tariff charges on presentation of evidence that the coal was so used, is improper and unlawful-that is to say, that the carrier has no right to attempt to dictate the uses to which commodities transported by it shall be put in order to enjoy a transportation rate."

§ 97. Cost of Assembling Theory.-Carriers have attempted to equalize, by a system of rates, the opportunities of groups of shippers; especially is this true as to manufacturers. Similarly, carriers have attempted to overcome geographical disadvantages by an equalizing system of rates. Economic or geographical equalization is not the province of a carrier, nor is such equalization a factor which determines in considering the reasonableness of a particular rate or a system of rates.521

*

*

Lumber is

Each of these cases

§ 98. Value of the Commodity, Its General Utility and Danger of Loss.-The Commission, in the Tift and Central Yellow Pine cases,522 as reasons for its conclusion that the rates there under investigation were illegal and unreasonable, said: "Lumber is an inexpensive freight. It is not what is known as perishable traffic, and in case of accident, the damage is insignificant. moreover an article of general utility." received the approval of the Supreme Court.523 The element of value of the commodity transported forms a proper consideration to be taken into account in the establishment of a rate. The liability of a carrier as an insurer of freight against all loss, except such as is occasioned by the act of God or the public enemy is elementary, and the greater the value the greater the risk.524 In the Food Products case," 525 it was

521 Iron Ore Rate Cases, 41 I. C. C. 181, 188, 189.

522 Tift v. So. Ry. Co., 10 I. C. C. 548; Central Yellow Pine Asso v. Ill. Cent. R. Co., 10 I. C. C. 505.

523 So. Ry. Co. v. Tift, 148 Fed. 1021, 206 U. S. 428, 51 L. Ed. 1124, 27 Sup. Ct. 709; Ill. Cent. R. Co. v. Int. Com. Com., 206 U. S. 441, 51 L. Ed. 1128, 27 Sup. Ct. 700.

524 Note 512, ante; Howell v. New York, L. E. & W. Ry. Co., 2 I. C. C.

272, 1 I. C. R. 162, 172. See also Int. Com. Com. v. Chicago Great W. Ry. Co., 141 Fed. 1003, 1015, and citations.

525 Re Alleged Excessive Rates on Food Products, 4 I. C. C. 116, 3 I. C. R. 93, 104. See also Mayor, etc., of Wichita v. Atchison, T. & S. F. Ry., 9 I. C. C. 534, 548; Farmers', etc., Club v. À. T. & S. F. Ry. Co., 12 I. C. C. 351, 360.

stated: "While rates should not be so low as to impose a burden on other traffic, they should have reasonable relation to the cost of production, and the value of the transportation service to the producer and shipper. In the carriage of the great staples which supply an enormous business, and which in market value and actual cost of transportation, are among the cheapest articles of commerce, rates yielding moderate profit are both justifiable and necessary."

"It is axiomatic that rates depend largely upon value, ''526 and "value has long been one of the established measures of a rate,''527 but value and not use is one of the determining factors in classification.528 That value should be considered in rate-making has been recognized by the Supreme Court.529 The Hoch-Smith Resolution530 enjoins upon the Interstate Commerce Commission the duty of considering value as an element of rate-making.

The correctness of the rule, that value should be considered in making rates, and the difficulty of applying the rule, is forcefully stated by the Commission in the Overall case531 where, although recognizing that, equitably, these cheap cotton garments were entitled to a classification different from the more valuable woolen clothing, relief was denied.

When increased value of a commodity increases the hazard, the cost of service from loss and damage claims may be increased, and that fact might justify an increased rate.532 Iron should not bear a rate equal to the average of all rates.533

526 Re Reduced Rates on Returned Shipments, 19 I. C. C. 409, 418.

527 Fels & Co. v. Pennsylvania R. Co., 25 I. C. C. 154, 158, and Note 512, ante; Texolite Chemical Co. v. Tex. & Pac. Ry. Co., 40 I. C. C. 594, 596; Nat'l Society of Record v. A. & R. R. Co., 40 I. C. C. 347, 355.

528 Re Suspension of Western Classification No. 51, 25 I. C. C. 442, 499. See also Union Tanning Co. v. Southern Ry. Co., 26 I. C. C. 159, 163. 529 Kansas City Southern Ry. Co. v. Carl, 227 U. S. 639, 650, 653, 57 L. Ed. 683, 33 Sup. Ct. 391, citing Re Released Rates, 13 I. C. C. 550; South

ern Oil Co. v. Southern Ry. Co., 19 I. C. C. 79; Miller v. Southern Pac. Co., 20 I. C. C. 129; Northern Pac. R. Co. v. North Dakota, 236 U. S. 585, 50 L. Ed. 735, 35 Sup. Ct. 429.

530 43 Stat. 801, 49 U. S. C. A., Sec. 55.

531 Association of Union Made Garment Mnfrs. of America v. Chicago & N. W. Ry. Co., 16 I. C. C. 405. See also Caldwell Co. v. Chicago, I. & L. Ry. Co., 20 I. C. C. 412.

532 Kindel v. Adams Express Co., 13 I. C. C. 475, 485.

533 Colorado Fuel & Iron Co. v. So. Pac. Co., 6 I. C. C. 488, 515.

Coal534 and salt535 are articles of low-grade traffic and entitled to relatively low rates.

§ 99. Value of the Commodity-Difference Between the Raw and the Manufactured Product.-The more valuable the commodity shipped the greater the loss to the carrier should the commodity be damaged or destroyed while in course of transportation. This, and the rule just discussed relating to the value of the commodity, justify the general rule that the manufactured product should take a higher rate than the raw product from which the finished product is made.

This general rule, the Interstate Commerce Commission has held, is founded in reason, "because, ordinarily, there is a substantial difference between the value of the one and of the other, and frequently there is a greater degree of risk incident to the transportation and care of the manufactured product than of the raw material. ' '536

While this general principle has been frequently applied,537 the rule has its exceptions. Between the rates on live-stock and the rates on the products of live-stock there is no uniform relation. In some territories, the manufactured product takes the higher rate; in other sections live-stock and packing-house products take the same rates.538 So with grain and grain products.530 Where several products are derived from the

534 Denison Light & Power Co. v. Missouri, K. & T. Ry. Co., 10 I. C. C. 337; Sligo Iron Stove Co. v. Atchison, T. & S. F. Ry. Co., 17 I. C. C. 139; Sligo Iron Stove Co. v. Union Pac. R. Co., 19 I. C. C. 527.

535 Anthony Salt Co. v. Mo. Pac. Ry. Co., 5 I. C. C. 299, 4 I. C. R. 33.

536 East St. Louis Cotton Oil Co. v. St. Louis & S. F. Ry. Co., 20 I. C. C. 37. See also I. C. C. v. C. G. W. Ry. Co., 209 U. S. 108, 52 L. Ed. 705, 28 Sup. Ct. 493.

537 Bulte Milling Co. v. Chicago & A. R. Co., 15 I. C. C. 351, 364; Massee & Felton Lumber Co. v. Southern Ry. Co., 23 I. C. C. 110; Association of Union Made Garment Mnfrs. of America v. Chicago & N. W. Ry. Co.,

16 I. C. C. 405; American Milling Co. v. Pierre Marquette R. Co., Unrep. Op. 328.

538 Chicago Board of Trade v. C. & A. R. Co., 4 I. C. C. 158; Squire & Co. v. M. C. R. Co., 4 I. C. C. 611; Chicago Live Stock Exchange v. C. G. & W. R. Co., 10 I. C. C. 429; Int. Com. Com. v. C. G. W. R. Co., 141 Fed. 1003; Investigation of Alleged Unreasonable Rates on Meat, 20 I. C. C. 160; Sinclair v. C. M. & St. P. R. Co., 21 I. C. C. 490, 506; Western Rate Advance Case, 1915, 35 I. C. C. 497.

539 Mayor, etc., of Wichita v. A. T. & S. F. R. Co., 9 I. C. C. 534; Farmers, Merchants & Shippers Club v. A. T. & S. F. R. Co., 12 I. C. C. 351; Howard Mills Co. v. M. P. Ry. Co.,

same raw material, it is not uncommon for one or more of them-frequently called by-products-to take a lower rate than the raw material.

§ 100. Competition or Its Absence Considered in Determining Reasonableness of Rate.-In the Central Yellow Pine and the Tift cases,540 the Interstate Commerce Commission had under consideration a rate fixed by the concerted and concurrent action of the carriers, and there said:

"We deem it unnecessary to express an opinion as to whether this concert of action in fixing the advanced rate amounts to an unlawful agreement under the so-called "AntiTrust Act"-the enforcement of that act being a matter properly cognizable by the courts. It is clearly, however, within the scope of our authority and duty to consider this joint or concerted action of the defendants in the aspect of its bearing upon the reasonableness and validity of the advanced rate, the result of that action. When rates are established by concert of action and previous understanding between the carriers, it is manifest, whether or not there be a binding agreement to maintain such rates, that the element of competition is eliminated. Concert of action is wholly inconsistent with competition and, during the time the rates fixed by concert of action are maintained, the effect, so far as competition is concerned, is the same as if there was a binding agreement to maintain such rates.

"Competition is favored by law. The object of the pooling section (§ 5) of the Interstate Commerce Act is to prevent 'any contract, agreement, or combination' between otherwise competing carriers by which competition between them may be done away with. In East Tenn., Va. & Ga. Railway Co. v. Interstate Commerce Commission it is said, the Interstate Commerce Law, it is conceded, was intended to encourage normal competition. It forbids pooling for the very purpose of allowing competition to have effect. (99 Fed. Rep. 61.)

12 I. C. C. 258; Investigation of Advances in Rates on Grain, 21 I. C. C. 22, 32; Kansas-California Flour Rates, 29 I. C. C. 459, 32 I. C. C. 602; Wheat Rates from Oklahoma, 30 I. C. C. 93; Western Advance Rate Case 1915, 35

I. C. C. 497; Grain and Grain Products, 164 I. C. C. 619.

540 Central Yellow Pine Asso. v. I. C. R. Co., 10 I. C. C. 505; Tift v. So. Ry. Co., 10 I. C. C. 548.

The Supreme Court holds that the suppression of competition is violative of the so-called 'Anti-Trust Act' in that, such suppression restrains trade and commerce by 'keeping rates and charges higher than they might otherwise be under the laws of competition.'-(Joint Traffic Association Case, 171 U. S. 505, 569, 571, 577, 43 L. Ed. 259, 287, 288, 290, 19 Sup. Ct. Rep. 25; 1 Fed. Anti-Trust Dec. 869; U. S. v. Trans-Missouri Freight Association, 166 U. S. 341, 41 L. Ed. 1027, 17 Sup. Ct. Rep. 540.

"The ground upon which competition is favored is that it conduces to the reasonableness of rates or to the protection of the public from unreasonably high or excessive rates. In United States v. Freight Association, supra, the Supreme Court says, "competition will itself bring charges down to what may be reasonable.—(166 U. S. 339, 41 L. Ed. 1027, 17 Sup. Ct. Rep. 540). The act to regulate commerce (§ 1), in prohibiting unreasonableness of rates, in effect forbids whatever conduces to such unreasonableness. In any event, it is incumbent upon the commission, when the reasonableness of rates is in issue before it, to consider how those rates were brought about-whether they are the product of untrammeled competition or the result of a concert of action or combination between the carriers establishing and maintaining them. The advanced rates complained of cannot be claimed to be the outcome of competition because the natural, direct and immediate effect of competition is to lower (United States v. Joint-Traffic Asso., 171 U. S. 505, 577, 43 L. Ed. 259, 290, 19 Sup. Ct. Rep. 25), rather than advance, rates. The advanced rates must be presumed to be higher than rates which unrestrained competition would produce.'

19541

Mr. Commissioner Prouty, in Re Class and Commodity Rates from St. Louis to Texas Common Points, 11 I. C. C. 238, 269, 270, discusses this question as follows:

"The theory of this country in respect to interstate rates in the past has apparently been that competition between various railroads would, if it could be secured, produce reasonable freight rates in the same way that competition tends

541 Tift v. So. Ry. Co., 138 Fed. 753; Ill. Cent. R. Co. v. Int. Com.

Com., 206 U. S. 441, 51 L. Ed. 1128, 27 Sup. Ct. 700.