under the law. Among their duties are those prescribed by Section 21 of the Railroad Commission law of this State. Although this action was induced by the complaint of the Reno merchants, it will be observed that the Commission has full power to institute such proceedings without complaint being made by private individuals, firms or corporations. It does not follow that the Commission must petition the Interstate Commerce Commission strictly along the lines of the original complaint. On the contrary, it is clearly to be gathered from Section 21, taken as a whole, that the State Commission shall petition the Interstate Commerce Commission for such relief as the facts may warrant. In this connection it may not be improper to add that the State Commission, being an official body whose duty it is to supervise the operation of railroads within the State, would have full power to petition for relief from any abuse, even though Section 21 had been omitted from the statute. This Commission, therefore, broadened its pleadings so as to cover the whole question of the reasonableness of the charges upon the west-bound freight delivered at Nevada points, and the defendant has had every opportunity to meet the issues as presented by petitioner. Hence, defendant has no right to assume that the Railroad Commission of Nevada is not acting in the interest of the whole people of this State.

THE NATURAL TRANSCONTINENTAL RENO RATE The second subdivision of defendant's brief is under the above caption. It is simply a rehash of how the transcontinental rates are made, but there is not the slightest effort to show that the rates complained of are just and reasonable, which is the issue in this case. It is assumed that the combination on Sacramento gives Reno a better rate than the Ogden combination would, and that, therefore, Reno has nothing to complain of. It doesn't seem to occur to counsel that both combinations may be, and, as we have proved, are, unreasonable and excessive. Simply calling a rate a "natural" one does not make it reasonable, just or fair.

We are utterly indifferent as to the manner in which the transcontinental rates are made by the carriers jointly engaged in the haul. It is the local back-haul charge, made by the final carrier alone, of which we complain. This back-haul charge is entirely apart from and independent of any transcontinental charge or agreement. The final carrier can increase it with

out consulting its co-carriers, as was done in many instances in January, 1909. (See p. 24, original brief.) If the final carrier can increase the local back, it certainly can, in like manner, reduce it, and if it can reduce the charge, it can reduce it to nothing at all. Moreover, it is specifically designated a "local charge" added to the transcontinental charge, which precludes the possibility of its being a part of the "transcontinental" charge. It follows inexorably that any defense based upon fine-spun theories of how the transcontinental combinations are made must fail.

The third subdivision of defendant's brief presents nothing new, and requires no answer at this point.

THE TERMINAL RATE

Under this heading defendant's counsel say that counsel for petitioner exhausted himself in an endeavor to prove that the terminal rates are not forced and compelled rates which yield to the carriers less revenue than they ordinarily would be entitled to receive if there were no sea competition, etc.

With due and becoming modesty we beg to say that petitioner's counsel who made the oral argument did not exhaust himself on this or any other branch of the case. He simply demonstrated, first from defendant's own testimony, and then from the figures of Commissioners Thurtell and Shaughnessy, that the "terminal rates" are reasonably remunerative and that they are not forced down by sea competition below the point of fair commercial remuneration; that, instead of the water carriers forcing the rates, the railroads absolutely control them, and fix their own rates in utter indifference of what the water carriers do; that the water carriers then set their rates at some indefinite figures ranging from 20 to 40 per cent below the rail rates in order to catch a few crumbs of the business. All of this was so easily demonstrated that counsel for petitioner believe it was made perfectly clear to the Commission, and the one who made the oral argument is absolutely sure that he was very far from being exhausted. Indeed, he feels that it was one of the easiest argumentative tasks he was ever required to perform.

THE TERMINAL RATES FAIR

It may be that if there were no water competition at all, and no possibility of any, the defendant and all other rail

roads reaching the Coast terminals would endeavor to set higher rates. They might try to apply there the same method of charging that they now do at Reno and other interior points. But that does not prove or tend to prove that the present rates are not as high as they ought to be. To say that they are "forced" or "compelled" rates is not the equivalent of saying that they are not fairly remunerative.

WATER TONNAGE AGAIN

The figures of water tonnage given on page 12 of defendant's brief in no way differ from those commented upon in the petitioner's original brief, and no further reference to them is necessary. There is, however, a suggestion at the bottom of the page which is worthy of a moment's consideration. It is said that the witness Spence gave it as his opinion that the Tehuantepec route would have shown a much greater increase if it had not been that all of the carriers went through a period of severe depression during 1908. Upon this point Mr. Spence's opinion is purely argumentative and no better than that of any one else who is familiar with the business conditions. It does not follow that with a better business situation the Tehuantepec route would have gained more upon its rail competitors. In our judgment the depression oper-. ated to the advantage of the Tehuantepec route. Under such conditions every one seeks to economize. When business is dull the element of time is less important and the element of cost relatively more important. There is no room for doubt that if times had been good during the period named the railroads would have benefited by it far more than would the Tehuantepec route.

RAILROADS CONTROL THE RATES

Because of its significant bearing upon the point so strenuously urged by defendant that the terminal rates are forced down by water competition, the attention of the Commission is directed to the statement made near the bottom of page 13 of defendant's brief that rates by the Tehuantepec route run from 20 to 40 per cent below the rail rates. This is, in effect, an admission by defendant's counsel that rail rates are made first, and that the water rates are then based upon the rail rates, as shown by the testimony of Mr. Luce, quoted in our original brief. The testimony of this witness, as well as that

of witness Spence, proves as clearly as any testimony possibly could that the water carriers do not exercise a controlling influence upon rail rates, but that the reverse is the case.

THE PACIFIC MAIL TONNAGE

The defendant's brief (p. 14) reiterates the absurdity that the Southern Pacific Company should be permitted to plead the competition of the Pacific Mail Steamship Company in the face of the uncontradicted testimony that the Southern Pacific Company absolutely controls the Pacific Mail.

It seems to us that defendant might as well plead the competition of one of its trains with another, as one of its ships with one of its trains. Granting that the Southern Pacific Company does not own the ships on the Atlantic side, or the Panama Railroad, it is still obvious that the control of the steamship line on the Pacific side must give the Southern Pacific a potent influence in the operation of the entire route. The circumstance that only 46,000 tons of freight came by that route is strikingly significant. It indicates a policy of keeping down the water tonnage rather than increasing it.

But this is an inconsequential matter of detail. If we give the defendant the full benefit of its competition with itself, it still leaves the total water tonnage by far too small to control the rail rates, while the testimony of both Luce and Spence shows conclusively that it does not.

Defendant's whole contention upon this point, if sound, would tend to show that the great transcontinental rail lines are actually in danger of being put out of business by a few ships on the ocean; and this in the face of the fact that new transcontinental lines are even now under construction. It is altogether possible that the aggregate water tonnage may show an increase in the future, but it is more than possible, it is certain, that with the growth of the country the rail tonnage will increase vastly more.

ALLEGED LOSS OF TERMINAL BUSINESS

On page 20 of defendant's brief is given a table showing what purports to be the falling off in terminal business compared with that of the interior. The showing, in our judgment, is not a fair one, and, even if it were, it should have no weight in the decision of this case.

It is not fair because it takes simply the tonnage moving

through the Ogden gateway, when the entire tonnage moving through all the gateways must be considered in order to determine the force and effect of the alleged water competition. In all of these rate cases there is a studied purpose upon the part of the railroads to manipulate the figures on water tonnage and rail tonnage in such manner as will best serve their needs when litigation is on.

When it is to their advantage to put the rail tonnage to the terminals at its maximum, they do so, and, when necessary to sustain themselves on some other and different point, they unhesitatingly minimize the rail tonnage to the terminals and exaggerate the water tonnage to the fullest extent possible, without actually falsifying the figures. They do this by the process of segregating the rail tonnage and dividing it between and among the different gateways and terminals, while the water tonnage is first magnified to the uttermost limit and then concentrated mainly at the point where the railroad needs it most as matter of defense. In no other case has this disposition shown itself so strongly as in this one, for the reason, probably, that in none of the other cases has the defense of the charges at interior points, based upon the water competition theory, been so strongly assailed.

PERCENTAGE BASIS MISLEADING

Moreover, the percentage basis of comparison adopted is not a fair one in itself, for the plain reason that with the growth and development of the interior the distributing business at the Coast terminals, while increasing in the aggregate, will constitute a smaller percentage of the whole, because lesser distributing centers supplying not only themselves, but limited areas around them, will, as of course, spring up at various interior points. This will necessarily lower the percentage at the Coast terminals. It is not to be supposed that a condition will or can be permanently maintained whereby vast quantities of freight will be shipped from eastern points to San Francisco, and then shipped back again over the same line some hundreds of miles to the local dealer and consumer. Such a condition involves a tremendous waste of energy, and is at variance with sound rules of industrial economy.

WATER COMPETITION UPON THE ATLANTIC

It is proper at this point for us to direct attention to the fact that water competition upon the Atlantic seaboard is far