unduly prejudice other points.37 Under such circumstances a through rate may be established, not by uniting on a single rate for one entire haul over two roads, but by charging the separate rate on the goods to the junction point, and then, upon the goods being there reconsigned and reshipped over a second road, paying a rebate on the charges of the first or of the second road. 38 This is sometimes allowed when the goods are taken by the consignee at the junction point and there held for a considerable time, for the purpose of awaiting a favorable turn of the market. These privileges are only applicable to shipments intended from the outset to be through shipments, 39 and in order that this privilege may be legal, the agreement for through carriage must be made at the time of the original shipment.40 And the privilege must be extended by the carrier to all shippers on its line under similar circumstances and conditions, or else that place to which the privilege is not given will be unduly prejudiced.41 Permitting corn to be unloaded into elevators at Cairo, Ill., to be treated and shipped at balance of through rate, carrier paying to the elevator company an allowance of 34 cent per 100 pounds,

37 Cowan v. Bond, 39 Fed. 55, 2 Int. Com. Rep. 542; Listman Mill Co. v. Chicago, M. & S. P. Ry., 8 I. C. C. Rep. 47; Re Alleged Unlawful Rates, 8 I. C. C. Rep. 121; Re Rates and Practices of Mobile & O. Ry., 9 I. C. C. Rep. 373; St. Louis H. & G. Co. v. Illinois Cent. R. R., 11 I. C. C. Rep. 486.

38 Railroads which have formerly allowed reconsignment without additional charge may make an extra charge for cars standing on a "hold track" awaiting reconsignment directions. State v. Atchison, T. & S. F. Ry. Co., 176 Mo. 687, 75 S. W. 776. See also State v. Atlantic C. L. Ry. (Fla.), 52 So. 4.

39 Although a true rebilling rate is

but refusing to allow such

permissible where the same goods are reconsigned at some point in transit, the granting of a special rate for the transportation of other goods from a certain point to those who show "expense bills" for an equal amount received over an associated line constitutes illegal discrimination. Alabama & V. Ry. Co. v. Railroad Commission, 86 Miss. 667, 38 So. 356, affirmed in 203 U. S. 496, 51 L. ed. 289, 27 Sup. Ct. 163.

40 Re Alleged Unlawful Rates, 7 I. C. C. Rep. 240.

41 Commercial Club v. C., R. I. & P. Ry., 6 I. C. C. 647; Koch v. Pennsylvania Ry., 10 I. C. C. Rep.

675.

privilege or make such allowance at Decatur, Ill., was held unduly preferential; 42 and the granting of transit privileges on lumber at Memphis and denying it at Cairo was held to constitute an undue discrimination.43 All reconsignment arrangements must be carefully scrutinized, for they readily lend themselves to abuse, and result in unlawful discrimination. An ingenious attempt to conceal such a preference under the guise of a reconsignment agreement was made by the Santa Fe Railway, which allowed a rate of 10 cents on barbed wire, wire nails, wire staples and wire fencing, in carloads, from El Paso, Tex., to Las Cruces, N. M., when brought into El Paso over its lines, but charged a rate of 30 cents when brought into El Paso over the lines of other carriers. To take advantage of the 10 cent rate, the shipper might keep the goods at El Paso as long as he desired, and the rate would be accorded to him upon shipment of the same to Las Cruces, provided only the goods were originally shipped into El Paso over defendant's lines. The Commission held that such a rate was not in any sense a proportional rate, could not be sanctioned as a transit, reconsignment, or diversion privilege, and was merely an unlawful device to compel shippers to send their goods into El Paso over the defendant's road.44 A transit privilege may be withdrawn. Even though complainant alleged that its business had been built up on the strength of a transit privilege which had been taken away, the Commission refused to order its restoration. 45

§ 806. Back freight may be lower than outward freight. There is no reason for requiring the same charge for carriage between the same points in opposite directions. Various factors which properly enter into the rate may be different in the two cases. One reason often given for

42 Suffern Grain Co. v. I. C. Ry., 22 I. C. C. 178.

48 Sondheimer Co. v. I. C. Ry., 20 I. C. C. 606.

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

45 Schmidt & Sons v. M. C. Ry., 19 I. C. C. 535.

justifying a higher rate in one direction is the fact that the volume of traffic may be less. It is characteristic of the inexact character of the law of rate making that this fact might also justify a lower rate, if the railroad chose to make it. At all events where in the direction of lighter traffic a railroad is carrying many empty cars, it will be justified in lowering the rate in order to fill the cars.46 So the Commission has sustained the railways in charging a lower rate upon soft-wood lumber from Pacific coast producing points to eastern destinations than it charges upon hard-wood lumber from such eastern destinations to Pacific coast points.47 When the preponderance of freight is so largely in one direction that the supply of empty cars exceeds the demand for return loads at full rates, it is held to be not unlawful to encourage business by affording transportation on less profitable terms. Of course this making of low "back freights" is subject to the limitation that the rate must not be so low as not to recoup the railroad for the additional expenses in hauling back loaded cars, which must receive due protection during transit. 48

§ 807. What differentials may be allowed.

In principle differentials do not differ from any other form of discrimination, but certain differentials have been practised for so long that a kind of legitimacy has come to be implied in that term which is not associated with the balder word discrimination. This perhaps is largely due to the fact that the term differential is never applied to discriminations between persons-a form of preference

46 Special circumstances, such as the flow of traffic, may show that a higher freight rate in one direction than in the opposite is not an overcharge. Scull v. Atlantic C. L. R. R. Co., 144 N. C. 180, 56 S. E. 876.

47 Burgess V. Transcontinental Freight Bureau, 11 I. C. C. 668.

48 But in testing the reasonableness of a freight charge for carriage

in one direction the fact that the freight rate is lower in the opposite direction tends to show that the higher rate is unreasonable where the grades on the road and the expense of moving trains is substantially the same in both directions. Southern Ry. Co. v. Railroad Commission, 42 Ind. App. 88, 83 N. E. 721.

privilege or make such allowance at Decatur, Ill., was held unduly preferential; 42 and the granting of transit privileges on lumber at Memphis and denying it at Cairo was held to constitute an undue discrimination.43 All reconsignment arrangements must be carefully scrutinized, for they readily lend themselves to abuse, and result in unlawful discrimination. An ingenious attempt to conceal such a preference under the guise of a reconsignment agreement was made by the Santa Fe Railway, which allowed a rate of 10 cents on barbed wire, wire nails, wire staples and wire fencing, in carloads, from El Paso, Tex., to Las Cruces, N. M., when brought into El Paso over its lines, but charged a rate of 30 cents when brought into El Paso over the lines of other carriers. To take advantage of the 10 cent rate, the shipper might keep the goods at El Paso as long as he desired, and the rate would be accorded to him upon shipment of the same to Las Cruces, provided only the goods were originally shipped into El Paso over defendant's lines. The Commission held that such a rate was not in any sense a proportional rate, could not be sanctioned as a transit, reconsignment, or diversion privilege, and was merely an unlawful device to compel shippers to send their goods into El Paso over the defendant's road.44 A transit privilege may be withdrawn. Even though complainant alleged that its business had been built up on the strength of a transit privilege which had been taken away, the Commission refused to order its restoration. 45

§ 806. Back freight may be lower than outward freight. There is no reason for requiring the same charge for carriage between the same points in opposite directions. Various factors which properly enter into the rate may be different in the two cases. One reason often given for

46

justifying a higher rate in one direction is the fact that the volume of traffic may be less. It is characteristic of the inexact character of the law of rate making that this fact might also justify a lower rate, if the railroad chose to make it. At all events where in the direction of lighter traffic a railroad is carrying many empty cars, it will be justified in lowering the rate in order to fill the cars." So the Commission has sustained the railways in charging a lower rate upon soft-wood lumber from Pacific coast producing points to eastern destinations than it charges upon hard-wood lumber from such eastern destinations to Pacific coast points. 47 When the preponderance of freight is so largely in one direction that the supply of empty cars exceeds the demand for return loads at full rates, it is held to be not unlawful to encourage business by affording transportation on less profitable terms. Of course this making of low "back freights" is subject to the limitation that the rate must not be so low as not to recoup the railroad for the additional expenses in hauling back loaded cars, which must receive due protection during transit. 48

§ 807. What differentials may be allowed.

In principle differentials do not differ from any other form of discrimination, but certain differentials have been practised for so long that a kind of legitimacy has come to be implied in that term which is not associated with the balder word discrimination. This perhaps is largely due to the fact that the term differential is never applied to discriminations between persons-a form of preference

46 Special circumstances, such as the flow of traffic, may show that a higher freight rate in one direction than in the opposite is not an overcharge. Scull v. Atlantic C. L. R. R. Co., 144 N. C. 180, 56 S. E. 876.

47 Burgess V. Transcontinental Freight Bureau, 11 I. C. C. 668.

48 But in testing the reasonableness of a freight charge for carriage

in one direction the fact that the freight rate is lower in the opposite direction tends to show that the higher rate is unreasonable where the grades on the road and the expense of moving trains is substantially the same in both directions. Southern Ry. Co. v. Railroad Commission, 42 Ind. App. 88, 83 N. E. 721.