the transportation under very similar conditions to those governing the movement of oranges from California, the traffic being in some respects more desirable and in some less desirable. It will be observed that 45 cents for one thousand miles is nearly equivalent to $1.25 for 2,700, but it must be further remembered that the level of rates between Chicago and New York is much lower and the actual cost of the service is less than between California and the Missouri River. We very recently held that the peach rate from Georgia to New York was not unreasonably high. Georgia Peach Growers Association v. Atlantic Coast Line Railroad Co. 10 I. C. C. Rep. 255. That rate is in round numbers 80 cents for 900 miles with a minimum of 22,500 pounds in cars forty feet in length. The peach is a more delicate fruit, the minimum is somewhat less, the time somewhat faster and refrigeration is always necessary; still after all this has been taken into account, it can hardly be said that $1.25 for a proper service over 2,700 miles, is excessive for the movement of oranges if 80 cents is not too much for the movement of peaches 900 miles. And here again it must be remembered that the transportation of these peaches is through territory where the general average of rates is less than on these transcontinental roads. If the orange rate be compared with other rates from California to the east or from the east to California it will be found nearly as low, when the nature of the service is taken into account, as the extremely low water-competitive rates at Pacific coast terminals, and generally lower than rates not affected by actual and controlling competition of some kind.

Upon the other hand, I do not regard this rate as a phenomenally low one. The attempt of the Southern Pacific and the Santa Fe to show that this business is handled at a loss is ridiculous, in view of the fact that ten years ago they were both actively soliciting it, and that their connections were, a year before the institution of this proceeding, sending agents two thousand miles to buy it if it could not otherwise be obtained. This rate is, perhaps, somewhat lower to New York than the Florida orange rate to the same point, and it is somewhat higher to Chicago than the Florida rate. All things considered, it seems to me about the fair equivalent of the Georgia peach rate. It

is substantially in line with rates on similar California products. It is a profitable rate to the carrier, and it brings this product freely into the eastern market. It has been in effect for many years. The time may come when it ought to be reduced, but if these defendants were furnishing a proper service I should hesitate to disturb it now.

The service is not, however, anything like what it should be and the reason for this is obvious. Years ago when independent car lines operated in Southern California there was between them the most active competition which led in some cases to an actual reduction in the rate and always to the most zealous attention to the wants and necessities of the shipper. In those days there was competition between the originating roads, the Southern Pacific and the Santa Fe, and the soliciting agents of those two companies were found in every orange grove. Connections east of the Missouri River took pains to ask for this traffic and even to pay for it. To day all this has changed. The exclusive contract has driven every car line but one out of this territory, for the Santa Fe practically owns its own cars. There is no longer competition between originating lines and neither of these companies ever approaches the grower to solicit his business. The denial of the right to route traffic has extinguished competition between eastern connections. The result of all this appears in the service which these shippers obtain or rather in the entire neglect of all their demands for a proper service. I speak entirely of the period covered by the testimony: having no knowledge of present conditions.

In my opinion these competitive conditions cannot be restored by law. I do not believe that they will ever again become effective to improve rates or conditions. If this Commission had the power I would favor prescribing a reasonable service and requiring the railways to perform that service under penalty. I suggested at the taking of the testimony in Los Angelesthat some schedule be agreed upon with a fixed rate for that schedule and a reduction in rate when the schedule was not made. The traffic officials of the defendants insisted that this could not be done; certainly this Commission has no power to attempt it. All we can do is to deal with the rate but in so

doing we must consider the service, not as it ought to be, not as the railways say it is to be, but as we actually find it.

Testimony recently taken by this Commission touching the movement of live stock, much of it from carriers who are defendants in this proceeding, tends to show that it costs the carrier 20 per cent more to move express freight upon a schedule of 20 miles an hour than to move dead freight at the rate of 10 miles an hour, and the reasons which they advance in support of that proposition are persuasive. Assuming that $1.25 would be a reasonable rate for a schedule of from seven to eight days, I think that the service which has been actually rendered in recent years is certainly worth 15 cents per hundred pounds less to the shipper, and probably actually costs the carrier that much less to perform.

The defendants offered various excuses for the character of the service in recent years. It is a sad commentary upon modern railroad operations if with better roadbeds, better motive power, improved methods, it is impossible to make the same time which was made ten years ago. I do not for a moment believe that it has been impossible for any considerable period; it may have been inconvenient. It has paid better not to make the time and, therefore, it has not been made. But assuming that the excuses are well founded, and that the carrier has been and will be unable to render a proper service, how can this alter the conclusion? The shipper should not suffer from the misfortune of the carrier. If the carrier is unable to make the same time as formerly, it is because of an accumulation of traffic from which it earns more money, out of which it can well afford to make good the loss which the shipper of this particular traffic suffers in consequence. I agree, therefore, in the proposed reduction.

KNAPP, Chairman, dissenting:

I am unable to concur in the conclusions of my associates in this case. In several important particulars the findings in the majority report do not accord with my understanding of the proofs, while the inferences therein drawn are not warranted in my judgment by due consideration of all the facts and circum

stances entitled to be taken into account.

The matters to which

I refer are so fully discussed in the separate opinion of Commissioner Prouty that only two or three points seem to me to require further coinment.

For example, the finding in respect of rebates, as I read it, substantially implies that the actual rate paid by the shippers averaged something like 8 cents per 100 pounds less than the tariff rate by reason of rebates paid to them; and this is advanced as one of the reasons for condemning the tariff rate as unreasonable. Such a view does not seem to me to be supported by the evidence. The initial carriers, the Santa Fe and the Southern Pacific, perform the greater part of the transportation service and receive the greater part of the rate collected. Any reduction from the present tariff must therefore be largely borne by these two roads. But the testimony of their officers and representatives is positive and emphatic to the effect that neither of them paid any rebates directly or indirectly, or contributed in any way to the rebates received by the shippers; and there is not a syllable of proof to indicate that they were untruthful or mistaken in that regard. More than this, it plainly appears that the complainants herein were the principal recipients and beneficiaries of these illegal payments. This of course, does not preclude them from complaining of the rate in question or operate in any sense as a bar to its reduction, yet to my mind it is a matter of some significance that no complaint appears to have been made by them until they were deprived of these illicit gains. Taking into account all the evidence relating to this aspect of the case, I cannot therein find any ground for holding that the tariff rate should be condemned.

Another reason for the conclusion of the majority appears to be drawn from a comparison of this orange rate with the rates on other articles to and from Pacific Coast terminals. This does not seem to me a fair comparison. There are few important rail rates anywhere more influenced by water competition than are the rates between the eastern seaboard and the Pacific coast. We have several times held that intermediate rates may reasonably and lawfully be higher than through rates on account of the controlling force upon the latter of water competition.

But orange rates are not at all affected by such competition because oranges do not and would not in any case move in important volume by the water routes. Without amplifying the point, it seems to me obvious that no just or informing comparison can be made between the orange rates in question and the extremely low rates on other articles which the rail carriers must accept or abandon the business to the water lines. On the other hand, if comparison be made between the orange rate and the general run of intermediate rates, which, like the orange rate, are not in any considerable degree affected by water competition, it will be found that the orange rate is beyond question relatively low. In other words, the relation of the orange rate to the rates on other traffic, moving between similar points and under similar conditions on these transcontinental lines, is more favorable to the orange shipper than the general relation of such rates in other parts of the country. So far, therefore, as the majority opinion depends on comparison with competitive rates to the Pacific Coast, or other comparison with relative rates elsewhere, it seems to me to have little or no support.

Of more consequence, from my point of view, is the apparent assumption of the majority report that the rate in question was a reasonable rate for the carriers when it was first established. Therefore, the argument runs, this rate should now be considered excessive because of the remarkable increase in the volume of orange shipments and the largely augmented revenues of the carriers from that traffic. But this view ignores undisputed testimony to a contrary effect and seems to me at variance with the circumstances under which the rate was originally fixed and the considerations which then determined its amount. It was doubtless good policy for the carriers to encourage the orange business by the rate accorded and thereby make practically the whole territory of the United States accessible to the California growers. However this may be, the proofs are convincing that this rate at the time it was fixed was materially lower than the carriers were under any legal obligation to apply. If the original rate had been considerably greater, I do not know of any sustainable ground upon which it could have been assailed. So far as I can judge this rate might have been materially ad