On the 29th of January the Commissioners received the following reply from Mr. Perkins:

BOSTON, January 26, 1886.

E. G. MORGAN, ESQ., Secretary Iowa Railroad Com'rs, Des Moines, Iowa: DEAR SIR-I have to acknowledge the receipt of your letter of the 19th inst. enclosing copy of a letter of that date from yourself to Mr. Jeffery of the Illinois Central Railroad Co. You say that the Commissioners feel that the case under discussion is an interesting one, and would be glad to consider my views, either on the general subject or the peculiar facts of this case.

With regard to the general subject, it has always seemed to me quite as difficult to lay down rules affecting the price of transportation as to lay down similar rules affecting the price of anything else. Within limits, all prices vary more or less, according to circumstances. Merchants frequently sell certain articles without any profit, and sometimes with an actual loss to themselves, for the sake of promoting the sale of other things on which they do make money. Railroads are compelled to do the same thing.

It will be admitted that a railroad is entitled to make a reasonable profit if it can, but who is to say what a reasonable profit is on a given transaction? The margin of profit on the transportation of some of the great staples is often absolutely nothing, and sometimes these staples are carried at a loss, because the railroad cannot afford to go out of that branch of business, for fear of its effect on other branches of business. If railroads are to be conducted on business principles and as business undertakings, obviously the owners alone should decide when and how much of their reasonable profit shall be given away to meet competition or to encourage transactions; no one else can decide such questions. The law—that is, the public-cannot reasonably attempt to decide them, or to say that a railroad must give away the whole or any part of its reasonable margin or profit in any given case; nor' can the law reasonably say that if the railroad thinks proper to give away the whole or part of such reasonable profit in one case, it must do so in any other, except where the conditions and circumstances are substantially the same.

The western jobbers in a communication to the classification committee of the western railroads, dated October, 1885, say: "The first of business principles is that each party to a trade shall be free to judge for himself what is for his interest." This is so obviously true that it requires no argument. Referring to the particular case under consideration, it seems clear from Mr. Jeffery's statement that the conditions and circumstances are not substantially the same, and that it is therefore not reasonable to require the railroad company to give away the whole or a part of its margin of profit on the shipment of apples to Remsen, because it is compelled to give away the whole or a part of its margin or profit on apples going to LeMars, or otherwsie to abandon the business.

The question presented to Mr. Jeffery is whether to allow the trade of LeMars to go wholly to the south, or to give away a part of his reasonable profit in order to meet this southern competition, and it would certainly not be reasonable, in case he decides to meet the competition, to require him for that reason to give up the whole or a part of his reasonable magin or profit on the business of a point which is not affected by the same conditions.

Transportation to LeMars is not the same commodity as transportation to any other point, and if it is for the interest of the railroad to sell the LeMars commodity at one price, and the Remsen commodity at another, either because of more competition or greater volume of business, or any other substantial difference in the conditions and circumstances, it should be permitted to do so.

What the railroad gives away is the whole or a part of its reasonable margin or profit, or perhaps even part of the actual cost, and as it does so from motives of self-interest, the public at large has nothing to gain by either prohibiting such reduction or demanding the same for all others, regardless of the moving circumstances. Neither the railroad nor any other business could be long conducted upon such a principle. There is no philosophy in the rule that no greater charge shall be made for a given haul than for a longer one. Circumstances frequently arise, as I have stated where it is necessary for railroads, as well as for others who carry on business, to retire from the field or to sell certain of their goods at

prices which pay no profit, or perhaps involve a loss; but because they do so in some cases rather than retire from the field, this constitutes no good reason why they should arbitrarily be compelled by law or public opinion to do so in other cases where the same necessity does not exist. The more or less prevalent belief in the soundness of the rule referred to grows out of the fallacy that cost, with a reasonable margin of profit, is in every case to be taken as the absolute measure of the price of transportation, while the truth is, as I have endeavored to point out, that it is often necessary for all traders, including railroads, to reduce the price by giving away a part or the whole of the profit, and sometimes part of the actual cost. Hoping that I have made myself clear, and thanking you for your letter, I remain,

Very truly yours,

C. E. PERKINS.

Mr. Jeffery being absent, no reply was received from him up to the time of closing the case. Before further consideration the case was closed, as shown by the following letter from the complainant, dated January 30, 1886:

Board of Railroad Commissioners, Des Moines, Iowa:

譬

WATERLOO, Iowa, January 30, 1886.

GENTLEMEN-Referring to our claim for overcharge on a car of apples consigned over the Illinois Central Railroad from Chicago to Remsen, Iowa, the same has been satisfactorily settled by said railroad company and ourselves. We are under great obligations to your honorable Board, and remain with great respect,

THE FOWLER COMPANY.

The case seems to the Commissioners to have presented a state of facts well adapted to bring out several difficult phases of the question of the propriety of making a short haul pay at least not more than a long haul. There was an apparent absence of competing rail or water routes. There was a great advantage to LeMars in the rate giving it the choice of northern or southern apples. There was a gain of revenues to the Illinois Central Company. Remsen was not charged more than the ordinary and usual rate. LeMars, by reason of peculiar circumstances, was charged less than the usual and ordinary rate. The only reason given for the charge was that thereby LeMars and the Illinois Central Railroad Company were benefited. There may have been fruit dealers in Remsen who were hurt thereby, but they were not parties to the complaint. Indirectly the fruit growers who raised the southern apples may have been hurt by being artificially brought into competition with growers of northern apples, but they were not parties to the complaint. Everyone sees the unjust character of a less charge for the long haul in the abstract, but extenuating circumstances are always pleaded for the purpose of making the case under investigation an exceptional one, until one almost feels that the advocates of changing conditions wish to state the rule as a good one in theory, but useless in practice.

This case is commended for consideration to those who are interested in studying the details of the transportation problem.

Subsequent to the settlement of this case by the parties, the Commissioners received a letter from General Manager Jeffery, in reply to their communications of January 19th and February 20th, and it is here inserted, being pertinent to the subject under consideration :

CHICAGO, February 23, 1886.

E. G. MORGAN, ESQ., Secretary Railroad Commissioners, Des Moines, Iowa: MY DEAR SIR-Your note of February 20th calling my attention to your unanswered letter of the 19th ult., is at hand.

During the last four weeks I have been away from my office, and upon the line of the road most of the time. Your communication was not placed on file, but was held awaiting an opportunity for reply. There is much force in the arguments which have been and can be adduced upon both sides of the question of rail lines meeting competition of water lines; and of rail lines competing between common points; and of rail lines in different localities competing in a market common to all of them, for the carriage of commodities to such market; and of rail or water lines charging higher tolls for the lesser distance to a noncompetitive point.

You cite a paragraph from the report of the Pennsylvania Railroad Company under date of February 15, 1870, wherein it is stated that the company named has been governed by the rule of not charging to any intermediate point a greater rate than is charged to one at a longer distance. It is perhaps necessary to suggest that in the last twelve months this proposition was ignored. Every trunk line from Chicago to the seaboard carried freight at from 2 to 21⁄2 mills per ton per mile, and did not reduce to such figures the rates on its traffic between intermediate points; therefore the Pennsylvania Company nullified its statement of February 15, 1870, and furnished a modern argument for an opposite course from the one indicated in the report referred to.

I note that you say that the New York Commissioners in their second annual report announced a proposition similar to that already cited from the Pennsylvania Company's report. The competition and rates on the trunk lines during the last twelve months demonstrated the impracticability in the present condition of transportation affairs, of practicing -the proposition. Theoretically and logically the proposition is a good one, and commends itself at first sight to every thinking mind; practically the diversity of transportation interests; the competition of different and widely separated territories; of communities and manufactures more or less remote from one another, but reaching common markets; the effect of competition by river, lake and ocean; all at present prevent the practical application of that which seems at first thought so logical and just.

You cite the laws of Massachusetts as forbidding a higher freight charge for a less distance from the same point and in same direction. Within the limits of a State like Massachusetts, and upon business strictly local to the State, it is reasonable to assume that the : rule might obtain of charging no less for transportation between two points, than for any integral part of the distance. It does not seem for reasons already suggested, practicable to 'apply it upon inter-state traffic, especially. that in commodities which must be carried long distances, and which if not moved and marketed will prostrate the great agricultural · or manufacturing interests of large areas of this growing country.

Our transportation, like all other of our interests, is in a state of transition. The time may come when a dense population, large and numerous commercial centers, active, convenient and numerous local markets, greater home consumption of the products of the soil, will enable the much lauded and vigorously supported transportation proposition first herein ·cited to obtain.

In view of the harmonious relations existing between the honorable Railroad Commissioners and our Iowa lines, the reasonableness of the Commissioners suggestions to us in the past, and the desire on our part to be equally as reasonable in conducting our transportation affairs, I at once on receipt of your letter of the 19th January directed a settlement with Messrs. Fowler & Co., of Waterloo, Iowa. The amount in controversy. was thirty-six dollars. It seems improper to occupy the time of the honorable Board in discussing the small difference. The traffic in apples to Remsen from and through Chicago is very small, and under these circumstances I deem it best to take action as herein explained, and give up the traffic. Very respectfully,

E. T. JEFFERY, General Manager.

LEONARD DAY & SONS, MINNEAPOLIS, MINN.,

VS.

Switching charges.

ILLINOIS CENTRAL RAILROAD COMPANY.

Filed December 8, 1885.

The parties complained to the Commissioners that they were compelled by the respondent company to pay a switching charge on cars of lumber from the Minneapolis & St. Louis to the Illinois Central Railroad at Fort Dodge, and stated that this was the only place in all their shipments where any charge was made for transfer of cars from one road to another. They asked the opinion of the Board as to whether this custom was a lawful one, and were replied to as follows:

DECISION OF THE COMMISSIONERS.

DES MOINES, Iowa, December 8, 1885.

LEONARD DAY & SONS Minneapolis, Minnesota:

GENTLEMEN-Your letter of the 5th instant received and contents noted. In a complaint submitted to this Board in March, 1881, the Commissioners recommended the reduction of transfer charges for switching lumber from five to three dollars per car, holding the latter to be a reasonable rate. The switching was from the joint sidetrack of the Minneapolis & St. Louis and Des Moines & Fort Dodge companies, from which the Illinois Central Company received cars from the former. The distance to the station of the latter road is three fourths of a mile. For this charge the empty cars have to be re-delivered on the sidetrack above mentioned. The case referred to is T. E. Malden, Manson, Iowa, v. Illinois Central Railroad Company, page 181 Iowa Railroad Commissioners' Report for 1881. This company charges. $3.00 for switching plaster. We have had no other cases before the Commission except those of lumber and plaster.

By order of the Board.

E. G. MORGAN, Secretary.

.

Mr. W. H. Reed, a grain dealer at Vinton, Iowa, complained that the Burlington, Cedar Rapids & Northern Railway Company diverted his shipments of grain from Vinton to Chicago, which were billed via the Chicago & Northwestern Railway, to either the Chicago, Rock Island & Pacific or the Chicago, Burlington & Quincy Railroads, and asked if the railway company has a right to do so.

This question was raised in the case of W. D. Clow vs. B., C. R. & N. R'y Co., before this Board, decided on November 13, 1885. The Commissioners in the latter case held that the shipper had the right to select 'the route which his grain should take to market. The receiving company is entitled to its local rate for the short haul from Vinton to Cedar Rapids, and it is its duty to deliver the car to the Chicago & Northwestern Company if so ordered. The Commissioners have decided in another case that a railway company is not required to furnish cars to go off its own line to that of another company, unless they are willing to do so. If the B., C. R. & N. Co. insisted on this ruling, it might be necessary to send C. & N. W. cars to Vinton for the grain. They see no reason for deviating from their former ruling.

The complainants, Butz Bros. & Co., of Des Moines, stated to the Commissioners that a box of oranges shipped by them on December 2, 1885, via the Chicago, Burlington & Quincy Railroad from Des Moines to Davis City, Iowa, did not reach their destination till the 7th of December, five days after being delivered to the company, and that when delivered to consignees the fruit was frozen and consequently spoiled. They charged that the goods were unnecessarily delayed en route, and made claim for the amount of the loss.