And under the amended form of Section 4, without permission from the Interstate Commerce Commission it is unlawful for railroads to grant reshipping privileges at a designated station on freight originating at certain distant points and to refuse such privileges for freight from nearer points on the lines passing through the same station.10 For example, the practice had developed among the roads of charging the local freight rate on hay, grain and grain products, passing through Ohio or Mississippi River crossing points destined for Nashville. This conces

rate to the intermediate points, that is to say, that under the power transferred to it by the section as amended the Commission was limited to ascertaining the existence of competition and to authorizing the carrier to meet it without any authority to do more than exercise its general powers concerning the reasonableness of rates at all points. But this proposition is directly in conflict with the statute as we have construed it and with the plain purpose and intent manifested by its enactment. To uphold the proposition it would be necessary to say that the powers which were essential to the vivification and beneficial realization of the authority transferred have evaporated in the process of transfer and hence that the power perished as the result of the Act by which it was conferred. As the prime object of the transfer was to vest the Commission within the scope of the discretion imposed and subject in the nature of things to the limitations arising from the character of the duty exacted and flowing from the other provisions of the Act with authority to consider competitive conditions and their relation to persons and places, necessarily there went with the power the right to do that by which alone it could be exerted, and therefore a consideration of the one and the other and the establishment of the basis by percentages was within the power granted. As will be seen by the order and as we have already said for the purpose of the percentages established zones of influence were adopted and the percentages fixed as to such zones varied or fluctuated upon the basis of the influence of the competition in the designated areas."

10 United States v. Louisville and Nashville Railroad Co., 235 U. S. 314, 59 L. Ed. The Supreme Court here said :-"We are of opinion that even if the allowance of such rebilling privilege when originally made was authorized by the statute and was therefore not a preference, the right to continue it had been expressly prohibited by statute until on application made to the Commission its consent to that end was given. The express or implied statutory recognition of the authority on the part of carriers to primarily determine for themselves the existence of substantially similar circumstances and conditions as a basis of charging a higher rate for a shorter than for a longer distance within the purview of the fourth section of the Act to Regulate Commerce and the right to make a rate accordingly to continue in force until on complaint it was corrected in the manner pointed out by statute, ceased to exist after the adoption of the amendment to section 4 by the Act of June 18, 1910, chapter 309, 36 Stat.

sion was originally based upon the water competition between those points. These shipments could then be held at Nashville for not longer than six months during which time they might be rebilled or reshipped to their destination in southern territory— and on such shipments so rebilled the freight charges into and out of Nashville were readjusted so that the total transportation

at L. 547. This results from the fact that by the amendment in question the original power to determine the existence of the conditions justifying the greater charge for a shorter than was exacted for a longer distance, was taken from the carriers and primarily vested in the Interstate Commerce Commission, and for the purpose of making the prohibition efficacious it was enacted that after a time fixed no existing rate of the character provided for should continue in force unless the application to sanction it had been made and granted. Inter Mountain Rate Cases, 234 U. S. 476, 58 L. Ed. 1408, 34 Sup. Ct. 986. If then it be that the rebilling privilege which is here in question, disregarding immaterial considerations of form and looking at the substance of things, was when originally established an exertion of the authority conferred or recognized by the fourth section of the Act, as there is no pretense that permission for its continuance had been applied for as required by the amendment and the statutory period for which it could be lawfully continued without such permission had expired, it follows that its continued operation was manifestly unlawful and error was committed in permitting its continuance under the shelter of the injunction awarded by the court below. To determine whether the fourth section is applicable requires a very brief consideration of the uncontroverted situation from which the rebilling privilege arose and upon the existence of which it depended. ***

"It is true that in argument it was said that the question here is whether there was a preference or discrimination under the second and third sections of the Act and not an inquiry under the fourth section and that a distinction between the various sections has been recognized. It has, indeed, been held that the provisions of the second, third and fourth sections of the Act being in pari materia required harmonious construction and therefore they should not be applied so that one section destroyed the others and consequently that a lesser charge for a longer than for a shorter distance permitted by the fourth section could not for such reason be held to be either a preference or discrimination under the second and third sections. Louisville and Nashville R. R. v. Behlmer, 175 U. S. 648, 44 L. Ed. 309, 20 Sup. Ct. 209; East Tennessee, etc., Rwy. Co. v. Interstate Commerce Commission, 181 U. S. 1, 45 L. Ed. 719, 21 S. C. 516. But the rule which requires that a practice which is permitted by one section should not be prohibited upon the theory that it is forbidden by another gives no support to the unwarranted assumption that that may be permitted which is devoid of all sanction and indeed is in direct conflict with all three of the sections, a result clearly arising in the case before us in consequence of the amendment of section 4. Indeed when the evil which it may be assumed conduced to the adoption of the amendment of the fourth section

charge on any shipment from any given Ohio or Mississippi River crossing by way of Nashville to any given destination in the designated southern territory was fixed at what it would have been had the shipment been billed and moved from the Ohio or Mississippi River point to its final destination without having been stopped in transit at Nashville. This privilege was not accorded to any shipments from points nearer to Nashville than the Ohio and Mississippi River crossings. Without the prior consent of the Interstate Commerce Commission, the Supreme Court declared, the enforcement of this practice to be a clear breach of the terms of section 4.

State Legislation on Long and Short-Haul.-The various states may, either by constitutional provision or legislative enactment, forbid intra-state carriers to charge a lesser rate for a longer than for a shorter haul on the same line, provided the traffic in question be between points entirely within the state.11

and the remedy which that amendment was intended to make effective are taken into view (see Inter Mountain Rate Cases, supra), it would seem that the case before us cogently demonstrates the applicability of the amendment to the situation. And it needs no argument to demonstrate that the application of the principle of public policy which the statute embodies is to be determined by the substance of things and not by names, for if that were not the case the provisions of the statute would be wholly inefficacious, as names would readily be devised to accomplish such a purpose."

II Louisville and Nashville Railroad Co. v. Kentucky, 183 U. S. 503, 46 L. Ed. 298, 22 Sup. Ct. 95. The state of Kentucky had adopted for intrastate traffic the provisions of the fourth section of the Act to Regulate Commerce. The court said:-"It is plain that the provision in question does not in terms embrace the case of interstate traffic. It is restricted in its regulation to those who own or operate a railroad within the state, and the long and short distances mentioned are evidently distances upon the railroad line within the state. The particular case before us is one involving only the transportation of coal from one point in the state of Kentucky to another by a corporation of that state. It may be that the enforcement of the state regulation forbidding discrimination in rates in the case of articles of a like kind carried for different distances over the same line may somewhat affect commerce generally; but we have frequently held that such a result is too remote and indirect to be regarded as an interference with interstate commerce; that the interference with the commercial power of the general government to be unlawful must be direct, and not the merely incidental effect of enforcing the police powers of a state. Erie Railroad Co. v. Pennsylvania, 158 U. S. 431, 439, 39 L. Ed. 1043, 15 Sup. Ct. 896;

But where such legislation interferes with the rates on interstate traffic or compels the interstate carrier to regulate or adjust its interstate rates with some reference to its rates within the state it is to such extent invalid, although its validity will not be questioned where its interference with interstate commerce is remote or merely indirect.

Water Competition.—Whenever a carrier by railroad shall in competition with a water route or routes reduce the rates on the carriage of any species of freight to or from competitive points, it shall not be permitted to increase such rates unless after hearing by the Interstate Commerce Commission it shall be found that such proposed increase rests upon changed conditions other than the elimination of water competition.

Water competition.

No cases have been decided by the Supreme Court involving the construction of this clause of section 4 since its adoption June 18, 1910.

Henderson Bridge Co. v. Kentucky, 166 U. S. 150, 41 L. Ed. 953, 17 Sup. Ct. 532."

See also Louisville and Nashville Railroad Co. v. Eubank, 184 U. S. 27, 46 L. Ed. 416, 22 Sup. Ct. 277, where the court said:-"We fully recognize the rule that the effect of a state constitutional provision or of any state legislation upon interstate commerce must be direct and not merely incidental and unimportant; but it seems to us that where the necessary result of enforcing the provision may be to limit or prohibit the transportation of articles from without the state to a point within it, or from a point within to a point without the state, interstate commerce is thereby affected, and may be thereby to a certain extent directly regulated, and in that event the effect of the provision is direct and important and not a mere incident. * * * It seems quite clear that any law which in its direct result regulates the interstate transportation of a single individual carrier, or company of carriers, violates the provision in question; that it is no answer to say the commodity can still be transported by another carrier or by water instead of rail, so long as the direct effect of the state legislation is to regulate the transportation of the commodity by a particular means, by rail instead of by water, or by a particular individual or company."

SECTION 5. POOLING OF FREIGHT AND DIVISION

freights and di

ings forbidden.

OF EARNINGS.

SEC 5. That it shall be unlawful for any common carrier subject to the provisions of this Act to enter into any contract, agreement, or combination with Pooling of any other common carrier or carriers for the poolvision of earn- ing of freights of different and competing railroads, or to divide between them the aggregate or net proceeds of the earnings of such railroads, or any portion thereof; and in any case of an agreement for the pooling of freights as aforesaid, each day of its continuance shall be deemed a separate offense. Pooling. This paragraph was included in the Act to Regulate Commerce of February 4, 1887, and has not been amended since that date. Despite the large amount of attention attracted to this clause at the time of the enactment of this statute it has been but seldom before the courts and the Supreme Court has had little occasion to construe its provisions.

This clause was discussed by the Supreme Court in the TransMissouri Freight Association case brought under the provisions of the Sherman Anti-Trust Act of July 2, 1890 in connection with the prohibition of all forms of combination, by trusts or otherwise, in restraint of trade. This case grew out of an agreement of a group of western railroads, entering into an association known as the Trans-Missouri Freight Association, for the purpose of dividing the field of business among the different participating roads and determining freight rates to be charged by all of them, and for similar purposes. It was urged that such an agreement by the railroads, as the one under discussion, was authorized by the Commerce Act. The court declared emphatically that the Commerce Act did not authorize an agreement of this nature that while it did not specifically prohibit such an agreement it did not either directly or by implication confer upon railroads any authority to make such an arrangement. The court said: "The 5th section prohibits what is termed 'pooling,' but there is no express provision in the Act prohibiting the maintenance of traffic rates among competing roads by making such an