Page images
PDF
EPUB

§ 684. Prevalent doctrine against reduction.

It may be asserted with confidence, however, that it is opposed to fundamental principles to permit the giving of special concessions to the large shipper as such. In the leading case of Hays v. Pennsylvania Company,80 this doctrine is well worked out. It appeared in evidence that defendant's regular price for carrying coal between the points mentioned, in 1876, was $1.60 per ton, with a rebate of from 30 to 70 cents per ton to all persons or companies shipping 5,000 tons or more during the year, the amount of rebate being graduated by the quantity of freight furnished by each shipper. In an excellent opinion by Baxter, the United States Circuit Judge, the various grounds upon which differences in rates have been justified by reason of differences in the cost of service by reason of economies of handling the business were reviewed, but he held very properly that none of these applied to the exclusive shipper as such: "In all particulars the plaintiffs occupied common ground with the parties who obtained lower rates. Each tendered coal for transportation in the same condition and at such times as suited his or their convenience. The discrimination complained rested exclusively on the amount of freight supplied by the respective shippers during the year. Ought a discrimination resting exclusively on such a basis be sustained? If so, then the business of the country is, in some degree, subject to the will of railroad officials; for, if one man engaged in mining coal, and dependent on the same, railroad for transportation to the same market, can obtain transportation thereof at from 25 to 50 cents per ton less than another competing with him in business, solely on the ground that he is able to furnish and does furnish the larger quantity for shipment, the small operator will sooner or later be forced to abandon the unequal contest and surrender to his more opulent rival. If the principle is sound in its application to rival parties engaged in mining

80 12 Fed. 309.

coal, it is equally applicable to merchants, manufacturers, millers, dealers in lumber and grain, and to everybody else interested in any business requiring any considerable amount of transportation by rail; and it follows that the success of all such enterprises would depend as much on the favor of railroad officials as upon the energies and capacities of the parties prosecuting the same." 81

§ 685. Reductions to large shippers unjust to small shippers.

Naturally the practice of some railroads under some circumstances of making lower rates to large customers was one of the first complaints brought to the Interstate Commerce Commission. One of those cases was Providence Coal Company v. Providence & Worcester Railroad Company,82 in which case it appeared that the tariff of the railroad on coal contained a provision for a discount of 10 per cent to any person, firm or company, who shall receive consignments of coal, in any one year, amounting to 30,000 tons or upwards, at any one station on the line of this road. But the Commission was very plainly set against any such differential, Mr. Commissioner Cooley saying: "The discrimination is therefore necessarily unjust within the meaning of the law. It cannot be supported by the circumstance that the offer is open to all; for although made to all, it is not possible that all should accept. Moreover, in testing such a discrimination we must consider the principle by which it must be supported; and the principle which would support a 30,000 ton limitation would support one of 50,000 or 100,000 equally well; the quantity named would be arbitrary in any case. It might easily be so high as practically to be open to the largest dealer only. A railroad company, if allowed to do so, might in this way hand over the whole trade on its road

81 Discussing particularly Nicholson v. Gt. Western Ry., 5 C. B. (N. S.) 366.

82 1 Int. Com. Rep. 363, 1 I. C. C. Rep. 107.

in some necessary article of commerce to a single dealer; for it might at will make the discount equal to or greater than the ordinary profit in the trade; and competition by those who could not get the discount would obviously be then out of the question. So extreme a case would not, however, be needful to show the inadmissibility of such a discount as is here offered; the injustice would be equally manifest if several dealers instead of one were able to accept the offer. A railroad company has no right, by any discrimination not grounded in reason, to put any single dealer, whether a large dealer or a small dealer, to any such destructive disadvantage.'

§ 686. Services to large and small practically identical. Moreover, the services to large shippers and to small shippers are practically identical. The large shipper, to be sure, sends more carloads in the aggregate than the small shipper, it was truly said in a court proceeding, but it makes no real difference whether a railroad takes two cars from A or one car each from A and B. And it is plain that to carry two barrels of sugar for one person on a given date, and to carry one barrel of sugar for another person, between the same points, over the same route, two days later, are contemporaneous, and like services.84 The argument was pressed further in another case of the same period; it is not in the least certain that the shipper who furnished the largest aggregate tonnage during the year may not have shipped in the most irregular way in the most inconvenient quantities. "This charge is justified by the master upon the ground that the quantity of oil shipped by another shipper was much larger than that shipped by the petitioner, and hence that the larger proportionate expense attending the handling and transportasuch facilities. In re Restricted Rates, 20 I. C. C. 426.

83 The Commission has lately said that a lower rate is not permitted to large shippers providing unloading facilities, than would be accorded to smaller shippers, unable to provide

84 United States v. Tozer, 39 Fed. 369.

tion of the smaller shipment warranted a higher rate than was charged for the larger shipment. In this conclusion we do not agree with the learned master. It does not differentiate the service performed for the several shippers, nor the conditions or circumstances under which it was performed. The only difference is that in one case the quantity shipped was larger, and in the other case it was smaller. This has been repeatedly held to be an insufficient and unwarrantable reason for discriminating rates of charge." 85

§ 687. Differences in amount of shipment.

No dissimilarity of conditions which can justify a difference in rate is, therefore, created by the total amount of shipments during a certain time, as so much in a year.86 A shipment of a large amount at one time may, however, justify a lower rate if it results in economy of operation, as for instance a carload shipment, provided the difference is reasonable in view of the saving effected.87 So a rule making a minimum charge of one hundred pounds on shipments of less weight is justifiable.88 If the amount of the shipment will not lead to a considerable saving in expense to the carrier, no difference can be made on account of it; so, where the shipment is in cargo or trainload quantities, it cannot get less than carload rates.89 A railroad should not be permitted to adopt a system of rate making which will enable a large dealer to drive a small dealer out of the market, and the Commission cannot act on the theory that the trade of a particular community is a vested right belonging to any particular class 85 Kinsley v. Buffalo, N. Y. & P. R. R., 37 Fed. 181.

86 Providence Coal Co. v. Providence & W. R. R., 1 Int. Com. Rep. 363, 1 I. C. C. 107; United States v. Tozer, 39 Fed. 369, 2 Int. Com. Rep. 597; Kingsley v. Buffalo, N. Y. & P. Ry., 3 Int. Com. Rep. 318.

87 Thurber v. New York C. & H. R.

R. R., 2 Int. Com. Rep. 742, 3 I. C. C. 473; Buckeye Buggy Co. v. Cleveland, C., C. & S. L. R. R., 9 I. C. C. Rep. 620.

88 Wrigley v. Cleveland, C., C. & St. L. R. R., 10 I. C. C. Rep. 412.

89 Paine v. Lehigh Valley R. R., 7 I. C. C. Rep. 218.

in the community; and since the effect of an order prescribing differentials on less-than-carload quantities would be to place a tax on retailers in order that jobbers in southeastern territory might realize a profit in competition with Nashville jobbers and at the expense of that community, such an order should be refused.90

§ 688. Reductions to groups of passengers.

Reductions to passengers in parties can only be justified if there is a difference in the cost of service. Thus such reductions were held by the Commission "1 to forbid granting a special reduced rate to all persons traveling in parties of ten or more. The Commission ruled that the selling of "party rate" tickets was not within any of the discriminations specifically excepted and allowed by section 22 of the Act. The Supreme Court,92 however, rightly held that conveying one person singly and conveying him as one of a party of ten did not constitute like services, "under substantially similar circumstances and conditions," that the making of a lower rate per capita for party rate tickets was a due and reasonable preference and not unlawful discrimination. "In order to constitute an unjust discrimination under section 2 the carrier must charge or receive directly from one person a greater or less compensation than from another, or must accomplish the same thing indirectly by means of a special rate, rebate, or other device; but, in either case, it must be for a 'like and contemporaneous service in the transportation of a like kind of traffic, under substantially similar circumstances and conditions.' To bring the present case within the words of this section, we must assume that the transportation of ten persons on a single ticket is substantially identical with the transportation of one, and, in view of

90 Duncan & Co. v. N. C. & St. L. Ry., 16 I. C. C. 590.

91 Pittsburg, C. & St. L. R. Co. v.

B. & O. R. Co., 2 Int. Com. Rep. 729, 3 I. C. C. Rep. 465.

92 Interstate Com. Com. v. B. & O. R. R., 145 U. S. 263, 12 Sup. Ct. 844.

« PreviousContinue »