of traffic, in any respect whatsoever, or to subject any particular person, company, firm, corporation, or locality, or any particular description of traffic to any undue or unreasonable prejudice or disadvantage in any respect whatsoever. By the general clauses of section 4 as recently amended, it is made unlawful for any common carrier subject to the provisions of this Act to charge or receive any greater compensation in the aggregate for the transportation of passengers, or of like kind of property, for a shorter than for a longer distance over the same line or route in the same direction, the shorter being included within the longer distance, or to charge any greater compensation as a through route than the aggregate of the intermediate rates subject to the provisions of this Act; but this shall not be construed as authorizing any common carrier within the terms of this Act to charge or receive as great compensation for a shorter as for a longer distance: Provided, however, That upon application to the Interstate Commerce Commission such common carrier may in special cases, after investigation, be authorized by the Commission 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.

8.751. Scope of its principles.

The object of the provisions of the Act, in so far as it relates to discrimination between localities, is to insure so far as possible that localities which are similarly situated shall receive equal treatment at the hands of the carrier. The Act recognizes, however that absolute equality is unattainable, and that some discrimination may be allowed, provided it is not undue. Whether any discrimination exists and whether it is undue are questions of fact, and the burden is on the carrier to justify itself. Under the third section considerable freedom of action is left to

the carrier so long as it keeps within reasonable limits, but the fourth section sets up a rigid rule that the rate for a long haul shall never be less than for a short haul included therein, unless the question has first been presented to the Commission and its approval of a departure from the rule obtained. In the original form of the Act, the carrier was forbidden to discriminate in favor of the long haul when made "under substantially similar circumstance and conditions." This qualification made it possible for the carrier to determine for itself as a primary question of fact whether or not dissimilar circumstances justifying a difference in rates existed, thus making it impossible for the Commission to pass upon it until an application to set aside the rate had been made to it by a carrier. This virtually nullified the section, and accordingly it was amended in 1910 by the omission of the words "under substantially similar circumstances and conditions." Under the Act as it now stands, it is for the Commission and not the carrier to make the primary decision as to whether a difference in conditions justifying a difference in rate exists. Applications for relief are numerous, and in general whatever is recognized as a dissimilarity of circumstances and conditions justifying discrimination under section 3 will be accepted by the Commission as a sufficient excuse for relief from section 4. Such appeals are most frequently based on the alleged existence of competition which the carrier must meet in order to participate in the traffic of a given point. This allegation is so easily made and the competition may so easily be either nominal or factitious that the Commission carefully scrutinizes the facts for the purpose of ascertaining whether the competition is real, whether it is substantial, and whether the carrier must make a preferential rate if it desires to meet it. The fourth section also contains two other rigid rules. The long haul rate is never to be greater than the sum total of the locals included therein, and whenever a carrier lowers a rate in

order to meet water competition it may not afterwards increase its rate merely because the water competition has been removed.

Topic A. Discrimination at Common Law and under Statute § 752. Locality has no right at common law to complain of rates.

At common law the carrier deals with individuals, not with cities or towns, and only a person, natural or artificial, has a right to complain that rates are too high. Except under a statute, a locality or the citizens in general cannot complain of the rates charged by a carrier. At common law the wrong, if any, is against the individual shippers at the various stations. They may complain if the rates charged them are unreasonable. While discrimination in rates between individuals is illegal, even if the higher rate is reasonable in itself, this is not true as to discrimination between localities. If a general rate charged to all shippers in a certain place is reasonable in itself, it is not rendered illegal merely because shippers in another place are charged a lower rate; but the lower rate may be used as evidence that the higher rate is unreasonable. Though discrimination between localities is not in itself illegal at common law, it is as offensive to sound public policy and to the principles of the law of public service as is discrimination between individuals. While it is true that a carrier possessed of such power may exert it for the benefit of the territory which it serves, it is also true that it is a power which cannot consistently with public safety be lodged in the hands of any individual or group of individuals who are not subject to public control. While it may be used to convert a wilderness into a city, it may also be used to convert a city into a wilderness. The public interest in the equal treatment of localities by carriers is so obvious that in time the courts might have placed discrimination between localities on the same

• Interstate Commerce Commission v. L. & N. Ry., 73 Fed. 409.

plane as discrimination between individuals. Not having done so, that step has been taken by legislation.

§ 753. Statutory regulation of discrimination between localities.

Under these provisions of the Act, quoted in the first section of this chapter, a community is entitled to something more than a reasonable rate; it is entitled to a nondiscriminatory rate. A carrier may not say: "We will give to this community a reasonable rate," and meet the full requirement of the law. It must view its rates as a whole, and see to it that they effect no advantage or preference to one community over another, which does not arise necessarily out of transportation advantages which the one has over the other. A community may be less concerned with the absolute reasonableness of the rate to which it is subject than it is with the rates charged to its competitors. Minneapolis and Duluth, for instance, are less concerned with the amount of the rate than they are with the maintenance of the present adjustment to those points and to Chicago. A change in the relative situation, even though slight, may give to one pre-eminent advantage and destroy the other. Any discrimination is prima facie unlawful. It always calls for explanation. The general principle has been well expressed in these words: "It is insisted that these differentials give an undue preference for the reason that they are without excuse or justification. If the assumption of fact in this statement is true, the conclusion probably follows. A preference without legitimate excuse would be in and of itself an undue and unreasonable one." It follows, therefore, that “a disturbance of a settled equality between localities by making for the first time a difference between them is prima facie

Railroad Commission of Nevada

v. Sou. Pac. Ry., 21 I. C. C. 329; In re Advances in Demurrage Charges, 25 I. C. C. 314.

In re Investigation of Advances

"a

in Rates on Grain, 21 I. C. C.

22.

Prouty, Com., in New York Produce Exchange v. Baltimore & O. R. R., 7 I. C. C. Rep. 613.

11

unreasonable, and should be looked upon with suspicion." 10 A carrier may not serve one community at the expense of another, or build a rate wall around one point to advance the interests of a competing point. Neither may it by arbitrary rate adjustments determine that one market shall have a certain territory and another market a certain other territory. Every market and every shipper has a right to go as far as reasonable and non-discriminatory rates will carry.12 Under such rates, producers, dealers and consumers have a right to select the markets to which they will ship their commodities and the routes by which they shall move. 13 Where the same carrier serves two districts which are in substantially similar circumstances and conditions, the serving carrier cannot lawfully prefer one in any manner whatsoever. 14 Equality between great and small is one of the underlying principles of the Act. 15 Even if the removal of an unjust discrimination between two markets somewhat injuriously affects a third market, that fact would be no excuse for permitting the unjust discrimination to continue. 16 If a rate is unlawful, the effect of its removal upon either the railway or the shipper is immaterial. Hence if an application of rates to actual conditions works a discrimination against a local creamery in favor of a centralizer, the rates are for that reason unlawful and should not be maintained, no matter what the effect upon the business or the property rights of the centralizer may be. 17

10 Knapp, Com., in Board of Trade of Lynchburg v. Old Dominion S. S. Co., 6 I. C. C. Rep. 632.

"Indianapolis Freight Bureau v. C., C., C. & St. L. Ry. Co., 26 I. C. C. 53.

12 In re Advances on Barley, 24 I. C. C. 664.

13 Commercial Club of Superior v. G. N. Ry., 24 I. C. C. 96; Aransas Pass Channel & Dock Co. v. G. H. & S. A. Ry., 27 I. C. C. 403.

14 Corn Belt Meat Producers' Ass'n v. C., B. & Q. Ry., 14 I. C. C. 376; Black Mountain Coal Land Co. v. Southern Ry., 15 I. C. C. 286.

15 Harbor City Wholesale Co. v. So. Pac. Ry., 19 I. C. C. 323.

16 Superior Commercial Club v. G. N. Ry., 25 I. C. C. 342.

17 Beatrice Creamery Co. v. I. C. Ry., 15 I. C. C. 109.