any evidence which tends to throw light upon the question of undue preference or prejudice. These terms imply comparison of relative locations, of natural and acquired advantages, of the reasonableness of charges per se, and in their relation to other rates on various lines which serve the competing localities. (Eau Claire Board of Trade v. Chicago, Milwaukee and St. Paul Railway Company, 5 I. C. C. Rep., 264, 4 Inters. Com. Rep., 65; Raymond v. Chicago, Milwaukee and St. Paul Railway Company, 1 I. C. C. Rep., 230, 1 Inters. Com. Rep., 627; Boards of Trade Union v. Chicago, Milwaukee and St. Paul Railway Company, 1 I. C. C. Rep., 215, 1 Inters. Com. Rep., 608.)

To compare one rate with the proportion of another rate is quite a different thing from comparing one rate with the whole of another rate, and it does not follow that the latter comparison is to be excluded because the former is inadmissible. The fourth section provides for comparison of aggregate rates over the same line; and in the view of Congress, as we believe, the physical connection of two or more roads, which unite in carrying traffic under joint tariffs, constitutes an extended "line," of which each road forms a part. In such case there is a prohibition against through rates over the entire line which are less as a whole than the rates in force over either of the constituent parts of that line. It is immaterial under the first section or the third section of the act whether the carriers complained of operate the same or different lines.

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The decisions in the Osborne and Tozer cases were fully discussed by the Commission in its sixth and seventh annual reports to Congress.

RELATIVE RATES TO COMPETING LOCALITIES.

These Sioux Falls cases, brought on behalf of that locality by E. J. Daniels, were decided in October last in favor of the complainant. As stated above, the complainant contended that the relation of rates established by the carriers to Sioux Falls and Sioux City from Chicago in the one case, and from Duluth in the other, was relatively unreasonable and unjust, constituted undue prejudice to Sioux Falls, and gave undue preference and advantage to Sioux City. During the pendency of the proceedings the rates to each point, both from Chicago and Duluth, were materially increased by the carriers. The defendants in the Chicago case claimed justification for the existing relation of rates on the ground that charges to Sioux Falls and Sioux City from Chicago were adjusted in exact accordance with the short line distance from Chicago, such distance and the rates to Sioux Falls being exactly 108 per cent of such distance and the rates to Sioux City. The Commission held that it is unusual to find freight charges applied in exact proportion to distance, especially where all the places compared are at considerable distance from common points of origin. Ordinarily the rate per ton per mile diminishes with increasing length of haul, and it does not follow that Sioux Falls rates from Chicago should be 108 per cent of Sioux City rates because the short line distance from Chicago to Sioux Falls is 108 per cent of the short line distance to Sioux City.

Another feature of the case was that rates from Sioux City and Sioux Falls to points in surrounding territory were fixed according to the same mileage basis, and this was claimed by the carriers as additional

justification for the relation of rates complained of. We held that the law requires regulation of railroad charges according to the ascertained rights of persons and places, and that it is not an agency for the regulation of trade by enabling shippers and communities to do business, or putting them on even terms with rivals more remote from competitive territory; and, therefore, the fact that Sioux Falls is able under existing rates to and from that point to compete with Sioux City on practically even charges for the aggregate in and out transportation can not be regarded as an excuse for any injustice in the rates to Sioux Falls. It was held that the rates to the two competing towns should accord with their relative situation; an order was entered directing that the rates from Chicago to Sioux Falls should not be greater than 104 per cent of rates from Chicago to Sioux City.

At the time, and for a considerable period after the complaints were filed, the same rates were in force from New York and other Eastern points to Chicago and Duluth on business destined to Sioux City and Sioux Falls, and the carriers from Chicago and Duluth to these places claimed that any reduction in the rates from Duluth to Sioux Falls must necessarily, on account of the strong competition via Duluth from the East, result in a corresponding reduction in the rate from Chicago. But some time before the decision was rendered the Eastern carriers to Duluth practically withdrew from competition by that route for traffic to Sioux City and Sioux Falls by discontinuing the making of propor tional rates to Duluth for such business. It therefore appeared that the decision of either case would in no wise be affected by the correction of rates in the other. While Sioux Falls is farther than Sioux City from Chicago, it is, on the other hand, situated at a much less distance than Sioux City from Duluth. The Commission directed that rates from Duluth to Sioux Falls should not exceed those contemporaneously in force from Duluth to Sioux City.

We found occasion in these cases to discuss, and to some extent criticise, the practice of the carriers in using the Missouri River as a "basing line" on which to establish common rates for east and west traffic. This basing-point method of rate making in the West, at least to the extent it is now employed, has never commended itself to the judgment of the Commission or appeared to be necessary to an adequate scheme of tariff construction.

RELATIVE RATES FROM COMPETING LOCALITIES.

A decision rendered by the Commission on November 25 of the present year relates to rates on steel rails, bar iron, and other iron and steel articles from Pueblo, Colo., to San Francisco, as compared with rates charged on those commodities from eastern localities much more distant from San Francisco, such as Omaha and other Missouri River points; St. Louis and other Mississippi River points; Chicago, Ill.; Columbus, Ohio; Pittsburg, Pa., and New York City. The distance

from Pueblo to San Francisco is about 1,559 miles, while the distance from Chicago to San Francisco is 2,418 miles; yet the rate from Chicago to San Francisco was 60 cents per hundred on rails and 50 cents per hundred on bar iron, while from Pueblo to San Francisco the rate on both commodities was $1.60 per hundred pounds.

At the time the complaint was filed the rate to San Francisco on rails was 58 cents from Mississippi points and 54 cents from stations on or near the Missouri River, but these rates were directly afterwards raised by the carriers to 60 cents. This made the rate in force on rails to San Francisco to the various points involved stand as follows: From Pueblo, $1.60; from the Missouri River, or the Mississippi River, or Chicago, 60 cents; from Columbus, 72 cents (combination rate based on Chicago); from Pittsburg, 72.3 cents (combination based on Chicago), or 70.7 cents (combination based on New York); from New York, 60 cents (all rail via Chicago and Santa Fe system or water and rail via Morgan Steamship Line and Southern Pacific Railway from New Orleans). The complainant, the Colorado Fuel and Iron Company, insisted that the carriers from Pueblo should not exact more profit for carrying iron and steel articles from that point to San Francisco than they obtain out of the rate in force from Chicago and other Eastern points, and also claimed that a rate of 40 cents on rails or 33 cents on bar iron from Pueblo would give the carriers something more than their proportion of through rates on the same traffic from the East.

The disparity between rates from Pueblo and other points above stated was so great that the defendants, while claiming justification for the rates complained of, did not insist upon their continuance, but offered to put the same rates in effect from Pueblo as those in force from Missouri River, which were then 60 cents on rails and 50 cents on bar iron, the same as those in force from Chicago. This offer was extended by representatives of some of the defendant carriers in their testimony at the hearing so as to concede the rates claimed by the complainant, 40 cents on rails and 33 cents on iron, provided the Commission would, by suitable order, permit the carriers to charge higher rates from Pueblo to intermediate points, Salt Lake City or Reno, for instance. But, as herein before stated, under the head of "Relief granted to carriers from the operation of the long and short haul clause," the Commission declined to consider this offer as amounting to the neces sary application for relief under the proviso of the fourth section.

The rates involved in this case applied over extremely long distances, the shortest being 1,559 miles, from Pueblo to San Francisco. It was evident that after the cars are lined up in trains, billed, and routed from Pueblo to San Francisco, the carriers between those points are at no greater expense in the haul to and delivery at San Francisco than they are for like freight brought to them at Pueblo from Chicago or other points. It also appeared that the rates on the iron and steel articles covered by the complaint are generally regarded by carriers

throughout the country as among the lowest grades or classes of freight, and take rates which yield a revenue much below the average revenue per ton per mile on all freight. The Commission held that rates on steel rails and other low-grade freights which yield per ton per mile the average received on all freight would be unjust; that the value of the goods, the cost of the service, the degree of risk to the carrier, among other considerations, have important bearing upon the relation of rates on different kinds of traffic as well as the reasonableness of the rates on a specified article. But the Commission also decided, following principles announced in other cases, that the proportion received by some of the carriers out of the long distance through rate is not necessarily the measure of the through rate which such carriers are entitled to make over a materially shorter distance, though such proportion is an important consideration in determining the rightful relation of the two through rates.

The competition of water routes, strongly relied upon by the carriers as a main ground of defense, was found altogether inadequate to account for the general relatively low rating shown to exist on lumber, grain, and other staple or heavy goods to or between inland points, and that of a long list of commodities, including iron and steel, to San Francisco from Chicago and so-called Mississippi River and Missouri River points, from none of which shipments can be made by water to San Francisco without transfer and the use of considerably more time than by rail. The rates complained of prohibit the movement of iron and steel articles from Pueblo to San Francisco, while greatly lower rates from far more distant points prevail. The Commission said that whatever may be the merits of water competition as a defense in this case, it would seem that better cause exists for lower rates where, under higher ones, the traffic is subjected to such disadvantage or prejudice that it will not move at all. The interest of the carriers as well as that of the public is served by rates which are low enough, if not below a remunerative point, to permit the general movement and distribution of low-class commodities, including iron and steel, which are in general demand for construction, building, manufacturing, and other purposes. It was also shown in this case that rates on iron and steel articles to San Francisco were considerably affected by the competition of iron and steel produced in foreign countries and shipped by vessel at low cost to that market; but it was clear that this foreign competition affected the iron and steel industry at Pueblo as well as at eastern points in respect of participation in supplying the San Francisco market. On the other hand, it appeared that it costs the complainant more than its eastern competitors to produce iron and steel on account of inferior iron ore and coal, less improved condition of its plant, and greater cost of labor; and it was held that these facts should not be given weight in determining the rightful relative adjustment of rates from Pueblo and competing localities. The Commission also ruled that the magnitude

of the complainant's enterprise, which probably furnished support to 15,000 or 20,000 persons, the developing results of its business upon the natural resources of a State, the use of its material in the industrial trades and on railroads themselves in construction and repair, or the fact that it can not move its plant to other localities more favored by transportation interests, do not entitle it to different consideration in respect of just rates than small concerns and individuals are entitled to; but that these facts help to illustrate the far-reaching extent to which serious injury may be effected by methods and practices which the statute was designed to prohibit.

The Commission decided that the rates from Pueblo were unreason. able and unjust, and subjected complainant, the localities in the State of Colorado where its industry is carried on, and its traffic in iron and steel articles to San Francisco, to undue and unreasonable prejudice and disadvantage, and resulted in giving undue preference and unreasonable advantage to other shippers in the United States of iron and steel over the defendant roads to San Francisco. Upon all the facts and circumstances in the case, we ordered that the rates from Pueblo to San Francisco should not exceed 45 cents per 100 pounds on steel rails and railway fastenings, or 373 cents per 100 pounds on bar iron and other specified iron articles, nor should the rates from Pueblo to San Francisco be greater at any time on such traffic or other iron and steel freights than 75 per cent of rates contemporaneously in force on like traffic from Chicago to San Francisco over any of the defendant roads. Such percentage relation was confined to rates from Pueblo and Chicago in the expectation that the present relation of rates applying to San Francisco from Chicago, Columbus, Pittsburg, and other eastern points, over the various routes in use, would not be changed in such manner as to result in any new injustice to Pueblo, but to guard against such a contingency the case was held open for such further proceedings or action as might at any time appear necessary.

New injustice to Pueblo, through changes in the relation of rates to San Francisco from eastern points, might be brought about in various conceivable ways, but such action on the part of the carriers could not be assumed as probable. Some possibilities of the situation were, however, indicated on the record. It appeared that in 1893 the rate on bar iron and other iron articles from New York City to San Francisco was as low as 30 cents, while at the same time the rate on those articles from Chicago was 60 cents. It is evident that under such rates and the usually low iron and steel rates from Pittsburg and Columbus and even Chicago to the Atlantic Seaboard, much if not most of the traffic east of the Mississippi River would go to San Francisco by the way of New York, thence over the Southern Pacific's steamship line to New Orleans and its railway from that point to San Francisco. Such diversion of traffic through lower rates over a circuitous route, involving transshipment in transit, might well render necessary a revision of