This was illustrated in the ruling of the supreme court in Southern Pacific Railroad v. Interstate Commerce Commission, 219 U. S. 433, 55 L. Ed. (1911), reversing the circuit judges of the ninth circuit in 177 Fed. 963, which had enforced an order of the commission, 14 I. C. C. R. 61, which directed the railroad to reduce the rate on lumber from the Willamette Valley points. The court said the commission had no power to fix rates upon the assumption that it had the right to protect the lumber interests from the consequences of a change in rates, even if the change was from a rate which had been fixed unreasonably low for the purpose of encouraging the industry, though the higher rate thus reduced was not in itsel/ unjust or unreasonable.

To the same effect is the ruling by the comerce court (October 5, 1911, Fed.) in the Arlington Heights Fruit Association Case, where the court said that the commission had no power to protect the lemon industry of Califonia against foreign competition, and as the order of the commission in 19 I. C. C. R. 148, was based primarily on such assumed authority, it was void.

It seems from the opinions in these cases that if the commission had based its orders upon findings Chat the rates were unreasonable per se, and that the reduction was necessary to make them reasonable per se, such conclusio▲ of the commission would not have been disturbed.

§ 175 (134). Presumptions f reasonableness from established rates. In the determination of such an indefinite problem as the reasonableness per se of a given rate, dependence must necessarily be had upon the presumptions of fact which the circumstances afford rather than on those of law.

Thus it is ruled that the long continuance of a rate is an admission of reasonableness; and where, in reliance upon existing rates, capital has been invested and industrial conditions established, such rates cannot be discontinued without taking into account its effect upon these commercial and industrial conditions (15 I. C. C. R. 59): but the voluntary reduction of a rate does not carry with it the conclusive presumption that the prior rate was unreasonable (15 I. C. C. R. 11), and the long continued maintenance of a lower rate raises no presumption of law that a newly established higher rate is unreasonable (17 I. C. C. R. 313).

There may be an inference of unreasonableness in a voluntary reduction of rates by a carrier, but not conclusive. 8 I. C. C. R. 561. For presumption of unreasonableness from change of rates by carriers, see 6 I. C. C. R. 295.

After a rate has been raised by a carrier, it is still presumed to be reasonable until shown to be unreasonable, excepting in cases under the amendment of 1910, whereunder the carrier is compelled to prove the reasonablenss of the increased rate. A lower rate via one line is not conclusive evidence of unreasonable ness of higher rate by another line. 15 I. C. C. R. 107, 15 I. C. C. R. 49.

As to absence of legal presumption of reasonableness from publication of rate, see Yellow Pine rate case, 206 U. S. 441, supra.

§ 176 (133). The burden of proof.-It necessarily follows from this presumption of reasonableness of the existing statutes that the party complaining has the burden of proof to show unreasonableness. The commission has uniformly ruled that rates cannot be declared unreasonable where no proof is offered but that of comparison. I. C. C. R. 230, and 1 Int. Com. Rep. 627. A rate is not unreasonably simple because a lower rate is in effect on lines of other carriers. 17 I. C. C. R. 286. Parties complaining must, therefore, make proof of unreasonableness in hearings before the commission.

As to the burden of proof on justification of increases under amendment of 1910, see infra, sec. 15.

§ 177. Considerations in the determination of reasonableness. The commission has ruled (see 13 I. C. C. R. 651), that a carrier has no right to attempt to dictate the use to which commodities transported by it shall be put; or to fix the rate for one use higher than where the commodity is shipped for a different use. In this case the railroads sought to impose a higher rate upon nitrate of soda when used for the manufacture of explosives than when used for fertilizers.

The commission cannot accept as conclusive any stipulation of parties as to the reasonableness of rates, 16 I. C. C. R. 426. The conclusions of the commission on such matters must be reached with a due consideration for the conclusions which it has

already announced on the same subject, and for the knowledge which it has gathered with relation thereto in other cases. The willingness of the shipper to receive, and of the carrier to pay, reparation upon certain traffic and under certain rates, can be approved by the commission only under a clear and decisive showing of facts which would lead the commission to award such reparation in opposition to the carrier's wishes.

It was said in 17 I. C. C. R. 15, that agreements covering rates could be evidence of an admission as between the parties executing it and had strong evidentiary value that the rate agreed upon is reasonable. The rate which was advanced as the result of an agreement among carriers, even if such agreement was under color of violation of the Anti-Trust Act, will not on that account alone be declared unreasonable, 12 I. C. C. R. 451. Evidence of such violation is pertinent, but the existence of such unlawful agreement, even when proved, is not conclusive of the unreasonableness of the rate so advanced.

§ 178. What is a reasonable rate.-A just and reasonable rate is neither the minimum charge that can be made for the service and permit the carrier to live, neither is it the maximum charge that can be borne by the shipper. An absolute rate may possibly be also a just and reasonable rate but the presumptions are against it by reason of its inflexibility. Between the minimum and maximum limitations, rates to be just and reasonable should be flexible and should permit compliance with sections 2 and 3 of the act forbidding discriminations, as well as section 4 with respect to long and short hauls. Assume that the out of pocket cost to the carrier for any transportation is 10 cents, assume further that the traffic would not move if the rate were fixed as high as 30 cents. In such a case a rate of 10 cents ordered by a commission would amount to confiscation of the carrier's property and a rate of 30 cents would be injurious to both carrier and shipper. A rate of 11 cents in such a case would permit of a large movement and whether it would be compensatory to the carrier or not would depend upon the carrier's financial condition and whether the increased movement fell short of over-taxing the carrier's facilities. If a rate of 20 cents under such conditions permitted reasonably free movement of the traffic, and if a rate of 15 cents yielded some approach to a fair

return upon the carrier's investment, the reasonable rate might be fixed at anything between these two figures. In the Western Advance Rate Case, 20 I. C. C. R. 307, on pages 347, 348, the commission said:

"Thus we return to the question, What is the reasonable rate that shall be charged to the shipper? The legislature may not make rates so as to confiscate the carrier's property. The carrier, on the other hand, may not make rates which are unjust to those who by economic necessity are compelled to employ its services. Here, then, we have the minimum of legislative power and the maximum of the carrier's power. Between these lies a zone, indefinite and variable. Without question the carrier will tend toward the maximum, while governmental authority will be inclined-in fact, has been created-to repress its upward tendency. One moves inevitably upward to the highest rate which the traffic will bear; the other attempts to discover some relation between charge for service and cost of service."

There is clearly a zone of reasonableness within which any rate is compensatory or just and reasonable to the carrier and fair to the shipper, or just and reasonable to the public. Within this reasonable zone, for any particular traffic, rates as between different localities are to be adjusted with regard to each other to comply with other sections of the act.

§ 179. Res judicata with respect to rates.-There can be no such thing as res judicata in respect to rates. In practice, however, the publication and maintenance of a rate by a railroad estops it, ordinarily, from denying that the rate so published is just and reasonable, or compensatory so far as the carrier is concerned; by the act the orders of the commission with respect to rates expire after a period of two years; and the finding or order of the commission or the action of a carrier on its own initiative is merely declaratory of what the rate ought to have been in the past, or what it shall be for the immediate future and is always subject to revision. In 19 I. C. C. R. 34, the commission said: "It ought to be perfectly apparent that rates which are reasonable at the present time may within a period of two years become very unreasonable, by reason of changes in circumstances and conditions, economic, transportation or the like. It should be just as apparent that a rate which was unreasonable two years

or more ago may become reasonable by reason of such changes in conditions. We think the plea of estoppel by reason of former adjudication is not good insofar as the present rates on these articles are concerned."

§ 180 (128). Through rates and local rates.-The distinction between the through and local services of a railroad, i. e. its reasonable right to make the local rates greater than the proportionate part of a through rate over the same distance, has been recognized in the decisions of the commission and also of the courts. The distinction has also been considered in the state rate case (see supra, § 126), as the through rates are usually, but not always, interstate rates, and local rates are usually intrastate; but not infrequently, as when great cities are contiguous to state lines, such local rates are interstate.

As to the comparative cost of local business as compared with through business, see South Dakota Rate Case, 176 U. S. 167, 44 L. Ed. 417, and the Minnesota Rate Case, 186 U. S. 257, 46 L. Ed. 1151. In the latter case it was claimed by the carrier that the sum of two admittedly reasonable local rates could not be unreasonable as a through rate between two designated points. But the court said that the practice of railroads in this country was almost universally to the contrary, the through rate being almost invariably less than the sum of the locals.

See also discussion of through and local rates in Augusta S. R. Co. v. Wrightsville, 74 Fed. 522 (1896.)

The commission has discussed this distinction in a number of cases, and has uniformly held that the through rate should be less than the sum of the local rates. 3 I. C. C. R. 252, 2 Int. Com. 604; 8 I. C. C. R. 377; 9 I. C. C. R. 17; 7 I. C. C. R. 323; 6 I. C. C. R. 488.

Through rates and through billing are matters of agreement among carriers engaged in interstate commerce, excepting where established by order of the commission; and when they have been established and entered or finally abrogated or changed they are required by the statute to be kept open for public use. See infra, sec. 6, and 9 I. C. C. R. 182.

Through rates are not required to be made on a mileage basis nor local rates corresponding with the division of a joint through rate over the same line. Mileage, however, is usually an element