ported from the first upon a published inland rate in exactly the same way that grain is exported, rates would have been lower and facilities better than they are today; certainly that both rates and facilities would be as good as they now are. Cotton at Aberdeen does not reach Liverpool at a less rate because the Mobile & Ohio is allowed to move it through the port of Mobile at the same rate which obtains through the port of New Orleans, although something may be gained in the way of facilities by the affording of two routes. It is certainly possible that if carriers were obliged to publish these rates to the ports in all cases the result would be keener competition. The Mobile & Ohio has no inducement to reduce its rate for export so long as it is allowed. to adopt whatever rate is made by other lines without publication upon its part. It is worthy of note that with substantial uniformity the export rates on cotton are higher than domestic rates, while the export rates on grain, which is universally handled upon a published inland proportion, are without exception lower than the corresponding domestic rates.

So too of the ocean rate. At the present time a reduction of the rate from New Orleans to Liverpool does not mean that the steamer at New Orleans will receive the cotton for the reason that railroads not reaching New Orleans, by shrinking their own rates from inland points, are able to pay a higher ocean rate from other ports. If the inland rates were fixed so that the ship at New Orleans bid against those at other points, much keener ocean competition must result.

This practice of equalizing the rate through different ports has without doubt contributed to harmony among the carriers themselves by affording a means of distributing the traffic between various routes, but it is by no means clear that any exigency is presented which calls for a forced construction of this statute in order to permit a continuance of that method. It would in our opinion be much less prejudicial to the public interest to prohibit southern carriers from handling export cotton in this way than to permit the making of all export and import tariffs by that method.

There seems to be an impression that this inquiry was instituted with a view to making some general order with reference

erroneous.

to the publication of import and export tariffs. This is entirely The Commission has no discretionary power whatever in the premises. The Elkins act provides that failure upon the part of a carrier to file and publish the tariffs or rates and charges as required by the Interstate Commerce Act, or strictly to observe such tariffs until changed according to law, shall be a misdemeanor punishable by heavy fine. If the act to regulate commerce requires the filing and maintenance of these rates thestatute of February 19, 1903, is mandatory in requiring a compliance with that provision. The purpose of this inquiry was, first, to hear what might be said as to the interpretation of the act in that respect; second, to ascertain what practical difficulties might stand in the way of a publication of these rates; for if the Congress had unwittingly imposed an unreasonable burden upon the foreign commerce of this country we felt that opportunity should be afforded for a correction of that mistake. We have concluded, as already indicated, that the act requires such tariffs to be filed and maintained, and it now remains to state our view of the practical effect of that requirement.

The Commission would regard it as a grave misfortune if export and import traffic were withdrawn from the supervision of the law. Since the enactment of the Act to regulate commerce the trade of this country, especially the export trade in manufac-tured articles, has enormously increased. There is hardly a mill or factory at the present time, of any pretension, which does not seek to a greater or less extent a foreign market; and the ability to reach that market often determines the success of the enterprise as a whole. When the foreign market is used as a dumping ground for surplus production, which can not be consumed at home, the price is usually closer than the domestic price, the cost of transportation is of first importance in determining the accessibility of the market, and the inland rail transportation in this country a factor of great importance. If the American rail line is allowed to make whatever rate it sees fit upon export business, to pay whatever rebate and grant whatever concession it pleases, to extend facilities to one shipper which it denies to another, the power exists to discriminate against a competitor to the extent of finally driving him from business.

The foreign rate may be the direct equivalent of concessions on domestic tariffs. And if the power exists the history of the past conclusively shows that it will be to a greater or less extent used and abused. There is scarcely a reason for placing domestic rates under legal control which does not apply with equal force to export and import business. To remove it from such control would result in chaos.

Nor does there appear to be in most instances any good reason why these rates cannot be published and maintained; of which the best possible evidence is the fact that this is now done. In the year 1902, 80.19 per cent in value of our total imports came in through the Atlantic ports, and we have already seen that this traffic is handled under the first method, that is, by publication and maintenance of the inland rail rate. The same year

3.44 per cent came through the Gulf ports, 1.52 per cent over the Mexican border, 7.50 per cent over the Northern border and by lake, 1.34 per cent directly to interior points, and most of this traffic was also carried upon tariffs established under the first method; 6.01 per cent came in through Pacific ports and this possibly moved largely by the third method. So of our exports, of which during the same year 93.67 per cent passed out through the Atlantic and Gulf ports and the Southern and Northern borders moving for the most part, with the exception of cotton, upon a published inland tariff. Of the total, 6.33 per cent was exported through the Pacific Coast ports and our information as to this is not definite. Through schedules are filed both on export and import traffic through these ports, but are not perhaps maintained. It is evident that the bulk of all import and export business is to-day handled upon a tariff published and maintained exactly as domestic tariffs are, nor is it seriously contended that it would be for the interest of railway or public if the practice were otherwise.

Southern lines insist, however, that the same method of making and publishing these rates cannot be followed in the South as is observed through the North Atlantic ports, especially in the movement of cotton. It has been already suggested that this is of more importance to the railroads than to shippers. The claim is not that the rate to the foreign destination must be an elastic

one in order that the American seller may meet the price of his foreign competitor, but merely that it shall be the same via all. the ports so that each of the competing rail lines may obtain a fair share of the traffic. In point of fact the rate as formed by this second method is not more elastic than when formed by the first method, the only elasticity in either case being in the ocean proportion. This scheme of equalization through all the ports seems to be an arrangement by the railways for the purpose of restricting competition and distributing traffic between various lines. Still it has all along appeared to us, and still does, that conditions at these Southern ports although improving are different from those at the North Atlantic ports, and that to enforce the same rule as to the publication and maintenance of export and import tariffs might bear more severely upon them than it would upon Northern lines. There are moreover without doubt factors which enter into the situation which the Commission does not fully appreciate. Conditions attending the movement of cotton are peculiar to that traffic. So far as we know the present method has given satisfaction to shippers and has not resulted in confusion or discrimination. While no such method could be applied to the miscellaneous export and import traffic of this country, so far as we are informed there seems to be no good reason why it might not be continued in the movement of cotton. The carriers handling this traffic insist that it is a matter of first importance to them that it should be. If the Commission had the power to modify the requirements of the act as to the publication of tariffs upon certain specified commodities it probably would unless some different state of facts was made to appear, permit the movement of export cotton in the manner now and of late years in vogue, subject of course to reasonable requirement that whatever rate was named should be filed with the Commission and afforded all shippers alike. The same might be true of some other commodities in Southern territory. Whether as applied to the movement of the same traffic there might be with propriety one rule as to publication through one port and a different rule for another port is a question of more difficulty. If so it would be in the nature of a differential accorded the weaker line.

The case presented by the transcontinental lines is entirely different. The claim here is that the rate must be an elastic one and that to compel the publication of a rate which can only be advanced upon ten days' notice and reduced upon three days' notice would be destructive of the interests of both shipper and carrier.

The information of the Commission as to conditions upon the Pacific Coast is extremely meager and not sufficient to justify the expression of an opinion. It is apparent, however, that there may be great force in the claims of these carriers. The market for American products in the Orient is not yet established but is still in the formative state. The American producer meets there competition from England, France, Germany and other European countries. Freight rates from those countries are by water, need not be published, and are subject, so far as we know, to no governmental supervision. It is asserted that if the rate under which the American manufacturer must operate is a fixed quantity, which can only be varied under certain conditions, he is at a disadvantage in comparison with his European competitor; that the search for these markets is a joint venture between the manufacturer and the carrier, and that each must be ready to meet by advance or reduction the competition which is found. The carrier should not be prohibited from giving aid to the American producer.

There is this further consideration. Lines of ocean communication between Pacific ports and the East have not yet reached that stage of development to which they have advanced upon the Atlantic. While as already said very few railway systems are directly interested in lines of transportation leading from the Eastern seaboard, exactly the reverse is true upon the Pacific coast. Nearly all transcontinental lines either directly maintain or are interested in lines of steamships plying between a Pacific port and the Orient. It is alleged that in no other way can the necessary vessels for ocean carriage be obtained at the low rate which must be made. It is apparent that a line of railway cannot successfully maintain a steamship line across the Pacific unless it has power to prefer its own line to other ships. But if it is compelled to publish an inland differential it must accord that