be entitled to a refund of a part of the rate into Fort Smith, that such a provision was unlawfully discriminatory.23 But the Commission in a recent case, apparently modified this by saying that carriers may in connection with transit privileges reduce their reasonable rates in consideration of getting out-bound shipments, but cannot add thereto any sum as penalty to be forfeited if the outbound shipment does not move over same line which handled in-bound raw material.24 It is probably true that in fixing rates in general weight may be given by the carrier to the fact that the free movement of the commodity is an auxiliary to the production of larger volume of traffic to the carriers. 25 But the Commission has declined to lower rates merely because the carrier had a previous haul on raw material. 26

§ 699. Other methods of holding business.

The general principle is that all goods offered for shipment at a certain point must be carried at the established rate for such goods from such point, regardless of the place where they originated." And the Commission has recently ruled that local rates to a junction point should be same for all shippers to that point, and the through rate on shipments going beyond the junction should be alike for all shippers to the destination. 28 And an arrangement has been squarely condemned where a lower local rate was given, provided only the goods were originally shipped into a trading center over the defendant's lines, on the ground that such a rate was not in any sense a proportional rate, nor could it be sanctioned as a transit, reconsignment or diversion privilege, but was simply an unlawful device to compel shippers to send their goods over

23 Memphis Freight Bureau V. Ft. S. & W. R. R., 13 I. C. C. 1, 4. 24 May Bros. v. Y. & M. V. R. R., 26 I. C. C. 323.

25 Meridan Fertilizer Factory v. T. & P. Ry., 26 I. C. C. 351.

26 Paragon Plaster Co. v. N. Y. C. & H. R. R. R., 19 I. C. C. R. 480. See Bascom Co. v. A., T. & S. F. Ry., 17 I. C. C. 354.

28 In re Restricted Rates, 20 I. C. C. 426.

defendant's road. 29 And the general principle was again laid down in a still later case that a common carrier cannot impose an unreasonable rate because of the origin of the traffic.30

Topic D. Concessions for Special Kinds of Business §700. Different rates for goods used for different purposes. It is strongly urged by the railroads that they should be allowed to make different rates for goods which are going to be used for different purposes. It is pointed out that in order to get more traffic, which by reason of the law of increasing returns is for the benefit of all concerned, it will often be necessary for them to make lower rates for goods which are going to be used for one purpose than for goods which are going to be used for another purpose.31 Moreover, the railroad managers take a higher plane of argument when they urge that to make different rates for different users they may further the development of the industries of the communities which they serve. But neither of these arguments can be pushed too far in a legal discussion because in so far as any railroad policy involves discrimination it is illegal; and to charge one of two shippers who wants exactly the same transportation of the same goods one rate while another shipper is charged another rate is personal discrimination prima facie.32

29 Bascom Co. v. A., T. & S. F. Ry., 17 I. C. C. 354.

30 Acme Cement Plaster Co. v. C. G. W. Ry., 18 I. C. C. 19.

31 Whether concessions may be made for special kinds of business is a debated question. Such reductions were allowed in Hoover v. Pennsylvania R. R., 156 Pa. St. 220, 27 Atl. 282, 36 Am. St. Rep. 43, 22 L. R. A. 263.

The Commission will refuse to sanction a classification resting upon

the use to which a commodity is put. Metropolitan Paving Brick Co. v. A. A. R. R., 17 I. C. C. 197.

32 But in the following case such reductions are forbidden: Fitzgerald v. Grand Trunk Ry., 63 Vt. 169, 22 Atl. 76, 13 L. R. A. 70.

The use to which a commodity is put affords no basis for a difference in rates under the Act. Sligo Iron Store Co. v. A., T. & S. F. Ry., 17 I. C. C. 139.

§ 701. Such rates formerly allowed.

The argument for allowing the making of different rates for the same commodities which are destined to be used for different purposes is a strong one. How strong it is from an economic point of view may be seen by an examination of the leading case supporting this argument, Hoover v. Pennsylvania Railroad.33 In that case the court held that an agreement to charge a uniform rate on shipment of coal to the Bellefonte Nail Works for consumption in operating its machinery could not be complained of as unjust discrimination against a mere dealer, who received his coal over the same road and was charged a higher rate, the court relying upon the broadest grounds of public policy to justify this result, Mr. Justice Green saying: "In point of fact, it is perfectly well known and appreciated that the output of freights from the great manufacturing centers upon our lines of transportation constitutes one of the chief sources of the revenues which sustain them financially. Yet no part of this income is derived from those who are mere buyers and sellers of coal. When the freight is paid upon the coal they buy, the revenue to be derived from that coal is at an end. Not so, however, with the revenue from the coal that is carried to the manufacturers. That coal is consumed on the premises in the creation of an endless variety of products, which must be put back upon the transporting lines, enhanced in bulk and weight by the other commodities which enter into the manufactured product, and is then distributed to the various markets where they are sold." 34

33 156 Pa. St. 220, 27 Atl. 282, 22 L. R. A. 263, 36 Am. St. Rep. 43.

See also Louisville & W. R. R. v. 'Fulgam, 91 Ala. 555, 8 So. 803.

34 In Missouri, K. & T. R. R. v. Trinity C. L. Co., 1 Tex. Civ. App. 553, 21 S. W. 290, the court left the question open, whether it was illegal discrimination for a railroad to fix

a lower freight rate for narrow gauge cars for use of railroads engaged in the carrying business than for those intended to be used for logging purposes.

In Fry v. Louisville & W. Ry., 103 Ind. 265, 2 N. E. 744, a lower rate quoted for farm purposes passed scrutiny without objection.

§ 702. Repudiation of this doctrine.

However, this doctrine is plainly inconsistent with the modern law against discrimination which in its development to-day insistently forbids all discrimination. This is well brought out in the Railroad Discrimination Case 35 where it was held that a carrier may not give one customer a lower rate of freight than another merely because the former ships the manufactured product over the carrier's line, Chief Justice Clark saying: "The proposition that a common carrier has a right to charge one person a lower rate of freight than another for shipping the same quantity the same distance, under the same conditions, provided the shipper give the company a consideration (shipping the manufactured lumber subsequently over its line), which its managers think will make good to it the abatement of rate given to such parties." "But if this is equality as to the treasury of the company," said Chief Justice Clark, "it is none the less a discrimination against the plaintiff.'

19 36

§ 703. Such differences now held illegal discrimination.

When all has been said of special rates for manufacturers the fact of personal discrimination remains; and it is submitted that the law against personal discrimination has developed so far as to have become a positive rule for the benefit of all shippers.37 An excellent illustration of this within a few years was the disposition made of this problem by the Canadian Railway Commission when this problem first came before them.38 "The law is clear that the allowance of a reduction in the freight rate on any article of merchandise to one class of shippers and refusal 35 Hilton Lumber Co. v. Atlantic Coast Line, 136 N. C. 479, 48 S. E. 813.

36 See the further discussion of this case in an eloquent opinion against all discrimination in Hilton Lumber Co. v. Atlantic C. L. Ry. Co., 141 N. C. 171, 53 S. E. 823.

37 See Duncan v. A., T. & S. F. Ry., 6 I. C. C. 85.

38 Manufacturers' Coal Rates Case, 3 Can. Ry. Cas. 438. In Manufacturers' Construction Material Case, 3 Can. Ry. Cas. 427, the Commission foreshadowed this opinion.

of the same rate to another is unjust discrimination, and unjust discrimination is prohibited by the Railway Act. Common carriers are bound by every principle of justice and law to accord equal rights to all shippers who are entitled to like treatment both in the receiving of supplies and the shipment of their products, and a carrier who, under any pretext whatsoever, grants to one shipper an advantage which he denies to another violates the spirit and thwarts the purpose of the law. This is a statement of a conclusion arrived at by the Interstate Commerce Commission in a question very similar to the present and will be found in a case of Castle v. Baltimore & O. Ry. Co.,39 and to this judgment and opinion this Board subscribes." 40

704. Classification based upon use.

A carrier has no right to attempt to dictate as to the uses to which commodities transported by it shall be put, as its duty is to transport all goods offered at its tariff rates, and on equal conditions for all. Therefore, tariffs naming different rates on nitrate of soda when destined for the manufacture of fertilizer and that for the making of powder were held unlawful.41 The Commission has been set against the maintenance of different rates upon the same commodity dependent upon the use to which the article is put.42 Latterly a difference in the rate according to the use to which a commodity is put has received general condemnation in various opinions of the Commission.43 In a recent proceeding it appeared that the

398 I. C. C. Rep. 333.

40 In Capital City Gas Co. v. Central Vt. Ry., 11 I. C. C. Rep. 103, the Interstate Commerce Commission held that it constituted illegal discrimination to make a rate of 90 cents per ton for bituminous coal for railroad supply while charging $1.85 per ton to complainant and other consignees.

41 Fort Smith Traffic Bureau v.

St. L. & S. R. R., 13 I. C. C. 651.

42 Hardie Mfg. Co. v. O. R. R. & N. Co., 24 I. C. C. 545; see also Memphis Freight Bureau v. St. L. & S. F. R. R., 24 I. C. C. 602.

43

Paper rates from Manitowoc and Milwaukee to Kaukauna, Wis., 28 I. C. C. 305; see also Metropolitan Brick Co. v. A. A. R. R., 17 I. C. C. 197.