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subject. It was therefore held that the Commission might properly proceed with that branch of the case.

The Commission also held, with respect to the order to cease and desist, that all territory over which the reduction of 1896 applied to the original case was ended and no further steps could be had, but that it was still open to the Commission to inquire what that territory was and to proceed with respect to territory not embraced in those limits to correct the unreasonable rates produced by the exaction of this $2 charge.

The decision last rendered in this case shows that the matter of reparation was further held in abeyance, and that the only branch of the case for determination was that relating to an order for the future. This involved two questions of fact: First. To what territory did the reduction of 5 cents in October, 1896, apply? Second. As to the remaining territory had the rates to Chicago become so low that the addition of the $2 terminal charge was not unjust and unreasonable? Some other matters were also considered by the Commission. The general findings and rulings of the Commission in this case are briefly stated as follows:

A railroad company may maintain its live-stock depot at a particular point, although it neither builds nor repairs nor insures the stock pens into which the stock is unloaded and does not hire or control the men who do the unloading; and whether the Union Stock Yards at Chicago have been, in railroad phraseology or in legal definition, the depot of defendants is immaterial, for they were and still are, in fact, the point to which the stock is transported and unloaded under the shipping contract of defendants.

Excluding the territory covered by the reduction of 1896, which is described in the findings of the Commission, live-stock rates to Chicago, participated in by the defendant carriers, were on May 31, 1894, reasonable compensation for the service performed, including delivery at the Union Stock Yards in Chicago. At all times since that date such rates have been and now are sufficiently high to include a delivery at the stock yards as such delivery was made prior to June 1, 1894. While since that time there have been advances and reductions, they have been about equal, averaging probably less than 1 cent per 100 pounds, and the great majority of rates remain the same as they were on May 31, 1894. These scattered reductions, as well as the advances, applied variously, some on cattle, some on sheep, and others on hogs.

No change in the rate has been made to offset the addition of the terminal charge in Chicago of $2 per car or with any reference to such charge. The imposition of any such terminal charge, except in so far as the cost in Chicago of delivery has been increased by the trackage charge paid by defendants to the stock-yards company,

since June 1, 1894, is unreasonable. Such increased cost of delivery-that is to say, such trackage charge-is fairly estimated for all the defendants at $1 per car. Thereupon the Commission held, first, that delivery to the Union Stock Yards prior to June 1, 1894, was included in the rate and was in no sense a gratuity; second, that outside of the excluded territory the terminal charge for delivery to the stock yards in Chicago of $1 per car is reasonable, and that defendants' terminal charge of $2 per car, exacted since June 1, 1894, is unreasonable.

As before stated, the case was retained for further proceedings in the matter of reparation.

The Tift Lumber case.-A case brought before the Commission by H. H. Tift and others against the Southern Railway Company and other southeastern carriers, including among the defendants the Southeastern Freight Association and the chairman of that association (10 I. C. C. Rep., 548), was decided by the Commission in February last.

In this case an advance of 2 cents per 100 pounds in the lumber rates from points in Georgia and Chattanooga, Tenn., to Cincinnati and other points on the Ohio River, East St. Louis, and St. Louis, and points beyond was complained of. This advance was originally promulgated by the carriers to take effect April 15, 1903. It would have become operative on that date but for the temporary injunction granted April 14, 1903, by the United States circuit court for the southern district of Georgia in a case brought before that court by complainants.

Subsequently, on May 16, the circuit court dissolved the temporary injunction and withheld further action until the court could be appraised of our decision in this proceeding, and such a proceeding was thereupon instituted before the Commission. The advance of 2 cents was put into effect by the carriers on June 22, 1903. Prior to that date the rates were in effect from September 8, 1899, on which date an advance was made of 1 cent from group 2 points on the Southern Railway and 2 cents from most other grouped shipping points in Georgia over rates in force May 17, 1894. From the various groups the advanced rates considered in the case before the Commission to Cincinnati, Louisville, and Evansville were, as to some, 4 cents higher than in 1892 and, as to others, 3 cents higher than in 1891. The Commission found that the rates prior to the advance complained of, namely, on June 22, 1903, were remunerative to the carriers. The rulings made by the Commission in this case are prescribed as follows:

That complainants, constituting only a small portion of the membership of the Georgia Saw-Mill Association, which is alleged by defendants to be an unlawful association, were entitled to bring and

maintain this proceeding in their own behalf and in the interest of all shippers of the traffic involved and others, constituting the public at large.

That the advance of rates complained of in this case was the result of concerted action by defendants and other carriers, and, while the question whether such concert of action is in violation of the antitrust act is for determination only by the courts, it is the province and duty of this Commission, when the reasonableness of rates is in issue before it, to consider whether the advanced rates resulted from untrammeled competition or were fixed by concert of action or combination of the carriers.

That where an advance is made in rates which have been long maintained and the evidence shows that the traffic affected is large, important, and constantly increasing the advance will be held unjust, unless it is satisfactorily explained.

That the test of the reasonableness of a rate is not the amount of profit in the business of the shipper or manufacturer, but whether the rate yields a reasonable compensation for the services performed. Carriers necessarily and justly participate in the prosperity of their patrons in the resultant enlargement of their own business, and no rule is more firmly grounded in reason or more universally recognized by carriers than that the greater the tonnage of the article transported the lower should be the rate.

That if permanent improvements are not included in the operating expenses of defendants, and if only such expenditures for equipment as are properly chargeable to a single year are included, the percentages of operating expenses to gross earnings will be materially reduced.

The carriers have no right to advance a rate which is already reasonably high and which yields an adequate return for the service rendered solely because additional revenue is needed. The mere fact of the need of additional revenue to meet increased expenses does not justify the advance in rates on these lumber shipments from Georgia to and beyond the Ohio River, which are, for the most part, of low grade and comparatively small value.

That the hauling of flat cars empty to the mills or the practice of shippers to load cars below their capacity are conditions which, to the extent they exist, are properly taken into account by carriers in fixing rates, and it must be assumed that they were considered by defendants in making and maintaining the rates so long in force prior to the advance herein charged.

That the rates on lumber prior to the advance complained of were reasonably high when compared with the rates on other commodities which are at all analogous to lumber in respect to value, volume, risk, cost of handling, and other circumstances and conditions affecting the transportation of the traffic.

That lumber rates should be relatively low, in view of the limited life of the lumber business in Georgia, at the end of which large investments of manufacturers in plants, including buildings, machinery, and tram roads, will become practically valueless, the increase in the net revenue of the roads caused by the lumber traffic, the fact that lumber is inexpensive freight and few other commodities furnish greater tonnage, the constancy of the traffic throughout the year, the fact that no special equipment is required for its movement, that it is loaded by shippers and unloaded by consignees, that when flat or open cars are furnished the shipper is at considerable expense to equip them so as to protect the lumber and the train, that it is not a perishable freight and does not require rapidity of movement, that there is small risk and in case of accident the damage is insignificant, and that lumber is an article of general utility.

That the advance of 2 cents per 100 pounds in defendants' rates on lumber from Georgia shipping points to Ohio River points, which was made effective June 22, 1903, was not warranted by the facts, circumstances, and conditions disclosed in this case, and that the increased rates then put in force are unreasonable and unjust.

The defendant carriers having failed to obey the order of the Commission, a suit for its enforcement was commenced by the complainants in the United States circuit court for the southern district of Georgia. After further hearing a decision was rendered by Judge Speer sustaining in all respects the decision of the Commission. (Tift et al. v. Southern Railway Company et al., 138 Fed. Rep., 753.) Such decision is referred to at length under the head of "Court Decisions" in this report.

The Central Yellow Pine Association Lumber case.-At the time the decision of the Commission was rendered in the Tift case the Commission also announced its decision in the case of The Central Yellow Pine Association v. Illinois Central Railroad Company et al. (10 I. C. C. Rep., 505.)

In this case complaint was made of an advance by the defendant carriers of 2 cents per 100 pounds on April 15, 1903 (except as to the Louisville & Nashville Railroad Company, which made the advance effective June 22, 1903), in the rates on lumber in carloads from points in lumber-producing territories east of the Mississippi River, in Louisiana, Mississippi, and part of Alabama, served by such carriers to Ohio River points, applied both on shipments local to said Ohio River points and to shipments destined beyond. On September 9, 1899, the rate previously put into effect on May 1, 1894, was advanced 1 cent, making a total advance of 3 cents since May 1, 1894. The rates. prior to the advance of April 15, 1903, were found by the Commission to be remunerative to the carriers.

The points decided in this case are as follows:

That when a railroad company advances a rate which has been for some time in force, the fact of its continuance is in the nature of an admission against that company, which tends to show the unreasonableness of the advance; and in this case the rates in effect for long periods prior to the advance are shown to have been profitable to the defendant carriers.

That the test of the reasonableness of a rate is not the amount of profit in the business of the shipper or manufacturer, but whether the rate yields a reasonable compensation for the services performed. Carriers necessarily and justly participate in the prosperity of their patrons in the resultant enlargement of their own business.

That the advance in rates by defendants was not justified by increased cost of operating the roads, for while the operating expenses have constantly increased they have been enlarged by the inclusion therein of large expenditures for permanent improvements, and defendants' gross earnings have increased from year to year to such extent as to result in a constant increase of net earnings.

That the value of the entire property of a road employed for the public convenience can shed but little, if any, light upon the question whether the rate on one among thousands of articles of traffic yields its proper proportion of a fair return upon that value, and, moreover, the voluminous and conflicting testimony in this case on that subject does not enable the Commission to determine the value of defendants' respective properties.

That the elements to be considered in determining the reasonableness of an entire system of rates are widely different from those involved in the question of the reasonableness of the rate upon a single commodity.

That the advance of rates complained of in this case was the result of concerted action by defendants and other carriers; and while the question whether such concert of action is in violation of the antitrust act is for determination only by the courts, it is the province and duty of this Commission, when the reasonableness of rates is in issue before it, to consider whether the advanced rates resulted from untrammeled competition or were fixed by concert of action or combination of carriers.

That the rates in effect prior to the advance were reasonably high when compared with the rates on other commodities which are at all analogous to lumber in respect to value, volume, and the various conditions affecting the service of transportation.

That carriers have no right to advance a rate which is already reasonably high and which yields an adequate return for the services rendered solely because additional revenue is needed.

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