trol. Nor can the carrier justify unreasonably high rates on domestic business upon the ground that it will be able only in that way to meet losses on its interstate business. So far as rates of transportation are concerned, domestic business should not be made to bear the losses on interstate business, nor the latter the losses on domestic business.'

§ 961. Methods of the division.

The method of procedure in such a case is to find what part of the gross receipts is derived from business within the State, and then find the actual cost of doing the business. This cannot be found by taking a proportionate part of the cost for the entire line, since the cost of moving local freight is greater than that of moving through freight. "Additional fuel is consumed at each station where there is a stop. The wear and tear of the locomotive and cars from the increased stops and in shifting cars from main to side tracks is greater; there are the wages of the employees at the intermediate stations, the cost of insurance, and these elements are so varying and uncertain that it would seem quite out of reach to make any accurate comparison of the relative cost. And if this is true when there are two separate trains, it is more so when the same train carries both local and through freight. It is impossible to distribute between the two the relative cost of carriage. Yet that there is a difference is manifest, and upon such difference the opinions of experts familiar with railroad business is competent testimony, and cannot be disregarded. The fact that an exact mathematical computation of the cost is impossible is immaterial; the cost must be found, as best it may, before the reasonableness

6 In Minnesota the State court had taken the other alternative possible by assuming that a similar rate would be adopted throughout the whole system, the court feeling that

there was not any good reason why a railway system should be divided on State lines at all. Steenerson v. Gt. Northern Ry. Co., 69 Minn. 353, 72 N. W. 713.

of the local rate can be determined. There are many things that have to be determined by court and jury in respect to which mathematical accuracy is not possible."7

$962. Bases of the proportion.

In one of the State cases the problem was discussed in this manner: "The other issue the respondent has likewise failed to meet. Taking the figures from the brief filed by the respondent, we find that the local business alone produces a net earning of at least 3 per cent. on the total value of the road in Florida, charging against such income the whole of the taxes. While a State is not permitted to offset local business against interstate business, and to justify low local rates by reason of the profitableness of the latter, yet the interstate and foreign business may and should be considered in determining the proportion of the value of the property of the company assignable to local business. There is no proper showing of the interstate and foreign business, so that we may determine on what fraction of the whole value of the property in Florida the company might be entitled to earn an income from local business. There is, however, a showing that the interstate and foreign business is large, and on a proper showing and a proper proportioning of the service between domestic and foreign business this percentage of net income would be largely increased. Under the scheme of distribution of the earning of the whole road between the several States through which it runs, a ton of Florida oranges or early vegetables is allowed the same credit as a ton of coal in Virginia, and no more. We have examined with care all the rate cases decided by the Supreme Court of the United States, and see nothing therein to conflict with the views expressed above."

7 Chicago, M. & St. P. Ry. v. Tompkins, 176 U. S. 167, 44 L. ed. 418, 20 Sup. Ct. 336, reversing S. C. 90 Fed. 363.

8 State v. Atlantic C. L., 48 Fla 114, 37 So. 657.

§ 963. Apportionment of total expense.

The recent State legislation reducing passenger fares could only apply to intrastate business. To determine whether this reduction was unjustifiable the Federal courts saw that they were required not only to allocate the respective costs of passenger and freight business but also to apportion these to the intrastate and interstate business. In one of the latest cases' on this subject Judge McPherson narrowed the discussion to two theories-the mileage proportion and the revenue proportion. He admitted that neither of these would result in mathematical accuracy; but he insisted that as a practical matter the one which promised to be most satisfactory should be taken as the basis of action. "The theory to now recognize must be either the proportion of earnings, State or interstate, or ton and passenger mile." After reviewing what few cases there are bearing upon the point, all of which agree upon the greater proportionate cost of local business as compared with through business, he said that, although other standards are suggested, the more satisfactory and accurate was "the difference in cost in relation to the revenue.'

§ 964. Inherent difficulties of the problem.

99 10

The interblending of operations in the conduct of interstate and local business by interstate carriers is apparent. The same right of way, terminals, rails, bridges, and stations are provided for both classes of traffic; the proportion of each sort of business varies from year to year, and indeed, from day to day. It may be urged, therefore, no

9 In St. Louis & S. F. R. R. Co. v. Hadley, 168 Fed. 317.

Citing Northern Pacific R. R. Co. v. Keyes, 91 Fed. 47; Chicago, M. & St. P. Ry. Co. v. Smith, 110 Fed. 473; In re Arkansas R. R. Rates, 163 Fed. 141; Chicago, M. & St. P. Ry. Co. v. Tompkins, 176 U. S. 167, 44 L. ed. 417, 20 Sup. Ct. 336.

10 In Washington So. Ry. v. Com. (Va.), 71 S. E. 539, the court refused in the absence of proof by the carrier of the proportions of its interstate and intrastate accounts to protect it from the operation of a 21⁄2 cent per mile passenger rate order of the State Commission.

regulation of rates can be just which does not take into consideration the whole field of the carrier's operations, irrespective of State lines. And attention is drawn to the extreme difficulty and intricacy of the calculations which must be made in the effort to establish a segregation of intrastate business for the purpose of determining the return to which the carrier is properly entitled therefrom. Yet realizing all this the Supreme Court said in the Minnesota Rate Cases: 11 "But these considerations are for the practical judgments of Congress in determining the extent of the regulation necessary under existing conditions of transportation to conserve and promote the interests of interstate commerce. If the situation has become such, by reason of the interblending of the interstate and intrastate operations of interstate carrier, that adequate regulation of their interstate rates cannot be maintained without imposing requirements with respect to their intrastate rates which substantially affect the former, it is for Congress to determine, within the limits of its constitutional authority over interstate commerce and its instruments the measure of the regulation it should supply." 11a

§ 965. Comparisons with interstate rates.

The fact that a rate does not cross a State line is no reason why it may not be considered when an interstate rate over the same line and for substantially the same distance is under examination. 12 The rates established by a State Commission cannot be taken as conclusive of the unreasonableness of higher interstate rates between the

11 230 U. S. 352, 33 Sup. Ct. 729. 11 It should be noted that, with what seems an inconsistency, the regulation of service is not dealt with as precisely in this matter as the regulation of rates; at all events, in ordering a service to be performed within its borders the commission of

a state will apparently be allowed to justify its requirement, if the business of the system as a whole is profitable. Atlantic C. L. Ry. v. No. Car. Corp. Comm., 206 U. S. 1, 51 L. ed. 993, 27 Sup. Ct. 585.

12 Board of Mayor and Aldermen v. V. & S. W. Ry., 15 I. C. C. 453.

same points, since the rates voluntarily established by a carrier are entitled to the same presumption of unreasonableness as that attaching to rates prescribed by a State Commission.13 In determining the reasonableness of an interstate rate, the decisions of the several State Commissions are worthy of consideration; but the Commission is not justified in accepting a comparison of lower intrastate rates prescribed by the State authorities, with those applying on interstate traffic as conclusive of the unreasonableness of the interstate rates.14 While in determining interstate rates similar rates established by State authority must have great influence, especially where they have been long acquiesced in by the carriers; still such rates have no binding force upon the Commission, and where the Commission finds the State rates unreasonable, a through interstate rate may be established by it higher than the sum of the State locals.15 The Commission is not controlled by the rates established by State Commission, unless they seem to be reasonable when applied to interstate movement. 16 Certainly a low State rate is no reason for exacting unreasonable interstate rates.17

§ 966. Supremacy of the federal system.

The Shreveport case 18 recently decided by the Supreme Court has resolved most of the doubts in relation to the situation in question. This appeal to the courts was the result of an order of the Commission directing the carriers concerned "to duly and justly equalize the terms and conditions" upon which they will extend "transportation to traffic of a similar character, moving into Texas from Shreveport, with that moving wholly within Texas." In

13 Paola Refining Co. v. M., K. & T. Ry., 15 I. C. C. 29.

14 Marshall Oil Co. v. C. & N. W. Ry., 14 I. C. C. 210.

15 Corn Belt Meat Producers Ass'n v. C., B. & Q. Ry., 14 I. C. C. 376.

16 Bartles Oil Co. v. C., M. & St. P. Ry., 17 I. C. C. 146.

17 Fort Dodge Commercial Club v. I. C. R. R., 16 I. C. C. 572.

18 Houston, E. & W. T. Ry. v. United States, 234 U. S. 833, 34 Sup. Ct. 833.