case it was apparent that the rates complained of were rates intended to be made in conformity to the spirit of the act, and without any purpose of benefiting or injuring other towns than those to which they were given. And it might also be seen that these peculiar incidental benefits could not be monopolized by a few commercial centers, nor could any one of them gather benefits without reaping losses also. If the dealers in small towns beyond Omaha are now enabled to pass by that city and make purchases in Chicago, which they were accustomed to make in Omaha, so they may pass by Chicago, also, and make them, perhaps, to like advantage in Philadelphia, New York, or Boston. They can now reach out in all directions as they could not before, and even for family supplies there may be a choice of markets, which formerly was not available.

Such a state of facts as was shown in the instances mentioned does not present a case calling for the protection of commercial centers as against each other; what should be done obviously is, to leave just and equal rates to have their natural effect under the influence of legitimate competition. The law can not be blamed for incidental consequences when its rules are just and justly applied. It could not be denied that the rates given to the smaller towns in the cases mentioned were just to them, and the large towns could not, with any propriety, demand that, for their own benefit, rates unjust to the smaller towns should be imposed. All they could claim was that rates should be relatively just when all stations were considered. The carriers could not go further in aid of the competition of cities than to make them so.

In some cases in which it was complained that excessive rates were charged, the evidence offered to make out the excess consisted largely in showing that the rates formerly paid, after deducting the rebates which were allowed, were much below the rates now exacted. Evidence to this effect would come almost exclusively from large dealers, and it did not usually show that the public in general at the same locality had formerly been given more favorable rates than they now had. But the evidence was incomplete for the purpose designed because it did not take a comprehensive view of the whole field, but was confined to a single place. Proof that a railroad company is now on an average, when all its stations are considered, charging higher rates than formerly, may be taken as a strong prima facie showing that present rates are excessive; but their being higher at a single locality may be a result of an equalization of rates as between localities, which necessarily advances those which formerly were proportionally too low, and reduces in like degree those which formerly were proportionally too high. If the rates are now found to be made on correct principles, and are relatively fair as between localities, it can not be a just ground for complaint that some town which formerly was greatly and unjustly favored, finds its rates advanced. Not unlikely it may turn out on investigation into the circumstances of such a case that the advance was necessary to enable a carrier to make the proper concessions to other localities.

To what is above said regarding the effect upon large towns of a strict enforcement of the long and short haul clause of the act, a partial exception must be made of towns and cities upon the trans-continental lines. All the interior towns, large and small, will receive benefits therefrom; the incidental injurious effects will fall mainly upon the terminal cities.

UNIFORM CLASSIFICATION.

In the first annual report of the Commission attention was called to the fact that rates for railroad transportation are to some extent ad

justed on principles analogous to those on which taxes are laid: the articles or the interests that can least afford to bear such burdens are given the benefit of low rates which the carriers can not afford to give to all, and higher proportional rates are levied upon the articles and interests which would feel the burdens less. This method of adjusting rates has been and is of very high value to the country; indeed, it may be said to be indispensable.

The business of a railroad company as a carrier of freight is to exchange for the people the products of different sections and countries, and this exchange, as to many commodities in a country so large as ours, or indeed in any considerable country, would be restricted to comparatively small sections if articles which are at once bulky and cheap and articles which in small compass comprise very great value were alike charged rates for transportation which disregarded the value as an element of estimation, or took it into account only so far as reasonable insurance against loss or injury might render prudent. Railroad managers very soon discovered that they could not measure their rates exclusively by the standard of cost of carriage of the several kinds of traffic, separately considered; but it was wise for themselves and best for the country that the cost of carriage be considered in the aggregate and that the rates which are to be the compensation for the service performed be then apportioned on special consideration of the value of the service to the kinds of traffic severally. Such an apportionment would seldom be burdensome to articles of high value, but it would relieve cheaper articles from burdens which, if apportioned strictly to the cost to the carriers of their transportation, would render carriage for considerable distances out of the question.

But a practice based upon any such general principle will almost inevitably in its application be subject to many exceptions. Every railroad serves a certain territory, and every part of the country has to some extent interests to be served which are special and peculiar to it, and these it will naturally desire to have specially considered by local, official, and corporate authorities, whether the business in hand be the imposition of taxes or the adjustment of rates for transportation; and as many other circumstances besides cost of transportation and value must always be taken into account, such as bulk or weight of articles, convenience of handling, special liability to injury and necessity for speedy delivery, and the field of production or of consumption, so that there can never be any fixed or definite rule for the measurement of the charge to be made upon any particular traffic, it is always possible for the railroad manager in making rates to yield something to the special interests of his section, and still keep in view the general principles upon which he will professedly act.

As rates are apportioned by means of classification of articles which are expected to be offered for carriage, a pressure from sectional and local interests has been continuously brought to bear upon the authorities making the classifications to have them so made that those interests may be favored which the roads to use the classification will more particularly serve. For the most part the classifications have been made by the carriers themselves; in a few instances they have been made by State commissions, but under influences corresponding to those which have influenced the carriers in the same work. The carriers, it may be assumed, have primarily consulted their own interests, but they have also at the same time consulted the local feeling and the local interests, and have commonly found that their own interests were best subserved in doing so.

The consequence has been that a great number of classifications have been in force in different parts of the country, some of them covering large and some small sections, some made for several but more made for single roads. In very many cases there were two or more classifications in force on a road; one for the traffic in one direction, another for that in the other, a third, perhaps, for the traffic coming from or going to a particular section of the country, and so on. The existence of so many was a great public evil, and it necessarily resulted in constant embarrassment in the interchange of traffic between the roads. The owners of the freights were more annoyed than the carriers themselves, for they were perpetually subject to the liability to be called upon to pay charges for transportation which were greatly in excess of any which they had anticipated. Unexpected charges were likely to breed controversies and cause delays in transportation and delivery, and in the minds of those unfamiliar with the subject of classification there were often suspicions, based on appearances which afforded color for them, that the carriers were guilty of intentional wrong and unjustifiable exactions.

The first important step in the direction of reform was taken by what are known as the trunk-line roads, and resulted in an agreement upon what was designated by them the Official classification, which was put in force contemporaneously with the taking effect of the act to regulate commerce. The condition of things in the territory of the trunk lines and the effect of the action taken have been thus stated in proceedings before the Commission:

At the date of the passage of the act under which this Commission was organized, one hundred and thirty-one railroad companies within the territory roughly defined by a line drawn from Chicago to Saint Louis, including both those cities, and taking in the territory east of the Mississippi and north of the Ohio and Potomac rivers, and including all the New England States, each had, or largely had, a separate classification. In addition to those classifications that grew up out of local conditions, and were thought to be accommodating to the particular roads and shippers, there were also five confederations of railroad companies having each its classification. The present classification has taken the place of the following, which were formerly in use:

First. The local classification of each railroad company.

Second. The through west-bound classification, generally known as the trunk-line west-bound classification, upon the through traffic originating at sea-board cities or points east of the western termini of the trunk lines, and destined to their western termini-Buffalo, Erie, Pittsburgh, Parkersburgh, etc.—and to a number of competitive points, trade centers, or railroad junctions beyond.

Third. The east-bound classification, which alone applied to east-bound traffic originating in the territory east of Chicago and the Mississippi River, west of the western termini of the trunk lines, and north of the Ohio River, on traffic destined to the western termini of the trunk lines and points east thereof.

Fourth. Traffic between competitive interior points in the Middle States (New York, Pennsylvania, New Jersey, Delaware, Maryland, Virginia, and West Virginia), interchanged between the several trunk lines and connecting roads, was governed by the joint merchandise freight classification, which also applied to the local traffic of certain roads.

Fifth. The Middle and Western States classification applied to traffic between competitive interior points west of the western termini of the trunk lines, east of the Mississippi River and north of the Ohio River.

Sixth. Traffic between certain points in the Western States east of the Mississippi River, and certain southern competitive points was governed by the east and southbound classification.

The present classification takes the place of all these widely different classifications as well as the many local classifications which were more or less in conflict with each other; if they had been continued it would have been impossible to carry out either the letter or spirit of the interstate-commerce law.

The conditions and requirements under which the present classification is based are therefore of an entirely different character to those upon which the trunk line westbound classification from New York was based prior to April 1, 1887. That was con

fined to one kind of traffic in one direction, destined to comparatively few competitive points west of the western termini of the trunk lines, while the present classification applies to all the traffic in every direction between all stations of the roads, both local and through. The companies using the present classification operate about 47,000 miles of railway, more than one-third of the entire railway mileage of the United States, and over these roads are transported 232,000,000 tons, or about 50 per cent. of the total tonnage carried over the railroads in the United States.

These railroad companies embraced within the territory referred to, desiring to accommodate the traffic passing over these lines to their understanding of the legislation, met together, the principal roads being represented at this meeting, and on February 18, 1887, a committee was appointed to recommend a uniform classification in place of the then existing ones. This committee consisted of representatives of Eastern and Western roads familiar with the requirements of each section of the country and the different interests involved. The committee finished its labors March 1, 1887, and submitted the result thereof to the Eastern and Western roads at a meeting held in New York, and with some modifications and amendments the report of the committee was adopted, and put into effect on April 1, 1887, which resulted in the making of the common joint classification which first went into effect-Official Classification No. 1.

The former condition of things is further shown in an interesting extract from a letter written to the Commission by the chairman of a railroad freight association, which is given in Appendix E, containing several papers and documents relating to the general subject of classification.

The Official classification was not at first entirely satisfactory to the parties agreeing upon it, and it has from time to time been somewhat changed, but not radically. It did not, however, entirely displace all others, but many roads which adopted it made use also of others to some extent, and still do so. A list of the roads which have adopted and are now using it is also given in Appendix E, with figures indicat ing that some of them use others also. The whole number of roads using it appears to be 131, of which 87 use it exclusively, 35 use one other, and 9 use two others.

This action of the trunk line roads is very far from being all that has been recently taken in the direction of uniformity in classification. There has been steady and constant movement in that direction, the most important of which has been the enlargement of the territory of the Western classification. The roads making use of that classification had been steadily increasing, and on June 11, 1888, were sixty-nine in number. Since that date the roads forming the Texas Association have adopted the same classification; the transcontinental lines also employ it. The result is, that practically all the railways operating west of a line drawn from New Orleans through Chicago, following Lake Michigan and the connecting waters to Marquette, are using one uniform classification except that locally in some of the States railway commissions have adopted a classification of their own making.

The principal classifications now in force are the Official, the Western, and the Southern Railway and Steam-ship Association classifications. The territory embraced by them severally may be roughly indicated as follows: The first, the territory cast of Chicago and north of the Ohio River; the second, the territory west, north, and southwest from Chicago; and the third, the territory south of the Ohio and east of the Mississippi. It must be understood, however, that neither of them is exclusively made use of in the territory indicated. Commodity rates are given to a considerable extent in Pacific coast territory, especially upon through transcontinental business, and individual roads in all sections use classifications of their own when circumstances seem to require it.

Efforts in the direction of uniformity have continuously been made

during the last year. The most important of these was through a conference of representatives of roads east and west of Chicago, whose sessions began in September, 1887, and extended to July 20, 1888. This conference it was hoped might result in merging the Official and Western classifications. That result was not accomplished, for reasons stated in a report adopted by the conference, and which is given in Appendix E. But unification on a larger scale is still kept in view, and a meeting has now been called by representatives of the existing classifications, to be held at Chicago in the present month, under which it may be assumed the subject will be taken up under auspices more favorable than ever before. The call, with other valuable information on the subject, is appended.

It has seemed to many persons that to unify classifications must be a very simple task. What is classication, it may be asked, but the arrangement of the several articles of commerce under different heads, as pupils in a school may be arranged in classes for recitations, or as a farmer may send his stock for pasturage to different fields? But those most familiar with the subject of classification will be least inclined to look upon the making of a uniform classification as a very simple affair. It is very far from being a simple affair. It is, on the contrary, as difficult a task as under the ordinary operations of government is likely to be devolved on any person or any body of men. In its nature it corresponds closely to the making of the customs tariff for the country, but the necessity for going into particulars may be greater, for classification must reach every article of ordinary commerce, and it must be framed on the understanding that for every one some burden is to be provided, though among them all there may be apportionment of burdens on some principle adjusted to the general good. And when it is understood that the classifications now in force have come into existence, to a very large extent, as an outgrowth of local and sectional feelings and interests, it will readily be perceived that the difficulty in prescribing uniformity is very much greater than it would be if the work could be taken up now unembarrassed by what has heretofore been done, and by the adjustment of business interests to classifications now in force. In fact, the difficulties are now so great that many intelligent persons in railroad service do not believe satisfactory unification is now possible. This is not, however, a universal belief; many practical railroad men hold a different view, and are now working to that end.

The Commission believes that all action taken on the subject should lead towards uniformity, but that to force it at once would be undesirable. In all consideration of the subject it must be borne in mind that the carriers are not the parties whom unification would most affect. Some carriers might gain and some perhaps at first lose thereby, but the most of them would be able so to adjust their rates that the losses would be inconsiderable, and would also be temporary. But the business interests of the country would have no similar power of self-protection. Unifying the classification means necessarily the placing of the same article in the same class for the purposes of rating in all sections of the country, with the effect as to some of them of lowering the rates greatly in some sections while advancing them in perhaps the like proportion in others, so that in the same business, while one dealer might be greatly benefited, another might be ruined. And what would affect injuriously a single dealer would in like manner affect all in the same line of business in the same section of country and to some degree the country at large as well.