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torily is increased by the fact that the carriage by express is not by law subject to the same rules which control the carriage as ordinary freight. The feature of the express business which during the past year has been the subject of most frequent complaint has related to the refusal of several of the companies, when receiving freight from another for delivery by itself, to either advance the charges of the company from which the freight is received, or to collect them for such company from the consignee on delivery. The refusal while it continued is supposed to have rested on no better reason than unfriendly rivalry, and it subjected parties employing these agencies to a great many vexations which would be entirely avoided if the express companies were required, as the railroad companies are, to "afford all reasonable, proper, and equal facilities for the interchange of traffic between their respective lines, and for the receiving, forwarding, and delivering of property to and from their several lines and those connecting therewith."
ADMINISTRATIVE WORK OF THE COMMISSION.
The general administration of the act during the year has been steady and progressive, and presents few features calling for special remark. In Appendix B is given a brief statement of the formal complaints passed upon by the Commission with the points decided, and Appendix C contains a further statement of the disposition or the present situation of all formal complaints made during the year under the thirteenth section of the act. The great majority of complaints, however, have been laid before the Commission informally, and have either presented matters over which the Commission has no jurisdiction, or they have been adjusted with its assistance by correspondence with the complainants and the carriers, or in some other manner disposed of by the parties themselves. In most cases where a complaint has appeared to be prima facie well founded, the carriers have shown a disposition to consider it in an accommodating spirit, and have not been inclined to insist upon formal complaints or formal adjudications.
The most frequent complaint made has been of rates supposed to be excessive. It is commonly found that the parties complaining advance the fact as proof of the excess that less proportionate rates are made by the same carrier on other parts of its line, or that lower rates are made by other carriers in the same or other sections of the country. This evidence by itself, and without a showing of circumstances under which the rates are made, is not of much value; but the fact that opinions on the reasonableness of rates are commonly formed upon comparisons of the kind mentioned, and that great apparent disparities are continually found to be productive of discontent, is forcible reason for every carrier to keep at least its own rates in due proportion just as completely as may be found practicable, and to eliminate, when it may be done, all circumstances which have forced the laying of exceptional burdens on any locality or any species of traffic. It is always of importance that rates shall appear to be fair, as well as be fair in fact.
In one case decided by the Commission, the principle was laid down that carriers in making rates can not arrange them from an exclusive regard to their own interest, but that they must respect the interests of those who may have occasion to employ their services, and subordinate their own interests to the rules of relative equality and justice which the act prescribes. The case was one of the transportation of railroad ties. Heretofore it is believed not to have been unusual for railroad companies to class and rate this species of property high in order to prevent its transportation to a distance, thereby keeping the ties ob
tainable near their own lines, for their own use, and excluding such competition by other roads as would tend to advance the market value. The Commission held this to be unwarrantable, and declared it to be the duty of the carriers to make the classification and rating of this species of property correspond to that of other property of the same general character and of corresponding value.
The principle which required this ruling is not restricted to particular states of fact; it is one of general application and should be applied by the carriers wherever the reasons on which it is based are found to exist. The obligation to do this has not always been kept in mind. It is believed that railroad companies in some cases have practiced the giving for season or mileage tickets, to the keepers of sea-side resorts, rates which were exceptionally low, while declining to give corresponding rates to other points on their lines. The ground on which this is done is understood to be, that though the number of such tickets sold may be small, the occupations of those who purchase them, and the inducements to amusement and recreation which they supply, naturally attract to their resorts many other persons who pay the regular and customary rates, and the carrier therefore consults its interest in accommodating the owners of such resorts with a specially favorable ticket. But this is not believed to be a sufficient reason for the discrimination. A large shipper of freight might on the same grounds and with as much legal justification be given exceptionally low rates because of the business his influence brings to the carrier. The act does not contemplate that influence shall either directly or indirectly be paid for by giving advantages in transportation, and a discrimination that is unjust is not rendered legal by the carrier finding a profit in it.
The Commission is confident that during the year very considerable advance has been made in the direction of putting rates upon a better proportionate basis than they have been on heretofore, and to any extent in which this has been accomplished the public is benfited. Comparatively little fault is now found with the general principles on which freight rates are claimed to be adjusted; it is from the misapplication of those principles that inequalities and injustice most commonly result.
Early in the present year the Commission became satisfied that underbilling of freight was being somewhat extensively practiced. This was not confined to any particular road or group of roads, but was prevalent even on lines which at the time were protesting most emphatically their conformity to the requirements of the law. Officers and managers of the roads condemned the practice, but nevertheless traffic was admitted upon their lines on which the billing was short, when they could have known and ought to have known the facts. The Commission made careful investigation of the whole subject, and published its conclusions.
One difficulty in dealing with this device whereby particular shippers obtained unjust advantages was encountered in the fact that in each particular case the carriers assert that they did not know of its existence; that they were imposed upon by the shipper or were unwittingly led into error by the fraud or ignorance of an agent, and proof to the contrary was difficult to obtain. Nevertheless, in most cases some degree of negligence not easily excused was apparent. The Commission considered at some length the excuses offered, and the result of its action is believed to have been that the carriers became more active and vigilant in holding their agents to their duty, and in many cases
by concurrent action established precautions for the detection of such frauds by shippers as had theretofore at times been perpetrated with impunity. These precautions rendered future excuses on their part less plausible, and the frauds, it is believed, have in consequence become very much less common than formerly. But they are undoubtedly still occasionally committed, sometimes with the connivance of agents, and sometimes through deceptions which the shippers practice upon them. The Commission thought then and still thinks that the act ought to be so amended as to impose a penalty upon shippers who, by false billing, false classification, false weighing or false report of weight, or by other devices, knowingly and willfully obtain transportation for their property at less than the regular rates.
Only two complaints were made during the year of the giving by carriers of free transportation of persons as an unlawful discrimination; neither of these was found to possess any merit, and the complaints were dismissed upon hearing. The Commission has every reason to believe that free transportation of persons not entitled to it under the exceptions contained in the act is now rare, except when given in consideration of real or pretended services, or as commissions are paid, or when ostensibly limited to State transportation. Passes are undoubtedly given to a considerable extent which are made good between points all of which are in the same State, the party giving them understanding that the act is not violated thereby.
It is probable that in some cases this understanding is erroneous. When the pass is issued for use in respect to interstate traffic, so that the giving of it is in effect the giving of a preference or advantage to the recipient over others not thus favored, it is believed that the limitation of use within a single State is unimportant to the question of legality. A rebate given on interstate traffic, but measured by the transportation within, a particular State, would be no less illegal than if allowed regardless of such a limitation; and such a case seems strictly analogous to a pass given to influence interstate traffic but limited in like manner. The important fact is that something of value is given; and the effect of giving it is such an unjust discrimination as the statute condemns. And it may be doubted whether the limited pass is not illegal in any case, not coming within the exceptions of the statute, where it is given to be used or is actually used for free transportation on part of an interstate journey.
The decisions made by the Commission within the year, when against the carriers, have been accepted and conformed to with reasonable promptitude, except in two instances. The first of these was the case of the Kentucky and Indiana Bridge Company against the Louisville and Nashville Railroad Company, which involved some very important questions of law as well as of fact, and was also, as the Commission understood, only one part of a controversy some branches of which were not subject to the authority of the Commission and had already been made to some extent the subject of judicial cognizance. It was entirely proper, therefore, that the whole controversy should be referred to the proper judicial tribunal, and this is understood to have been done. The other case is still the subject of consideration by the Commission.
THE LONG AND SHORT HAUL PROVISION.
Since the issue of the first annual report of the Commission very much has been done in the direction of bringing railroad rates into
conformity with the general rule of the fourth section of the act, which makes it unlawful for the carrier "to charge or receive any greater compensation in the aggregate for the transportation of passengers or of the like kind of property under substantially similar circumstances and conditions for a shorter than for a longer distance over the same line in the same direction, the shorter being included in the longer distance." In the section of the country north of the Potomac and the Ohio and east of the Missouri the cases in which the greater charge is made for the shorter transportation are few and their circumstances are such that complaint is not often made that they operate oppressively.
In July of the present year, however, the Chicago, Saint Paul and Kansas City Railroad Company, a company having a line from Chicago to Saint Paul and Minneapolis, and which theretofore had not claimed any privilege under the act of making the greater charge on the shorter hauls, announced to the Commission its purpose to reduce very largely its rates between the termini of its road without reducing intermediate rates, the effect of which would be that from either terminus to a number of intermediate stations the rates upon any consignment would be greater than they would be on the same property if carried through to the other terminus.
The company laid down two propositions as justifying its action: first, its rates to intermediate stations were perfectly just and reasonable, and therefore there was no injustice in maintaining them; and, second, the rates between its terminal points were forced down by the unfair competition of another line, which had previously promulgated the like reduced rates and thus compelled its competitors to meet them. The reduced rates, it was insisted, were altogether below what was reasonable, but the action of the other company made them all that it was possible to obtain, and established conditions and circumstances so dissimilar to those prevailing at intermediate stations as to justify the action taken and bring it within the protection of the statute. The Commission immediately ordered an investigation and gave very full hearing to all parties interested at a convenient point in the territory affected by the rates.
On the hearing it was made to appear that the facts regarding the reduction of rates between the terminal points were as had been claimed: a competing company had reduced them to a point much be low what they had commonly been on all the roads, and the evidence tended very strongly to show that this made them unreasonably low. The road which was being investigated claimed that it had no alternative but to meet them. There was no such pressure of competition at the intermediate stations as was felt at the terminals, and the circumstances and conditions governing the making of rates were, therefore, it was said, altogether different at the terminal stations to what they were elsewhere. The company could make them what they ought to be at the intermediate stations, but was compelled to accept what the competitor would allow it to get at the termini.
The reasoning seemed strong and was certainly plausible. But the question involved was a question of the construction of the act; its answer was to be arrived at on consideration of what was probably the legislative intent. It was seen that the circumstances and conditions relied upon as entitling the carrier to make the exceptional rates were not circumstances growing out of natural causes; they were not the outcome of competition by water routes; there was no peculiarity of the line which would make the rates at the termini and at other stations relatively just; the only dissimilarity in the circumstances and
conditions which attended the making of the rates at the different points was that at the termini there was sharp railroad competition and at the intermediate stations there was not.
But this was a state of things that, at the pleasure of the railroad companies acting generally, or even of single companies disposed to act in hostility, might be made to exist at any point of railroad connection in the country; and if the greater charge on the shorter haul was admissible in the case under investigation the rule of the fourth section would be of no practical value whatever. Any railroad company might by its action absolve a competitor from its obligation, and be itself absolved in return. The legislature never intended this consequence. It did not intend, as the Commission believed, that the carriers subject to the law should at pleasure thus make the rule of the statute ineffectual. The carrier under investigation conformed to this conclusion, and graded its rates accordingly, and the objectionable rates made by the carrier complained of were also soon discontinued.
The transcontinental rates have received a large share of the attention of the Commission during the year.
Among the cases which were mentioned in the former report as then pending were those of the Lincoln, Nebraska, Board of Trade against the Burlington and Missouri River Railroad Company and others, and Plummer, Perry & Co. against the Union Pacific Railway Company and the Southern Pacific Company. In these cases it was claimed that the fourth section of the act to regulate commerce had been violated in charging from Pacific coast points to Lincoln more for the transportation of freights than was charged to Omaha. The cases were fully heard at Lincoln, where a large amount of evidence was taken. They were found to present peculiar and difficult questions growing out of conditions which could not be here stated in a paragraph, if it were important to state them now, which it is not.
The cases were taken under advisement, but before decision was announced the railroad companies forming the through lines changed their tariffs so as to give to Lincoln the same rates from the Pacific coast that were given to Omaha. As this was all that could be claimed in respect to rates for the future, the Commission abstained from any expression of opinion and gave leave to withdraw the petitions. Money claims were made against the defendants for prior violation of the law, but as the opinion of the Commission upon them would not be binding upon the parties, the Commission followed its usual course in such cases and refrained from expressing it.
The result thus obtained was largely determined by the action of the Commission in the case of Martin against the Southern Pacific Company and others, known as the Denver case. This case presented the question whether the transcontinental roads could properly exact a greater charge for transportation from the Pacific coast to Denver than to Kansas City, some 600 miles further east. It was fully heard and was treated as involving the entire subject of relative rates as between the shorter and longer hauls on all the transcontinental lines. At the time of the hearing the carriers relied upon competition by the Canadian Pacific Railroad Company, a foreign corporation, as the justification for the rates made. It appeared that about the time when the act to regulate commerce took effect, the Canadian line, then recently opened from Vancouver Sound to various points of connection with lines in the Eastern States, entered upon an active competition for through business in both directions between all Pacific coast points