nearly 1500 miles of road, situated in four States and reaching many important points between the Atlantic Ocean and the Mississippi River. It connects at Bristol with the line of the Norfolk & Western from the eastern cities.

The interstate commerce of this system includes traffic which originates at points located on the line of its road and destined to points in other States also on its own line, and joint traffic handled in connection with other lines. The principal originating points of its local traffic are Knoxville, Chattanooga, Memphis, Atlanta, Brunswick, Selma and Meridian. Probably, however, the more considerable part of the interstate business of this line is traffic to and from Virginia and the Eastern States via Bristol; Paint Rock and Brunswick; traffic to and from the Western States via Jellico, Chattanooga and Memphis; and traffic with Mississippi and Louisiana via Meridian. Much of this business is very long distance traffic; for example, from New Orleans and Memphis to New York City, or from Chicago and St. Louis to Atlanta, Macon and Brunswick.

It is traffic of the latter class which presents the greatest apparent difficulties to the traffic manager who endeavors to comply with the fourth section of the Act to regulate commerce in the working of rates through a country where business is light and distances between stations long. There is, for example, proof of the existence of considerable freight traffic from Chicago, St. Louis and other points in the Western States to Charleston, Savannah, Brunswick and other points on and near the Atlantic seaboard, consisting of packing-house products, flour, grain, etc. Taking as an illustration Class D (grain), the rate as established September 30, 1888, by the Southern Railway and Steamship Association over these and other lines from St. Louis to the Atlantic coast points referred to was 25 cents; to Macon and Augusta, Georgia, the rate was 34 cents, and to Atlanta, Georgia, 32 cents, Macon being 195 miles inland from Savannah. The low rate to the coast points was claimed to be compelled by reason of competitive rates established on rail routes from St. Louis and Chicago to Baltimore and Philadelphia and

thence by ocean vessels to the coast points in South Carolina and Georgia.

The various carriers engaged in the all-rail traffic to those points have recently revised these rates, and on February 1, 1889, the rate from St. Louis to the coast points was made 31 cents on Class D, the rate to Macon and Atlanta remaining unchanged. A trial of this revised tariff is now being made and the practical results will soon enable the carriers engaged therein to determine whether they can not properly make the Macon rate a continuous rate to the coast. Macon and Atlanta, however, have at all times been treated as competitive points and have received rates of the lowest grade.

The intermediate points which seemed to the Commission to have been particularly in view in the framing of the Act, are the smaller places scattered along the lines of the Southern roads; for example, between Brunswick and Macon and between Macon and Atlanta. Owing to the treatment which points of this kind received from the carriers there has been little opportunity for the exhibition of local enterprise or for the development of local industries. It has been customary to issue tariffs from distant commercial centers to the larger southern points and railway junctions as basing points, from which rates to all surrounding intermediate territory were made by the addition of local charges, usually framed on a progressive mileage basis and increasing rapidly, the hauls being treated as short and independent from the several basing points, and the combination of the through and local rate being regulated only by giving to such points the "benefit," as it is somewhat ironically termed, " of the lowest combination;" by which is meant the adoption of such combination as would produce the lowest rate, whether the basing point was on one side or the other of the destination; in other words, the shipper at these local stations had the legal right to have his goods forwarded to a point beyond his depot and returned at local rates, if less than the combination made from a basing point in the other direction by adding the local rate therefrom to the through rate thereto.

The belief has forced itself upon this Commission with increasing strength during the period in which it has observed

the operation of various systems of rate-making in the Southern States and elsewhere, that this system of combined joint and local rates to points in the Southern States intermediate to the so-called basing points is in a very great degree responsible for the lack of local development in that region, except at favored localities. That there are difficulties in the situation is readily conceded; that there are present and temporary advantages to the carrier in the establishment of thriving cities and.jobbing centres distant from each other one hundred miles or more, with stretches of intermediate territory where all distribution and collection of articles. of consumption and products of the soil are made at local tariff rates, may also be conceded; nevertheless it is the belief of the Commission that it was the situation of these local communities and others similarly situated in other parts of the country, mostly agricultural, without important manufactures, mills or other business enterprises, and paying rates for transportation largely in excess of the customary tariffs to competitive centres, that attracted the attention of Congress and led to the incorporation of the short-haul -clause, so-called, as a leading feature of the Act to regulate .commerce Having given a most attentive consideration to this subject it is the further belief of the Commission that the complaint of these minor communities was a just complaint; the expression of the short-haul principle has been clearly made in the Act to regulate commerce; and it would be the duty of any tribunal competent to aid in the enforcement of a statute of this nature, to insist upon its execution, subject only to such just exceptions as the language of the Act may reasonably sustain.

When, therefore, competitive carriers are enabled by harmonious action to so adjust their rate sheets as to bring their charges into conformity with the general rule of the fourth section, and still realize reasonable and fair return for the service performed for the public, it becomes the duty of the Commission to see that intermediate points receive the benefits of such an adjustment.

By "intermediate points" the Commission does not refer to points like Macon and Atlanta so much as to the minor

points along the lines of the various carriers. If the former principle of adding local rates from basing points is pursued, the effect of any advance of rates to terminals will be to advance them at all the local stations by the same amount. This is directly contrary to the intention of the law; it is the duty of the Commission to see to it that such advances, when proper in themselves, are made the occasion for reduction rather than advances at minor intermediate points.

The chief obstacle in the way of a general compliance with the rule of the fourth section is found in the question of revenue. Carriers in the Southern States employ that argument in every case when conformity to the law is suggested. They say that the railroads must live or there can be no commerce by rail; and they insist that any reduction of rates means loss of revenue, which is against the public interest and the carrier's right, unless the rate in question be unreasonable But it is not clear that the application of the general per se. rule of the law would involve permanent loss of revenue. The stimulus given to business at intermediate points will increase traffic largely; that proposition has been so often. practically demonstrated that no intelligent observer can reject it. Moreover the adjustment required does not necessarily involve immediate loss of revenue. An advance of a single cent, for example, on the various classes and specials composing the large interstate traffic to and from Atlanta would compensate the carriers for very considerable reductions on the comparatively light interstate traffic which is now carried to local points on the Atlanta combination.

The construction of the tariffs of the East Tennessee, Virginia & Georgia Railway during the period that has elapsed since the passage of the Act, has been in some respects intelligent, and an effort has been observed to bring them in some degree into conformity with the spirit of the law. The treatment accorded to different parts of its system has not, however, been uniform, and much room still remains for progress. It is the belief of the Commission that an intelligent study of the tariffs of the system as a whole, from the standpoint of observing desirable changes rather than of seeking for the perpetuation of old methods, would result in the elimination

of much injustice which still remains, without materially affecting the earning capacity of the property. The method by which this may be accomplished is indicated above.

At present the amount shipped to intermediate points is relatively very small; giving such points the rates charged at more distant places, if adopted and maintained as a general principle, would necessarily encourage local industry and enterprise. Such encouragement would not be at the expense of the coast points, but would in its reflex action and by necessary laws ultimately work in their favor also. It is customary for dealers at Baltimore, Philadelphia, New York and Boston to supply interior towns in their vicinity by sales to customers there located, deliveries being made by the stoppage of cars en route for the terminals, at the same rates charged in case they are carried through. The adoption of such a system in the Southern States would not break up the business of distributing points; the methods would be somewhat changed, but the combinations of credit and acquaintance would maintain existing business relations. The operation of this system in the Eastern, Northern, and Western States, by way of developing local communities, has wrought benefits to the country at large which are obvious to the most superficial observer. An example of the results which might follow the abandonment of the old system of constructing tariffs is given in the following extracts from a communication which was addressed to the Traffic Manager of the East Tennessee, Virginia & Georgia Railroad, from a party residing twenty-three miles north of Macon on the line of that road.

"We own at Juliette, Ga., a water-mill with a capacity at present of grinding about one car-load of corn per day, besides some wheat, stock-feed, etc. The mill site is 100 yards from your line of road, on the Ocmulgee River, which, during lowest water, furnishes about five thousand horsepower, easily available, enough to run an enormous mill, or several of them. Now, we have undertaken to improve this property, commensurate with its earnings, and propose to put a good deal of money in it if it pays, and there is no