merce.

We wish, in addition, to draw attention here to three decisions by the Supreme Court of the United States which bear with peculiar significance upon the work of this Commission.

The first of these is Texas & Pacific Railway Company. v. Abilene Cotton Oil Company, 204 U. S., 426. The cotton oil company had transported cotton seed from certain points in the State of Louisiana to its factory at Abilene, Tex. It claimed that the charges made by the railway company for this service were exorbitant and brought suit in the State court to recover the excess of those charges above a reasonable rate. The jury found that the charges were excessive.

The rates under which the cotton seed moved had been duly filed with the Interstate Commerce Commission and were the lawful rates applicable to the movement of that commodity. The railway company contended that the reasonableness of these rates could not be contested in court, certainly not in the State court. The trial court sustained the position of the railway company, but the Texas court of final resort reversed that holding and gave judgment for the plaintiff upon the verdict of the jury.

The Supreme Court of the United States set aside this judgment. At common law railways were obliged to accord reasonable rates for services rendered and suit could be maintained to recover the excess if an unreasonable rate was charged. The eighth and ninth sections of the act to regulate commerce provide that a party damaged by a violation of any provision of that act may either bring suit in the proper circuit court for the recovery of damages or may present his claim to the Commission. The charging of an unreasonable rate is a violation of the act, and it had been generally understood that a shipper might either maintain his suit at law or present his claim to the Commission. The court held, however, that the only remedy against the payment of an unreasonable interstate rate was by application in the first instance to the Commission. No suit at law could be brought until the Commission had acted.

The same reasoning upon which this decision rests would lead, apparently, to the further conclusion that in every case where the Commission is invested with authority to determine whether a rate, regulation, or practice is in voilation of law, any claim for damages arising out of such violation or any proceeding to permanently correct such violation or obtain damages there for must be instituted before the Commission. The court can only act by reviewing in some form the conclusion which the Commission has first reached.

The court did not suggest in the Abilene case the extent to which it would revise the findings and conclusions reached by the Commission, but some intimation upon this point is afforded by the later case, Illinois Central Railroad Company et al. v. Interstate Commerce Commission, 206 U. S., 441.

Carriers leading from southern mills to the Ohio River had advanced their rates on yellow pine lumber 2 cents per 100 pounds, and this advance had been condemned by the Commission, which had ordered carriers to cease and desist from charging the advanced rates. Suit having been brought by the Commission to enforce this order, the court below decreed in favor of the complainant, and this decree was affirmed by the circuit court of appeals. In the Supreme Court, counsel for the railways asked the court to lay down certain rules of transportation law by which the reasonableness of rates might be determined. This the court declined to do, stating that while the determination of a reasonable rate might frequently involve the application of legal principles and that, in such event, the court would pass upon the correctness of the principle, still, as a general proposition, the reasonableness of rates was largely a question of fact, which must be passed upon, in the first instance, by the Commission, whose findings of fact would not be lightly disturbed. The court, at page 454, used this language:

* * * And the findings of the Commission are made by law prima facie true. This court has ascribed to them the strength due to the judgments of a tribunal appointed by law and informed by experience. (Louisville & Nashville Railroad Co. v. Behlmer, 175 U. S., 648; East Tenn., etc., Railroad Co. v. Interstate Commerce Commission, 181 U. S., 1, 27.) And in any special case of conflicting evidence a probative force must be attributed to the findings of the Commission, which, in addition to "knowledge of conditions, of environment, and of transportation relations," has had the witnesses before it and has been able to judge of them and their manner of testifying.

It also cited with approval the following words from its opinion in Cincinnati, Hamilton & Dayton Railway Company v. Interstate Commerce Commission, 206 U. S., 142:

* *

*

The statute gives prima facie effect to the findings of the Commission, and when those findings are concurred in by the Circuit Court we think that they should not be interfered with, unless the record establishes that clear and unmistakable error has been committed.

Upon this same point, as applied to the actual work of the Commission, the case Atlantic Coast Line Railroad Company v. North Carolina Corporation Commission, 206 U. S., 1, is instructive.

The North Carolina commission had ordered the Atlantic Coast Line Railroad to put on an additional passenger train for the purpose of making with the Southern Railway a connection which the public interest required. The railroad declined to obey, and appealed to the State court, as it might under the statute of North Carolina, for a review of that order.

Upon a trial by jury, in accordance with the law of that State, a special verdict was rendered to the effect that the public interest required the putting on of the additional train; that the expense of operating it would be $40 per day and that the receipts would be $25

per day. The trial court upon this verdict gave judgment for the railway, but this was reversed by the supreme court of North Carolina, which decreed an enforcement of the order of the commission. Upon error to the Supreme Court of the United States the decree of the supreme court of the State was affirmed. It was confidently insisted that inasmuch as the cost of operating the train was more than the receipts to be derived from this source, here was a clear taking of property without due process of law, and that, therefore, the order of the commission in question was in violation of the fourteenth amendment.

The court distinguished between a single rate and a schedule of rates; between a single train and an entire passenger service. It held that while the State must allow to this railroad company a reasonable return for the entire service rendered by it, it did not, as a matter of law, follow that the State might not in the public interest require that railroad to render a particular service for less than the actual cost. It decided, in substance, that an order of this kind, made with respect to a single rate or a single practice, would not be obnoxious to the due process clause or the equal protection clause of the fourteenth amendment, unless it was so arbitrary and unreasonable as not to be within the fair limit of legitimate regulation.

This, when considered in connection with the language of the court in the Illinois Central case above referred to, indicates that a decision of the Commission upon a question of fact which involves no misconception or misapplication of law, and which is regularly made, will seldom be disturbed unless it is manifestly wrong.

Another point of considerable general interest was passed upon by the court in Illinois Central Railroad Company v. Interstate Commerce Commission, supra. The Commission had frequently held that railways might not tax the public through the medium of their rates both for the betterment of their properties and for dividends to their stockholders, and this holding was repeated in the above case. The defendants confidently insisted that this was error upon the part of the Commission, relying upon Union Pacific Railroad Company v. United States, 99 U. S., 402, in which the Supreme Court had declared that in determining net revenues for the purposes under discussion in that case, improvements to the property might properly be charged against gross revenues. The court in the Illinois Central case discussed the Union Pacific case, showing that it had no application to the question as presented, and expressly decided that improvements which added to the permanent value of the property, which had presumably increased the earning power of the property, which were not to be used for a single year, but for many years, should, as between the public and the railway, in estimating a reasonable transportation charge, be made out of net income and not out of earnings.

In other words, that a railroad company has no right to put its earnings into betterments and at the same time pay its stockholders a dividend, provided the dividend and the amount invested in improvements would together exceed a reasonable return upon the value of the property.

RATE SCHEDULES AND APPLICATION OF RATES.

Definiteness, clearness, and simplicity in stating transportation charges, uniformity in applying the rates so stated, and stable conditions are ends aimed at in the law and sought by the Commission in administering it.

Prior to the enactment of the amended law the time of notice of changes in rates required by the act was too short to give stability to conditions of transportation, even if the terms of the law had been carefully observed. Tariffs were issued upon statutory notice and upon no notice at all. Opportunities to get business were met by issuing a tariff "expiring with this shipment;" by quotation of rates found in some other carrier's tariffs and applicable via another route; by quotation of rates not found in any tariff; by forwarding under regular tariff rates and refunding an agreed-upon portion thereof and by forwarding under regular tariff rates and agreeing to "protect” any rate of any competing carrier. Some carriers openly published declarations of which the following is a sample:

"Tariffs published by connecting lines to competitive points on this road, or to points beyond, which do not read in connection with this road, will be protected by this road, if the rates in such tariff are less than those published by originating line in connection with this road."

As a necessary outcome of such practices the official files of tariffs were very voluminous and contained an endless number of contradictions and conflicts. To bring order out of this condition and at the same time have all the carriers conducting transportation to the utmost extent of their overtaxed facilities was an important, a delicate, and a large undertaking.

This work was approached by the formation, after exhaustive conferences with traffic officials of carriers, of a code of regulations governing the construction of tariffs, which was promulgated to become effective May 1, 1907, and June 1, 1907, as to freight and passenger tariffs, respectively.

This code has been supplemented from time to time, as occasion demanded, by administrative rulings of the Commission, by which many misunderstandings and differences of opinion have been harmonized. It is pleasing to note that such rulings have, very generally, been cheerfully accepted by carriers and shippers.

As an aid to elimination of the objectionable, contradictory, and conflicting features which were contained in the tariffs that were on

file and in use when the amended act became effective, and for the purpose of permitting carriers to promptly adjust interstate rates in harmony with intrastate rates that were changed by State authorities, the Commission has exercised its discretion to permit changes in rates and schedules on less than statutory notice more freely than it would under different conditions.

Many of the features that have been eliminated affected the interests of so many shippers and localities that considerable time was necessarily consumed in arranging for and providing superseding rates and regulations which would not work severe or irreparable injury to innocent parties. Much has been done along this line, much is now being done, and much remains to be done. The task is by no means hopeless and, now that a good foundation is laid for it, more progress will be apparent on the surface in the future. In this work the Commission has insisted upon all of the progress that was possible within the limits of the ability of the carriers' tariff and rate forces and the capacity of the available printing facilities. In the twelve months ended November 30, 1907, there were filed with the Commission 220,982 tariff publications, all containing changes in rates and rules governing transportation, and about 400,000 notices of concurrence in tariffs.

Under former practices, adopted and followed by the carriers, no provision was made for definite concurrence by a carrier in tariffs issued by another carrier. The general, if not universal, understanding was that a carrier accepted any rates published by another carrier if it did not file specific notice of nonconcurrence therein. This liability was not, however, always accepted, and numerous complications and controversies arose from a carrier denying responsibility under a tariff on the ground that it had not specifically concurred therein. The tariff regulations adopted by the Commission require affirmative, definite concurrence from a carrier before it may be named as a party to a joint tariff.

Much traffic is moved under joint tariffs, participated in by many carriers, and issued by joint agent, who acts under powers of attorney given by his several principals. This plan commends itself strongly. It operates to reduce the number of tariff publications and assists greatly in avoiding conflict between tariffs of a given carrier in two or more of which conflicting rates upon the same commodity, between the same points and at the same time are, under old practices, not infrequently found.

The unrestrained and run-mad competition which has been resorted to in the past has resulted in the establishment of some conditions, privileges, contracts, and allowances in connection with the furnishing of transportation by carriers, which created, or which contain the elements of, the discriminations which the law condemns. 24274-08-2