natural commercial advantages resulting from location or other favorable condition of one territory in order to put another territory on an equal footing with it in a common market. Each locality competing with others in a common market is entitled to reasonable and just rates at the hands of the carriers serving it and to the benefit of all its natural advantages. If this result in prejudice to one and advantage to another, it is not the undue prejudice or advantage forbidden by the Statute, but flows naturally from conditions beyond the legitimate sphere of legal or other regulation." 85 The Commission clearly recognizes not only the impossibility of equalizing natural advantages and commercial conditions and of placing all shipping points upon the same plane, but also that such a result would be unjust. Every locality is entitled to whatever advantages it possesses, whether they are due to nature or to the enterprise of its citizens.86 Carriers, it is true, have

85 Freight Bureau of the Cincinnati Chamber of Commerce v. C., N. O. & T. P. Ry., 6 I. C. C. Rep. 195, 4 Int. Com. Rep. 592. See to the same effect, Crews v. R. & D. Ry., 1 Int. Com. Rep. 703, 1 I. C. C. 401; James & M. Buggy Co. v. C., N. O. & T. P. Ry., 3 Int. Com. Rep. 682, 4 I. C. C. Rep. 744; Raworth v. Northern Pac. Ry., 3 Int. Com. Rep. 857, 5 I. C. C. Rep. 234; Eau Claire Board of Trade v. C., M. & St. P. Ry., 4 Int. Com. Rep. 65, 5 I. C. C. Rep. 264; Commercial Club v. C., R. I. & P. Ry., 6 I. C. C. Rep. 647; Commercial Club of Omaha v. C., R. I. & P. Ry., 6 I. C. C. Rep. 675; Freight Bureau v. C., N. O. & T. P. Ry., 7 I. C. C. Rep. 180; Danville v. So. Ry., 8 I. C. C. Rep. 409; Wichita v. Mo. Pac. Ry., 10 I. C. C. Rep. 35; C. Y. P. Ass'n v. V. S. & P. Ry., 10 I. C. C. Rep. 193; Washburn-Crosby Co. v. Penn. Ry., 11 I. C. C. 40; Valley Flour Mills v. A., T. & S. F. Ry., 16 I. C. C. 73;

Acme Cement Plaster Co. v. L. S. & M. S. Ry., 17 I. C. C. 30; Corporation Commission of N. C. v. N. & W. Ry., 19 I. C. C. 303; Wichita Falls System Joint Coal Rate Cases, 26 I. C. C. 215; Rates on Linseed Oil, 26 I. C. C. 265; West Virginia Rail Co. v. B. & O. Ry., 26 I. C. C. 622; Missouri River-Illinois Wheat and Flour Rates, 27 I. C. C. 286; Aransas Pass Channel & Dock Co. v. G. H. & S. A. Ry., 27 I. C. C. 403; Board of Trade of Chicago v. C. & A. Ry., 27 I. C. C. 530; Lebanon Commercial Club v. L. & N. Ry., 28 I. C. C. 301; Traffic Ass'n of St. Louis Coffee Importers v. I. C. Ry., 28 I. C. C. 484; Bryant Co. v. Ft. W. & D. C. Ry., 28 I. C. C. 594.

86 In the following cases the Commission emphasizes the impropriety of any attempt on its part to deprive a place of its natural advantages. Saginaw Board of Trade v. G. T. Ry., 17 I. C. C. 128; Carstens Packing Co.

often given great weight to commercial considerations in the fixing of rates,87 and the Commission might require such rates, when voluntarily established, to be maintained, but it will not initiate rates upon that theory.88 Nor will it require a carrier which has by rate adjustment as to one commodity enabled a manufacturer or producer to overcome a natural disadvantage of location to establish a like adjustment as to another commodity.89 On the other hand, the fact that a locality possesses advantages not enjoyed by its rivals does not deprive it of its right to a reasonable rate, nor justify any discrimination against it.90 But in the view of the Commission, whatever advantages are possessed by a city which tend to give it lower rates or superior service cannot be ignored." What constitutes a reasonable rate depends in part upon the natural situation of a city,92 and it is the purpose of the Act to secure to it a rate which in view of all the circumstances and conditions is reasonable and non-discriminatory. Every locality is entitled to such a rate as of right, and also to whatever business it can obtain under it.93 A shipper in choosing a

v. O. & W. Ry., 22 I. C. C. 77; Chamber of Commerce of New York v. N. Y. C. & H. R. Ry., 24 I. C. C. 55; Commercial Club of Superior v. G. N. Ry., 24 I. C. C. 96; In re Advances on Cooperage, 24 I. C. C. 656; In re Wool, Hides, and Pelts, 25 I. C. C. 185; In re Mine Rating, 25 I. C. C. 286; Wichita Board of Trade v. A., T. & S. F. Ry., 25 I. C. C. 625; Chamber of Commerce of Beaumont v. T. & N. O. Ry., 25 I. C. C. 695; Furniture Rates in the Northwest, 26 I. C. C. 655; Transcontinental Rates from Group F., 28 I. C. C. 1. See also State v. Adams Express Co., 171 Ind. 138, 85 N. E. 337.

87 City of Spokane v. No. Pac. Ry., 19 I. C. C. 162.

88 Douglas & Co. v. C., R. I. & P. Ry., 21 I. C. C. 541; International

90

90 Hecker-Jones-Jewell Milling Co. v. B. & O. Ry., 14 I. C. C. 356; Sioux City Commercial Club v. C. & N. W. Ry., 22 I. C. C. 110; Massee & F. Lumber Co. v. So. Pac. Ry., 23 I. C. C. 110; Indianapolis Freight Bureau v. C., C., C. & St. L. Ry., 26 I. C. C. 53.

91 Kindel v. N. Y., N. H. & H. Ry., 15 I. C. C. 555; Saginaw Board of Trade v. G. T. Ry., 17 I. C. C. 128. 92 Chamber of Commerce of Newport News v. So. Ry., 23 I. C. C. 345.

93 Receivers' & Shippers' Ass'n of Cincinnati v. C., N. O. & T. P. Ry., 18 I. C. C. 440.

locality takes it with all its advantages and disadvantages,94 and these in turn determine to some extent the commercial and transportation facilities which the carrier may confer upon it.95 But the natural disadvantages of a place should not be magnified unduly nor allowed to obscure its right to reasonable rates.96 On the other hand, the carrier must not for its own purposes disregard the natural advantages of a locality and bar it from competing with other places. Thus, when a carrier makes rates to two competing markets, which give the one monopoly over the other, because it can secure reshipments from the favored locality and none from the other, it goes beyond serving its fair interest, and disregards the statutory requirement of relative equality as between persons, localities, and particular descriptions of traffic.97 And so inequality in treatment of shippers and localities is indefensible where it has no other justification than the diversion by the carrier of through traffic from a shorter route over which it participates in carriage, so as to secure for itself greater aggregate revenue through a long haul by a different route, over which it is also engaged in transportation.98 Nor may railways create artificial differences in market conditions by an arbitrary differential in rates, whereby the product of one section of the country is assigned to one market, and the product of another section of the country to another market.99

§ 777. Discrimination against the staple industry of a locality.

Prejudice against the locality may arise from rates

94 In re Advances in Rates, Western Case, 20 I. C. C. 307; In re Investigation of Rates on Meats, 22 I. C. C. 160; Globe Milling Co. v. C., M. & St. P. Ry., 24 I. C. C. 594.

95 City of Spokane v. No. Pac. Ry., 21 I. C. C. 400.

96 Board of Trade of Carrollton v. C. & G. Ry., 28 I. C. C. 154.

97 Savannah Bureau of Freight & Transportation v. L. & N. Ry., 8 I. C. C. Rep. 377.

98

C. F. & I. Co. v. So. Pac. Ry., 6 I. C. C. Rep. 488.

99 In re Export Rates from Points East and West of Mississippi River, 8 I. C. C. Rep. 185.

1

which while not directed against any particular place have the result of injuring a staple industry of a place. Thus section 3 is violated and Chicago is prejudiced by an unduly high relative rate on live hogs as against packing house products; but where the rate is caused by genuine competition between carriers and where the result of the rate complained of has not been to change the volume of traffic or materially affect the business of the complainant, it is not unduly discriminatory.2 Duluth is prejudiced by higher rates on shingles than on lumber." Kansas and Missouri river points are prejudiced by a differential against corn products in favor of corn.1 So the localities in Official Classification Territory wherein hay and straw are produced were discriminated against by the act of several carriers in advancing those commodities from the sixth to the fifth class and thereafter charging fifth-class rates for transportation.5

§ 778. Equalization of values.

While a difference in rates may be made by reason of difference in value, it should not be so great as to equalize the difference in value in the ultimate market of the commodities carried. In a recent case the Federal court set aside the order of the Commission on the ground that the similarity of circumstances and conditions under which a service of carriage is rendered, which under the Act, requires an equality of rate, relates only to the circumstances and conditions which affect the service. And it was consequently held that where different coal mining localities are grouped into a district for rate-making purposes, a

'Chicago Board of Trade v. Chicago & A. R. R., 3 Int. Com. Rep. 233, 4 I. C. C. 158; Chicago L. S. Exch. v. Chicago G. W. Ry., 10 I. C. C. Rep. 428.

2 Interstate Commerce Commission v. C. G. W. Ry., 209 U. S. 108, 28 Sup. Ct. 493, 52 L. ed. 705, affirming 141 Fed. 1003.

* Duluth Shingle Co. v. D. S. S. & A. Ry., 10 I. C. C. Rep. 489.

Board of Railway Commissioners v. A., T. & S. F. Ry., 8 I. C. C. Rep. 304; In re Rates on Corn & Corn Products, 11 I. C. C. Rep. 212.

5 National Hay Ass'n v. L. S. & M. S. Ry., 9 I. C. C. Rep. 264.

carrier is not justified in making a different rate for the same or substantially similar service from a particular locality in such district or on the product of a particular mine or vein, from that charged others. That the difference in the product from such locality, mine, or vein and that from other mines in the district is such that it can pay a higher rate and still compete in the market is not material in this regard. The Commission will not attempt to equalize differences in the cost of production, whether natural or artificial." And when market quotations on grain were offered to show the advantages enjoyed by Omaha over Kansas City it said, "There is no difference in the intrinsic value of like grain in the two markets, and it is not within our province to adjust rates merely to equalize market conditions." 8

§ 779. Disproportionate charges inconsistent with public duty.

It is the belief of the writer that the public service law will not be satisfied in the end unless with some reasonable degree of certainty each applicant who requires a service is charged his proportion of the total cost, including in that. cost, over and above all current and fixed charges, a fair return upon proper capitalization. It must be admitted that the law relating to disproportion is still in the making; it is as indefinite as the law relating to discrimination was twenty-five years ago. By the weight of authority a generation ago, there was no law whatever against discrimination as such. As has been seen in a previous chapter at the beginning of this book, if in those days each applicant for the same service was quoted a rate reasonable in itself, all was then well; although outrageous differences even at that time might be evidence that the higher rate was unreasonable. In the same way to-day,

" Philadelphia & R. Ry. Co. v. Interstate Commerce Commission, 174 Fed. 687.

7 Andy's Ridge Coal Co. v. So. Ry., 18 I. C. C. 405.

8 Omaha Grain Exchange v. C., R. I. & P. Ry., 28 I. C. C. 680.