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 INTERSTATE COMMERCE COMMISSION. 
 
 IN RE THE LOUISVILLE AND NASHVILLE RAILROAD 
 COMPANY ET AL 
 
 THE LIBRARY 
 
 -onut— 
 
 UH1VER8ITY CF ILLISQIS 
 
 OPINION ON PETITIONS FOR RELIEF UNDER SECITON FOUR OF THE 
 ACT TO REGULATE COMMERCE. 
 
 Washington, June 15 , 1887 , 
 
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THE FOURTH SECTION OF THE ACT 
 TO REGULATE COMMERCE. 
 
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 INTERSTATE COMMERCE COMMISSION. 
 
 i'i Washington, Jtine 15, 1887. 
 
 i In the matter of the petitions ) 
 
 , ? OF I 
 
 ^ The Louisville and Nashville )> 
 
 Eailroad Company and | 
 
 others. 3 
 
 OPINION OF THE COMMISSION. 
 
 Cooley, Chairman. 
 
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 The Lq^iisville and Nashville Railroad Company was one of the first 
 to apply for relief under the fourth section of the Act to regulate com¬ 
 merce, which, after declaring the general rule that more shall not 
 be charged or received in the aggregate by a common carrier subject 
 to the law, for the transportation of passengers or of the like kind of 
 property, under substantially similar circumstances and conditions for 
 a shorter than for a longer distance over the same line in the same di¬ 
 rection, the shorter being included in the longer, proceeds then to au¬ 
 thorize exceptions, and confers upon the Commission certain powers in 
 respect thereto. 
 
 From the first there have been two opinions regarding the proper 
 construction of this provision for exceptions j one view being that no 
 exception can be lawful unless made with the sanction of the Commis¬ 
 sion ; and the other, apparently better supported on the words of the 
 statute, that an order of relief is not required when the circumstances 
 and conditions are substantially dissimilar, since the carrier, in act¬ 
 ing upon them, would commit no breach of law, though it would be re¬ 
 sponsible in case it were found that the circumstances and conditions 
 were misconceived or misjudged. Under this last vfiew the order for 
 relief would be needful only when the case was not one of plainly 
 dissimilar circumstances and conditions, but in which, nevertheless, 
 there might be reasons and equities that would sanction such greater 
 charge. 
 
 The Commission is informed that the interstate roads north of the 
 Potomac and the Ohio and east of the Missouri, with substantial 
 unanimity, have conformed to the requirements of the fourth section 
 by putting in force tariifs rearranged accordiugly. Some friction was 
 
 R 
 
 h 5G4T2 
 
4 
 
 manifested for a time, arising largely from the discontinuance of special 
 rates, favors, and privileges, and from tiie adoption of new classifica¬ 
 tions j but where the fourth section has been thus made operative very 
 few instances have come to our attention of injury thereby occasioned. 
 
 The roads which anticipated especial injury to commerce from the 
 strict enforcement of the law were principally those situated in the 
 Southern States and the transcontinental lines. After a little time 
 some of the north and south roads in the territory first mentioned found 
 themselves excluded to a certain extent from business which they had 
 previously handled, but these instances were not numerous, so far as 
 the Commission is at present advised. 
 
 In the cases where loss of revenue to the roads and injury to the busi¬ 
 ness of the country was most seriously anticipated, the railroad com¬ 
 panies, although some of them took the ground that the statute con¬ 
 templated they would determine for themselves the exceptional cases' 
 in which they might make a lower charge for a longer haul, neverthe¬ 
 less were unwilling to incur the peril of so arranging their tariffs that 
 they would in any instance conflict with the general rule which the act 
 prescribed, apparently deeming it more prudent to suffer temporary loss 
 of traffic until the act could receive authoritative construction than to 
 subject themselves to heavy penalties in case it should finally be held 
 that the general rule must be applied in every case until the authority 
 of the Commission for making exceptions had been given. The Louis¬ 
 ville and Nashville Company was one of those which took this position, 
 and upon its application a temporary order of relief was made. Fol¬ 
 lowing the making of that and of other like orders, the Commission 
 proceeded to take a great amount of testimony bearing upon .the ques¬ 
 tion whether the several carriers relieved were warranted in making 
 rates on their lines which were not in conformity to the statutory rule, 
 and in doing so it invited light from all sources, and was glad to have 
 the assistance, not only of the railroad companies, but of competing 
 steamboat owners, of boards of trade, and of citizens generally, what¬ 
 ever might be their line of business. The fullest opi)ortunity has 
 been afforded to any citizen of the United States who desired to be 
 heard upon the matter, to present facts personally or by affidavit, and 
 arguments viva voce^ in writing, or in print. The invitation has been 
 quite largely accepted ; the subject has been laid fully before us, and 
 we have endeavored to give to it the consideration its importance de¬ 
 mands. 
 
 In making the orders of temporary relief no opinion was expressed 
 upon the question whether they were necessary for the protection 
 of the carriers in case the circumstances and conditions were found 
 to be in fact dissimilar. The railroad companies did not raise that 
 question, but, as has been said, elected as a matter of prudence to ap¬ 
 ply for the preliminary order. No objection could well be taken to this 
 course provided it should prove to be practicable for the Commission to 
 
5 
 
 take lip and in a reasonable time dispose of the several applications 
 made to it; but it was almost immediately perceived that the number 
 was to be so great that this would be quite out of the question. Each 
 order for relief would necessarily be preceded by investigation into the 
 facts, on evidence which in' most cases would be best obtained along the 
 line of the road itself. A single case might therefore require for its 
 proper determination the taking of evidence all the way from the Pa¬ 
 cific to the Atlantic, and this not merely the evidence of witnesses for 
 the petitioning carrier, but of such other parties as might conceive that 
 their interests or the interests of the public would be subserved either 
 by granting the relief applied for or by denying it. 
 
 If the Commission were to give to the petitions the time needed for 
 their proper determination, it would be compelled to forego the perform¬ 
 ance of judicial and other functions which by the statute were appar¬ 
 ently assumed to be of high importance, and even then its authority to 
 grant relief w'ould be performed under such circumstances of embar¬ 
 rassment and delay that it must in large measure fail to accomplish the 
 beneficial purposes which we must suppose the statute had iu view. 
 Assuming—as we must when the law provides for it—that it is impor¬ 
 tant to t\ie public interest that a privilege to charge more for the shorter 
 haul than for the longer over the same line iu the same direction, should 
 be admitted in some cases, as had been the custom, the interruption of 
 the jirivilege when the case was proper for it would presumptively cause 
 mischief, and should not therefore be compulsory while the slow pro¬ 
 cesses of ail investigation were going on, especially as the particular in¬ 
 vestigation might itself be compelled to await the determination of many 
 others. Moreover, an adjudication upon a petition for relief would iu 
 many cases be far from concluding the labors of the Commission iure- 
 spect to the equities involved, for questions of rates assume new forms, 
 and may require to be met diiferently from day to day; and in those sec¬ 
 tions of the country in which the reasons or supposed reasons for ex¬ 
 ceptional rates are most prevalent, the Commission would, iu efiect, be 
 required to act as rate makers for all the roads and compelled to adjust 
 the tariffs so as to meet the exigencies of business while at the same 
 time endeavoring to protect relative rights and. equities of rival car¬ 
 riers and rival localities. This in any considerable State would be an 
 enormous task. In a country so large as ours, and with so vast a mile¬ 
 age of roads, it would be superhuman. A construction of the statute 
 which should require its performance would render the due adminis¬ 
 tration of the law altogether impracticable, and that fact tends strongly 
 to show that such a construction could not have been intended. 
 
 We have listened, with an earnest desire to reach a just conclusion, 
 to all the arguments presented on the construction of the statute, by 
 those appearing either to advocate or to oppose the applications, and 
 after mature consideration we are satisfied that the statute does not 
 require that the Commission shall prescribe in every instance the ex- 
 
6 
 
 coplioiial case and grant its order for relief before the carrier is at lib- 
 erty in its tarifis to depart from the general rule. The terms of the 
 statute clearly lead to the opposite conclusion. It declares: 
 
 “It shall he unlawful for auy common carrier subject to the provisions of this act 
 to charge or receive any greater compensation in the aggregate for the transportation 
 of passengers or of the like kind of property under substantially similar circumstances 
 and conditions for a shorter than for a longer distance over the same line in the same 
 direction, the shorter being included in the longer distance.” 
 
 Here we have clearly stated what is unlawful and forbidden; and for 
 doing the unla wful and forbidden act penalties are then provided. But 
 that which the act does not declare unla wful must remain lawful if it 
 was so before, and that which it fails to forbid the carrier is left at lib¬ 
 erty to do without permission of any one. The charging or receiving 
 the greater compensation for the shorter than for the longer haul is seen 
 to be forbidden only when both are under substantially similar circum¬ 
 stances and conditions; and therefore if in any case the carrier, with¬ 
 out first obtaining an order of relief, shall depart from the general rule, 
 its doing so will not alone convict it of illegality, since if the circum¬ 
 stances and conditions of the two hauls are dissimilar the statute is 
 not violated. Should an interested party dispute that the action of 
 the carrier was warranted, an issue would be presented for adjudica¬ 
 tion, and the risks of that adjudication the carrier would necessarily 
 assume. The later clause in the same section, which empowers the Com¬ 
 mission to make orders for relief in its discretion, does not in doing 
 so restrict it to a finding of circumstances and conditions strictly dis¬ 
 similar, but seems intended to give a discretionary authority for cases 
 that could not well be indicated iu advance by general designation, 
 while the cases which upon their facts should be acted upon as clearly 
 exceptional would be left for adjudication when the action of the car¬ 
 rier was challenged. The statute becomes on this construction prac¬ 
 tical, and this section may be enforced without serious embarrassment. 
 
 From the recital of the history of the framing of this section (which 
 is given further on) it appears among other things that the proviso re¬ 
 specting orders for relief was devised by the Senate committee which 
 originally drafted the section, and that it was an essential part of it as 
 first proposed; the prohibitory i)art of the section being then quite 
 stringent, but a discretion being conferred upon the Commission to re¬ 
 lieve against its operation. Afterwards the words ‘‘under substan¬ 
 tially similar circumstances and conditions” were inserted in the first 
 sentence of the section. The proviso was perfectly intelligible so long 
 as the leading clause contained a hard and fast rule against charging 
 more for the shorter than for the longer haul. It was then obvious that 
 a discretion was left to the Commission in the matter of relaxing the rule 
 when different circumstances and conditions rendered such relaxation 
 in its judgment proper. Had the section passed as it then stood, the 
 exercise of such a discretion might have been entered upon by the Com¬ 
 mission with a-distinct understanding of the task imposed, even though 
 
7 
 
 its adequate performance might have been out of the question; but modi¬ 
 fied as it now stands, the necessity for a relieving order is greatly nar¬ 
 rowed, it being obvious that no order is needed to relieve against the 
 operation of the statute when nothing is done or proposed which it 
 makes unlawful. 
 
 If any serious doubt of the proper construction of the clause of the 
 statute now under review should, after careful consideration of its 
 terms, still remain, it would seem that it must be removed when section 
 2 , in which the same controlling words are made use of, is examined 
 in connection. That section provides : 
 
 “That if any common carrier subject to the provisions of this act shall, directly or 
 indirectly, by any special rate, rebate, drawback, or other device, charge, demand, 
 collect, or receive from any person or persons a greater or less compensation for any 
 service rendered, or to be rendered, in the transportation of passengers or property, sub¬ 
 ject to the provisions of this act, than it charges, demands, collects, or receives from 
 any other person or persons for doing for him or them a like and contemporaneous 
 service in the transportation of a like kind of traffic under substantially similar cir¬ 
 cumstances and conditions, such common carrier shall be deemed guilty of unjust 
 discrimination, which is hereby prohibited and declared to be unlawful.’’ 
 
 Here it will be observed that the phrase is precisely the same; and 
 there can be no doubt that the words were carefully chosen, probably 
 because they were believed to express more accurately and precisely 
 than would any others the exact thought which was in the legislative 
 mind. And in this section, as well as in section 4, the phrase is em¬ 
 ployed to mark the limit of the carrier’s privilege 5 its privilege, too, 
 in respect to the very subject-matter with which section 4, where 
 it is employed, has to do, namely, the charges for transportation 
 service. It is not at all likely that Congress would deliberately, in 
 the same act and when dealing with the same general subject, make 
 use of a phrase which was not only carefully chosen and peculiar, 
 but also controlling, in such different senses that its effect as used in 
 one place upon the conduct of the parties who were to be regulated 
 and controlled by it would be essentially different from what it was 
 as used in another. But beyond question the carrier must judge for 
 itself what are the “ substantially similar circumstances and condi¬ 
 tions” which preclude the special rate, rebate, or drawback, which is 
 made unlawful by the second section, since no tribunal is empowered 
 to judge for it until after the carrier has acted, and then only for the 
 purpose of determining whether its action constitutes a violation of law. 
 The carrier judges on peril of the consequences; but the special rate, 
 rebate, or drawback which it grants is not illegal when it turns out 
 that the circumstances and conditions were not such as to forbid it; and 
 as Congress clearly intended this, it must also when using the same 
 words in the fourth section have intended that the carrier whose privi¬ 
 lege was in the same way limited by them, should in the same way 
 act upon its judgment of the limiting circumstances and conditions. 
 
8 
 
 Most of the applications made to the Commission for relief may be 
 said to be based upon a showing of dissimilar circumstances and con¬ 
 ditions claimed to justify the larger charge for the shorter haul. The 
 Commission was asked to find that such dissimilar circumstances and 
 conditions existed, and the question was presented in a great variety of 
 forms. Upon this question it was believed that investigation into the 
 conditions of railroad service in the States south of the Ohio and east 
 of the Mississippi would be particularly useful. In the system of rate¬ 
 making practiced in that section, the making of a greater charge on 
 interstate business to and from intermediate stations than to and from 
 competitive points requiring a longer haul had been, it appears, sub¬ 
 stantially universal, and business men in the larger towns united with 
 the carriers in asserting that the cessation of the practice would force 
 a stoppage of trade to an extent that would be destructive of many con¬ 
 siderable interests. That section, therefore, seemed to afford a proper 
 field for an inquiry into the reasons supposed to justify the practice. 
 When the investigation was concluded the reasons which had been 
 advanced appeared to be substantially the following : 
 
 That the support and maintenance of a railroad ought properly to be 
 borne by the local traffic for which it is supposed to be built, and the 
 through traffic may justly be carried for any sum not below the actual 
 cost of its own transportation. 
 
 That the cost of local traffic is greatest, and the charges for carrying 
 it should be in proportion, and if they are so they will often result in 
 the greater charge for the shorter haul. 
 
 That traffic carried long distances will much of it become impossible 
 if charged rates corresponding to those which may properly be imposed 
 on local traffic 5 and it must therefore be taken in recognition of the 
 principle, accepted the world over, that traffic must be charged only 
 what it will bear. 
 
 That the long hauls at low rates tend to build up manufactures and 
 other industries without injury to the traffic upon which the rates are 
 heaviest. 
 
 That charges on long hauls, which are less than the charges on 
 shorter hauls over the the same line in the same direction, are commonly 
 charges which the carriers do not voluntarily fix, but which are forced 
 upon them by a competition from whose compulsion there is practically 
 no escape. 
 
 On some one or more of these reasons each of the applications was 
 planted. 
 
 On the construction which we give to the statute these several ap¬ 
 plications need not have been filed, and therefore they might now be 
 withdrawn without further judgment. But though the carrier might 
 have acted on the judgment of its managers, it would have been at 
 the peril of the consequences, and as it elected not to assume the re¬ 
 sponsibility, but to apply to the Commission for a relieving order, it 
 
9 
 
 may be proper to consider the application on its merits, especially as. 
 the question, What is a case of dissimilar circumstances and conditions 
 within the meaning of the law'? must in general be a mixed question of 
 law and fact, upon which differences of opinion would be expected to 
 arise. It is manifestly important to the public interest, as well as to 
 that of the railroads themselves, that mistakes shall as far as possible 
 be avoided. It is also important that the general rule laid down by 
 the statute be strictly complied with whenever compliance appears to 
 be fairly practicable, and that carriers direct their attention more to 
 the feasibility of coming into conformity with it, than to the possibility 
 of finding reasons upon which to ground exceptions. They are tliere* 
 fore entitled to the benefit of such conclusions as we have already 
 reached upon the general merits of their applications, that they may 
 be guided thereby in the preparation of their tariffs respectively. In 
 giving these conclusions we limit ourselves strictly to the cases pre¬ 
 sented, and leave out of view such other grounds of relief, if any, as are 
 not yet formally brought forward. 
 
 I. The fact that the shorter haul is of local traffic and the longer is 
 not we cannot accept as making out a case of dissimilar circumstances 
 and conditions within the meaning of the statute. The claim to that 
 effect which was advanced in support of one of the applications rests 
 upon a theory that railroads are constructed for the special accommo¬ 
 dation of the traffic along their lines respectively, and that consequent]}" 
 that traffic may be relied upon for their support, and may fairly be 
 charged with all the items of cost and maintenance. Traffic origiuatiug 
 at a distance and taken over the line may on this theory be justly ti ans- 
 ported at any rates the carrier may consent to accept not below the 
 actual cost of movement, and the local shippers are not in position 
 to complain that such rates, as compared with what they must pay, 
 seem to discriminate unjustly. But this theory has very little founda¬ 
 tion in fact. It is not true, as a general rule, that railroads are con¬ 
 structed in exclusive reliance upon local traffic j on the contrary, through 
 traffic is also contemplated, and is sometimes expected to yield returns- 
 even greater than that which the local traffic is likely to give. And 
 whenever a road is constructed with special regard to local traffic, it is 
 very likely to be the case that the local communities take upon them¬ 
 selves especial burdens in aid of the construction. When they do so 
 they may justly claim that their traffic should be favored if discrimina¬ 
 tion of any sort is to be admitted. There are cases also in which roads 
 have been constructed with special regard to long-haul traffic, some of 
 them with the aid of Government grants, and in such cases the theory 
 lacks all plausibility. Indeed it may be said to become plausible in 
 any case only when, after a road has been constructed, some new and 
 unanticipated business is offered it for long haul, but at rates relatively 
 lower than the local traffic is charged. It may be neither unreasonable 
 nor unjust to accept the lower rates for the long haul traffic in some 
 
10 
 
 cases ou grounds stated further on ; but it will not be because of any 
 such inherent difference between long and short haul traffic as can 
 make the latter chargeable with heavier burdens. 
 
 11. That the cost to the carrier of handling and transporting local 
 traffic is greater than that of traffic carried long distances is a fact 
 which may with greater reason, when the difference is considerable and 
 clearly shown, be claimed to make out a case of dissimilar circum¬ 
 stances and conditions under the statute. Cost of the service is always 
 an important element in the fixing of rates; and the evidence taken by 
 the Commission tends to show—what indeed is well known and under¬ 
 stood—that in proportion to amount and to the distance it is trans¬ 
 ported, the cost of the local traffic to the carrier is considerably the 
 greater. This fact fairly establishes in favor of the carrier an equity 
 entitling it to make for the more onerous service a greater proportion¬ 
 ate charge. But it does not follow that the difference may be so great 
 as to make the case an exception ,to the general rule the statute has 
 prescribed. It is obvious that the statute intends that the greater 
 charge for the shorter haul shall only be made in cases which ou their 
 facts are exceptional; and when the carrier shows the general fact that 
 the local traffic is most expensive he thereby proves not the excep¬ 
 tion, but the rule. To establish the exception it would be necessary 
 to go further and make proof that in the case of the particular traffic 
 the difference in cost would be exceptionally great. Such cases some¬ 
 times arise. They occur on water as well as on laud, and vessel owners 
 on the rivers make the greater charge for the shorter haul in the same 
 direction in many cases, defending their doing so with good reason on 
 this very ground of greater cost, in making landings, &c. The carriers 
 by land may sometimes justify the like charges with equal reason. 
 
 There is in the case, however, an inherent difficulty of no small mo¬ 
 ment. While cost, as has been said, is an element to be taken into ac¬ 
 count in the fixing of rates, and one of the ver}- highest importance, it 
 cannot for reasons well understood, be made the sole basis, but it must 
 in any case be used with caution and reserve. This is not merely be¬ 
 cause the word ^^cost” is made use of in different senses when applied 
 to railroad traffic; it being often used to cover merely the expense of 
 loading, moving, and unloading trains, but also because, in whatever 
 sense the word may be used, it is quite impossible to apportion with ac¬ 
 curacy the cost of service among the items of traffic. First of all when 
 it is undertaken there must be an apportionment between the passen¬ 
 ger traffic and the freight traffic; and if we suppose this to be made 
 with reasonable accuracy there must then be a like apportionment be¬ 
 tween the different kinds and classes of freight. Freight comes to a 
 road in infinite variety; some heavy, some light, some in large packages, 
 some in small; some perishable or of special value and requiring pecu¬ 
 liar accommodations and care; it is picked up in varying quantities 
 at numerous stations, to be carried differing distances, sometimes on 
 
11 
 
 fast trains and sometimes on slow; the service is performed by men 
 whose compensation differs, but the most of whom have something- to 
 do with all branches of the traffic, so that all assist in carrying it on 
 over a road and by means of buildings, appliances, and equipment 
 which have been provided for the whole. Any attempt to apportion 
 the cost therefore would at the best and under the most favorable cir¬ 
 cumstances only reach an approximation. This is so well understood 
 the world over that the i^ropositions which from time to time have been 
 made in other countries to measure the charges of the carrier by the 
 cost of the carriage solely have always been abandoned after investiga¬ 
 tion. 
 
 We may well believe, therefore, that the statute, in its provision 
 against the greater charge for the shorter haul, did not intend that a 
 difference in cost which is practically universal, and could not possibly 
 be arrived at with accuracy, should as a general fact be a governing- 
 consideration, to the extent that would support the greater charge for 
 the shorter haul in the cases in which such greater charge was in gen¬ 
 eral lirohibited. Where there are no circumstances to make the short 
 haul exceptionally expensive to the carrier, or the long haul relatively 
 inexpensive, a difference in rates which reason and fairness will justify 
 may still be made within the limitation of the statute j but to make out 
 the exceptional case, in which the general rule of the statute may be dis¬ 
 regarded on the ground that the circumstances and conditions are not 
 substantially similar, the difference in cost should itself be exceptional, 
 and be capable of proof amounting to practical demonstration. 
 
 In support of one of the applications presented to us the carrier was 
 able to make a showing of lower cost on long-haul freight more clear 
 and distinct than is commonly possible. The showing was that the 
 through business on its 450 miles of road was transacted by different 
 trains from the local; that these moved much more rapidly and carried 
 vastly the most freight to the train 5 that the number of men required 
 was much less in proportion, not only upon the trains, but for t]ie station 
 and terminal service, and consequently^ all the items of exx)ense were 
 much smaller. These facts, which were apparent to the customers of 
 the road, together with the peculiarly effective water competition, 
 which affected principally the through traffic, influenced intelligent 
 men doing business at local stations to admit, in giving evidence, that 
 it might be just, and even necessary in some cases, that the charge for 
 the shorter haul should be the greater. The disproportion, it was in¬ 
 sisted, had been too great; but when the question is one of degree,reg¬ 
 ulation rather than prohibition must be admitted to be the appropriate 
 remedy; and the carrier must keep in mind that if the right be estab¬ 
 lished in any case to make the greater charge for the shorter haul, it is 
 not a right to make a charge not just or reasonable in itself, or one 
 which will work unjust preference between individuals, localities, or 
 
12 
 
 commodities. It is, on the other hand, a right grounded in justice, and 
 must be so exercised that the result shall be equitable. 
 
 III. We have uext the case of dissimilar circumstances aud condi¬ 
 tions supposed to be made out by a showing that property now trans- 
 ^)orted long distances at very low rates could not be transported at all 
 unless concession in rates were made to it. This is a common fact in rail¬ 
 road transportation 5 the cases are to be met with in the traftic of all 
 the long lines. The necessity for making concessions to long-haul traf¬ 
 fic in the case of articles whose value in proportion to bulk or weight is 
 small, and especially in that of the necessaries of life, which are bandied 
 in large quantities, and in the supply of which the most distant coun¬ 
 tries compete, has long been conceded wherever railroads exist. The 
 household goods of immigrants to the West have been carried for them 
 at ver}" low rates, and the results of their agriculture have afterwards 
 been taken for seaboard and European markets in recognition of the 
 general principle that the traffic must not be charged rates beyond what 
 it can bear. This is a just and sound principle when justly applied^ 
 and the country may be said not only to have acquiesced in its recogni¬ 
 tion, but to have desired and urged its application in a great variety 
 of cases. Any suggestion that it was meant by the statute to abrogate 
 it would scarcely be plausible, especially since, when not misapplied, 
 it can harm no one, but may be, and often is, of great aud manifest ad¬ 
 vantage, in enabling distant sections of the country to come into closer 
 commercial relations, and to exchange to their mutual benefit their dis¬ 
 similar productions, or to compete with each other in those which are 
 similar. 
 
 But the cases must be very rare in which the larger charge in the 
 aggregate for the shorter haul of the same kind of property over the 
 same line in the same direction could be justified, when no other reason 
 supported it than the fact that the traffic for the longer haul would bear 
 no more. Manifestly such a discrimination when not imperative on 
 other grounds is unjust; and the injustice becomes oppression when the 
 eftect is to increase the burden upon the traffic which has the shorter 
 haul. There is a plain limit to the application of the principle that 
 property is to be carried at rates it will bear; aud the limit is reached 
 when the rates charged are so low that further reduction would neces¬ 
 sitate an increase of the charges upon other traffic in order to make up 
 to the carrier such loss as the reduction causes. If'some common veg¬ 
 etable, worth but five cents a hundred pounds more at a market a 
 thousand miles distant than it is where it is grown, were to be trans¬ 
 ported that distance for the sum named, the producer nearer the market 
 if subjected to a higher charge would have a right to complain that 
 not only did the discrimination reduce the market value of his i)roduce, 
 but that the acceptance of the unreasonably low rates from the distant 
 producer had a tendency to increase the charge for the shorter haul, so 
 
13 
 
 as to make it not only relatively, but, when considered by itself, un¬ 
 reasonably high. 
 
 It is a matter of public notoriety that a belief has prevailed to a con¬ 
 siderable extent that long haul traffic was in many cases carried at a 
 loss ; that the carriers were enabled to take it by making the charges 
 for short haul traffic greater than would otherwise be necessary or rea¬ 
 sonable, and that this constituted an abuse that ought to be corrected 
 by law. Persons who did not hold to this belief have, on the other hand, 
 taken low charges on long haul traffic as a proper measure for all 
 charges, and have insisted that if the railroads could accept the low 
 charges for one class of business they could and ought to do so for all 
 classes. And this, as a rule, would be quite true if the railroads had 
 it in their power to make the rates for all j which, however, is far from 
 being the fact. There are many cases in which they have the option 
 only to take the traffic at rates prescribed by its owners, or not to take 
 it at all. But in respect to such cases, we must repeat, by way of em¬ 
 phasis, that a successful appeal cannot be made to the equity of the 
 statute on the mere ground that long-haul traffic will not bear higher 
 rates, if in fact those it can bear, if accepted, will cause a loss to the car¬ 
 rier which must be made up on short-haul traffic. To have one’s property 
 carried at a loss would not be matter of right, but of favor; and favors 
 in transportion are not to be granted to any one class at the expense of 
 any other. 
 
 lY. The greater charge for the shorter haul has been in some cases 
 defended, on the ground that manufactures and other industries were 
 thereby favored and built up. But a question likely to arise in such 
 cases is whether that which is done for some is not at the expense or 
 to the unjust prejudice of others. The statutes of some of the South¬ 
 ern States seek to encourage manufactures by permitting special rates 
 to be made in their favor; and railroad companies, in some cases 
 which were brought to our notice, have entered into contracts with 
 parties proposing to establish large manufactories or otherwise en¬ 
 gage extensively in business whereby, in consideration of the in¬ 
 vestment of some named sum in the proposed enterprise, they agree 
 that favorable rates, which are specified, shall be given on its 
 traffic for a term of years. The purpose of such laws and such con¬ 
 tracts is no doubt commendable, but the practical difficulty of giving 
 them effect without prejudice to the interest of others is always found 
 to be serious. Very often they tend to the benefit of large establish¬ 
 ments and to the prejudice of small. Manufactures are infinite in va¬ 
 riety and extent, and, while it might be easy for those whose transac¬ 
 tions were large to obtain the benefit of an impartial law made for the 
 encouragement of all, the small establishments, sending out their goods 
 in small lots and irregularly, might find the law practically of little or 
 no value. The railroad companies, not unwilling to make long-time con¬ 
 tracts for rates which contemplate a large business, would scarcely be 
 
14 
 
 expected to stipulate for them with the small establishments, which ex¬ 
 ist in variety in every town and hamlet. 
 
 As a matter of fact the laws and the contracts which are made for the 
 benefit of manufactures usually contemplate not all kinds of manufact¬ 
 ures, but only those leading and most prominent kinds which require 
 large cai)ital, and whose operations are on an extensive scale. En¬ 
 couragement to these is of public advantage when it wrongs no one; 
 but it is just as much the duty of the common carrier in making its low 
 rates on long hauls to consider whom they may ruin as whom thej" may 
 build up ; and while the carrier cannot be held responsible for the con¬ 
 sequences which flow legitimately from tarifls impartially arranged, it 
 cannot justify on the ground of public benefit the unequal rates which, 
 however beneficial to some, may be equally mischievous to others. A 
 great establishment, strengthened by the favor of the public carriers 
 until it acquires the power to crush competition and actually exercises 
 that power, may by that very fact become an enemy to the civil state; 
 and no benefit it can give to the public in the low prices of its com¬ 
 modities or otherwise can compensate for the general sense of wrong 
 which those must feel who are injured by it, or for the sentiment which 
 grows u]) in view of its operations, that the law fails to give the equal¬ 
 ity of right and privilege which it nominally promises. That some 
 such great establishments have been fostered by the aid of the railroad 
 companies is commonly believed; and i)rovisions against unjust dis¬ 
 criminations in this statute had for their object, among other things, to 
 bring this mischief to an end. The plausible excuse of public benefit, 
 if it ever had force in such cases, has none now, for the statute forbids 
 what public sentiment had already condemned. 
 
 It was shown by the evidence that the rates ux)on long hauls were 
 such as would admit of the pine lumber of Mississippi being sold in 
 Wisconsin in competition with lumber there cut, and of the iron of 
 Alabama being carried^ through Pittsburgh to Eastern manufactories. 
 If the lines originating in Wisconsin and Pennsylvania give to the pro¬ 
 ducers of those States corresponding rates for the traffic in the other 
 direction under similar circumstances, this will prejudice no one; but, on 
 the contrary, may operate to the public advantage, provided always 
 that the rates actually charged are compensatory. The petitioner in 
 this case claims that in no case does it carry such long-haul traffic at 
 rates which fall below cost. By this, however, is meant only the cost 
 of movement of the particular traffic, leaving out of view the fixed 
 charges of the road, which must, in any event, be provided for, whether 
 the long-haul traffic is or is not taken. This distinction between the 
 cost of movement and the fixed charges often becomes of importance 
 in such cases as that of the lumber trade just mentioned. That trade is 
 new; the roads which take it were built without anticipating its spring¬ 
 ing up, and their managers made their calculation for business to meet 
 the whole cost of operation in reliance upon such traffic as was then 
 
15 
 
 apparent or probable. The fixed charges of the road may, for purposes 
 of illustration, be assumed to equal one-half of the whole, the cost of 
 movement of freight the other half. The rates laid were doubtless cal¬ 
 culated to cover the whole, with a margin for profit, and were so laid that 
 all traffic would contribute towards both fixed charges and cost of move¬ 
 ment. But now comes this new business, aud from the nature of the 
 case low rates are a necessity to it; it can pay perhaps little if anything 
 more than half what is paid by other traffic. But taking it will not 
 increase perceptibly the fixed charges of the road, because those are 
 made up of items that must be paid whether the traffic is large or 
 small. What is added to the cost by taking it is simply the expense 
 of its own handling and movement j and upon the supposition made, 
 there might perhaps be gain to the road instead of loss in taking it at 
 anything above half the rates which are levied upon other traffic corre¬ 
 sponding to it in classification. It might therefore be carried at such 
 rates without wrong to any one. But if it were carried at lower rates 
 still, not only would the other traffic be left to pay the fixed charges 
 aud the cost of its own movement, but it would also, to some extent, be 
 burdened with the cost of movement of the long-haul traffic thus added 
 to the business of the road. 
 
 The injustice of this would be very apparent, and it would become 
 intolerable if some portion of the short-haul traffic was competitive to 
 the long-haul traffic, and was so heavily taxed by higher rates as to 
 make continuance impossible. It is very plain that an unrestricted 
 power to make such rates is liable to infinite abuses, and that it may as 
 easily be made use of to injure one enterprise as to build up another. 
 In the earnest and sometimes unreasoning rivalry of railroad companies, 
 it has no doubt often been employed as much to give mere volume to 
 business as for any anticipated net revenue; aud the wrongs have in 
 such cases far exceeded any possible advantages that could accrue either 
 to the roads themselves or to the public. It cannot be supposed that 
 in any case the true interest of a road will be prejudiced by its being- 
 held strictly to the rule that excessively low rates ou some traffic are 
 not to be compensated for by excessively high rates on other traffic. 
 Aud if rates are so graded as to violate the statutory general rule, it 
 cannot be accepted as justification for the higher rates on the shorter 
 haul that the lower rates on the longer haul had encouragement to 
 manufacturers or other industries for their motive. 
 
 V. The chief ground on which the applicants pressed for relief from 
 the long and short haul clause of the statute was that competition 
 forced the railroad companies to make rates to aud from connecting 
 points to the level of which it was not possible to bring the charges 
 at non-competitive points, because the doing so would cause such re¬ 
 duction of revenues as would force roads into bankruptcy and ulti¬ 
 mately into suspension. It was, therefore, as was said, inevitable that 
 in a great number of cases the greater charge should be made for the 
 
16 
 
 shorter haul; and nothiug but putting a stop to competition bylaw 
 would prevent it. This it was insisted the new law does not attempt 
 or intend. On the contrary the importance of competition in fostering 
 and regulating the internal commerce among the States is clearly noted. 
 In the sixth section carriers are permitted to reduce their rates at any 
 time, but are forbidden to raise them except after giving ten days’ 
 notice. In the fifth section the i^ooling of freight is forbidden, unques¬ 
 tionably because the practice was regarded as having a tendency to 
 prevent or check competition. The act studiouslj’ omits to bring the 
 steamboats and other independent water lines within its control, and 
 must, therefore, have contemplated the continuance not only of compe¬ 
 tition, but of those things which competition renders inevitable. The 
 existence of competitive forces to an extent that the railroad companies 
 at competitive points are unable to control, it was therefore argued, 
 would make out a case of circumstances and conditions so dissimilar 
 to those prevailing at non-competitive points as might justify the mak¬ 
 ing of the greater charge for the shorter haul which was in general 
 prohibited. 
 
 The competition which was brought to our attention as having this 
 imperative force first, the competition of railroads with water-ways: 
 second, the competition of railroads with other railroads which are not 
 subject to the provisions of the “ Act to regulate commerce”; third, 
 the competition with each other of railroads which are subject to that 
 act;/owrt/i, the competition of business or trade centers with each 
 other, operating indirectly upon the roads which form their channels of 
 trade; and,^/f/i, the competition of business interests in like manner op¬ 
 erating upon the roads, by whose assistance the business is carried on. 
 This fifth species of competition has already been remarked upon to some 
 extent, and it has been seen that it will not justify a railroad company 
 in discriminating between its own customers to an extent that would 
 create an exception to the general rule the statute prescribes. We pass 
 it now Avithout further remark. The others demand at our hands due 
 consideration. 
 
 I. It was fairly shown before us that instances exist, and may be 
 found, along the routes of petitioner’s lines in the States of Kentucky, 
 Tennessee, Georgia, Alabama, Mississippi, and Louisiana, where the com¬ 
 petition of water-ways forces down the railroad rates below what it is 
 possible to make them at non-competitive points and still maintain the 
 roads with success or efficiency. The reason is that the carriers b^' water 
 can perform the service at A^ery much less cost than the carriers by land. 
 The general fact is that railroad rates for the transportation of property 
 must approximate closely those which are made between the same points 
 by steamer, and the steamer rates are generally, if not invariably, much 
 below what the railroads can afford to accept upon all their business. 
 In such cases, if competition is maintained, more must be charged at 
 interior points than can be obtained at the points of competition ; and 
 
17 
 
 if the competitive rates are such as are productive of some gain, how¬ 
 ever slight, the nou-competitive points are likely to receive indirect 
 advantage therefrom, while the competitive points have the larger and 
 more direct benefit, and are afforded a choice of agencies in transporta¬ 
 tion whose rivalry may fairly be expected to keep the cost down to a 
 minimum. The interior points may have no ground for complaint in 
 such a case, i)rovided the rates they are charged are in themselves just 
 and reasonable, even though the effect be that in some cases more is 
 charged for the short than for the long haul over the same line in the 
 same direction. This general fact is recognized the world over; and of 
 English railways it has been often remarked that some of them would 
 be deprived of much of their value if they were not allowed to meet 
 water competition by such concessions at the points of contact as the 
 competition would compel. 
 
 The only question that fairly arises in regard to it is whether the 
 competition is kept within proper bounds. Vessel owners produced 
 evidence before us to show that the railroads put down their rates to a 
 ruinous point in their determination to take the competitive traffic at 
 all hazards, and eventually to crush out competition j and railroad man¬ 
 agers retorted with evidence that the blame for unremunerative rates 
 was upon their rivals. But the question of relative fault is not impor¬ 
 tant now. Low rates are a necessity of the situation j and if railroads 
 compete with water transportation either on the ocean or on the navi¬ 
 gable rivers, they have no choice but to accept such rates. To compel 
 the roads to observe strictly the general rule laid down by the fourth 
 section would necessitate their abandonment of some classes of business 
 in which their competition with water transportation is now of public 
 importance. Vessel owners who appeared before us to oppose the ap¬ 
 plications made for relief, put their opposition in some cases explicitly 
 on the ground that denying the applications would enable the vessel 
 men to put up their own rates. This was to be expected, and is far from 
 being blameworthy if in fact their business is not now reasonably profit¬ 
 able ; but it is suggestive of the fact that the interest of the public and 
 that of any class of public carriers is not in all respects identical. 
 
 It is more than probable that the complaints made by the vessel own¬ 
 ers against certain of the railroads are to some extent well founded 5 
 that the railroads have not only made the rates at points of competition 
 with vessels much too low in order that they might at all events ob¬ 
 tain the business, but that this has been done in disregard alike of right 
 and of true policy. This is only saying that in their wars of rates with 
 vessel owners they have sometimes shown the same recklessness as in 
 like wars among themselves 5 but the fact still remains that they must 
 either be allowed to compete with vessel owners and make low charges 
 for the purpose, or they must leave vessel owners in possession of the 
 business without the check upon charges which competition would af¬ 
 ford. 
 
 23113-2 
 
18 
 
 The question here is whether this limitation of competition was in¬ 
 tended by the statute; or, on the other hand, did Congress intend that 
 the existence of competition might in some cases make out the dissimi¬ 
 lar circumstances and conditions which would support a greater charge 
 for the shorter haul, even though it might be over the same line in the 
 same direction, the shorter being included in the longer distance? On 
 this subject the history of the proceedings in Congress which resulted 
 in the adoption of the fourth section as it stands is instructive, and with 
 such brevity as is practicable it is recited here, not as determining con¬ 
 clusively the construction of the section, but as showing beyond ques¬ 
 tion that the benefits of competition were meant to be retained, and 
 that exceptions to the rigorous general rule were provided for to meet 
 the contingencies which the competition might create. 
 
 In the report of the Senate select committee, submitted January 18, 
 1886, known as the Cullom report, is found the following language : 
 
 No question connected with the problem of railroad regulation has given the com¬ 
 mittee more perplexity than that relating to the utility and expediency of legislation 
 prohibiting a carrier from charging more for a shorter than a longer haul under any 
 circumstances; not that we have any doubt as to the injustice of such a charge un¬ 
 der most circumstances, but because it seems inexpedient to enforce such a regula¬ 
 tion under all circumstances. 
 
 When the effect of the proposed prohibition is considered with reference to the 
 whole internal commerce of the United States, and especially with reference to the 
 necessity of preserving the prevailing cheap rates for long distance transportation, 
 there is reason to fear that the result of rigidly enforcing the proposed regulation 
 would be to stifle competition in numberless cases where it now exists and is to the 
 general public interest, and perhaps to deprive the country of-the benefits of the low 
 through rates now and for years given to and from the tide-water, without practical 
 or appreciable advantage to intervening points. 
 
 The bill introduced with the report contained the following provis¬ 
 ion upon this subject: 
 
 Section 4. That it shall be unlawful for any common carrier subject to the-pro¬ 
 visions of this act to charge or receive any greater compensation in the aggregate for 
 the transportation of passengers or property for a shorter than for a longer distance 
 over the same Hue in the same direction, and from the same original point of depart¬ 
 ure, if such greater charge for the shorter distance constitute an unjust discrimina¬ 
 tion ; but such greater charge for a shorter distance shall be presumptive evidence 
 of unjust discrimination, which may, however, be rebutted by the common carrier. 
 
 Upon application to the Commission appointed under the provisions of this act, 
 such common carriers may, in special cases, be authorized to charge less for longer 
 than for shorter distances for the transportation of passengers or property; and the 
 Commission may from time to time make general rules covering exceptions to any such 
 common carrier in cases where there is competition by river, sea, canal, or lake, ex¬ 
 empting such designated common carrier from the operation of this section of this 
 act; and when such exceptions shall have been made and published they shall have 
 like force and effect as though the same had been specified in this section. 
 
 Afterwards, and before debate, the committee on February 16, 1886, 
 reported as a substitute for this bill another, in which the following lan¬ 
 guage is found : 
 
 Sec. 4. That it shall be unlawful for any common carrier to charge or receive any 
 greater compensation in the aggregate for the transportation of passengers or prop- 
 
19 
 
 erty subject to the provisions of this act for a shorter than for a longer distance over 
 the same line in the same direction, and from the same original point of departure : 
 provided, however, that upon application to the Commission, &c. * ^ * [sub¬ 
 
 stantially as before]. 
 
 The formal discussion of the measure was commenced April 14, 1886, 
 the chairman of the select committee opening the debate by a speech in 
 which he said concerning the fourth section: 
 
 It is agreed that this is the principle that should be observed as a general rule. 
 The committee found, however, that the principle was not of universal application ; 
 that there were cases in which the railroads were compelled to make lower rates for 
 longer than for shorter distances by the great law of competition, which is stronger 
 than any law we can make, and that in some cases it would be a great hardship to 
 the public as well as the railroads to rigidly enforce the general principle. 
 
 It is perfectly clear that the intention of the original framers of the 
 Senate bill was to leave it to the discretion of the Commission to exempt 
 carriers from the operation of the rule in cases when the great law of 
 competition” made such a relaxation proper, having in view the inter¬ 
 ests of the carriers and the people. 
 
 On May 6,1886, Senator Oullom moved to amend the section by strik¬ 
 ing out the words “covering exceptions to any such common carrier in 
 cases when there is competition by river, sea, canal, or lake.” He sup¬ 
 ported this motion by the suggestion that these words were not neces¬ 
 sary, and that without them the Commission would have the same power 
 and more. Senator Harris favored the amendment, as giving a broader 
 discretion to the Commission, and it was adopted. 
 
 On May 12th, a motion was made by Senator Camden to change the 
 phraseology of the first part of the section, so that it should read “of 
 like kind of property under substantially similar circumstances and con¬ 
 ditions.” This amendment was agreed to as a substitute for a previous 
 amendment proposed by Senator Camden, and with little additional de¬ 
 bate. 
 
 The bill was finally passed on the part of the Senate, section 4 re¬ 
 maining substantially as above, with the insertion of the following: 
 
 , But this shall not be construed as authorizing any common carrier within the terms 
 of this act to charge and receive as great compensation for a shorter as for a longer 
 distance. 
 
 The bill then went to the House of Eepresentatives, and was referred 
 to the Committee on Commerce. That committee reported as a substi¬ 
 tute for it the bill before pending in the House, which contained the fol¬ 
 lowing provision upon the subject embraced in section 4 of the Senate 
 bill: 
 
 That it shall be unlawful for any person or persons engaged in the transportation 
 of property as provided in the first section of this act to charge or receive any greater 
 compensation for a similar amount and kind of property, for carrying, receiving, stor¬ 
 ing, forwarding, or hauling the same, for a shorter than for a longer distance, which 
 includes the shorter distance on any one railroad; and the road of a corporation shall 
 include all the road in use by such corporation, whether owned or operated by it un¬ 
 der a contract, agreement, or lease by such corporation. 
 
20 
 
 In opening the debate on July 21, 1886, Mr. Eeagan, chairman of the 
 House Committee on Commerce, severely criticised the fourth section 
 of the Senate bill, saying that the closing part of the section substan¬ 
 tially nullified the former part, while his proposed substitute contained 
 an absolute prohibition. 
 
 The minority of the committee, four in number, opposed the substi¬ 
 tution, and in their report the following passage occurs: 
 
 Nor do the minority favor the provision prohibiting a greater charge for a shorter 
 than a longer haul, as it was shown to a satisfactory degree, as we think, in the hear¬ 
 ing that, where two competing points were connected by water as well as rail, it 
 was impossible for the railroads to secure the traffic unless they made their rates as 
 low as the water rates, and that while they might be able to do this on a portion of 
 their traffic, it would be destructive of their interests to reduce all their rates to those 
 which were forced upon them between certain points by the competition of the water 
 routes. 
 
 It is obvious therefore that, in the House as well as in the Senate, 
 it was understood that the existence of competition was intended to be 
 included in the margin of discretion provided for by the Senate meas¬ 
 ure. The question as to this point was distinctly markedj the debate, 
 so far as this section was concerned, was upon that basis. On July 30, 
 1886, the substituted bill was agreed to and passed on the part of the 
 House. A conference committee was appointed, and at the second ses¬ 
 sion of the Congress that committee agreed upon a report, which was 
 presented to the Senate December 15, 1886. By this report the fourth 
 section of the Senate bill was amended so as to read as it now stands. 
 
 The work of the conference committee was very elaborately and 
 carefully performed. The two bills which were referred to it pre¬ 
 sented very clearly the views which had prevailed in the two houses 
 respectively, on the general subject of relative charges on long and 
 short haul traffic—the House view of an inflexible rule, forbidding ab¬ 
 solutely the greater charge for the shorter haul, and the Senate view 
 that the rule should be subject to exceptions when the circumstances 
 and conditions required it. The conference committee accepted de¬ 
 liberately the Senate view, and presented it, in the refDort to the two 
 houses. In the Senate the report, before adoption, was discussed, and 
 what was proposed by it on this point of vital interest was very dis¬ 
 tinctly brought out and made prominent; and in the House, where 
 also the report was adopted, nothing which was said by any one indi¬ 
 cated that the situation was otherwise understood. 
 
 It is impossible to resist the conclusion that in finally rejecting the 
 “long and short haul clause” of the House bill, which i^rescribed an 
 inflexible rule, not to be departed from in any case, and retaining in 
 substance the fourth section as it had passed the Senate, both houses 
 understood that they were not adopting a measure of strict prohibition 
 in respect to charging more for the shorter than for the longer distance, 
 but that they were, instead, leaving the door open for exceptions in 
 certain cases, and, among others, in cases where the circumstances .and 
 
21 
 
 conditions of the traffic were affected by the element of competition, 
 and where exceptions might be a necessity if the competition was to 
 continue. And water competition was beyond doubt especially in 
 view. 
 
 In thus deliberately making provision for competition, even though 
 it might be necessary to allow for the puri^ose exceptions to the general 
 rule laid down in the statute. Congress must be supposed to have done 
 so because the public interest required it. That competition is the life 
 of trade is one of the most generally accepted of maxims; among its 
 principal benefits is the protection it gives against extortionate charges. 
 But legitimate, open, and fair competition was meant; not everything 
 that has been done under the name of competition, and which in many 
 cases has been equally destructive of public and of private right. 
 Among the common abuses have been the granting of special fav¬ 
 ors in exceptional rates, rebates, drawbacks, &c., all of which are 
 now expressly prohibited by law when they assume the form of 
 unjust discrimination. There has also been favoritism between places 
 and communities as a result of violent competition; but this also is 
 no longer permissible. Other similar wrongs will be referred to further 
 on; but the wars of rates, under the excitement of which traffic is 
 carried at a loss, to be made good by excessive charges on other 
 traffic at other times, is not the least of those from which the public has 
 suffered. And these wars are as indefensible when vessel owners are 
 their objects as when made between the railroads themselves, and are 
 not to be justified on any pretense of competition. Water transporta¬ 
 tion is entitled to such traffic as in fair rivalry and at fair prices it 
 can take, and the railroads in competition with it must recognize this 
 right and not recklessly attempt to preclude its exercise. It is true 
 that while the roads are obliged to. publish their tariffs and the carriers 
 by water are not, the former are at a disadvantage in the competition; 
 but possibly the law in this regard may be amended if justice shall be 
 found to require it. 
 
 Every railroad company ought, when it is practicable, to so arrange 
 its tariffs that the burden upon freights shall be proportional on all por¬ 
 tions of its line and with a view to revenue sufficient to meet all the 
 items of current expense, including the cost of keeping up the road, 
 buildings, and equipment, and of returning a fair profit to owners. 
 But it is obvious that, in some cases, when there is water competition 
 at leading points, it may be impossible to make some portion of the 
 traffic pay its equal proportion of the whole cost. If it can then be 
 made to pay anything toward the cost, above what the taking of it 
 would add to the expense, the railroad ought not, in general, to be 
 forced to reject it, since the surplus, under such circumstances, would 
 be profit. As has been tersely said by M. de la Gournerie, formerly 
 inspector-general of bridges and railways in France, a railroad “ought 
 not to neglect any traffic of a kind that will increase its receipts more 
 
22 
 
 than its expensesand long-haul traffic which can only be had on 
 these terms may sometimes be taken without wronging any one, when, 
 to carry all traffic, or even the major part of it, at the like rates, 
 would be simply ruinous. But we desire to apply generally to every 
 kind of competition herein discussed the observation above made, that 
 when competition leads to the transportation of property below actual 
 cost, fairly computed, it ceases to be legitimate. Fair and reasonable 
 competition is a public benefit; excessive and unreasonable competi¬ 
 tion is a public injury. Competition is to be regulated, not abolished. 
 The other sections of the law of themselves imply ample authority for 
 its regulation, and, in connection with the fourth section, suiDport the 
 interpretation that it is wholly inadmissible to press competition to a 
 point where expenses are increased beyond the increase of income. 
 
 II. The question whether railroad competition with other railroads 
 which are not subject to the control of this law, can present a case of 
 dissimilar circumstances and conditions, within the meaning of section 
 4, may possibly be one of greater doubt. The classes of roads not 
 thus subject, and whose competition might be severe, are the Canadian 
 roads and roads which are entirely within the control of a single State. 
 As regards the latter, it is not improbable that cases exist of roads not 
 restrained by any long and short haul clause corresponding to the Fed¬ 
 eral statute, which are so situated in respect to rivals coming under the 
 law of Congress as to be able ta monopolize to the public detriment the 
 traffic at important points of competition unless the latter are given 
 equal freedom of action. We do not understand, however, that any of 
 the pending applications are of this nature, and we therefore leave such 
 cases to be considered when they shall be presented more directly. 
 Competition with Canadian roads may, it is believed, present a case of 
 dissimilar circumstances and conditions. Whenever such roads compete 
 with roads in the United States for business between one part of our 
 country and another, a state of circumstances arises and exists as to 
 such business which justifies American roads in meeting such com¬ 
 petition by a corresponding reduction of rates, without regard to the 
 fact that in so doing the rates between the terminals may be reduced 
 below rates to and from intermediate places which are otherwise rea¬ 
 sonable and just in themselves. The fact that American roads are left 
 free to meet such competition is of itself an assurance that no extensive 
 war of rates is likely to be engaged in by the Canadian roads, or, if 
 engaged in, to be long j)ursued. 
 
 III. The competition with each other of the railroads which are sub¬ 
 ject to the Federal law can seldom, as we think, make out a case of 
 dissimilar circumstances and conditions within the meaning of the stat¬ 
 ute, because it must be seldom that it would be reasonable for their com¬ 
 petition at points of contact to be pressed to an extent that would 
 create the disparity of rates on their lines which the statute seeks to 
 prevent. But we cannot now assume that no case has arisen or can 
 
23 
 
 hereafter arise which on its own peculiar facts and in consideration of 
 its special equities can be deemed to present a just claim under the 
 statute. 
 
 First, it may be observed here that in some i^arts of the country it is 
 not easy to separate railroad competition altogether from competition 
 by the water-ways. 
 
 Water competition is not limited in force strictly to the points of con¬ 
 tact of water and rail lines, but extends its influence to an indefinite 
 distance therefrom, qualifying to greater or less extent the all-rail rates. 
 But passing that consideration by, it will be found on investigation that 
 cases will exist in which, unless the force of strictly railroad compe¬ 
 tition is allowed to create exceptions under the statute, an existing com¬ 
 petition which is supposed to be of public interest must come to an end. 
 And where that is the case the strong lines will in general be gainers 
 at the expense and sometimes to the destruction of those which are 
 weaker. 
 
 One such case is that of the railroad extending from Pittsburgh, Pa., 
 parallel to the Pennsylvania Eailroad as far as Youngstown, and thence 
 to Ashtabula, Ohio, where, through connection with the Lake Shore, it 
 gives to the people of Pittsburgh and Youngstown competition with the 
 Pennsylvania road in their business to and from New York and New 
 England. The peculiarity of the competition is, that the business on 
 the roads respectively is started in opposite directions when destined to 
 the same point, so that on east-bound traffic from Pittsburgh the haul 
 by one road is shorter than from Youngstown and longer by the other. 
 As the Pennsylvania road has the shorter line, it is in position to de¬ 
 termine what the rates shall be and the longer line has no option but 
 to conform to them. In making them the leading road gives to Pitts¬ 
 burgh lower rates than to Youngstown, as it justly should do, in recog¬ 
 nition of the geographical position. But the other road must do the 
 same, though over its line the traffic between Youngstown and the sea¬ 
 board will have the shorter haul. There is nothing unreasonable or 
 unjust in this j and if the longer line were to attempt a change which 
 should reduce the rates from Youngstown to the level of those of Pitts¬ 
 burgh it would in doing so only open a war of rates in which all the ad¬ 
 vantages would be with its rival. Finding itself in this dilemma, it 
 applied to the Commission for an order permitting a greater charge to 
 made on traffic to and from Youngstown than is made on that to and from 
 Pittsburgh, and its application is strenuously opposed by the Pennsyl¬ 
 vania road, which insists that competition by this roundabout route is 
 illegitimate and ought not therefore in any manner to be aided. 
 
 Whether this position is sound the Commission may determine here - 
 after. It is sufficient to say of the case at this time that it is one—and 
 not a solitary instance—in which a strict application of the general rule 
 laid down by the statute must be fatal to competition. If the compe¬ 
 tition in itself is illegitimate, it may be right to permit its destruction. 
 
24 
 
 But it is not admitted by those interested in the road just mentioned 
 that its case is of this nature. It is shown that it was constructed by 
 Pittsburgh capital for the express purpose of the competition j and it 
 appears that though the route is indirect, the competition has given 
 it considerable business, and large investments have been made in 
 reliance upon its continuance. 
 
 One fact obvious on the statement of this case is that the wrong 
 against which the long and short haul clause of the statute is aimed is \ 
 not to be found in it. When the greater charge for the shorter haul 
 over the same line in the same direction is spoken of, the natural sug¬ 
 gestion to the mind is of a line leading with some directness to the place 
 to which the traffic is destined ; and there seems to be in such greater 
 charge a manifest unfairness, since it deprives the place of shipment 
 nearest the destination of its proper advantage of situation. But in the 
 case stated the position is the opposite to this; the greater charge for 
 the shorter haul preserves the iDroper advantage of situation, and has 
 in itself no element of injustice to localities. It is the situation which 
 forces upon the road an unequal charge which is nevertheless not unfair, 
 and a strict application of the statute must compel the surrender of 
 what is now competitive traffic to the older and more direct route whose 
 very conformity to the general rule precludes conformity by the com¬ 
 petitor. 
 
 There are other cases in the country of roads now taking part in 
 competitive traffic which the peculiarities of situation will compel them 
 to abandon if the long and short haul clause of the statute is strictly 
 applied. This to some extent might be the case with certain north and 
 south roads, like the road from Cincinnati to Toledo, and that from New 
 Albany to Chicago, which have heretofore engaged considerably in east 
 and west bound traffic which they deliver to or receive from other roads 
 crossing them, or at their terminals. In many cases these roads have 
 been accustomed to make the greater charge for the shorter haul sim¬ 
 ply because the direction they run compels it; but in doing so they may 
 wrong no one, because the rates are not determined by them but by the 
 direct east and west lines, and are made with regard to relative dis¬ 
 tance. Both the roads named now have applications pending for relief 
 from an embarrassment for which they are not themselves responsible; 
 and they aver, with plausibility at least, that the public interest will 
 suffer if they are shut out from s uch share in competition as they have 
 hitherto taken. We do not pass upon these cases finally at this time, 
 and, therefore, do not undertake to say of them that they constitute 
 cases in which the competition of roads subject to the Federal law creates 
 the dissimilar circumstances and conditions which make up an exceptional 
 case. But this brief reference to the facts is suggestive of a possibility, 
 at least, that the exceptional case may exist; and if it does exist a strict 
 enforcement of the general rule might be found quite asinjurious to the 
 
25 
 
 public interests as to those of the railroads which would thereby be 
 shut out from competition. 
 
 TV. Whether the competition of towns which are trade centers or dis¬ 
 tributing points can in any case make out the dissimilar circumstances 
 and conditions independent of the competition of the carriers is a ques¬ 
 tion which may be said to be presented by the evidence taken, but not 
 with such distinctness as to call for an expression of opinion at this 
 time. The pre-eminence of such trade centers in the territory reached 
 by the petitioner's roads is peculiar, and has probably been increased 
 by the con cessions in rates which therailroads havemade to them, while 
 making less concessions or none at all to less-important stations. This 
 condition of affairs tends to perpetuate itself, and the disparity of rates 
 as between competitive and non-competitive towns—the former being 
 the “ trade centers ”—must have had some influence to increase steadily 
 the disparity in growth and prosperity. 
 
 By some of the witnesses before us this was bitterly complained of, 
 while by others it was defended as being best for both classes of towns. 
 The smaller towns in this part of the country it was said, are dependent 
 on the trade centers for their supplies, and they get indirectly the bene¬ 
 fit of low rates to the distributing points in lower prices than could 
 otherwise be given to them. In proportion also as the distributing 
 points are prosperous, they can and do extend to the dealers at other 
 points credit and indulgence. The prevalence of such ideas, and the 
 acting upon them in making freight tariffs, gives to railroad managers 
 a power of determining within certain limits what towns shall be trade 
 centers, and what their relative advantages j and while it may be, as 
 they assert it is, that in deciding upon rates under the pressure of the 
 competition of trade centers they endeavor to do justice between them, 
 yet as they do not, at the same time, feel a like pressure from non-com¬ 
 petitive points, it is obvious that justice to such points is in great danger 
 of being overlooked, and it is altogether likely that it is so to some ex¬ 
 tent. 
 
 One result is that towns recognized by railroad managers as trade 
 centers come to be looked upon as towns with special privileges, and 
 other towns strive for recognition as such, and complain perhaps of in¬ 
 justice when they fail. It was made very clear by the evidence produced 
 in behalf of the railroads that the exceptionally favorable rates which 
 were given to certain localities were in some cases given to build up 
 trade centers; and as they had had that effect, and large establish¬ 
 ments had been located at such centers, invited by the favoring rates, 
 it was urged that there would be injustice in now compelling the roads 
 to go back to the rule of equality. Of this it may be said, first, that 
 as between different localities it is no sound reason for discriminating 
 in favor of one as against another that the purpose is to build up the 
 favored locality as a trade center; and, second, if the discrimination has 
 existed and has had its effect, the fact that large establishments have 
 
26 
 
 thereby been encouraged is no reason why the injustice should be per¬ 
 petuated. This statute aims at equality of right and privilege, not less 
 between towns than between individuals, and it will no more sanction 
 preferential rates for the purpose of perpetuating distinctions than of 
 creating them. 
 
 These general views will indicate as far as we deem at this time neces¬ 
 sary the bounds within which the railroad managers must limit their 
 action in making charges which are greater in the aggregate for the 
 transportation of passengers or of the like kind of property for a shorter 
 than for a longer distance over the same line in the same direction, the 
 shorter being included in the longer distance. With responsibility to 
 the law and to the restraining power of the Commission in case the 
 bounds are exceeded, it may confidently be expected that all carriers 
 will bring themselves into conformity with the general law so far as it 
 may be found reasonably practicable, and that the occasions for special 
 interference will not be numerous. Our observation and investigations 
 so far made lead to the conclusion that strict conformity to the general 
 rule is possible in large sections of the country, without material injury 
 to either public or private interests; and that in other sections the ex¬ 
 ceptions can be and ought to be made much less numerous than they 
 have been hitherto, and that when exceptions are admitted the charges 
 should be less disproportionate. Yery many of the roads, as we are in¬ 
 formed, have so arranged their tariffs as to make no exception what¬ 
 ever 5 and where that has been proved to be reasonably feasible, return 
 to the former custom cannot be tolerated. In any case in which a 
 company fails to bring its tariffs into conformity with the general rule, 
 if parties whose interests are thereby unfavorably affected complain, it 
 must be prepared to justify its action by a showing of circumstances and 
 conditions which render it just and reasonable. 
 
 In the views above expressed the members of the Commission, after 
 full consideration, are unanimous. 
 
 The order for temporary relief which was made in favor of the peti¬ 
 tioner will be allowed to remain in force until the day originally limited 
 for its expiration, and in the mean time its officers will have the oppor¬ 
 tunity to make thorough revision of its freight and passenger tariffs, in 
 order to bring them as nearly as may be reasonably feasible into har¬ 
 mony with the general rule of the statute and with the views expressed 
 in this opinion. That they may be brought much nearer to conformity 
 than they now are without the sacrifice of any substantial interest, we 
 have very little question; and as business adapts itself to the new prin¬ 
 ciple established by Congress, it will no doubt be found that exceptions 
 can safely and steadily be made less and less numerous. 
 
27 
 
 The other applications for relief under this section which remain to be 
 disposed of are as follows: Fifteen^are by the Eichmond and Danville 
 Eailroad Company, The East Tennessee, Virginia and Georgia Eailroad 
 Company, and other members of the Southern Eailway and Steamship 
 Association, which is an association of railroad and steamship com¬ 
 panies operating lines of transportation in the territory south of the 
 Ohio and Potomac and east of the Mississippi Eiver. Eleven are by 
 other railroad lines in the same territory, the Mobile and Ohio, ‘‘ Queen 
 and Crescent,” Illinois Central, and others. Two are on behalf of com¬ 
 panies in Louisiana and Texas. Seven are presented by the various 
 transcontinental lines. One is in favor of the New York, New Haven 
 and Hartford and other companies operating short lines in Connecticut, 
 Ehode Island, and Massachusetts, which also seek relief against alleged 
 water competition. One is filed by the Delaware and Hudson Canal 
 Company, and another by the Eome, Watertown and Ogdensburg Eail¬ 
 road Company, in the State of New York, asking relief in respect to 
 Canadian competition. Four are presented in behalf of the Pittsburgh 
 and Lake Erie, the Cincinnati, Hamilton and Dayton, and two other 
 roads similarly situated. One by the Mason City and Fort Dodge Com¬ 
 pany, a north and south road in the State of Iowa. Four are in behalf 
 of certain roads in the vicinity of Peoria. Two are in behalf of roads in 
 Southern Illinois, relating to their connections south of the Ohio. Three 
 are by the Wisconsin Central and two other roads in Wisconsin and 
 Minnesota. One by the New York, Philadelphia and Norfolk, in Dela¬ 
 ware. One by the Memphis and Little Eock, in Arkansas; and one by 
 the Detroit, Grand Haven and Milwaukee, in the State of Michigan. 
 
 The temporary orders which have been made on some of these peti¬ 
 tions will in like manner be permitted to remain in force until the ex¬ 
 piration of the time originally limited in each. No further order will 
 be made upon any of the petitions, for although some two or three of the 
 cases may not, by the facts recited in the applications for relief, be 
 brought strictly within the principles above discussed, yet they all pre¬ 
 sent what are claimed to be different circumstances and conditions 
 adequate to authorize exceptions to the general rule; and if the peti¬ 
 tioners are persuaded that the fact is as they represent, they should 
 act under the statute accordingly. 
 
 The points that are intended to be decided at this time are as fol¬ 
 lows : 
 
 First. That the prohibition in the fourth section against a greater 
 charge for a shorter than for a longer distance over the same line, in 
 the same direction, the shorter being included within the longer dis¬ 
 tance, as qualified therein is limited to cases in which the circumstances 
 and conditions are substantially similar. 
 
28 
 
 Second, That the phrase “ under substantially similar circumstances 
 and conditions ” in the fourth section, is used in the same sense as in 
 the second section; and under the qualified form of the prohibition in the 
 fourth section carriers are required to judge in the first instance with 
 regard to the similarity or dissimilarity of the circumstances and con¬ 
 ditions that forbid or permit a greater charge for a shorter distance. 
 
 Third, That the judgment of carriers in respect to the circumstances 
 and conditions is not final, but is subject to the authority of the Com¬ 
 mission and of the courts, to decide whether error has been committed, 
 or whether the statute has been violated. And in case of complaint for 
 violating the fourth section of the act the burden of proof is on the car¬ 
 rier to justify any departure from the general rule prescribed by the 
 statute by showing that the circumstances and conditions are substan¬ 
 tially dissimilar. 
 
 Fourth. That the provisions of section one, requiring charges to be 
 reasonable and just, and of section two, forbidding unjust discrimina-. 
 tion, apply when exceptional charges are made under section four as 
 they do in other cases. 
 
 Fifth. That the existence of actual competition which is of control¬ 
 ling force, in respect to traffic important in amount, may make out the 
 dissimilar circumstances and conditions entitling the carrier to charge 
 less for the longer than for the shorter haul over the same line in the 
 same direction, the shorter being included in the longer, in the following 
 cases: 
 
 1. When the competition is with carriers by water which are not sub¬ 
 ject to the provisions of the statute. 
 
 2. When the competition is with foreign or other railroads which are 
 not subject to the provisions of the statute. 
 
 3. In rare and peculiar cases of competition between railroads which 
 are subject to the statute, when a strict application of the general rule 
 of the statute would be destructive of legitimate competition. 
 
 Sixth. The Commission further decides that when a greater charge in 
 the aggregate is made for the transportation of passengers or the like 
 kind of property for a shorter than for a longer distance over the same 
 line in the same direction, the shorter being included in the longer dis¬ 
 tance, it is not sufficient justification therefor that the traffic which is 
 subjected to such greater charge is way or local traffic, and that which 
 is given the more favorable rates is not. 
 
 Nor is it sufficient justification for such greater charge that the short- 
 haul traffic is more expensive to the carrier, unless when the circum¬ 
 stances are such as to make it exceptionally expensive, or the long-haul 
 traffic exceptionally inexpensive, the difference being extraordinary and 
 susceptible of definite proof. 
 
 Nor that the lesser charge on the longer haul has for its motive the 
 encouragement of manufactures or some other branch of industry. 
 
29 
 
 Nor that it is designed to build up business or trade centers. 
 
 Nor that the lesser charge on the longer haul is merely a continuation 
 of the favorable rates under which trade centers or industrial establish¬ 
 ments have been built up 
 
 The fact that long-haul traffic will only bear certain rates is no rea¬ 
 son for carrying it for less than cost at the expense of other traffic. 
 
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