Page images
PDF
EPUB

milk originating in the zone from 40 miles to 60 miles a slightly higher rate, and so on.83 The Commission has often approved blanket rates covering wide areas, but always with the reservation either that no one was objecting, or that a substantial reason for that adjustment had been shown.84 And in a recent proceeding the blanket system of making rates on wool from the west to eastern points was ordered broken up and graded rates established.85

§ 595. Testing reasonableness of grouping.

Whether or not the grouping of points of origin or points of destination constitutes undue or unjust discrimination, must be determined from the facts in each case.86 In all cases of blanket or group rates, there is of necessity more or less disregard of distance, and varying degrees of inequality, but such inequalities are not of necessity unreasonable or unjust, when the situation is viewed from every standpoint, taking into account all interests.87 Because the revenue per ton per mile yielded by rates from farther distant points is less than that yielded by rates from a shorter distant point, it does not necessarily follow that the latter is subjected to unjust discrimination.88 The unreasonableness of a rate cannot be established by comparing it with the rate to a point situated at the farther edge of territory taking a blanket rate, when the purpose of the comparison is to show the rates charged with respect to distances involved are unfair.89 It is inevitable that in every blanket or zone rate, the near-by point pays a proportionally higher rate than the more distant point. In comparison with, or in passing upon the reasonable

83 Mills Producers Ass'n v. D., L. & W. R. R., 7 I. C. C. 92.

84 "Transportation Bureau of Wichita v. St. L. & S. F. R. R., 23 I. C. C. 679.

85 In re Transportation of Wool, Hides and Pelts, 23 I. C. C. R. 151. Muskogee Traffic Bureau V. A., T. & S. F. Ry., 17 I. C. C. 169.

87 Chicago Lumber & Coal Co. v. T. S. Ry., 16 I. C. C. 323.

88 Indianapolis Freight Bureau v. C., C., C. & St. L. Ry., 15 I. C. C. 504.

89 Bash Fertilizer Co. v. Wabash R. R., 18 I. C. C. 522.

90 Schmidt & Sons v. M. C. R. R., 19 I. C. C. R. 535.

basis to the group basis it is usually insisted that the short hauls shall be properly provided for.”

§ 594. Grouping must be reasonable.

While grouping is permissible in a proper case, it must nevertheless be reasonable; the Commission cannot approve a blanket rate which imposes upon any point an unreasonable burden.78 Carriers have followed the principle that whenever distance between certain points constitutes a relatively small percentage of distance between any of those points and ultimate market, such originating points should be grouped for rate-making purposes.79 Where grouping is reasonably done, the shorter distances to the markets may be determined by the average distances from the points reached by two or more systems; and where there is no such point in a group the distance should be computed from a point centrally located.80 In stating rates between remote sections, territorial groups of considerable extent must be employed; and differences in distance of several hundred miles are frequently disregarded under the blanket plan of rate making.81 The boundary line to mark the limits of application of blankets rates may not be so artificially drawn as to subject shippers immediately outside the favored zone to unjust discrimination.82 Even when grouping is resorted to in order to preserve competition in commodities, as where railroads entering New York grouped the stations which supplied the city with milk, it was held that it would be unreasonable to make a uniform rate for all milk stations to New York, but reasonable to establish zones at proper intervals by which all milk from stations up to a certain distance, say 40 miles, should pay the same rate, then all

77 In re Advances on Cottonseed Products, 25 I. C. C. 237.

78 Switzer Lumber Co. v. K. C. S.

Ry., 25 I. C. C. 611.

79 Rates on News Print Paper from Sault Ste. Marie, Ont., 26 I. C. C. 13.

80 Superior Commercial Club v. G. N. Ry., 25 I. C. C. 342.

81 In re Advances on Barley, 24

I. C. C. 664.

82 Southern Furniture Mf'rs Ass'n v. S. Ry., 25 I. C. C. 379.

milk originating in the zone from 40 miles to 60 miles a slightly higher rate, and so on.83 The Commission has often approved blanket rates covering wide areas, but always with the reservation either that no one was objecting, or that a substantial reason for that adjustment had been shown.84 And in a recent proceeding the blanket system of making rates on wool from the west to eastern points was ordered broken up and graded rates established.85

§ 595. Testing reasonableness of grouping.

Whether or not the grouping of points of origin or points of destination constitutes undue or unjust discrimination, must be determined from the facts in each case.86 In all cases of blanket or group rates, there is of necessity more or less disregard of distance, and varying degrees of inequality, but such inequalities are not of necessity unreasonable or unjust, when the situation is viewed from every standpoint, taking into account all interests.87 Because the revenue per ton per mile yielded by rates from farther distant points is less than that yielded by rates from a shorter distant point, it does not necessarily follow that the latter is subjected to unjust discrimination.88 The unreasonableness of a rate cannot be established by comparing it with the rate to a point situated at the farther edge of territory taking a blanket rate, when the purpose of the comparison is to show the rates charged with respect to distances involved are unfair.89 It is inevitable that in every blanket or zone rate, the near-by point pays a proportionally higher rate than the more distant point.90 In comparison with, or in passing upon the reasonable

83 Mills Producers Ass'n v. D., L. & W. R. R., 7 I. C. C. 92.

84 Transportation Bureau of Wichita v. St. L. & S. F. R. R., 23 I. C. C. 679.

85 In re Transportation of Wool, Hides and Pelts, 23 I. C. C. R. 151. 86 Muskogee Traffic Bureau V. A., T. & S. F. Ry., 17 I. C. C. 169.

87 Chicago Lumber & Coal Co. v. T. S. Ry., 16 I. C. C. 323.

88 Indianapolis Freight Bureau v. C., C., C. & St. L. Ry., 15 I. C. C. 504.

89 Bash Fertilizer Co. v. Wabash R. R., 18 I. C. C. 522.

90 Schmidt & Sons v. M. C. R. R., 19 I. C. C. R. 535.

ness of, a blanket rate neither extreme of the group should be considered, but rather a fair average.91 As long as rates are made under the group system, the distance theory must be modified.92 In passing upon reasonableness of a blanket rate, the rate to the nearest point must be offset against that to the more distant point.93 Extravagant rates ought not to be imposed upon 90 per cent of traffic in group upon pretext that more favorable rate is granted to other 10 per cent.94 Under its enlarged powers the Commission has held a blanket adjustment under which rates from the east are higher to Spokane than to Pacific Coast terminals held to be violation of the Act, so far as they exceed certain zone rates prescribed by the Commission.95 But no reason was apparent to the Commission in a recent proceeding for disturbing blanket arrangement under which rates on hides from California to Michigan are as high as rates from California to the Atlantic seaboard.96

§ 596. Uniform rate to a group of stations.

Although it may be conceded that a slightly greater profit will be made on a traffic passing to the nearest grouped point than to the furthest point, the difference, if the stations are properly grouped, will not be sufficient to make the arrangement illegal. It is clear that the grouping must be so managed that the rate to the nearest point will not be unreasonable in itself, and the rate to the furthest point will be remunerative. Grouping is often justified in order to preserve competition in commodities carried to market, where a strict mileage rate would give

91 Oregon & Washington Lumber M'frs Co. v. S. P. Co., 21 I. C. C. R. 389.

92 McCloud River Lumber Co. v. S. P. Co., 24 I. C. C. 89.

93 Commercial Club of Salt Lake City v. A., T. & S. F. Ry., 19 I. C. C. R. 218.

94 Southwestern Missouri Millers' Club v. M., K. & T. Ry., 22 I. C. C. R. 422.

95 City of Spokane v. N. P. Ry., 21 I. C. C. R. 400.

96 Northwestern Leather Co. v. O. R. R. & N. Co., 21 I. C. C. R. 66.

too great an advantage to the commodities produced at the nearest point to the market. Upon broad grounds of public policy, this is permitted in order to best develop the resources of the country. Upon these principles it was held reasonable to group all the mines in a certain locality, such as the Lehigh anthracite coal region.97 These general principles are well set forth in the quotation which follows.98 "It is said by way of argument that there is an inherent injustice in carrying the product of one locality at a less rate than that of another which lies nearer to the common market, because in that case the nearer shipper pays a part of the expense of transporting the freight of his rival a longer distance upon the same train. This result does not necessarily follow, however. In cases where the rate is sufficiently high to afford a reasonable profit upon each portion of the traffic by itself, there are no losses upon the longer portion of the route to be made up by overcharges upon the remainder."

597. Commutation rates for suburban passengers.

In the case of fares for passengers the system of grouping finds its scope in the rates given commuters, and the principles under discussion apply well to passenger fares as to freight rates. The Act itself, by express proviso, permits the issuance of commutation tickets. It cannot be said, therefore, that such rates are discriminatory in themselves, either against persons paying regular fares, or places outside the territory covered by such a system of rates.99 Ordinarily the price of commutation tickets, and the conditions upon which they are sold, as well as the distance to which they shall extend, are matters within the discretion of the carrier. But here, as elsewhere, the final word is with the Commission, as to all matters connected

97 Coxe v. Lehigh Valley R. R., 3 Int. Com. Rep. 460, 4 I. C. C. Rep. 535.

98 Walker, Com., in Howell v. New

York, L. E. & W. R. R., 2 Int. Com.
Rep. 162, 2 I. C. C. Rep. 272.

99 Sprigg v. Baltimore & Ohio R. R., 8 I. C. C. 443; see also Beall v. W. A. & M. V. Ry., 20 I. C. C. 406.

« PreviousContinue »