CHAPTER XI CLASSIFICATION OF COMMODITIES § 480. Provisions of the Act. 481. Prevalence of classification. Topic A. Methods of Classification § 482. The meaning of classification. 483. Classification the method of establishing the rate. 486. History of classification in the United States. 487. Uniformity of classification attempted. 488. Classification necessarily imperfect. 489. Classification not unduly minute. 490. Extra class divisions. 491. Commodity rates. 492. Method of classification. 493. Interpretation of the classification sheet. Topic B. General Principles of Classifying § 494. Influences determining classification. 495. Adjustment of business to established classification. 496. Classification according to representations. 497. Bases of classifying goods. 498. Justification for making classification on railroads. 499. Reasonableness of classification requisite. 500. A proper rate involves reasonableness of classification. 501. Classification not determined by a particular commodity. 502. Jurisdiction of the Commission. 503. Relief from improper classifications. 504. Low-grade commodities. 505. High-grade manufactures. Topic C. Comparison of Commodities § 506. Elements in comparison of commodities. 507. Like classification for similar goods. 508. Different classification for dissimilar goods. 509. Certain commodities compared. 510. Provisions. 511. Groceries. § 512. Vegetables. 513. Lumber. 514. Bottled goods. 515. Dry goods. 516. Difference between commodities. 517. Raw material and manufactured products. Topic D. Differences Between Commodities Carried § 518. Classification based on the package. 519. Business expensive to handle. 520. Shipment in form more convenient for handling. 521. Perishable freight. 522. Less than usual care required. 523. Unusual care in handling required. 524. Classification based on volume of business. 525. Large volume of traffic in a certain commodity. 526. Value of the goods as an element. 527. Different classification of coals. 528. Bases of comparing values of goods. 529. Differing value of same kind of freight. Topic E. Carload and L. C. L. § 530. Different classification and rating. 531. When difference in classification is required. 532. Minimum carloads. 533. Minimum carload regulations. 534. Mixed car loads. 535. Shipment in form permitting greater carload. 536. Trainloads. 537. Traffic handled in special trains. 538. Car loaded by several shippers. 539. Commission rulings upon special ratings. 540. Car sizes. 541. Special equipment not necessary. Topic F. Difference in Rate Between Classes § 542. Principles governing differences between classes. 546. Principles in making commodity rates. 547. Reasonableness tested by comparison. 548. Slight differences between similar commodities. 549. Discrimination between commodities forbidden. 550. Difference between values justifies different classification. 551. Relative differences between ratings. § 480. Provisions of the Act. The powers of the Commission specifically over classification are as recent as the Amendments of 1910. Previous to that time, classification could only be reached indirectly by attacking particular rates, either as unreasonable in themselves, or unjustly disproportionate. Only since 1906 has the Commission had power to fix rates absolutely, as a maximum; and, before that time, not having such power, it could not order changes in classification. As section 15 now runs, all rates, classifications, regulations and practices must be reasonable, the clause providing, as to classification, that it is thereby made the duty of all common carriers, subject to the provisions of the Act, to establish, observe, and enforce just and reasonable classifications of property for transportation, and reasonable and proper regulations affecting classifications, upon just and reasonable terms. Every unjust and unreasonable classification is prohibited and declared to be unlawful and the Commission has the same jurisdiction over these matters pertaining to rates as it has over the rates themselves. How differences in rating are saved from being considered discriminatory is discussed at large in Chapter XV. § 481. Prevalence of classification. It is obvious that classification is in many businesses necessary for convenience in rate fixing, if for no other reason. And, indeed, some form of classification has been used from time immemorial. The first formal classification appears to have been made for toll roads, a system which was taken up naturally enough for canal tolls. For as soon as public service became a diversified business of large proportions, fairness to the patrons, as well as the convenience of the proprietors, required a classification as the basis of fixing rates. In modern times classification has become the very foundation of railroad rates, and the question of charge is primarily a question of into which class the goods shipped fall. It may be admitted that as a classification gains in convenience, it loses in accuracy. No classification can be so minute as to conform to the differing varieties and conditions of traffic; and to separate differing grades or varieties of the same service into different classes with varying rates, even if it could be accomplished, would go far to defeat the real purpose of classification. Topic A. Methods of Classification § 482. The meaning of classification. Articles offered for transportation are classified in such a way as to bring together into one class such articles as can fairly be subjected to the same charge for carriage. A rate is then fixed for each class; not a difficult matter to schedule, since it has been found quite practicable to make the number of classes small.44 This division of all possible articles of transportation into a few large classes as a basis for fixing the rates of carriage is what is known as classification of freights. It has been seen that it is probable that the necessity of the case forced a more or less crude classification upon carriers, as soon as carriage became a business. At all events, to-day the classification sheet is the basis upon which rate making is accomplished. 45 It is impossible even to enumerate all the articles that may be offered for transportation; still more so to frame a schedule showing an independent rate for every such article, and convey information of the schedule to every freight agent in such a form that he can quickly and accurately state a rate to the shipper. No modern carrier doing a large business, and especially no modern railroad, has undertaken to make rates without classification. § 483. Classification the method of establishing the rate. The division of rates is accomplished by the classification of all articles into certain groups, and then fixing the 44 Classification of articles should be plainly and clearly stated. Pacific Coast Biscuit Co. v. S. P. & S. Ry., 20 I. C. C. 546. 45 How the goods should be loaded considered in determining the proper classification. Western Classification Case, 25 I. C. C. 442. rate for each group. 46 In classification, as will be seen, all the factors which have been discussed are considered; and it is by affecting the classification that such factors usually influence the particular rate. 47 The classes having been established, it is necessary next to determine the difference of rate between the classes, which may be effected by establishing a certain proportion between the various class rates. Finally, it remains to fix the charge according to the length of journey; and this may be done by fixing the rate between individual stations, or by grouping the stations, and fixing the rate with reference to an entire group. The character of the freight in question, the space it occupies in proportion to its weight, its intrinsic value to the shipper, and the risk to the carrier attending its transportation all have to be considered in determining whether a rate and classification are just and reasonable. § 484. The necessity of a proper classification. Different articles require such different care in carriage that it would be unjust to fix a single rate that should apply to all articles carried. If a uniform rate were fixed for each pound carried, lead would be more expensive to ship than live stock; and if the rate were proportioned to bulk, a diamond would be carried more cheaply than fenceposts. It is necessary in order to distribute fairly among the shippers the burden of the entire schedule of rates to graduate the charge according to the nature of the article carried. 48 "Classification is recognized as a necessary method of adjusting the burdens of transportation 46 When differentials are not disproportionate to differences in transportation conditions, higher rates on salt in packages than on salt in bulk are not unreasonable. Gottron Bros. Co. v. G. & W. R. R., 28 I. C. C. 38. 47 A classification rule applying minimum weights on shipments in corrugated paper or pulp cartons of certain sizes, when uncrated, instead of assessing on actual weights, is unreasonable. Millinery Jobbers Ass'n v. American Express Co., 20 I. C. C. 498. 48 McDill, Com., in F. Schumacher Milling Co. v. Chicago, R. I. & P. Ry., 6 I. C. C. Rep. 61. |