be under a rate filed with this commission. A rate to a port for shipment beyond by a water carrier, not subject to the provisions of this act, would not be a proportional rate.

"(2) Where from the absorption of a switching charge it results that a total transportation charge from a more distant point to the point where the property is delivered is less than the total transportation charge from or to an intermediate point, the fourth section is violated. Owing however to the very general practice of absorbing switching charges from competitive and not from non-competitive stations, and in view of the fact that more benefit and little complaint results, the commission will by general order permit a continuance of this practice, reserving for consideration and determination individual cases which may require separate consideration."

§ 295. Ruling of commission as to export and import rates under the section.-On December 17, 1910, the commission made a ruling as to the application of the section as amended to export and import rates.

"(1) That inland export and import rates are subject to the provisions of the act and within the jurisdiction of the commission.

"(2) That the fourth section of the amended act forbids carriers subject thereto without authority from the commission, in accordance with the said section, to charge more for the transportation of a like kind of export or import traffic for a shorter than for a longer haul over the same line in the same direction, that is, as we understand the law the validity of the rate under the section is determined by comparison of an export rate with an export rate, and import rate with an import rate.

"(3) So far as the fourth section is concerned carriers are not required in the first instance to establish export and import rates which shall be measured and limited by domestic interstate rates between the same points of origin and destination in the United States; but as export and import rates as well as domestic interstate rates are subject to the provisions of the act and the jurisdiction of the commission, it is clear that the reasonableness of any of these rates under the provisions of section one, and the questions of discrimination under the third section, may all be considered and the commission may condemn

any discrimination in export and import rates upon comparison with those applicable on domestic interstate traffic to the extent that the same may be found unjust or unreasonable in any particular case upon investigation and full hearing."

§ 296. The commission on application for relief under the fourth section.-In opinions filed June 22, 1911, 21 I. C. C. R. 329, and 21 I. C. C. R. 400, the commission exhaustively considered the history and purpose of the amendment of the fourth section concerning the long and short haul clause, and ruled that the amendment was a provision of law within the proper scope of congressional jurisdiction and was not a grant of arbitrary or absolute power, and that its purposes must be limited and conditioned upon the presence in special cases of conditions and circumstances which would make such exceptions legal and proper and in no wise antagonistic to other provisions of the act. Under the proviso it must be affirmatively shown by the carriers in seeking exception that injustice will not be done to intermediate points by allowing rates to the more distant points. The enactment of the amended law was to make its prohibition of the higher rate for the shorter haul a rule of well nigh universal application from which the commission may deviate only in special cases, and then to meet transportation circumstances which are beyond the carrier's control. The commission said that congress intended to invest the commission with authority, not only to determine whether a wrong results from the disregard of the long and short haul provision, but also to correct that wrong if found to exist.

In the application for relief as made the commission must inquire whether the maintenance of the higher intermediate rate will result in unreasonable charges and unjust discriminations, and the commission may also prescribe in any way that is definite and certain the extent to which the intermediate rate may exceed the long distance in cases where this is necessary to prevent unreasonable rates or unjust discriminations.

In 21 I. C. C. R. 329, the commission gave an interesting review of the long-time struggle between the transcontinental railroads and the ocean carriers, and concludes that the transcontinental lines naturally gave consideration to sea competition, but that for thirty years the whole of their efforts had been to

neutralize and control such competition. The opinion intimates that the railroads must soon meet with competition by water more important, searching and determinative in its effect upon railroads than any other; that is, when the route by the Panama canal is opened.

The enforcement of these orders of the commission has been temporarily enjoined by the commerce court (Nov. 1911) and it is understood that the alleged confiscatory character of the orders will finally be determined by the supreme court.

§ 297. The five trade zones in transcontinental traffic.In the reports referred to on the applications for relief under the fourth section, under the amendment of 1910, the commission ruled that the carriers had not shown that undue discrimination was not affected by their rate adjustment between points in Nevada and points in California, nor had they established that the rates to the coast cities if extended by them from eastern points outside the zone of water influence were not fully compensatory. The applications for relief by the transcontinental carriers from the long and short haul clause were therefore denied. The cities of Spokane and Salt Lake City were held specifically to be prejudiced by the charge of the through rate to the coast with the local rate added.

The commission announced that for the purpose of disposing of this matter by an order under the fourth section, they had divided the United States into five territorial zones, as follows:

"(The transcontinental groups hereinafter described are as specified in R. H. Countiss' agent's transcontinental tariff, I. C. C. No. 929.)*

"Zone No. 1 comprises all that portion of the United States west of a line called line No. 1, which extends in a general southerly direction from a point immediately east of Grand Portage, Minn.; thence southwesterly along the northwestern shore of Lake Superior, to a point immediately east of Superior, Wis.; thence southerly, along the eastern boundary of transcontinental group F, to the intersection of the Arkansas and Oklahoma state line; thence along the west side of the Kansas City Southern Railway to the Gulf of Mexico.

"Zone No. 2 embraces all territory in the United States lying east of line No. 1 and west of a line called line No. 2, which

R. H. Countiss referred to, is the agent of the trans-continental lines for the purpose of compiling, publishing, and filing with the commission their tariffs on classes and commodities.

begins at the international boundary between the United States and Canada, immediately west of Cockburn Island, in Lake Huron; passes westerly through the Straits of Mackinaw; southerly through Lake Michigan to its southern boundary; follows the west boundary of transcontinental group C to Paducah, Ky.; thence follows the east side of the Illinois Central Railroad to the southern boundary of transcontinental group C; thence follows the east boundary of group C to the Gulf of Mexico.

"Zone No. 3 embraces all territory in the United States lying east of line No. 2 and north of the south boundary of transcontinental group C and west of line No. 3, which is the BuffaloPittsburg line from Buffalo, N. Y., to Wheeling, W. Va.; thence follows the Ohio river to Huntington, W. Va.

"Zone No. 4 embraces all territory in the United States east of line No. 3 and north of the south boundary of transcontinental group C.

"Zone No. 5 embraces all territory south and east of transcontinental group C."

And the commission added (21 I. C. C. R. 425):

"Looking at this whole situation and endeavoring to justly consider the interests of all parties affected, including the carriers, we are of the opinion that from zone 1 no higher charge can justly be made at any intermediate point than to a more distant point. The eastern limit of this territory is approximately 1,500 miles from the Atlantic seaboard, almost midway between the Pacific and Atlantic oceans. No traffic has ever been, and none probably ever will be transported from this section to the Atlantic coast and thence by water to the Pacific coast. Giving full weight to the effect of competition of all kinds, we can find no justification for a system of rates which maintains from this territory a higher charge to an interior point than is made to the coast.

"With respect to territory embraced in zone 2 the case stands somewhat different. This zone comprises the Mississippi Valley and a considerable portion of the great manufacturing area of the west. It lies 400 miles nearer the Atlantic seaboard, with which it is connected in part at least by lines of railroad affording the cheapest transportation service in any part of the country. Still there never has been and there probably never will be in the future any considerable movement of traffic from this territory to the Pacific coast by way of the Atlantic seaboard.

"We are of the opinion that rates from this territory to intermediate points may properly exceed by not more than 7 per

cent. rates from the same points of origin to Pacific coast terminals.

"From zone 3 there is still greater possibility of actual transportation competition on business destined to Pacific coast points, although from this section hitherto the actual movement has been only occasional.

"We are of the opinion that from points of origin in this territory rates to intermediate points may properly exceed those to terminal points by not more than 15 per cent.

"In the past the actual movement from eastern points of origin to Pacific coast terminals has been mainly confined to zone 4, and even in this zone the greater part of the traffic has originated in or near the seaboard itself.

"The force of water competition is greatest in New York and gradually diminishes as the distance from New York increases, but we are of the opinion that this entire territory may properly be treated as a single group, and that rates from points of origin within its limits to intermediate points may properly exceed those to terminal points by not more than 25 per cent.

"No opinion is expressed at this time as to zone 5, since rates from that territory are not involved in these proceedings."

The commission said that this was not a new and additional authority, but simply the exercise of a jurisdiction provided for in the fifteenth section for the adjustment of unjust discrimination, and that there was no essential difference between this order and an order which the commission might make under the third section.