very probably by the weight of authority, there is no law against disproportion as such. Provided each applicant for different service is quoted a rate which is reasonable in itself, it may be that there is no redress by established law, however outrageous the disproportion may be; although it seems to be agreed that outrageous differences may be evidence that the higher rate is unreasonable in itself. And yet it is quite in the line of the evolution of the public service law that a rule against disproportion as such may eventually be recognized, despite the fact that it might interfere with the business policies of the public service companies even more than the present rule against outright discrimination has done. For the same principles which forbid any differences when the conditions are the same, should prohibit disproportionate differences when the conditions are different.

Topic D. Long and Short Haul

§ 780. Long and short haul at common law.

The question as to whether a carrier may charge less for a long haul than for a short one included therein is but one phase of the general problem as to whether there is any legal requirement that rates shall be relatively reasonable. Whether a lower charge for a longer haul be justifiable or not, there are many cases in which it would be hard in the absence of legislation to prevent it. In the case of carriage of goods, it appears to be clear abstractly that the owner may demand that his goods shall be delivered up to him at any point on the journey, provided it is reasonably easy for the carrier to comply with the demand. It is of course possible for a railroad to run freight trains through without stopping from one end to the other of the long haul, and thus defeat the demand of the owner to have his goods at the intermediate point; and it is also in its power so to make up the train that it will be difficult to drop goods directed to the end of the route at a way station. This being the case, it is not difficult in the case of goods

to defeat the demand of an owner for the delivery of his goods short of their destination; and as a practical matter, therefore, a lower charge for a longer haul may be enforced. On the other hand, it should be said that the common law has thus far been concerned only with the absolute reasonableness of rates. If the charge to the intermediate point is not inherently unreasonable the shipper cannot complain because a more remote point has a more favorable rate. While it is possible that any discrimination by a carrier against either a person or a locality may in time come under the ban of the common law, it cannot be said that discrimination against localities is at present so regarded.

§ 781. Legal justification of lower long-haul rate.

As a matter of reasonableness the charge has still to be justified at common law; but this may be done in some cases. If competition is met at one point and not at another, a competitive rate is established at the former point. A railroad whose line runs through the noncompetitive to the competitive point must at the latter point either meet the competitive rate or lose all business. It must of course give up the business rather than carry at a loss, and throw upon the remaining traffic the burden of supporting the road and also of making up the loss. But the competitive rate is ordinarily slightly remunerative; it yields a net income, though less than is necessary to pay its proportion of the fixed charges. If the business is given up, all the fixed charges must be paid by the traffic at the non-competitive points; if the competitive rate is met and business obtained, the profit from the business will go to reduce the amount of fixed charges to be paid by the non-competitive traffic. As the competitive traffic will not pay its share of the fixed charges, the noncompetitive traffic, having more than its share of the fixed charges to bear, will necessarily pay a rate higher than the competitive rate in proportion to the distance;

and it may well be obliged to pay absolutely a higher rate than the competitive rate for a longer haul. Nevertheless, the rate will be lower than it would be if the railroad did not meet the competitive rate and obtain its share of the business; and therefore, being the lowest rate which the carrier can charge and obtain fair compensation, it is reasonable at common law.

§ 782. Statutory regulations of long and short-haul rates. The charge by a carrier of a less rate between two points than is charged for carriage from the same initial point to an intermediate point on the same route seems at first sight indefensible upon any legal basis. Nevertheless such rates have always been common in every railroad schedule and are still vigorously defended. Such discrimination flourished practically without any real check during the period when no rule against any discrimination was recognized, but its seeming unfairness has led to the passing of statutes in many jurisdictions forbidding the charging of less for a long haul than for a short haul one included therein. The chief of these is the Interstate Commerce Act of 1887, which not only forbade all discriminatory charges, but in a separate section (section 4) expressly forbade charging less for a long haul than for a short one included in it when "under substantially similar circumstances and conditions. This section also provided, however, that upon application by the carrier the Commission might authorize a less charge for the longer haul. But the carriers set up the contention that such an application need be made to the Commission only when the two hauls were made "under substantially similar circumstances and conditions," and that any circumstances which seemed to them to constitute a dissimilarity of condition which would justify a discriminatory charge operated ipso facto to exempt them from the restraints of this section and authorized them to give preferential rates. Thus the carrier decided primarily whether the two hauls

were under similar conditions, leaving to the Commission only such authority over the rates established as was conferred upon it by the second and third sections of the Act. This construction of the Fourth Section was adopted both by the Commission 10 and by the Supreme Court."1 In so holding they were no doubt influenced by the fact that the English Act, on which this clause was based, had been so construed by the English courts.12 Thereafter the power of the Commission to grant exemption from the rule of equality set up in the Act became practically useless, 13 and application was made to it only in extraordinary cases, such as the failure of crops 14 and the sudden rush to the Klondike.15 Of course, the decision of the carrier as to the existence of a dissimilarity of circumstance and condition was subject to review by both the Commission and the courts, but if the carrier had established a rate which, even though discriminatory, was one

"The philosophy of the Act as expressed by Judge Shiras in Van Patten v. Chicago, M. & St. P. Ry., was that competition would reduce the rates to a fair amount at all competitive points, and that the Fourth Section would then keep the rates at non-competitive points down to the level of the competitive rates. The courts, however, finally decided, in view of the limitation of the section to cases where the conditions were substantially similar, that competition with other railroads would justify a lower rate for the longer haul, and as practically all cases of the sort before the passage of the Act had been due to the competition of other railways, this decision in effect qualified the whole section.

10 In re L. & N. Ry., 1 I. C. C. 31, 1 Int. Com. Rep. 278. But the Commission abandoned this view in Georgia Railroad Commission Clyde S. S. Co., 5 I. C. C. Rep. 324.

V.

11 Interstate Commerce Commission v. A., T. & S. F. Ry., 50 Fed. 295; Interstate Commerce Commission & C., N. O. v. T. P. Ry., 56 Fed. 925; Behlmer v. L. & N. Ry., 71 Fed. 835; Interstate Commerce Commission v. Ala. Mid. Ry., 168 U. S. 144, 42 L. ed. 414, 18 Sup. Ct. 45; L. & N. Ry. v. Behlmer, 175 U. S. 648, 44 L. ed. 309, 20 Sup. Ct. 209; E. T., V. & G. Ry. v. Interstate Commerce Commission, 181 U. S. 1, 45 L. ed. 719, 21 Sup. Ct. 516.

12 A good account of the working of the Fourth Section before the amendment of 1910 may be found in City of Spokane v. No. Pac. Ry., 21 I. C. C. 400.

13 Phipps v. London & N. W. Ry., 1892, 2 Q. B. 299.

14 Re F. E. & M. V. Ry., 6 I. C. C. Rep. 293; World's Fair, Re R. W. & O. Ry., 6 I. C. C. Rep. 328.

15 Re A., T. & S. F. Ry., 7 I. C. C. Rep. 593.

which the fourth section authorized, it could not be condemned as illegal, for what the law authorizes cannot be unlawful. It was evident, however, that this construction of the Act vested in the carrier the power to make a primary decision on a question which was essentially public in its nature. 16 From the standpoint of public policy, this was not a desirable situation.

§ 783. The Fourth Section Amendment of 1910.

The result reached by the construction placed upon the fourth section in its original form was so far from the legislative intent that in 1910 the section was amended by the omission of the phrase as to similarity of circumstances and conditions, and at the same time the maximum through rate was fixed at an amount not to exceed the sum total of the intermediate rates. This is an unyielding rule from which there can be no relief even though the existence of water competition be proved." Neither may it be evaded through the establishment of blanket rates, for these are subject to the limitation that from no part of the group covered by them may a lower rate be constructed on a combination of locals. 18 It was also proIvided that if rates were reduced in order to meet water competition, the carrier might not increase the rates unless the Commission should find that such proposed increase rests upon some change of condition other than the elimination of water competition, but it has been held that the suspension of lake navigation during four months of the year is not an "elimination of water competition" within the meaning of the Act. 19 The Commission has also held

16 T. & P. Ry. v. Interstate Com. merce Commission, 162 U. S. 197, 40 L. ed. 940, 16 Sup. Ct. 666.

17 National League of Commission Merchants of U. S. v. A. C. L. Ry., 20 I. C. C. 132.

18 Hydraulic Press Brick Co. v. Vandalia Ry., 15 I. C. C. 175.

19 American Insulated Wire & Cable Co. v. C. & N. Ry., 26 I. C. C. 415. This clause does not apply to rate reductions made before June 18, 1910. Westbound Lake-andRail, Knit Goods Commodity Rates, 32 I. C. C. 54.