tions to construction must not be charged all against the revenues of the single year when made but should be distributed over a considerable period of time.89 In order to prevent abuses growing out of the charging of such items to operating expenses of a single year and in order to enable the Interstate Commerce Commission to judge more accurately of what may constitute reasonable and proper rates, the Act to Regulate Commerce by section 20 vests the Commission with authority to prescribe a uniform system of accounting and bookkeeping.90 Through Rates Compared With Local Rates.-The earlier claim that the sum of two reasonable local rates cannot constitute an unreasonable through rate has been expressly disavowed by the Supreme Court. Many items and considerations establish the fact that local business is per mile more costly than through business-for example, the additional fuel consumed, the increased wear upon machinery occasioned by frequent stops, the wages of added employees. So that, other considerations being see that from earnings the value of the property invested is kept unimpaired, so that at the end of any given term of years the original investment remains as it was at the beginning." 89 Illinois Central Railroad Co. v. Interstate Commerce Commission, 206 U. S. 441, 51 L. Ed. 1128, 27 Sup. Ct. 700, where the court said:"The Commission finds that the net and gross earnings of the appellant have grown from year to year, and also that what they have reported as operating expenses have also grown. But in these operating expenses there were included 'expenditures for real estate, right of way, tunnels, bridges, and other strictly permanent improvements, and also for equipment such as locomotives and cars.' The Commission expressed the opinion that such expenditures should not be charged to a single year, but 'should be, so far as practicable and so far as rates exacted from the public are concerned,' projected proportionately over the future. He (the carrier) must pay a toll, but a toll measured by the reasonable value of the service. The elements of that value may be many and complex, not always determinable, as we have seen, with mathematical accuracy, but, we think, it is clear that instrumentalities which are to be used for years should not be paid for by the revenues of a day or year; and this is the principle of returns upon capital which exists in durable shape." 90 See discussion under section 20. Also Interstate Commerce Commission v. Goodrich Transit Co., 224 U. S. 194, 56 L. Ed. 729, 32 Sup. Ct. 436; Kansas City Southern Railway Co. v. United States, 231 U. S. 423, 58 L. Ed. 296, 34 Sup. Ct. 125. equal, a reasonable through rate is less than the aggregate of the local tariffs between the intermediate stations.91 Presumption of Reasonableness of Rates.—In the judicial review of rates complained of by a railroad the burden of proof naturally devolves upon the carrier to show that the legislature, state or national, or its duly organized agency, has set an unreasonable limitation upon its rates. If the complaint is made by a shipper the burden of proof rests upon him to show that the rates fixed by the carrier are unduly high. Of nature under the amendment of June 18, 1910, upon objection to an advance of rates pro 91 Minneapolis and St. Louis Railroad Co. v. Minnesota, 186 U. S. 257, 46 L. Ed. 1151, 22 Sup. Ct. 900, where the court said: "There is an underlying fallacy in the argument of the railroad company in this connection, that the sum of two reasonable local rates cannot be unreasonable. * * We cannot assent to this proposition. The practice of railways in this country is almost universally to the contrary, and a through tariff is almost always fixed at a less sum than the aggregate of local tariffs between nearby stations upon the same road. Doubtless the fixing of a lower through tariff is dictated largely by a desire of each road to get as much mileage as possible from its patrons, as well as by an effort to meet competition over other lines between the same termini; but in addition to this there is an increased cost of local business over through business in the additional fuel consumed and the increased wear upon the machinery of each train involved in stopping at every station." These facts were noticed by Mr. Justice Brewer in the opinion of the court in Chicago, Milwaukee and St. Paul Railway Co. v. Tompkins, 176 U. S. 167, 44 L. Ed. 417, 20 Sup. Ct. 336, in which he makes the following observation :-"Take a single line of 100 miles with ten stations. One train starts from one terminus with through freight and goes to the other without stop. A second train starts with freight for each intermediate station. The mileage is the same. The amount of freight hauled per mile may be the same; but the time taken by the one is greater than that taken by the other. Additional fuel is consumed at each station where there is a stop. The wear and tear of the locomotive and cars from the increased stops and in shifting cars from the main to side tracks is greater; there are the wages of the employees at the intermediate stations, the cost of insurance, and these elements are so varying and uncertain that it would seem quite out of reach to make any accurate comparison of the relative cost. And if this is true, when there are two separate trains, it is more so when the train carries both local and through freight. It is impossible to distribute between the two the relative cost of carriage. * * * We think, therefore, there was error in the failure to find the cost of doing the local business, and that only by a comparison between the gross receipts and the cost of doing the business, ascertaining thus the net earnings, can the true effect of the reduction of rates be determined." posed by a carrier, the burden is placed on such carrier to show the reasonableness of the advance suggested. The legal presumption is furthermore that the rates fixed by the legislature or its agency are reasonable and the burden of proof rests upon the railroad companies to show to the contrary, to demonstrate that they infringe the constitutional guarantee of protection to property. The case in behalf of the railroad must be clear, or the legislation of the states will be upheld by the courts.92 Furthermore the existence of a rate raises a presumption of reasonableness in its behalf.93 But the maintenance of a lower rate does not raise a legal presumption that a new and higher rate is unreasonable." passes Free and free trans ited. Free Transportation and Passes Prohibited.No common carrier subject to the provisions of portation prohibthis Act shall, after January first, nineteen hundred and seven, directly or indirectly, issue or give any interstate free ticket, free pass, or free transportation for passengers, except to its employees and their families, its officers, agents, surgeons, physicians, and attorneys at law; to ministers of religion, traveling secretaries of railroad Young Men's Christian Associations, inmates of hospitals and charitable and eleemosynary institutions, and persons exclusively engaged in charitable and eleemosynary work; to indigent, destitute, and homeless persons, Excepted classes. 92 In Chicago, Milwaukee and St. Paul Railway Co. v. Tompkins, (South Dakota Rate Case), 176 U. S. 167, 44 L. Ed. 417, 20 Sup. Ct. 336, the court said:-"In approaching the consideration of a case of this kind we start with the presumption that the Act of the legislature is valid, and upon the company seeking to challenge its validity rests the burden of proving that it infringes the constitutional guarantee of protection to property. The case must be a clear one in behalf of the railroad company or the legislation of the state must be upheld." See also Minneapolis and St. Louis Railroad Co. v. Minnesota, 186 U. S. 257, 46 L. Ed. 1151, 22 Sup. Ct. 900, in which the court said: "The presumption is that the rates fixed by the Commission are reasonable, and the burden of proof is upon the railroad companies to show the contrary." 93 Interstate Commerce Commission v. Union Pacific Railroad Co., 222 U. S. 541, 56 L. Ed. 308, 32 Sup. Ct. 108. 94 Southern Pacific Co. v. Interstate Commerce Commission, 219 U. S. 433, 55 L. Ed. 283, 31 Sup. Ct. 288. and to such persons when transported by charitable societies or hospitals, and the necessary agents employed in such transportation; to inmates of the National Homes or State Homes for Disabled Volunteer Soldiers, and of Soldiers' and Sailors' Homes, including those about to enter and those returning home after discharge; to necessary care takers of live stock, poultry, milk, and fruit; to employees on sleeping cars, express cars, and to linemen of telegraph and telephone companies; to Railway Mail Service employees, post office inspectors, customs inspectors, and immigration inspectors; to newsboys on trains, baggage agents, witnesses attending any legal investigation in which the common carrier is interested, persons injured in wrecks and physicians and nurses attending such persons: Interchange of Provided, That this provision shall not be construed to prohibit the interchange of passes for the officers, agents, and employees of common carriers, and their families; nor to prohibit any common carrier from carrying passengers free with the object of providing relief in cases of general epidemic, pestilence, Extension of or other calamitous visitation: And provided fur"employees" and ther, That this provision shall not be construed to authorized pass es. meaning of term "families." prohibit the privilege of passes or franks, or the exchange thereof with each other, for the officers, agents, employees, and their families of such telegraph, telephone, and cable lines, and the officers, agents, employees and their families of other common carriers subject to the provisions of this Act: Provided further, That the term "employees" as used in this paragraph shall include furloughed, pensioned, and superannuated employees, persons who have become disabled or infirm in the service of any such common carrier, and the remains of a person killed in the employment of a carrier and exemployees traveling for the purpose of entering the service of any such common carrier; and the term "families" as used in this paragraph shall include the families of those persons named in this proviso, Jurisdiction and penalty for also the families of persons killed, and the widows Passes. Under the Act to Regulate Commerce as originally enacted in 1887 there was no inhibition against the issuance of passes or giving of free transportation by common carriers. Although this practise had been condemned by the Interstate Commerce Commission as well as the United States Supreme Court as a practical violation of section 2 of the Act in that it amounted to an unjust discrimination between patrons of the roads, the fact remained that the custom of giving passes had continued and had become a well recognized abuse both to the railroads themselves and to the general public as well. By amendments of March 2, 1889, and February 8, 1895, to section 22 of the Interstate Commerce Act the railroads were expressly forbidden to transport free of charge any property. And also recognition was given to the right of the railroads to carry without charge certain officials and certain classes of persons. By the Act of June 29, 1906, Congress for the first time adopted an express statutory inhibition against the issuance of passes by any carriers embraced by the terms of the Act to Regulate Commerce and forbade the giving of free transportation except to certain classes specifically designated. The purpose of the Hepburn Act was to entirely eliminate and uproot the whole practise of furnishing free transportation under any guise or pretense. |