In pursuance of this power, aided by the additional power granted in the Panama Canal Act," the Commission has held that it could enforce through routes with a water carrier.92

§ 161. Discrimination by Charging More for a Shorter Than a Longer Haul-Old Law.-Section 4 of the Interstate Commerce Act, as originally enacted, known as the long-andshort-haul clause, prohibited carriers from charging or receiving a greater compensation from transportation of passengers or "like kind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. The proviso of this section authorized the Commission, in special cases, after investigation, to permit a less charge for a longer than a shorter haul. The meaning of this proviso was first discussed by Judge Cooley, then chairman of the Commission, in In re Petition of Louisville and Nashville Railroad Co. and Southern Ry. & S. S. Co., 1 I. C. C. 31, 57, 1 I. C. R. 278. The carriers, not knowing just what would be the construction of such section, thought it wise to appeal to the discretion granted by the Commission

91 Post, Sec. 468.

92 Augusta & Savannah Steamboat Co. v. Ocean Steamship Co., 26 I. C. C. 380; Decatur Nav. Co. v. L. & N. R. Co., 31 I. C. C. 281 and cases cited; Port Huron & D. S. S. Co. v. P. R. Co., 35 I. C. C. 475. In discussing this question the author hereof in a report to the Commission adopted by it in Baltimore & C. S. S. Co. v. A. C. L. R. R. Co., 49 I. C. C. 176, 180 said: "Regardless of what the defendants have done in making rates into the southeast, they are under a duty to make reasonable proportional rates to and from ports reached by them, and their defense in this case is based upon conditions which Congress intended to change by the provision for proportional rates. Under defendants' system of rates there is a minimum of water haul and a maximum of rail haul. The full utiliza

tion of water highways will tend to lessen car shortages and will make cheaper the transportation cost of many commodities of prime necessity. The rail carriers are entitled to a reasonable compensation for their haul between ports and interior points, but no more. Nor can the rail carriers by a refusal to publish proportional rates, or to join in through routes and joint rates, deprive interior points of the benefit of water transportation to and from the ports nearest to such points. That there are other reasonable water-and-rail routes furnishes no sufficient justification for a refusal to establish proportional rates which shall make available a route that will increase the water haul and lessen the rail haul, and thus decrease the cost of the total haul."

in the proviso. The proceedings before the Commission in the case cited, supra, are given at length in the Interstate Commerce Reports, Vol. I., beginning at page 76.

The first case under this section to reach the Supreme Court is what is known as the Social Circle case.93 In that case, the first contention was that as the charge to Social Circle was made up of the joint rate to Atlanta-the long haul-plus the local rate over an intrastate road from Atlanta to Social Circle, the whole of the local rate going to the state road, the shipment was not within the provisions of the Act to Regulate Commerce. This contention was held unsound, the court saying "that when goods are shipped under a through bill of lading, from a point in one state to a point in another, and when such goods are received in transit by a state common carrier, under a conventional division of the charges, such carrier must be deemed to have subjected its road to an arrangement for a continuous carriage or shipment within the meaning of the act to regulate commerce." Having held that the Georgia road was subject to the provision of this section, the court proceeded to define the power of the Commission, and to state the effect of its decision that the section had been violated. The court said:

"Subject, then, as we hold the Georgia Railroad Company is, under the facts found, to the provisions of the act to regulate commerce, in respect to its interstate freight, it follows, as we think, that it was within the jurisdiction of the Commission to consider whether the said company, in charging a higher rate for a shorter than a longer distance over the same line, in the same direction, the shorter being included within - the longer distance, was or was not transporting property in transit between states, under 'substantially similar circumstances and conditions.'

"We do not say that, under no circumstances and conditions, would it be lawful, when engaged in the transportation of foreign freight, for a carrier to charge more for a shorter than a longer distance on its own line; but it is for the tribunal appointed to enforce the provisions of the statute,

93 Int. Com. Com. v. Cincinnati, N. O. & T. P. Ry. Co., 162 U. S. 184, 40 L. Ed. 935, 16 Sup. Ct. 700.

whether the Commission or the court, to consider whether the existing circumstances and conditions were or were not substantially similar."

§ 162. Long and Short Haul-Old Law Continued-Definite Construction.-In the Troy, Alabama, case,94 the Supreme Court held that competition between rival routes which affects rates must be considered in determining whether or not the circumstances and conditions were substantially similar under Section 4 of the Act, although such competition was not a pertinent fact in considering discrimination under Section 2. It was there said by Mr. Justice Shiras:

"We are unable to suppose that Congress intended, by the 4th section and the proviso thereto, to forbid the common carriers, in cases where circumstances and conditions are substantially dissimilar, from making different rates until and unless the Commission shall authorize them so to do, much less do we think that it was the intention of Congress that the decision of the Commission, if applied to, could not be reviewed by the courts. The provisions of Section 16 of the act, which authorizes the court to 'proceed to hear and determine the matter speedily as a court of equity, and without the formal pleadings and proceedings applicable to ordinary suits in equity but in such manner as to do justice in the premises, and to this end, such court shall have power, if it think fit, to direct and prosecute in such mode and by such persons as it may appoint, all such inquiries as the court may think needful to enable it to form a just judgment in the matter of such petition,' extend as well to an inquiry or proceeding under the 4th section as to those arising under the other sections of the act."

After reviewing the evidence, the order of the Commission was set aside. This decision put it in the power of rail carriers practically to destroy the force of Section 4. If competition of rival lines will relieve from the operation of the section, it is always possible for the line that reaches the longer-distance point, and not the shorter, to make such competition as will release from the obligation of the statute the

94 Int. Com. Com. v. Alabama M. R. Co., 168 U. S. 144, 42 L. Ed. 414, 18 Sup. Ct. 45.

carrier that serves both points. This result was clearly pointed out by Mr. Justic Harlan in his dissenting opinion, in language as follows:

"I dissent from the opinion and judgment in this case. Taken in connection with other decisions defining the powers of the Interstate Commerce Commission, the present decision, it seems to me, goes far to make that Commission a useless body for all practical purposes, and to defeat many of the important objects designed to be accomplished by the various enactments of Congress relating to Interstate Commerce. The Commission was established to protect the public against the improper practices of transportation companies engaged in commerce among the several states. It has been left, it is true, with power to make reports, and to issue protests. But it has been shorn, by judicial interpretation, of authority to do any thing of an effective character. It is denied many of the powers which, in my judgment, were intended to be conferred upon it. Besides, the acts of Congress are now so construed as to place communities on the lines of interstate commerce at the mercy of competing railroad companies engaged in such commerce. The judgment in this case, if I do not misapprehend its scope and effect, proceeds upon the ground that railroad companies, when competitors for interstate business at certain points, may, in order to secure traffic for and at those points, establish rates that will enable them to accomplish that result, although such rates may discriminate against intermediate points. Under such an interpretation of the statutes in question, they may well be regarded as recognizing the authority of competing railroad companies engaged in interstate commerce when their interests will be subserved therebyto build up favored centers of population at the expense of the business of the country at large. I cannot believe that Congress intended any such result, nor do I think that its enactments, properly interpreted, would lead to such a result."

It would seem that the dissenting opinion of Mr. Justice Harlan, supra, more nearly applied the legislative intent than that arrived at by the majority of the court. But it should be remembered that, as has been said by the Supreme Court, the original Act to Regulate Commerce was experimental, and its purpose was not to prevent, but to promote, competition.

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*

Competition of markets is a force that carriers cannot very well disregard; it affects all transportation to a greater or less extent. As said by Arthur T. Hadley, in Railroad Transportation, p. 65: "The wheat of Dakota, the wheat of Russia, and the wheat of India come into direct competition. The supply at Odessa is an element in determining the price at Chicago. Cabbages from Germany contend with cabbages from Missouri in the markets of New York." Nor does this lower rate to the competitive point injure the noncompetitive point, so long as there is any profit in the competitive rate. This fact is clearly pointed out in the LaGrange case. 95 The higher rate for the local haul is sometimes necessary in order that a community may have railroad transportation. To quote again from Hadley's Railroad Transportation, at p. 115:

"Suppose it is a question whether a road can be built through a country district, lying between two large cities, which have the benefit of water communication, while the intervening district has not. The rate between these points must be made low to meet water competition; so low that if it were applied to the whole business of the road it would make it quite unprofitable. On the other hand, the local business at intermediate points is so small that this alone cannot support the road, no matter how low or how high the rates are made. So that, in order to live at all, the road must secure two different things-the high rates for its local traffic, and the large traffic of the through points which can only be attracted by low rates. If the community is to have the road, it must permit the discrimination."

The burden of proof to show dissimilarity in circumstances is on the carrier.96 "Line" as used in the statute means a physical line, not a mere business arrangement.97

95 Int. Com. Com. v. Louisville & N. R. Co., 190 U. S. 273, 47 L. Ed. 1047, 23 Sup. Ct. 687.

96 Spartanburg Board of Trade v. Richmond & D. R. Co., 2 I. C. C. 304, 2 I. C. R. 193.

97 Boston & A. R. Co. v. Boston & I.. R. Co., 1 I. C. C. 158, 1 I. C. R.

500, 571; Daniels v. Chicago, R. I. & P. R. Co., 6 I. C. C. 458, 476. For other cases discussing the subject see: Railroad Com. of Georgia, Trammell et al. v. Clyde S. S. Co., 5 I. C. C. 324, 4 I. C. R. 120, 150; Tex. & P. Ry. Co. v. Int. Com. Com., 162 U. S. 197, 40 L. Ed. 940, 16 Sup. Ct. 666;