and from other places in the same general territory by adding to such through rates the local charges in force between the distributing centers and the other localities. Such practice is followed in making rates for stations on the same line, as well as for points on different lines, so that on many roads throughout that section greater charges are imposed on shorter than on longer distance traffic over the same line in the same direction. Our annual reports to Congress and reported decisions in cases have uniformly condemned this distributing center or trade center theory of rate making, but the Southern carriers have steadily resisted our efforts to correct the practice.

The Social Circle case, now on appeal in the Supreme Court of the United States, and soon to be argued, arose through rates made according to this method-Social Circle being situated between Atlanta and Augusta, in Georgia, and required to pay a rate from Cincinnati made up of the rate to Atlanta added to the local rate from Atlanta to Social Circle, while Augusta, considerably more distant, has rates from Cincinnati no higher than those in force to Atlanta. It was claimed by the carriers that Atlanta and Augusta are points where competition forces rates down and that at Social Circle such forceful competitive conditions do not exist. The system gives to railway managers arbitrary "power of determining within certain limits what towns shall be trade centers and what their relative advantages." (Re Louisville and Nashville Railroad Company, 1 I. C. C. Rep., 31.) "A fatal difficulty with the theory that a trade center as such is entitled to specially favorable rates is found in the fact that it is in conflict with the spirit and purpose of the act to regulate commerce." (Martin v. Chicago, Burlington and Quincy Railroad Company, 2 I. C. C. Rep., 46.)

This basing-point practice is condemned by the Commission in its recent decision in the above-mentioned case of Hill & Bro. v. Nashville, Chattanooga and St. Louis Railway Company et al. (6 I. C. C. Rep., 343), and opinions prepared by former Commissioners, Messrs. Cooley and Walker, are there cited at some length.

The complainants, Hill & Bro., do a wholesale grain, flour, and hay business at Cordele, Ga. (not a basing point), in competition with dealers at the cities of Albany, Americus, and Macon, which are basing points, and therefore enjoy rates lower than those to Cordele from common sources of supply. The Commission said in this case:

If, as defendants claim, competitive conditions, existing among themselves and other members of the Southern Railway and Steamship Association, authorize them to select basing points and distributing centers, and to give them lower or preferential rates, upon what ground are Macon, Americus, and Albany so favored while this advantage is denied to Cordele? It can be and is reached from Nashville over various competing lines, formed in connection with two initial and two terminal lines; it has convenient rail communication east, west, north, and south; it is less distant by rail from the coast than Americus, Macon, and Albany, and is arbitrarily excluded from the advantages given to its rivals and business competitors. The general freight and passenger agent of one of the defendant companies, a witness called by them in support of the higher rates to Cordele, testified that Macon, Americus, and

Albany were competitive points, and Cordele was not, for the reason that it is not a distributing point to the extent that the other places are; that if competitive forces were allowed to operate at Cordele so as to give it lower rates, its business would increase to some extent and thus make it more of a distributing point. Testimony for complainants is that the increase of business to result from reduced rates would be large. We have, then, this state of case. Cordele is not treated by the defendant roads as a competitive point because it is not a sufficiently large distributing point, and it is not such a distributing point because it is not treated as a competitive point, and the defendants seek to excuse themselves from wrongdoing by offering the results of the wrong in justification. Tried by its results, this system of rate making is at variance with all the equality provisions of the act to regulate commerce, including that which requires all rates to be reasonable and just.

Shorter routes exist for the carriage of traffic from Nashville to Cordele than those formed by defendant roads in this case, and by such shorter routes Cordele is reached over a longer distance than either Macon or Americus, but the longer defendant lines do actively engage in transportation to these points through Cordele. The Commission held that the existence of such shorter lines does not so alter or change the conditions of the transportation by defendants as to take it out of the long and short haul rule of the statute, and that defendants' remedy for any hardships occasioned by observance of the fourth section lies in an application to the Commission for relief.

But the Cordele rates in the Hill case were found unlawful on other grounds than disregard of the fourth section. They were held to be unreasonable and unjust and unduly and unlawfully prejudicial to that locality. The Commission also reaffirmed in this case the principle frequently announced that in the absence of other influential conditions, distance may be fairly considered a controlling element in fixing reasonable rates. One of the defendant lines passes through Macon before reaching Cordele and Americus or Albany, and this was used by the defense to justify making Cordele rates by combination of through rates to Macon, Americus, or Albany, with local rates thence to Cordele, but application of the principle of distance demonstrated this claim to be unfounded. By this line from Nashville, through Macon to Cordele, the distance is 377 miles to Macon and 442 miles to Cordele, and the rates on grain were 19 cents per hundred to Macon and 27 cents to Cordele. "The mileage basis, fairly adjusted, which gives to Macon a rate of 19 cents per 100 pounds, applied to Cordele would reduce its rate to 22 cents."

The arbitrary method involved in the basing-point system disregards the commonly accepted rule in railroad operation that the rate per ton per mile should decrease as distance increases, and denies to Cordele even the same rate per ton per mile as to Macon, and under which the grain rate to Cordele would have been 5 cents less than the rate complained of. This reversal of the rate per ton per mile usage generally occurs where rates are made by combinations of through and local charges.

Although traffic from Nashville to Cordele, Macon, Americus, and Albany may be carried by several different lines, the traffic originates

at Nashville on the roads of only two initial carriers, the Louisville and Nashville and the Nashville, Chattanooga and St. Louis. It is shown by the annual report to the Commission of the Louisville and Nashville Railroad Company, one of the initial carriers, that such company has, by ownership of a majority of capital stock, a controlling interest in the line of the other initial carrier, the Nashville, Chattanooga and St. Louis Railway Company. This fact is significant upon the question of how much actual competition exists at Nashville for the routing of freight from that point to Macon, Americus, and Albany, or to Cordele.

A similar arbitrary action on the part of the carriers was shown in a case tried at the same time with that of Hill & Bro., and brought.by the Cordele Machine Shop against the Louisville and Nashville Railroad Company and others. This proceeding involved rates on coal and pig iron from Birmingham, Ala., to Cordele, as compared with such rates to Macon, Albany, and Americus, and the basing-point system of rate making, "under which a comparatively few places arbitrarily selected are designated competitive points, or basing-points, and given preferential rates, while adjacent and less distant points are classed as local and made to pay very much higher rates," was held to be at variance with all the equality provisions of the act to regulate commerce, including that which requires all rates to be reasonable and just, The defendants charged $3.69 per ton on pig iron and $2.60 per ton on coal to Cordele, which coal rate was, after the complaint, reduced to $1.60 per ton. The defendants charged from Birmingham to Macon, $1.80 per ton on pig iron and $1.60 per ton on coal to Macon. The Commission decided that any higher rate from Birmingham to Cordele than $1.60 on coal and $1.80 on pig iron is unreasonable and unlawful. The distance from Birmingham by this route is 332 miles to Macon and 267 miles, or 65 miles less, to Cordele; but the rate to Cordele on pig iron was more than double the rate on that commodity to Macon.

This basing-point system, as practiced in the South, was also mainly, if not altogether, the cause of the violations found by the Commission to exist in the case of Board of Trade of Troy, Ala., v. Alabama Midland Railroad Company et al., hereinafter referred to under the head of "Court Decisions."

GLASS RATES TO SOUTHERN POINTS.

The Commission decided in the cases brought by the Southern Paint and Glass Company and others, of Atlanta, Ga., in an opinion filed in February last, that the rates complained of (glass rates to Atlanta from Muncie, Ind., and Pittsburg, Pa.) had already been corrected by an order issued by the Commission in the cases of the Freight Bureaus of Chicago and Cincinnati (6 I. C. C. Rep., 195), and that such corrected rates were, with others, the subject of suits in the circuit court

for the southern district of Ohio. These Chicago and Cincinnati cases, which were fully reviewed in our last report, and are also referred to in another part of this report, are still pending in the United States circuit court.

REASONABLE RATES ON STRAWBERRIES AND VEGETABLES.

In a case instituted by the Truck Farmers' Association of Charleston, S. C., and vicinity against through lines of railroad from Charleston to New York and Jersey City, and in which rates on vegetables and berries were alleged to be excessive and unreasonable, the Commission decided that a rate maintained for a number of years for the service to New York, and applied on the service to Jersey City after the carriers had made that point their delivery point instead of New York, is prima facie excessive for the service to Jersey City. It was also held that when a carrier pays mileage on cars employed for shippers' use, as shown in this case, the carrier, and not the company from whom the car is rented, furnishes the car to the shipper, and that there is no privity of contract between the shipper and the car owner; that it is the carrier's duty to furnish adequate car equipment for its business and to do whatever is essential to the safety and preservation of traffic in transit, and that a charge for ice and its carriage, when necessary to traffic required to be carried in refrigerator cars furnished for shippers' use, is made "in connection with" the transportation charge, and must be reasonable under section 1 of the statute.

The 2-cent charge made for refrigeration of strawberries en route was required to be reduced so as not to exceed 12 cents, and a total charge per quart in excess of 6 cents was held unlawful. The rate on cabbages shipped in standard barrels or crates to Jersey City or New York was fixed at not to exceed three-fourths of the rate on potatoes so shipped, and 14 cents per package was required to be deducted from the rate on such barrels or crates containing vegetables where the point of delivery for the traffic had been changed from New York to Jersey City without change in the rate. Defendants applied for a rehearing, and after argument of counsel and consideration by the Commission an order was entered denying the application. The order as originally served was also slightly modified, but such modification does not affect the foregoing statement.

REASONABLE RATES ON BOX SHOOKS.

Box shooks, in many railroad tariffs designated "box stuff," are planks or boards, dressed or undressed, sawed or cut in widths and lengths, and only need nailing together to make them into boxes of various sizes. The parts or material of a single box, bound in a bundle, is a box shook. They are made of lumber of inferior grades known as "cullings." In a case brought by the Michigan Box Company, of Bay City, Mich., against the Flint and Pere Marquette and other roads, the

rates complained of were held excessive and unreasonable. It appeared that these railroad companies had established and maintained a rate of 15 cents per hundred pounds on box shooks, and a lower rate of 12 cents per hundred pounds on lumber, lath, and shingles carried from Bay City, Mich., to Buffalo, Black Rock, Tonawanda, and Suspension Bridge, N. Y. A carload of lumber weighs about 36,000 pounds; a carload of box shooks or shingles weighs about 30,000 pounds. Lumber carried in carloads is worth from $350 to $800 per car; a carload of box shooks is worth about $220. The freight charges on both lumber and box shooks were about $43, and on shingles about $36 per carload. The rates on these several products are the same from Bay City to Cleveland and ports on Lake Erie other than Buffalo, and to points in Illinois, Indiana, Ohio, and other States. The Commission decided that the higher rate on box shooks to Buffalo, Black Rock, Tonawanda, and Suspension Bridge was not justified. After complaint had been filed and the Commission had made its investigation, but before the decision was rendered, the carrier reduced the rate to the extent that it was alleged to be excessive, and the Commission thereupon held "that any order in respect of the rate of charges is unnecessary now that they are no longer excessive."

REPARATION TO INJURED SHIPPERS.

In the "Box Shooks case," above mentioned, reparation was claimed by the complainant, but the proof of shipments was insufficient to enable the Commission to pass upon the matter. The complainant was allowed to make proof within a specified time of the amounts it paid to the defendants in excess of 12 cents per hundred on box shooks carried by them from Bay City to Buffalo, Black Rock, Tonawanda, or Suspension Bridge during the time defendants' rate was 12 cents on lumber, lath, and shingles from Bay City to those points.

On November 14, 1892, the Commission filed its report and issued an order in three cases brought by the Independent Refiners' Associations of Titusville and Oil City, Pa. In one case the following-named carriers, operating connecting roads from the oil regions of Pennsylvania to Boston and other New England points, were defendants: Western New York and Pennsylvania Railroad Company, New York, Lake Erie and Western Railroad Company, Delaware and Hudson Canal Company, Fitchburg Railroad Company, and the Boston and Maine Railroad Company.

In another case the defendants were carriers from western Pennsylvania to New York Harbor points, viz, Western New York and Pennsylvania Railroad Company, New York, Lake Erie and Western Railroad Company, and the Lehigh Valley Railroad Company. The third case was against the Western New York and Pennsylvania Railroad Company and the Pennsylvania Railroad Company, and also 259A- -3