§ 623. Equal mileage rates impractical.

The effects of an absolutely equal mileage rate, which must prevent its adoption as a practical system of charges, were thus stated by a committee of the British Parliament. "(a) It would prevent railway companies from lowering their fares and rates so as to compete with traffic by sea, by canal, or by a shorter or otherwise cheaper railway, and would thus deprive the public of the benefit of competition and the company of a legitimate source of profit. (b) It would prevent railway companies from making perfectly fair arrangements for carrying at a lower rate than usual goods brought in large and constant quantities, or for carrying for long distances at a lower rate than for short distances. (c) It would compel a company to carry for the same rate over a line which has been very expensive in construction, or which, from gradients or otherwise, is very expensive in working, at the same rate at which it carries over less expensive lines. In short, to impose equal mileage on the companies would be to deprive the public of the benefit of much of the competition which now exists or has existed, to raise the charges on the public in many cases where the companies now find it. to their interest to lower them, and to perpetuate monopolies in carriage, trade, and manufacture in favor of those routes and places which are nearest and least expensive, where the varying charges of the company now create competition. And it will be found that the supporters of equal mileage, when pressed, often really mean, not that the rates they themselves pay are too high, but that the rates which others pay are too low."

§ 624. Rates are in rough proportion to distance normally. The Interstate Commerce Commission early announced the principles which it held fundamental in dealing with this ques

6 Stated in a note to Ransome v. Eastern Counties Ry., 1 Eng. Ry. & Can. Traf. Cas. 63 (1857).

tion. Thus in one opinion it was said in substance: "The doctrine that transportation charges should be proportioned to the distances between different points, where those distances are greatly dissimilar, has never been advocated by the railroads or recommended by the Commission. While distance is an everpresent element in the problem of rates and not infrequently a controlling consideration, the general practice of rate making is opposed to the principle of exact proportion, and there is no opportunity for its application under present conditions. Where all the distances brought into comparison are considerable, and the differences between them relatively small, there should be substantial similarity in the respective rates unless other modifying circumstances justify disparity.

"That rates should be fixed in inverse proportion to the natural advantages of competing towns with the view of equalizing commercial conditions,' as they are sometimes described, is a proposition unsupported by law and quite at variance with every consideration of justice. Each community is entitled to the benefits arising from location and natural conditions, and the exaction of charges unreasonable in themselves or relatively unjust, by which those benefits are neutralized or impaired, contravenes alike the provisions and the policy of the statute."

625. Different cost of service; heavy grades.

A difference in the ton-mile rate may be justified by varying cost of service on different parts of the line. Thus a higher tonmile rate is justified on a haul which includes heavy grades.8

7 Eau Claire Board of Trade v. C. M. & S. P. Ry., 4 Int. Com. Rep. 65, 5 I. C. C. Rep. 264 (1892).

8 Rice v. Western N. Y. & P. R. R., 2 Int. Com. Rep. 319 (1888); Brockway v. Ulster & D. R. R., 8 I. C. C. Rep. 21 (1898); Bellsdyke Coal Co. v. North British Ry., 2 Ry. & Can. Tr. Cas. 105 (1875); Nitshill Coal Co. v. Caledonia Ry., 2 Ry. & Can. Tr. Cas. 39 (1874).

The uniform mileage rate may also be modified by the proximity of fuel to one portion of the road.9

In New Orleans Live Stock Exchange v. Texas & Pacific high. The defendant's road had a heavy grade on the western portion, but a very easy grade on the eastern portion; only 30 cars could be handled on the western portion, while on the eastern portion 60 cars could be handled. The defendant claimed therefore that the most economical method of carrying would be to run only half as many freight trains over the eastern portion; but as cattle trains must go directly through, this could not be done in the case of cattle.. The Commission said, however: "The defendant seems to claim that it ought to be allowed to charge a higher rate because if it sends this live stock through in proper time it cannot consolidate its trains at Boyce; but it is a novel idea that the rate should be advanced because the cost of operation over a part of the line is decreased, and it certainly costs less per mile to haul the same train from Boyce to New Orleans than from Fort Worth to Marshall."

§ 626. Competition modifying distance rates.

It is well settled that under the Interstate Commerce Act competition may be considered in fixing the particular rate,11 and if it may be considered under the Act, a fortiori it may influence the rate at common law. 12 And indeed competition be

9 New Orleans Cotton Exch. v. Illinois Cent. R. R., 2 Int. Com. Rep. 777, 3 I. C. C. Rep. 534 (1890).

Railway, 10 a rate on cattle in carload lots was attacked as too

10 10 I. C. C. Rep. 327 (1904).

11 Texas & P. Ry. v. Interstate Commerce Com., 162 U. S. 197, 40 L. Ed. 940, 16 Sup. Ct. 666 (1896); East Tennessee V. & G. Ry. v. Interstate Commerce Com., 181 U. S. 1, 45 L. Ed. 719, 21 Sup. Ct. 516 (1901); Interstate Commerce Com. v. Louisville & N. R. R., 73 Fed. 410 (1896); Rice v. Western N. Y. & Pa. R. R., 2 Int. Com. Rep. 389 (1888); Gardner & Southern Ry., 10 I. C. C. Rep. 342 (1904); Phipps v. London & N. W. Ry. [1892], 2 Q. B. 229.

12 Under the Kentucky constitution, however, competition will not jus

tween railways is one of the most important factors in determining the rate between points which are connected by other railways or which have access to water routes. From an economic point of view the railroad is justified in making any reduction to competitive points that is necessary to get business, provided that it does not place its rates below remuneration for the costs of handling the competitive traffic. But while a through rate to a competitive point is commonly found to be relatively less than the local rates, the difference which the law will permit. must not be unreasonable. This general problem is discussed elsewhere. It is enough, therefore, to give at this place one of the important limitations upon making a through rate less than a local rate. An intermediate local rate should never exceed the through rate to the terminus of the line plus the local rate back to the intermediate point. 13

§ 627. Comparison of through rates and local rates.

It is often hard for the courts to justify a startling disproportion between through and local rates. Thus in one case the court expressed much surprise at such differences, saying: "The tariff rate for coal per ton from Duluth to the first station south of Minneapolis (Hopkins), about 9 miles, and on defendant's line of road, was $1.75. To Norwood, a trifle over 40 miles from Minneapolis, it was $2.50. It was the same to the stations southerly, 21 in number; the one most southerly being Boyd, 152 miles distant from Minneapolis, or about 112 miles beyond Norwood. That is, the rate agreed upon was the same per ton in carload lots, whether it was transported to a station 40 miles south of Minneapolis, or to another station 152 miles distant. And of

tify a difference in rates. Louisville & N. R. R. v. Com., 20 Ky. L. Rep. 1380, 43 L. R. A. 541, 46 S. W. 707, 20 Ky. L. Rep. 1102, 47 S. W. 210, 20 Ky. L. Rep. 1394, 43 L. R. A. 549, 47 S. W. 598 (1898); Louisville & N. R. R. v. Com., 21 Ky. L. Rep. 232, 51 S. W. 164 (1899).

13 Martin v. Southern Pac. Co., 2 Int. Com. Rep. 1, 2 I. C. C. Rep. 1 (1888).

this agreed rate it was stipulated by the railway companies that the carrier from Duluth to Minneapolis should receive $1 per ton, distance 162 miles. We refer to these figures for the purpose of calling attention to what is evidently a fact, that the defendant was either carrying coal to Boyd at a loss, or was collecting too much tariff per ton on the same article transported to Norwood." 14

§ 628. Difference in charge for carriage in opposite directions.

There is no reason for requiring the same charge for carriage between the same points in opposite directions.15 Various factors which properly enter into the rate may be different in the two cases. In a case 16 where a higher rate was charged for the eastward than for the westward carriage, Mr. Commissioner Clements said: "The claim is, in substance that the rate of $350 eastward is unreasonable in view of the fact that the rate over the same line and between the same points westward is only $263. This fact alone is relied upon to support the charge. The two rates have no necessary connection or relation, and the fact that a rate over a road or line in one direction is materially higher than the rate on the same class of traffic over the same road or line and between the same points in the opposite direction does not, as in case of hauls over the same line in the same direction, establish prima facie the unreasonableness of the higher rate. This would appear to be especially true where the hauls are of as great length as those now under consideration. It is moreover in evidence, as remarked above, that the westbound movement of the traffic termed "emigrants' moveables"

14 State v. Minneapolis & St. L. Ry, 80 Minn. 191, 83 N. W. 60 (1900). See, also, Interstate Com. Com. v. Western & A. R. R., 88 Fed. 186, 93 Fed. 83, 35 C. C. A. 217 (1900).

15 Macloon v. Boston & M. R. R., 9 I. C. C. Rep. 642 (1903).

16 Duncan v. Atchison, T. & S. F. R. R., 6 Int. Com. Rep. 85, 102, 4 I. C. C. 385 (1893).