disconnected from circumstances and conditions under which transportation is conducted. Various other grounds for a refusal of relief under section vi have been indicated by the commission. Among these are disturbances in rates, whether secret or open; unjust and unreasonable rates on the part of a competitor; 2 potential competition; 3 a longer line on part of a competitor; the fact that a commodity is foreign merchandise; the mere situation on a navigable river;6 competition of carriers subject to the act.7 The problem involved in competition among railways will be discussed more fully in connection with court decisions. However, one phase of it, the trade-centre theory, may be noticed in this place.

5

In the territory south of the Potomac and Ohio. and east of the Mississippi, known as Southern territory and controlled by the Southern Railway and Steamship Association, it has been customary to establish rates to competitive stations and make charges to non-competitive or local stations by adding to the rate of a competitive point the local rate from such point to the local destination, taking that competitive rate and that local rate which will produce the lowest combination, regardless of whether the competitive or basing point is beyond the local destination or not.8 Whenever the haul

8 Annual Report, I. C. C. (1892), p. 18; 6. 343 and cases quoted;

2. 25; 3. 19; 4. 686; 5. 96.

to the competitive point or "trade centre" is longer than that to the non-competitive point for which a greater charge is made, the haul being made over the same line in the same direction, the long and short haul principle is violated, and the non-competitive point can bring action against the carrier under section iv. The trade centre method is satisfactory, of course, to the "centres" which it establishes and maintains, but brings disadvantage to smaller "non-competitive " towns and rural communities. What shall and what shall not be made a trade centre is finally decided by an arbitrary authority; and no matter how good the intentions the local or non-competitive points are unable to develop their industries under the same advantages that are enjoyed by the competitive, basing, or distributive points, which have been made such not necessarily by any normal and natural process of industrial development, but by chance. or caprice or both. Contrary to the contentions of several carriers, the Commission has refused to admit that the existence of such "trade centres," or the competition between them, creates a dissimilarity of conditions within the meaning of section iv. It has repeatedly condemned the trade-centre idea as interfering with the natural course of trade, establishing arbitrary advantages, and violating both the spirit and the letter of the act to regulate commerce. It has held that trade centres are not entitled to more favorable rates than small towns for which they form dis

tributing centres; but no interference has been attempted where small towns get rates as favorable as the larger ones;1 and the equalization 2 of rates between small and large towns to do away with former special favors does not constitute a ground for complaint.3

The Question of Rates. The kernel of the railway problem is the question of rates. Few topics of importance in finance or administration or any other phase of railway transportation can be investigated without sooner or later touching upon rates as the decisive consideration. Upon no subject has the Commission rendered so many decisions as upon this. A long line of cases has arisen directly out of the general question of reasonable rates; another out of discrimination in rates; others, and some of the most important, out of questions connected with exports and imports; and about a dozen groups of decisions or parts of decisions deal with commodity rates and rates on special articles.

The terms "reasonable and just,' ""unreasonable or unjust," "undue or unreasonable preference or advantage," "undue or unreasonable prejudice or disadvantage in any respect whatsoever," and “unjust discrimination," as used in the act to regulate commerce, imply comparison, and rates to be law

8 The manner in which the decisions quoted on preceding pages have been modified by the courts will be discussed in the two following chapters.

ful must bear just relations to one another.1 Rates must be relatively fair and reasonable as between localities similarly situated in essential respects, not according to any rule of mathematical precision, but in substance and in fact, having regard to the geographical and relative positions of the localities, so that one will not be favored to the unjust prejudice of the other.2 Attempts to maintain trade relations, to protect competing markets, to equalize commercial conditions, and analogous considerations cannot justify unreasonable rates.3 Low charges on one line cannot be made up by high charges on others, and all charges should have a reasonable relation to cost of production and to the value of the service to the producer and shipper, but should not be so low on any as to impose a burden on other traffic. The length and character of the haul, the cost of service, the volume of business, the condition of competition, the storage capacity, and the geographical situation at the different terminal points are all elements of importance bearing upon the relative reasonableness of the respective charges for transportation.5 That rates should be fixed, says the Commission, in inverse proportion to the natural advantages of competing towns with the view of equalizing commercial conditions, is a proposition unsupported by law and quite at variance with every

1 6. 458, 548.

21. 215; 2. 315; 4. 79.

5 1. 230.

8 6. 195. 44. 48.

consideration of justice.1 Each community is entitled to the benefits arising from its location and natural conditions. Equality of charge is required under circumstances and conditions substantially similar, and relative equality is necessary in the degree of similarity. The degree of similarity 3 is determined by all the circumstances entering into the case, and not solely by one standard of comparison.

It is quite impossible to separate questions relating to reasonable rates, discriminations, through rates, etc., from one another. Yet the subject of discriminations has given rise to more controversy and legislation than, perhaps, any dozen other railway topics, and at least brief separate treatment must be accorded to it. In the popular mind discrimination means unjust discrimination, and to the eyes of most legislators all discriminations are unjust. But the well-known illustration of the Delaware oyster town, showing the necessity and justice of discriminations under peculiar circumstances, could be duplicated many times. While all discriminations against individuals, for like and contemporaneous services rendered under "similar circumstances and conditions," are unjust, discriminations against localities may be unavoidable and even just. Sixteen state constitutions and the laws of threefourths of the states prohibit all discriminations.5 3 1. 436.

11. 215; 5. 264; 7. 180.

2

4. 79.

4 Hadley, Railroad Transportation, p. 116. 5 Part II, ch. III.