by it whatever it could do upon its main line, and that it might accomplish under a joint rate with an independent railway carrier whatever could be done upon its own branch line. The real question is, therefore, can a railway which receives logs at a point upon its line, and transports those logs to a sawmill where they are manufactured into lumber, treat the lumber as originating where the log did, and make such an allowance towards the transportation of the logs as would be a fair compensation for hauling the lumber from that point. In other words, can the principle of milling in transit be applied to the manufacture of logs into luniber?

It is well understood that at the present time this principle is applied to the movement of many commodities. Generally in its application the raw material pays the local rate into the point of manufacture; when afterwards the manufactured product goes forward it is transported upon a rate which would be applicable to that product had it originated in its manufactured state at the point where the raw material was received for transportation, whatever has been paid into the mill being accounted for in this final adjustment. Under this or some equivalent arrangement at the present time grain of all kinds is milled and otherwise treated in transit; flour is blended, cotton is compressed, lumber is dressed and perhaps otherwise manufactured; live stock is stopped off to test the market.

It may be urged with much force that the Act to regulate commerce does not sanction arrangements of this kind and the Commission early in its history intimated that such might finally be its conclusion. Crews v. Richmond & D. R. Co. 1 I. C. C. Rep. 401, 1 Inters. Com. Rep. 703. Such practices were, however, in use to a considerable extent at the time of the passage of the Act and since then they have become universal. To abrogate these privileges would be to confiscate thousands and probably millions of dollars in value by rendering worthless industrial plants which have been constructed upon the faith of their continuation. Nor is it a forced construction of the statute to hold that when the product finally goes forward to the point of consumption it but completes the journey upon which it entered when the raw material was taken up. There can be no

doubt that the application of this principle has cheapened the cost of transportation and probably of manufacture. The Commission finally held, in the Matter of Unlawful Rates in the Transportation of Cotton, 8 I. C. C. Rep. 121, that cotton might be compressed in transit; and no distinction can be made between this and most of the arrangements above referred to. Manifestly, however, there must be some limit to the application of this idea. Can the principle be applied to the case before us?

This Commission has often observed that no general rule can be laid down for the solution of these traffic problems. Wherever the question is one of fact each situation must be considered by itself. The conditions before us are somewhat peculiar. The practice which is attacked has grown up with the development of the lumber industry and seems on the whole to have been beneficial to the country in which it exists. Its effect is to bring into market lands not otherwise accessible, to decrease the cost and stimulate the production of lumber, thereby benefiting the entire public. It amounts to a reduction in the freight rate which we ought not to forbid without substantial reasons. Values have adjusted themselves to this situation. Lands have been purchased, mills located, large amounts of money invested upon the theory that the system would be continued. While the mill owner has no legal vested right of this sort which he can assert, there is a moral obligation resting upon the railway company to continue the practice, if it can do so legally. So far as can be seen the mill owner, the railway, the purchaser of lumber are all benefited. It seems plain to us that we ought not to interfere unless the positive mandate of the law requires it, and with considerable hesitation we conclude that it does not.

When these logs start for the mill it is certain, and may readily be a matter of agreement, that the entire product will go forward to destination. If the logs were shipped from a point upon the main line of one of these defendants to the mill at the local rate, we do not think that an adjustment of the rate in and of the rate out, when the lumber went forward, which would treat the lumber shipment as originating where the logs did would be illegal as a matter of law. To hold otherwise would simply

compel the moving of these mills to the vicinity of the timber, and this although entailing much expense would benefit nobody.

Once admitting the legality of the principle of milling in transit, whether it shall be extended to a particular case must depend largely upon the facts. Under all the circumstances disclosed by the record before us we think that this practice may be permitted here, but this holding extends the application of that principle to the extreme limit.

It appears that some, perhaps all of these defendants, now make what is known as a rough material rate upon logs from points upon their line to the mill. These tariffs specify that the low rate shall apply only in case the product is shipped out over the defendant line. Whether a carrier may apply a lower rate to the transportation of raw material to a given mill which ships the product out over its line than it applies for the same service to another mill, which disposes of the product otherwise, is not decided. What we hold is that the shipment of the log to the mill and the lumber from the mill may, under the circumstances of this case, be treated as in the nature of a through shipment from the point where the log is received to the point where the lumber is finally delivered, and that the carrier may make such allowance toward the cost of moving the log as would be fairly involved in moving the lumber from that point, and that it may do this by joint arrangement with the carrier bringing the log to the mill, provided that carrier is a common carrier by rail.

It will be noted that in our opinion these divisions can only be granted when the logging road is a public carrier which actually makes a joint through rate, and it was urged in argument that there can be no difference in effect between a common carrier which brings these logs to the mill and a private carrier which discharges the same service. It would be a sufficient answer to this that the law permits the allowance in one case and not in the other, but there is a practical answer as well. The common carrier is subject to public control, its tariffs must be filed according to law, it must report to governmental authority, it must obey the law obligatory on such carriers. These logging roads develop with the country, passing by almost imperceptible progress from carriers of logs to carriers of general merchandise and often of passengers. The same considerations which re

quire that railroads in general should be subject to public su pervision apply to these lines.

One further observation should be made. While the public as a rule has no concern in the division of through rates, and while the statute does not require the publication of the proportions into which such rates are divided among the carriers, we think these divisions stand somewhat different. The transportation first of the log and then of the lumber involves the exercise of the right to mill in transit. Where that privilege is granted to grain, cotton, or other commodities, the fact should be and usually is plainly stated upon the tariff, together with the conditions upon which the privilege will be allowed. In this case the only way of stating the value of that privilege to the mill owner is by giving the division which is allowed the tap line, since that division is in all cases, even if the road be a distinct and independent corporation, an allowance for the benefit of the mill. We think, therefore, that the tariffs should state upon their face that the transportation provided for covers the carriage of the log to the mill and the lumber from the mill, and that the division which is allowed the tap line should in all cases be named.

If the tariffs of the St. Louis, Iron Mountain & Southern were modified in accordance with the above suggestion, we think that company would be within the law, as it now conducts this business, in all cases where the branch line is in fact a common carrier. Whether a particular tap line is or is not a common carrier may evidently be a question of some difficulty, but it does not seem necessary to attempt to lay down any rules here upon that subject. To become a common carrier within the purview of this case the tap line must clearly file its tariffs and render its statistical report to the Commission.

According to the views here expressed, the divisions allowed by the Kansas City Southern and the St. Louis Southwestern, are in violation of law, and those granted by the St. Louis, Iron Mountain & Southern may be. An order in this case would not, however, be the most efficacious means of putting a stop to these illegal practices if continued; the more ready way would be a resort to injunction or criminal proceedings. This complaint will, therefore, be dismissed and such other steps will be taken as may seem necessary after due opportunity has been given the carriers to adjust their tariffs and other arrangements..

No. 607.

CHARLES M. CIST

บ.

MICHIGAN CENTRAL RAILROAD COMPANY.

Decided April 1, 1904.

1. A passenger fare charged by defendant over its branch line from a point in Canada to a point in the United States amounting to about 3 cents per mile for a distance of 35.3 miles, and including a 6-cent bridge charge by an independent company, is not unreasonable upon the facts of this case.

2. When a railroad company makes a reduction from regular passenger fares which are not found unreasonable, it may lawfully require that a person desiring to avail himself of such reduction shall purchase a ticket, and that all persons not holding such special reduced rate ticket shall pay the reasonable ordinary fare.

8. While the regulating statute may be applied to the reasonableness of a rate from a point in Canada to a point in the United States, it is clear that no law of the United States can apply to a discrimination between places in a foreign country.

Charles M. Cist for complainant.

O. E. Butterfield for defendant.

REPORT AND OPINION OF THE COMMISSION.

PROUTY, Commissioner:

Niagara-on-the-Lake is situated on the Canadian side of the Niagara River near the point where it empties into Lake Ontario. The defendant, a United States corporation, maintains a through passenger service from this point to Buffalo, New York. The route is by the railroad of the defendant from Niagara-on-the-Lake to Victoria, Canada, a distance of about 30 miles, thence across the International Bridge to Black Rock on the American side and from there to Buffalo ov r the tracks of