No. 741. MERSHON, SCHUETTE, PARKER & COMPANY v. THE CENTRAL RAILROAD COMPANY OF NEW JERSEY and THE PENNSYLVANIA RAILROAD COMPANY. Decided January 13, 1905. Defendants' rates for transporting lumber in carloads to points on the New York & Long Branch Railroad are made by adding to the rate to New York, N. Y., an arbitrary charge of 5 cents per 100 pounds when the shipping point is Saginaw, Mich., but only 2 cents per 100 pounds when the shipping point is Buffalo, N. Y. Water competition between Buffalo and New York affects the rates to New York, but it justifies no wider difference in the rates from Saginaw and Buffalo to these interior destinations than exists in the rates from these shipping points to New York. Held, That the discrimination is undue and in violation of the Act to regulate commerce. Humphrey & Grant for complainant. Francis I. Gowen and Geo. V. Massey for Pennsylvania Railroad Company. R. W. de Forest for Central Railroad Company of New Jer sey. REPORT AND OPINION OF THE COMMISSION. PROUTY, Commissioner: The complainant is a corporation engaged in the manufacture of lumber at Saginaw in the State of Michigan. It does not cut lumber from the log, but buys it in the rough from various mills on the Georgian Bay and at various other lake points, transports it by water to its mills at Saginaw, and there manufactures it into various kinds of dressed and finished lumber. The product is shipped by rail to different destinations, largely in the east, one-half being sold east of Pittsburg. Extensive plants engaged in the same business as the complainant are located at Buffaloand Tonawanda, New York. These mills purchase their rough lumber in the same markets, transport it by water to their mills at a cost of about 25 cents per thousand feet more than the cost to the complainant, manufacture it into the same product, and sell that product in the same markets with the complainant. The defendants are interstate carriers and transport the product of the complainant's mills from Saginaw and also from competing mills at Buffalo and Tonawanda to New York and to points on the New York & Long Branch Railroad in the state of New Jersey. The rate on lumber, including the product of the complainant's mills from Saginaw to New York is 21 cents per 100 pounds and the rate from Buffalo 15 cents per 100 pounds. To points on the New York & Long Branch Railroad the rate from Saginaw is 5 cents above the New York rate, while the rate from Buffalo is but 2 cents above that rate. The complainant insists that the same arbitrary above New York should apply in case of both Buffalo and Saginaw, and that is the question presented for decision in this proceeding. One cent per hundred pounds equals approximately 20 cents per thousand feet as applied to the lumber handled by the complainant. It will be seen, therefore, that in the matter of transportation the manufacturer at Buffalo has a considerable advantage over the manufacturer at Saginaw in the rate to New York, for while it costs the Buffalo mill 25 cents per thousand feet more from the point of origin to the point of manufacture it costs the Saginaw mill something over $1.00 more per thousand from the point of manufacture to the point of consumption. When this difference in the cost of transportation is further increased by 3 cents per hundred pounds as it is to points on the New York & Long Branch Railroad the manufacturer at Saginaw finds it almost impossible to compete with Buffalo. The testimony in this case shows and we find that this adjustment of rates has largely excluded Michigan dealers from the territory in question. An examination of the tariffs shows that in case of all other commodities the rates to points on the New York & Long Branch Railroad from Michigan are 5 cents above the rate to New York and from Buffalo also 5 cents above the rate to New York. So far as this record shows and so far as we can ascertain, lumber is the only commodity on which the arbitrary is different. Careful examination of this record fails to disclose any legitimate reason for that difference at the present time. No excuse can be alleged on the score of distance since Buffalo has apparently a somewhat less advantage over Saginaw in this respect to points on the New York & Long Branch Railroad than to New York. New England destinations take an arbitrary of 2 cents above the New York rate from both Saginaw and Buffalo. To Philadelphia the Saginaw rate is 2 cents less than to New York while the Buffalo rate is the same. There seems to be no reason, therefore, on the score of location for increasing the difference by 3 cents to these particular points; nor can we fairly assume that the relation to these few points is right, and wrong everywhere else. The defendants set forth in their answer that the discrimination was due to water competition and undertook in some measure to justify that claim upon the hearing; but it is evident on the admitted facts that it can have no foundation. There is active water competition in the transportation of lumber between Buffalo and New York and this competition in consequence affects the rate from Buffalo to New York. There is no communication by water between Buffalo and points on the New York & Long Branch Railroad; lumber moving from Buffalo by boat for those stations would be taken to New York, there placed upon the cars and transported by rail to destination. In other words the effect of water competition is exhausted when the lumber reaches New York and can justify no wider difference in rate at these interior points than exists at New York itself. It fairly appears from the testimony that the present relation in rates grew out of some condition which existed when the New York & Long Branch Railroad was operated as a separate prop erty. To-day it is jointly controlled by the Pennsylvania Railroad and the Central of New Jersey. The representative of the latter company said in substance that he could give no good reason for a continuance of the relation at the present time; none appears in this record and we find, therefore, that the discrimination is undue. CONCLUSIONS. Upon the foregoing findings of fact the complainant is entitled to an order requiring the defendants to cease and desist from maintaining the present relation of rates. The rate from Saginaw should exceed that from Buffalo by the same arbitrary above the rate to New York points. This discrimination can be corrected either by raising the rate from Buffalo or by lowering that from Saginaw and it is, therefore, possible that the effect of our conclusion may be to increase the rate on lumber to points upon the New York & Long Branch Railroad. This, however, seems to be no good reason why the above conclusion should not be reached. If the rate when adjusted is too high it should be reduced from both points. 10 L. C. C. REP. No. 790. THE LEHMAN-HIGGINSON GROCER COMPANY; THE WICHITA WHOLESALE GROCERY COMPANY; THE AYLESBURY MERCANTILE COMPANY, and W. E. JETT and FRANK C. WOOD, CoPartners Doing Business under the Name and Style of JETT & WOOD, v. THE ATCHISON, TOPEKA & SANTA FE RAILWAY RYLEY-WILSON GROCER COMPANY and NAVE-MoCORD MERCANTILE COMPANY, Interveners. Decided January 17, 1905. Complainants alleged that defendants, having in effect on sugar in carloads from New Orleans, rates per hundred pounds which were 25 cents to Wichita and 20 cents to Kansas City and other Missouri River points, increased those rates to 47 cents to Wichita and 32 cents to Missouri River points, thereby increasing the differential as between Wichita and Kansas City from 5 cents to 15 cents per hundred pounds, and that the new rates were, as against Wichita, unjust and unreasonable in themselves and relatively; and it was further alleged that new advanced rates from other points of origin imposed the same differential as between Wichita and Kansas City, and that, as against Wienica, those rates were also unlawful. Wichita and Kansas City compete for the sale of sugar in common competitive |