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sion in the Western Classification case467 dealt at length with the general subject. The opinion of the Commission, written by Mr. Commissioner Meyer, begins with the statement that classification is a public function, and that committees engaged in making or changing classifications should conduct their business publicly, giving full information to shippers and commissioners, state and national, in order that there may be opportunity for public hearings. Further principles were stated: "For years past the Western Classification Committee has compiled, to a certain extent, what are designated as classification units. These units, as compiled, are a combination or sum of unlike parts, but may be expressed with equal propriety as a product composed of unlike factors. They are intended to express the relation to one another of weight, space, and value. While a unit test of this character may not finally determine the classification of an article, it constitutes a basis for comparison with other articles. When all the modifying conditions and facts are known, a fair classification relation may be established among articles through the aid of this classification unit. A compilation of classification units just as far as practicable for every item in the classification would doubtless be of substantial value in the present formative work. The classification is in an inchoate state. Perhaps every classification must remain so. Constant change appears to be inherent in industrial life." In discussing the rules which should apply in making a uniform classification, it was said: "The uniform classification must be worked out without an attempt to affect revenues. Classification and rates and revenues should be kept entirely separate. There will doubtless be many coincidences in which the present rate applied to the new classification will bring about the exact transportation charge which results from the old rate applied to the old classification. In other cases the rate must be advanced or reduced, depending upon the change in the classification of the article in order to protect existing revenues. This is entirely without reference to the sufficiency or insufficiency of present revenues, which is a distinct and very different question. It would only complicate and confuse

Chicago R. I. & P. R. Co., 39 I. C. C. 256.

467 Western Classification Case, 25 I. C. C. 442.

matters to attempt, through the instrumentality of the classification, to bring about a revision in rates and charges. Whether a rate is too high or too low should be made a separate issue distinct from classification. Nevertheless, as far as possible, the establishment of ratings and the publication of rates should follow changes in the classification very closely. A classification is a universal tariff from which the schedules of individual carriers should not depart, except in cases demanded by special conditions. Commodity tariffs in restricted numbers will probably always remain a necessity."

In the Western Rate Advance Case of 1915,468 F. H. Millard, a witness for the Interstate Commerce Commission, presented the result of studies seeking to measure the extent to which the value of the commodity should constitute a norm in rate-making and rate-judging. These studies are shown in the appendix to the report of the Commission in that case. Classification descriptions must necessarily be somewhat general and cannot go into minute details.469

Differences in classification ratings in the major classification territories frequently present serious difficulties in making interritorial rates. Such difficulties are sometimes overcome by establishing differentials from and to "defined territories. ''470

§ 85. Class and Commodity Rates.-The number of classes varies in the three general classifications and in such state classifications as exist. So, also, the relationships of the several classes differ in the different classifications and sometimes in the same classification. The Commission, in Consolidated Classification Case, 54 I. C. C. 11, said: "While it is possible to remove many of the present inconsistencies without changes in rate scales, it should also be borne in mind that an abso

468 Western Rate Advance Case 1915, 35 I. C. C. 497.

469 Casket Mfrs. Assn. v. B. & O. R. R. Co., 49 I. C. C. 327; Acme Belting Co. v. A. & R. Co., 52 I. C. C. 15, 17. See for factors to be considered, National Society of Records v. A. &

R. R. Co., 40 I. C. C. 347, 355, and
Sec. 171, post.

470 For a description of such "defined territories," see Through Rates to Points in Louisiana and Texas, 38 I. C. C. 153.

lutely uniform classification could be prepared and proposed only in connection with a universal system of rate scales having a uniform number of classes. In our view a desirable arrangement would be to have in each scale at least ten classes related somewhat as shown below; practically all lessthan-carload traffic to be confined to the first four classes, and a redistribution made of the articles in the carload classes: 1 2 3 4 5 6 7 8 9 10 Percentages..100 85 70 60 45 35 30 25 2212 20 Many articles that now move under commodity rates and under exceptions to the classifications could be assigned ratings in such a scale that would result in the application of rates not substantially higher or lower than now apply.”

Classes

§ 86. The Consolidation of Freight Classifications.-As a step toward greater uniformity in the classification of freight, the United States Railroad Administration, during the period of federal control of the railroads (1918-1920), instructed a special classification committee to undertake a consolidation of the existing freight classifications-particularly the Official, Southern and Western, the three major classifications. in effect at that time-into one publication, observing, as far as practicable, uniform rules, regulations and descriptions of articles, but not uniform ratings. This work was successfully completed and published, after being reviewed and changed in some particulars by the Interstate Commerce Commission,471 as Consolidated Classification No. 1. It accomplished a much greater degree of uniformity in freight classification than had ever been attained before, but it still left the ratings as between the different classification territories irregular and inconsistent in many instances.

§ 87. Modern Tendency Toward the Making of Commodity Rates in Relation to Class Rates.-Another tendency of considerable importance in the making of freight rates has manifested itself since the close of the World War, and that is, the making of commodity rates in direct relation to class rates. This system of rate-making has been followed quite frequently in southern territory since the revised class rate adjustment

471 Consolidated Classification Case, 54 I. C. C. 1.

473

prescribed by the Interstate Commerce Commission in the Southern Class-Rate Investigation472 went into effect.4 It was also adopted by the Interstate Commerce Commission in the prescription of rates in southwestern territory.474 In the latter instance, commodity-rate columns bearing definite percentage relationships to the first-class rates were devised to take care of rates on many commodities and groups of commodities.

A convenient method of publishing commodity rates on this basis has been found in the establishment of exceptions to the governing freight classification. In this way, commodities have been given lower classification ratings than the standard classification prescribed, thus accomplishing, to all intents and purposes, the publication of commodity rates on such commodities.

It should be noted, in this connection, that this tendency toward the making of commodity rates on definite percentage relationships to class rates has provoked considerable opposition from the public on the ground that it precludes adequate recognition of all the special circumstances and conditions surrounding the movement of many commodities, particularly those of a basic character.

§ 88. Uniformity of Relationships Between Classes in the Class-Rate Scales.-In addition to the progress toward classification uniformity made by the consolidation of freight classifications, important strides have been made since the close of the World War in the establishment of uniform percentage relationships between the different classes as they appear in the rate scales themslves.

The first important step in this direction was taken by the Interstate Commerce Commission in its decision relative to class rates in southern territory.475

472 Southern Class Rates Investigation, 100 I. C. C. 513, 109 I. C. C. 300, 113 I. C. C. 200, and 128 I. C. C. 567.

473 See Bananas from Gulf Ports, 109 I. C. C. 211; Standard Paint Co. et al. v. Director General et al., 112 I. C. C. 589 and 142 I. C. C. 221; Mo

Theretofore the class

bile Chamber of Commerce & Business League v. A. & V. Ry. Co. et al., 129 I. C. C. 147; and many other cases. 474 Consolidated Southwestern Cases, 123 I. C. C. 203.

475 Southern Class Rate Investigation, 100 I. C. C. 513, 109 I. C. C. 300, 113 I. C. C. 200, and 128 I. C. C. 567.

rate scales in effect in southern territory exhibited varying percentage relationships between the classes. Not only did this condition create many disparities in rates, but it offset to a considerable extent the efforts toward classification uniformity. It sometimes happened that when an article of freight was raised or lowered in the classification, it made no change whatever in the rates in effect on some lines of railroad.

In discussing the matter of class-percentage relationships in the Southern Class-Rate Investigation, the Interstate Commerce Commission said:

"No mathematical formula can be applied with any degree of authority to the determination of class-percentage relationships. The problem is to arrive at relationships which will bring class rates to maximum usefulness and discourage the publication of all manner of special commodity rates."

The situation with respect to the lack of uniformity in class-percentage relationships which the Interstate Commerce Commission found to exist in southern territory also existed at that time, to a greater or less degree, in the other ratemaking territories of the country. But the Commission has undertaken an investigation of the situation in the other territories476 and is carrying out the principle of uniform relationships between the classes established in the Southern Class Rate Investigation.

§ 89. Minimum-Rate Power of the Commission.-Prior to the enactment of the Transportation Act, 1920, the Commission had no power to prescribe minimum rates. In removing discriminations under Section 3, the Commission at times stated what rates would serve the purpose of its orders and such orders indirectly resulted in the fixation by the Commission of minimum rates. The Transportation Act, in Sections 13 and 15 as that Act was inserted in the Acts to Regulate Commerce, gave the Commission power to make minimum rates. Under Section 13, where intrastate rates are involved, and where there is evidence justifying a finding, and a finding

476 See Consolidated Southwestern cases, 123 I. C. C. 203; Western Trunk Line Class Rates, 164 I. C. C. 1, and

Eastern Class Rate Investigation, 164
I. C. C. 314.

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