard Air Line or other competing carrier between the same points; that such lower rates for longer distances should not in any case be less than the cost of the service rendered.

The foregoing orders of relief from the operation of the fourth section were therefore respectively granted upon the following general grounds:

1. Public safety and convenience, and demand for increased passenger facilities.

2. The same, together with competition by Canadian lines.

3. Partial destitution throughout a section of the country caused by the failure of crops.

4. Market and water competition in the supply and transportation of oranges from foreign countries so severe as to preclude the California product, under rail rates ordinarily reasonable, from being marketed on the Atlantic Seaboard, and failure of the Florida orange crop.

5. Peculiar rail and water competition making rates to competitive points on a very considerable volume of passenger traffic so low as to afford insufficient revenue to the applying all-rail carrier, having a route more direct and therefore more convenient to the public, unless permitted to charge higher reasonable rates to intermediate stations.

A controlling consideration in these special cases of relief from the operation of the fourth section is that the lower longer-distance rates sought to be allowed shall not be less than the carrier's cost of service in respect of the longer-distance traffic. It will also appear from the foregoing statement that the public interest was given primary consideration, and was apparently served by the issuance of the order of relief in each case.

The grounds upon which these applications were made, and the Commission's immediate investigation and prompt action thereon, demonstrate that, under a proper construction of the fourth section, all proper relief can be easily and timely afforded to the carriers, and the public

interest in the promotion of legitimate competition between carriers fully served; while, at the same time, the general application of the prohibitory rule in the first part of the section will largely deter the carriers from indulging in that reckless competition at longer-distance points which is conceded by all parties to result in damage to the public interest and great diminution in net earnings of the roads.

What the Commission may do toward relieving carriers from hardships shown to result from their observance of the fourth section can not, however, be properly considered or rightfully determined in cases instituted by complaint charging the carrier with wrongdoing under the statute. The scope of such a case is necessarily limited by the allegations and averments in the complaint and answer, and a carrier charged with violation of the fourth section can not find justification for the injuries it causes to shippers and localities in any grievance of its own. This is particularly true where the statute provides the carrier with a special method of redress, such as is contained in the proviso to the fourth section. This rule of practice, first announced in Georgia Railroad Commission cases (5 I. C. C. Rep., 324), has been followed by the Commission during the present year in Hill & Bro. v. Nashville, Chattanooga and St. Louis Railway Company et al. (6 I. C. C. Rep., 343), and Colorado Fuel and Iron Company v. Southern Pacific Company et al. (6 I. C. C. Rep.).

In the Colorado case some of the defendants in their answers offered to concede as low rates from the complainant's locality as those in force from much more distant points to a common market, provided that such reduced rates from complainant's town to such market should not, under a relieving order to be issued by the Commission, be their maximum rates to shorter-distance stations. The Commission held on this point that

An offer of defendant carriers, made during the pendency of a case, to reduce the rates complained of, provided the Commission would relieve such carriers from the operation of the fourth section by granting an order permitting such reduced rates to be less than the charges of such carriers to intermediate points, is not an application for an order of relief under the fourth section. Such an order can only be granted upon the application and investigation required by law.

In the Hill case, which was decided against the defendants, the Commission pointed out that any hardship they might have in observing the rule of the fourth section, as required by the order in that case, could be relieved on application to the Commission, and that on any such application rates might be adjusted on a basis of fairness to all interests.

LONGER AND SHORTER DISTANCE CASES-BASING-POINT SYSTEM IN THE SOUTH.

Carriers in the Southern States east of the Mississippi and south of the Ohio River name certain towns as distributing centers and competing points, fix through rates thereto and therefrom, and make rates to