§ 540. Business situation should not be ignored altogether.

The same question was again raised and elaborately considered by the Interstate Commerce Commission in the case of Chicago Live Stock Exchange v. Chicago Great Western Railway. The railroads had again made the same rate on live stock and its products. It was shown that in some respects the cost of carrying one was lower-in other respects, the cost of carrying the other. Mr. Commissioner Fifer said:

"Another very important factor is the relation existing between the articles transported. If the relation is remote, such as that between flour and silk, a change of a few cents per hundred pounds in the rates charged for transporting one of them may not affect traffic in the other; but if the relation is close, such as that between raw material on the one hand and goods manufactured from that material on the other, a slight change in the adjustment of transportation charges between the two articles may be sufficient to close manufacturing plants at some points and increase the output of plants located elsewhere. And it is because of this difference that some discriminations made by carriers are justifiable under certain circumstances.

The competition between live stock and the products of live stock is very severe both in the markets of purchase and in the markets of sale, and live stock raised in the vicinity of the Missouri River is now and for many years has been transported to and slaughtered at different points in territory lying between that river and the Atlantic Seaboard. Packing houses at these different points have been established and maintained under rates of transportation which, generally speaking, have not been higher, while in many instances they have been lower, on the live stock than on the products; and the principle governing this adjustment, namely, that the rates on raw material shall not be greater than on the products of the material, has been applied in nearly all cases of a similar nature."

410 I. C. C. Rep. 428 (1905).

541. Rates should not equalize differences in value. The railroad cannot by its rates equalize qualities of the same article between different producers. In McGrew v. Missouri Pacific Railway,5 the defendant contended that as coal from its mines at Rich Hill has less value for domestic purposes than Myrick coal it might equalize such difference in value by making a lower rate on Rich Hill coal. The complainant's cost of mining coal at Myrick is nearly 50 cents a ton more than it costs defendant to mine its coal at Rich Hill. The Commission, however, held that this difference in quality would not justify a difference in rate. Mr. Commissioner Prouty said: "If difference in quality is to be equalized in favor of the defendant, why should not difference in cost of mining be equalized in favor of the complainant? When this complainant acquired his mine he knew that the value of this coal was greater for domestic purposes than that of Rich Hill, and the price of his mine may well have been fixed in view of that fact, but such an adjustment of rates as that put in force by the defendant entirely eliminates this element of value and might destroy the worth of complainant's property. If any such process of equalization is permissible defendant may absolutely dictate the comparative value of every mine and industry upon its road; and that such rates should be examined with closest scrutiny when resorted to by the carrier in its own favor."

§ 542. Passenger fares slightly affected by this principle.

Passenger schedules are usually made upon a mileage basis; there is little attempt in making them up to minimize the disadvantages of distances. But the principle is applied to a very limited extent by the railroads; for example, suburban stations are sometimes grouped in zones. The principal illustration of this policy, if it be such, of equalizing passenger fares is the five cent fare customary in American municipalities for transporta

58 Int. Com. Rep. 630 (1906).

6

tion in street cars whether the passenger rides for one block or ten miles. By this policy most land within a metropolitan district is brought within the benefit of this uniform fare, whatever may be its distance from the commercial centres. In justifying a consolidation of street railways one judge said: " "As a result, at the time the ordinance was adopted, the mileage of tracks increased from the previous aggregate of 110 miles to 142 miles, reaching every section of the city, with shorter and better routes, and furnishing 38 transfer points, with a universal transfer system, a feature of especial value to the public, as a single fare of five cents gives a maximum length of ride more than double the old arrangement."

6 Milwaukee Electric Ry. v. Milwaukee, 87 Fed. 577, B. & W. 336 (1898).

CHAPTER XVIII.

CLASSIFICATION OF COMMODITIES.

TOPIC A- METHODS OF CLASSIFICATION..

§ 551. The meaning of classification.

552. The necessity of classification for a proper distribution of the

burden.

553. The necessity of classification for convenience in rate fixing.

554. The history of classification in the United States.

555. Uniformity of classification attempted.

556. Classification necessarily imperfect.

557. Classification not unduly minute.

558. Extra class divisions.

558. Commodity rates.

560. Method of classification.

561. Interpretation of the classification sheet.

TOPIC B-GENERAL PRINCIPLES IN CLASSIFYING.

§ 562. Influences determining classification.

563. Adjustment of business to established classification.

564. Classification according to manufacturer's representations.

565. Classification of various goods.

566. Difference between forcing classification on railroads and justifying classification by railroads.

TOPIC C-BASIS OF CLASSIFICATION: COMPARISON OF

COMMODITIES.

§ 567. The reasonableness of a particular rate involves reasonableness of classification.

568. Classification not determined by consideration of rate on a par

ticular commodity.

569. Elements in comparison of commodities.

570. Comparison of similar things.

571. Vegetables for table use.

572. Perishable articles of food.

573. Groceries.

574. Articles shipped in glass.

575. Forest products.

576. Dry goods.

577. Comparison of unlike things.

578. Differences between commodities.

TOPIC D-CONVENIENCE IN HANDLING.

§ 579. Classification based on nature and size of package. 580. Shipment in small packages.

581. Shipment in form more convenient for handling. 582. Shipment in form permitting greater car load.

583. Classification based on volume of business.

584. Large volume of traffic in a certain commodity. 585. Volume of traffic in general considered.

586. Perishable freight.

587. Traffic handled in special trains.

588. Special equipment not necessary for the traffic. 589. Less than usual care required.

TOPIC E-VALUE OF THE GOODS.

§ 590. Value of the goods as an element in determining classification. 591. Difference between values justifies difference in classification. 592. Different classification of anthracite and bituminous coal.

593. Market value rather than intrinsic value.

594. Differing value of same kind of freight.

595. Low value of goods as reducing classification.

596. Value of the commodity not of the greatest importance.

TOPIC F-CAR LOAD RATES.

§ 597. Different classification and rating between car load and less than

car load lots.

598. Difference in classification not essential.

599. Minimum carloads.

600. Minimum carload regulations.

601. Mixed carloads.

602. Car loaded by several shippers.

603. Train loads.