In Eqnity, IST o.
Iq Uie Circdt tart of tlie üdW Slate for the Eastern
Divlrton of the Northern District of Mississippi
The Interstate Commerce Commission
V.
The Mobile and Ohio Railroad Company.
ARGUMENT FOR THE INTERSTATE COM¬
MERCE COMMISSION.
li. a. shaveb, Solicitor.
U f -, f 7 J
1
SYNOPSIS OF ABGTIMENT.
Page.
1. Statement op Case 7
(а) Complaint before Interstate Commerce Commission 8
(б) The order of the Commission 9
2. The Questions Presented 10
(а) Are the rates to the Aberdeen Group unreasonable in
themselves? 10-12
(б) Are those rates relatively unreasonable when compared
with the rates to Meridian and Mobile? 10-13
3. Unreasonableness per sb op Rates May Involve Relative
Unreasonableness 11
4. The Court Not Confined to Grounds Taken by the Commis¬
sion 14
(а) Proceedings in court de novo 15
(б) The court may hear the case on "other issues" than those
presented to the Commission 16
5. Unreasonableness per se of Rates on a Single Article or
Class of Traffic, How Ascertained 16
(а) Comparison of rates 18
(б) Opinions of railway officials 18
(c) ThelnterstateCommerceCommission, an expert tribunal. 20
6. Tables of Rates in Question and Distances 21
7. Distance as a Factor in Rate-making 22,23
8. Mobile and Meridian Rates Remunerative 24
(а) This being so, the much higher rates for the shorter hauls
to the Aberdeen Group are unreasonably high 25
(б) If Mobile and Meridian rates are unreasonably low, that
operates an unlawful prejudice to the Aberdeen Group. 25
9. Rates per Ton per Mile 26
(а) Those rates to Aberdeen Group higher than on traffic in
GENERAL throughout the country 27
(б) Grain and grain products being a low class of traffic, their
rates per ton per mile should be lower instead of higher
than the revenue per ton per mile on traffic in general.. 27
10. The Great Disparity in Rates as Between the Aberdeen
Group and Mobile and Meridian Places the Burden of
Justification upon the Dependant 28
11. The Plea of Competition 28,29
(a) While competition may justify low rates to Mobile and
Meridian, it is no excuse for excessive rates to the Aber¬
deen Group 28
(5) The elements or agencies of competition at Tupelo, Aber¬
deen, West Point, Columbus, and Starkeville 29=32
9261—06 1
2
11. The Plea op Competition—Continued. Page.
(c) If competition by the Mississippi River to Vicksburg and
thence by the Alabama & Vicksburg road to Meridian
operates to reduce the Meridian rates, why does not
competition by that river to Memphis and thence hy the
"Frisco" road to Tupelo result in the same way, the
distance by rail from Memphis to Tupelo being less than
from Vicksburg to Meridian? 29,30
(d) The Alabama & Vicksburg road from Vicksburg to Meri¬
dian engaged in interstate business and subject to the
interstate-commerce law 30
12. "Why Thebe is no Competition in Rates to the Abehdeen
Group 32
(а) It is because competition is stifled by an agreement fixing
rates 32
(б) The Aberdeen Group rates are established by an agree¬
ment between the defendant and other carriers as mem¬
bers of the Southeastern Mississippi Valley Associ¬
ation 33
(c) Contention that agreement is lawful because there is no
binding contract to maintain rates agreed upon 34
(d) The vice of such an agreement is that it restrains or stifles
competition. Concert of action or a previous under¬
standing accomplishes that end, whether there be a
binding agreement or not 34
13. Mobile and Meridian not Subject to the Southeastern Mis¬
sissippi Valley Association, while the Aberdeen Group
are 35
(а) The reason given for this distinction 35
(б) Admission that as to points outside of the association
competition is unrestrained, while the reverse is true
as to points inside the association, like the Aberdeen
Group 35
14. Competition Favored by the Law; it is a Preventive op
Excessive or Unreasonably High Rates 36
15. Larger Population and Greater Commercial Importance
of Mobile and Meridian, no Justification of the High
Rates to the Aberdeen Group 37
(a) The preferential rates to Mobile and Meridian have in¬
creased the business and population of those cities 38
(b) The defendant seeking to take advantage of its own
wrong 39
(c) The natural advantages of the Aberdeen Group 39
16. Promotion of Mobile Controlling Motive of Defendant in
its Rate Adjustments 39
(а) This shown by rates out of as well as to the Aberdeen
Group 40
(б) Carriers may not subserve their own interests by build¬
ing up one locality at the expense of another 41
3
Page.
17. Financial Condition op Defendant Immaterial 42
(a) That condition good and improving 42
18. The Order of the Commission Prima Facie Lawful 43
(а) The Commission has made out aprima facie case by prov¬
ing the issuance and service of the order and its viola¬
tion 44
(б) Not only are the findings of fact of the Commission made
by the law prima fade evidence, but its conclusions from
those facts are held by the conrts to be prima fade cor¬
rect 44
(c) In case of doubt the order of the Commission should be
sustained 45
(d) "The construction given to a statute by those charged
with the duty of executing it ought not to be overruled
without cogent reasons " 46
AUTHOBITIES CITED.
Page of argument
where cited.
Southern Pacific Co. v. I. C. C., 200 U. S,, 566 14
I. C. C. V. C., N. O. and T. P. ßy. Co., 56 Fed. Eep., 934, 935 15
I. C. C. V. C., N. 0. and T. P. By. Ca, 64 Fed. Rep., 985 15
Shinkle, etc., Co. v. L. & N. R. R. Co., 62 Fed. Eep., 693 15
I. C. C. V. Southern Pac. Co. et ah, 123 Fed. Rep., 601 15
Smythe v. Ames, 169 Ü, S., 466, 470 16,26,42
I. C. C. V. The E. T., Va. & Ga. Ry. Co. et ah, 99 Fed. Rep., 64 20
I. C. C. r. L. & N. R. R. Co., 118 Fed. Eep., 622 20,41
E. T., Va. & Ga. Ry. Co. v. I. C. C., 181 U. S., 20 26
Central Yellow Pine Ass'n v. 111. Cent. Ry. et ah, 10,1. C. C. R., 541. 34,36
Joint Trafile Ass'n case, 171 U. S., 569, 571, 577 36
U. S. r. C. N. O. & T. P. Ry. Co., 167 U. S., 506 38
U. S. V. Freight Assn., 166 U. S., 341 36,37
L. & N. R. R. Co. V. Behlmer, 175 U. S., 649 42
Covington & Lexington Turnpike Co. v. Sanford, 164 U. S., 596, 597. 43
I. C. C. v. L. & N. R. R. Co. et ah, 102 Fed. Rep., 709 44
Missouri Pacific Ry. Co. v. T. & P. Ry. Co., 31 Fed. Rep., 862 45
U. S. V. Moore, 95 U. S., 763 46
ABBREVIATIONS.
The following abbreviations are used in this argument:
I. C. C.=Interstate Commerce Commission.
Com. Rep. =Commission's report.
Com. Test. =Testimony before Commission.
(4)
CINCINNATI^
ST. tOUlS^EAST ST, tOUlS
♦O KANSAS CITY
Diagram showing line and localities involved and other lines and locali¬
ties in same territory.
R. P. Bingham,
July 18,1906.
ARGUMENT FOR THE INTERSTATE COMMERCE COMMIS¬
SION.
II.
STATEMENT OF CASE.
This is a petition by the Interstate Commerce
Commission nnder section 16 of the interstate
commerce act for the enforcement of an order of
the Commission against the defendant, the Mobile
& Ohio Railroad Company. Section 16 provides:
" Whenever any common carrier * * * shall
violate or refuse or neglect to obey or perform any
lawful order or requirement of the Commission
created by this act * * * shall he lawful
for the Commission or for any company or person
interested in such order or requirement, to apply
in a summary way, by petition to the Circuit Court
of the United States sitting in equity in the judi¬
cial district in which the common carrier com¬
plained of has its principal office, or in which the
violation or disobedience of such order or require¬
ment shall happen, alleging such violation or dis¬
obedience as the case may he ; and the said court
shall have power to hear and determine the matter,
on such short notice to the common carrier
complained of as the court shall deem reasonable
* * * ; and said court shall proceed to hear and
determine the matter speedily as a court of equity^
and without the formal pleadings and proceedings
(7)
8
applicable to ordinary suits in equity^ but in such
manner as to do justice in the premises * * *"
The order which the court is asked to enforce is
the result of an investigation by the Commission
of a complaint made to it under section 13 of the
act to regulate commerce by The Aberdeen Group
Commercial Association, which is composed of
commercial bodies or organizations of the cities of
Tupelo, Aberdeen, West Point, Starkville, and
Columbus, Mississippi, and the members of which
are merchants, manufacturers, and shippers at said
cities. Said cities will be hereinafter referred to
as the "Aberdeen Group."
The defendant, the Mobile & Ohio Railroad
Company, is a common carrier by rail engaged in
interstate transportation and operates the short
rail line from St. Louis, East St. Louis, and Cairo
to the Aberdeen Group and to Meridian, Miss.,
and Mobile, Ala. (See Diagram.)
Complaint Before Interstate Commerce Commission.
The complaint before the Commission of The
Aberdeen Group Commercial Association charged,
among other things, that the rates of the defendant
from St. Louis, East St. Louis, and Cairo to the
Aberdeen Group were unjust and unreasonable
^'"generalbf—that is, in and of themselves, as here¬
inafter shown—and also that those rates were ' Vc/a-
tively'''' unjust and unreasonable as compared with
the rates from said cities to Meridian and Mobile,
and subjected the Aberdeen Group and the mer¬
chants, manufacturers, and shippers of said group
9
"to an undue or unreasonable prejudice or disad¬
vantage," and gave to the merchants, manufac¬
turers, and shippers of Mobile and Meridian an
"undue or unreasonable preference or advantage"
over the merchants, manufacturers, and shippers
of the Aberdeen Group.
The complaint further charged that the rates of
the defendant out from the Aberdeen Group "to
points in surrounding territory" were unjust and
unreasonable "generally and relatively as com¬
pared with the rates from Mobile, Cairo, St. Louis,
East St. Louis, and other points," and resulted in
undue prejudice and undue preference, as in the
case of the rates to the Aberdeen Group.
Tlie Order of the Commission.
After due service of this complaint upon the
defendant and after a thoro investigation, the
Commission found that the rates on wheat and
flour, corn and corn meal and oats, from St. Louis,
East St. Louis, and Cairo to the Aberdeen Group
were "unreasonable, unjust, and unlawful," and
in pursuance of this finding issued the order
sought to be enforced in this case, which required
the defendant
"To cease and desist on or before the 10th day
of September, 1904, from charging, demanding,
collecting, or receiving the following-named rates
per hundred pounds for the transportation of wheat
and fiour, corn, cornmeal, and oats from St. Louis,
in the State of Missouri, or East St. Louis, in the
State of Illinois, to Tupelo, West Point, Aberdeen,
Starkville, and Columbus, in the State of Missis¬
sippi, to wit: On wheat and flour, 24 cents to Tu¬
pelo and 25 cents to West Point, Aberdeen, Stark¬
ville, and Columbus; and on corn, cornmeal, and
9261—06 2
10
oats, 22 cents to Tupelo and 23 cents to West
Point, Aberdeen, Starkville, and Columbus; and
from charging, demanding, collecting, or receiv¬
ing the following-named rates per hundred pounds
for the transportation of wheat, flour, corn, corn-
meal, and oats from Cairo, in the State of Illinois,
to Tupelo, West Point, Aberdeen, Starkville, and
Columbus, in the State of Mississippi, to wit: On
wheat and flour, 19 cents to Tupelo and 20 cents to
West Point, Aberdeen, Starkville, and Columbus;
and on oats, corn, and cornmeal, 17 cents to Tupelo
and 18 cents to West Point, Aberdeen, Starkville,
and Columbus."
The defendant refused to obey this order, and
thereupon this proceeding was instituted for its
enforcement.
II.
THE QUESTIONS PRESENTED.
There are two principal questions presented :
First. Are the rates from St. Louis, East St.
Louis and Cairo, to the Aberdeen Group unreason¬
able in themselves?
Second. Are those rates relatively unreasonable
as compared with the rates from those cities to
Meridian and Mobile?
Section 1 of the commerce act requires that all
charges for transportation, etc., " shall be reason¬
able and just," and prohibits and declares unlaw¬
ful ' ' every unjust and unreasonable charge for such
service."
Unreasonableness in rates may be either abso¬
lute or relative; in other words, rates may be
unreasonable either in themselves or relatively.
11
The language of section 1 being general covers
both kinds of unreasonableness.
Section 3, which forbids undue preferences and
undue prejudices as between different localities,
etc., applies to relative unreasonableness in rates,
but the same rate may be both absolutely and
relatively unreasonable, and therefore unlawful
under both section 1 and section 3. For example,
if two localities compete for business in the same
territory and the rates to one are reasonable per se
and to the other are unreasonable per se, relative
unreasonableness results from the unreasonable¬
ness per se of the rates to the latter.
It was alleged by the defendant as ground of
demurrer that ' ' there was no issue before the
Commission as to the unreasonable and unjust
character of the rates per se'''' from St. Louis,
East St. Louis, and Cairo to the Aberdeen Group,
and that the complaint before the Commission
"called in question only the just and reasonable
character of those rates as compared with the rates
charged by the defendant upon like traffic to
Meridian and Mobile."
The allegation of the ' ' comparative ' ' or relative
unreasonableness of rates puts in issue or involves
their reasonableness per se, because, as above
shown, relative unreasonableness may result from
unreasonableness per se.
In Section YI of the complaint before the Com¬
mission it is alleged that "defendant's rates from
St. Louis, etc., to Tupelo, etc., are unjust and unrea -
sonable generally and relatively as compared with
12
the rates from St. Louis, etc., to Meridian and
Mobile." Here is an allegation of a general mi-
reasonableness as well as relative unreasonable¬
ness. " Generally " being used in contradistinc¬
tion to "relatively " must refer to rates unjust and
unreasonable per se. Otherwise, it can have no
field of operation.
The defendant in Paragraph V of its answer
before the Commission (Exhibit D to the petition
in this court) traverses this allegation as follows :
"Defendant denies that its rates from St. Louis,
etc., to Tupelo, etc., are unjust and unreasonable,
generally or relatively, as compared with the rates
charged and exacted by it upon like traffic from
St. Louis, etc., to Meridian and Mobile."
The Commission understood that the reason¬
ableness per se as well as the relative reasonable¬
ness of the rates was in issue before it and so holds
in its report and opinion. On this point the
C-ommission says:
There are tioo questions presented for determi¬
nation in this case. First, the alleged unlawful
discriminations in favor of Mobile and Meridian
against Tupelo, etc., by the higher scale of rates
to Tupelo, etc., than to Mobile and Meridian on
traffic from St. Louis, East St. Louis, and Cairo.
The other question is that of the alleged unrea¬
sonableness of the rates on all commodities from
St. Louis, etc., to the Aberdeen Group.
(Commission's report and opinion. Exhibit D to
petition in this case, pp. 305, 306.)
The first of these two questions stated by the
Commission refers to the relative unreasonable¬
ness of the rates to the Aberdeen Group as com-
13
pared with the rates to Mobile and Meridian, and
the second to the nnreasonableness of the rates in
and of themselves.
Counsel for the defendant (Mr. Russell and Mr.
Williams) construed the pleadings as putting in
issue the reasonableness of the rates per se as well
as their relative reasonableness as shown by the
following extracts from their printed argument
filed before the Commission. On page 36 of that
argument it is said :
"The first question to be determined is whether
or not the rates from St. Louis, East St. Louis, and
Cairo to Tupelo, Aberdeen, West Point, Colum¬
bus, and Starkville are unjust and unreasonable."
And on page 50 it is said :
' ' The next point in order is the operation and
effect of section 3 of the act, which prohibits any
undue or unreasonable preference or advantage on
the one hand or any undue or unreasonable preju¬
dice or disadvantage on the other."
Counsel for the defendant should he held to be
estopped from contending before this court that
the reasonableness per se of the rates was not in
issue before the Commission. Not only in their
arguments, but also in the testimony introduced
by them before the Commission, they treated the
reasonableness per se of the rates as being in issue
under the pleadings, and, in fact, as being the
main question to be decided. It can not be denied
that the defendant had its day in courtbefore
the Commission on this question.
14
III.
THE COURT NOT CONFINED TO GROUNDS TAKEN BY THE
COMMISSION.
Poceediug's In Court de Novo.
If the rates to the Aberdeen Group are un¬
reasonable per se in violation of section 1 of the
law, or unreasonable relatively when compared
with the rates to Meridian and Mobile, in violation
of section 3 of the law, in either event the order
forbidding those rates is a lawful order and should
be enforced.
It is immaterial whether the Commission based
its order on the unreasonableness per se or relative
unreasonableness of the rates. In Southern Pa¬
cific Co. Y. Interstate Commerce Commission, it was
objected on the part of the defendants that the
Circuit Court had no authority to decree the en¬
forcement of the order involved in that case upon
any other ground than that taken by the Commis¬
sion itself. The Supreme Court in overruling this
objection says:
"We think that the court was not confined to
those grounds" (grounds named by the Commis¬
sion), "and if the court found the rule was, in
itself, for any reason, illegal as a violation of the
act, the order might be valid and be a lawful order,
although the Commission gave a u'rong reason for
making it. If it held the rule to be a violation of one
section, the order to desist might be valid, if, instead
of the section named by the Commission, the court
should find that the rule ivas a violation of another
section of the act.''^
{Southern Pacific Co. y. I. C. C., 200 U. S. hot.
p. 556.)
15
Proceedings in Court de novo.
Section 16 of the law under which this proceed¬
ing was instituted provides that in a case like the
present the court shall proceed ' ' to hear and de -
termine the matter speedily as a court of equity
and îvithout the formal pleadings and proceedings
applicable to ordinary suits in equity, but in such
manner as to do justice in the premises.The lead¬
ing idea of this enactment is thus seen to be the
speedy administration of justice without regard to
formal pleadings, etc., and, in the administration
of justice, it is held that the proceeding in court is
a proceeding de novo.
The following are a few of the cases on this
point :
The courts have the power to hear these cases
upon "other issues, pleadings, and facts than
those presented to the Commission."
(7. C. C. V. (7., N. 0. & T. P. By. Co., 56 Fed.
Rep., pp. 934, 935.)
Congress intended in these cases "to vest in the
courts a large discretion," and it is the duty of
the courts as courts of equity "to do justice in the
premises."
(7. C. C. V. (7., N. 0. é T. P. By. Co., 64 Fed.
Rep., top p. 985.)
" The court is not the mere executioner of the or¬
ders of the Commission,^'' but "the suit is an origi¬
nal and independent proceeding," and "the court
is not confined to a mere examination of the mat¬
ter as heard by the Commission, but proceeds to
hear the complaint de novo.''''
{Shinkle, ¿sc., Co. v. L. dc N. B. B. Co., 62 Fed.
Rep., p. 693.)
(See also 7. C. C. v. Southern Pac. Co. et al., 123
Fed. Rep., p. 601.)
The proceeding in this court being de novo, it
was commenced as an independent suit by a peti-
16
tiou or bill of complaint filed by the Commission.
It will be observed that in the first case cited supra
it is held that the courts have the power to hear
these cases upon '"''other issues'''' than those pre¬
sented to the Commission. If the issue as to the
reasonableness per se of the rates was not presented
by the pleadings before the Commission, that is
cured by Paragraph IX of the petition or bill of
complaint filed in this court, which alleges that
the rates forbidden in the order of the Commission
are "unjust and unreasonable in violation of the
law." This allegation covers all unlawful unrea¬
sonableness whether absolute or relative.
IV.
THE UNREASONABLENESS PER SE OF THE RATES, HOW
ASCERTAINED.
The question of the reasonableness or unreason -
ableness in itself of a rate on a single article of traf¬
fic or on a single class of articles^ like grain and grain
products, is one of almost insuperable difficulty.
In Sniythe v. Ames (Nebraska Freight Rate case,
169 U. S., 466) the Supreme Court held that—
"The basis of all calculations as to the reason¬
ableness of rates to be charged by a corporation
maintaining a highway under legislative sanction
must be the fair valuation of the property being
used by it for the convenience of the public," and
the carrier is entitled to earn ' ' a fair return upon
the value of that which it employs for the public
convenience." * * * "And in order to ascer¬
tain that value the original cost of construction,
the amount expended in permanent improvements,
the amount and market value of its bonds and
stock, the present as compared with the original
17
cost of construction, the probable earning capacity
of the property required to meet the operating
expenses, are all matters for consideration and are
to be given such weight as may be just and right
in each case."
That case differs, however, radically from the case
at bar. In that case there was involved the entire
system of rates applicable to all traffic upon all the
roads in the State of Nebraska and not the rate on a
single class of traffic like grain and grain products.
The act of the legislature of Nebraska which was
involved in that case was entitled "An act to regu¬
late railroads, to classify freights, to fix reasonable
maximum rates to be charged for the transporta¬
tion of freights upon each of the railroads in the
State of Nebraska^'''' and the question was whether
the rates prescribed by the legislature in that act
on all the traffic on all the roads in the State
yielded as a ivhole " a fair return" upon the value
of all the property of all the roads in the State.
(169 U. S., 470.)
While the value of the entire property of a road
or of all the roads in a State may shed light upon
the question, whether the rates prescribed by an
act of a State legislature upon all the traffic hauled
are, as a whole, a fair return upon the value of the
property used, that value is of no service in de¬
termining whether the rate on a single article or a
single class of goods, among thousands, yields a
proper proportion of a fair return on that value.
The rate on one article of traffic or on a number of
articles may be excessive and the carrier fail to
earn a fair return on the value of the entire prop -
erty employed for the public convenience because
of unreasonably low rates on other traffic; and
9261—06 3
18
vice versa ^ the rate on one article of traffic or a
number of articles may be unremunerative or un -
reasonably low and still the return to the carrier
from its entire business may be fair or reasonably
bigb, the deficiency under the rates on the former
being made up by the rates on the balance of the
traffic.
Comparison of Rates.
The usual way of ascertaining the reasonableness
of a rate or set of rates in question is by compari¬
son of those rates with other rates on the same or
similar traffic. In order that such comparison be
of any value the reasonableness of the rates with
which comparison is made must in the first place
be established. Those rates must be shown to be
a fair standard. In other words, it is not sufficient
to show that a rate in question is the same as, or
not higher than, the rate charged on the same arti¬
cle for the same distance by another road than that
whose rate is in question, but it must be first shown
that the rate of that other road is reasonable in
itself.
The best evidence, we think, of the reasonable¬
ness or unreasonableness of a rate is furnished by
a comparison of that rate with other rates of the
same carrier on the same traffic and over the same
line.
OpiiiioMS of Railway Officials.
It was contended by counsel for the defendant
before the Commission that the reasonableness or
unreasonableness of a rate was ' ' susceptible of only
19
one kind of direct proof, to wit, opinions of ex¬
perts," meaning by experts railway of&cials; and
it was said that as two experts, J. T. Poe, general
traf&c manager, and Hayden Miller, general freight
agent, of the defendant, both testified that the
rates in question were in their opinion reasonable,
and only one expert witness, C. W. Gibson, testi¬
fied to a contrary opinion, the preponderance of
testimony was in favor of the defendant on that
point.
If the opinions of railway ofiicials are to control
in these cases, it would be farcical to institute
them. With these witnesses "whatever is, is
right," so far as rates are concerned. We know
of no case where any railway of&cial has admitted
that a rate under consideration was unreasonable,
except as being unreasonably low.
These railway officials are the men who have
made and are responsible for the rates. They are
naturally strongly biased in favor of their own
action, and when they give their opinions as to the
reasonableness of rates and other matters involved
in cases of this character, those opinions are to be
viewed and weighed in the light of the fact that
they are the opinions of interested parties, natu¬
rally strongly biased.
If the courts are to he concluded by the opinions
of railway officials and can not go into the facts
hearing upon the reasonableness of rates in ques¬
tion, these officials are substituted for the courts
and the courts have but to ratify their opinions.
20
The Interstate Commerce Commissiou au Expert Tribuual.
In this connection we quote as part of our argu¬
ment the following extract from the opinion of the
Circuit Court of Appeals in Interstate Commerce
Commission v. The East Tennessee, Virginia and
Georgia Railway Company et al. (99 Fed. Rep.,
64) :
' ' It has been suggested that traffic managers are
much better able, by reason of their knowledge
and experience, to fix rates and to decide what
discriminations are justified by the circumstances
than courts. This can not be conceded so far as it
relates to the Interstate Commerce Commission,
which, by reason of the experience of its members
in this kind of controversy and their great oppor¬
tunity for full information, is, in a sense, an expert
tribunal; but it is true of the Federal courts.
Nevertheless, courts are continually called upon to
review the work of experts in all branches of busi¬
ness and science, and the intention of Congress,
that they should revise the work of railway-traffic
experts, whether railway managers or commerce
commissioners, is too clear to admit of dispute."
(Note.—This case was reversed in the Supreme
Court, but not on this point, and the above extract
from the opinion is quoted and approved in J. C. C.
v. L. c6 N. R. R. Co., 118 Fed. Rep., 622.)
Not only is the Interstate Commerce Commis¬
sion, " by reason of the experience of its members
in this kind of controversy and their great oppor¬
tunity for full information, an expert tribunal,"
but it has decidedly the advantage of railway traffic
managers in that it is an unbiased, impartial tri¬
bunal.
21
y.
TABLES OF RATES AND DISTANCES.
The rates in force to Tupelo, Aberdeen, West
Point, Starkville, and Columbus, and wbicb are
forbidden by the order of the Commission, and
also the rates to Meridian and Mobile, are shown
in Tables I and II below :
Table I.—Rates from St. Louis and East St. Louis.
Corn, corn- '
meal, and
oats.
Tupelo 22
Aberdeen 23
West Point 23
Starkville 23
Columbus
Meridian 17i
Mobile 15
Table II.—Rates from Cairo, 111.
Corn, corn
Wheat and
To—
meal and
flour in
oats.
sacks.
17
18
18
18
18
15¡
13
19
20
20
20
20
18
13
Table III.—Distances.
To—
Tupelo
Aberdeen
West Point
Starkville
Columbus (via Artesia)
Meridian
Mobile
From
St. Louis
and East
St. Louis.
Miles.
368
415
414
439
442
512
647
22
VI.
GREAT DISPARITY IN RATES.
Distance as a Factor in Rate-making.
It appears from the foregoing tables, I, II, and
III, that while the distance or length of the haul
to Meridian exceeds the distances or lengths of the
hauls to the Aberdeen Group by from 70 miles at
Columbus up to 144 miles at Tupelo, and the dis¬
tance or length of the haul to Mobile exceeds the
distances or lengths of the hauls to the Aberdeen
Group by from 205 miles at Columbus up to 279
miles at Tupelo, the rates to Meridian and Mobile
are materially lower than to the Aberdeen Group.
For example, the rates to the Aberdeen Group
(exclusive of Tupelo) from St. Louis and East St.
Louis (23 cents on corn, oats, and corn meal, and
25 cents on wheat and flour) are from 25 to 31 per
cent higher than the rates (17^ and 20 cents) to
Meridian, and are over 50 per cent higher than the
rates (15 and 17 cents) to Mobile. (Table I.)
A material but not so great a disparity exists in
the rates from Cairo. (Table II.)
Distance as a Factor in Rate Making.
It is conceded that, in the absence of competition
or some other circumstance creating a substantial
dissimilarity and thus justifying a relatively, if not
an absolutely, lower rate for a longer than for a
shorter haul, distance is a controlling factor in flx-
ing rates, and rates should be in proportion to dis¬
tance. In other words, other things being equal,
distance flxes the rate.
23
The cost of transportation consists of the ex¬
pense of handling the traffic at the two terminals
and the expense of the intermediate haul. The
longer the intermediate haul, the greater is the
cost of transportation, because:
(1) The greater is the consumption of time.
(2) The greater is the consumption of fuel.
(3) The greater is the wear and tear on the loco -
motive, cars, etc.
(4) The cost of keeping a road in repair is, as
a rule, greater in proportion to distance.
(5) The cost of building a road is, as a rule,
greater in proportion to distance and, therefore,
the fixt charges, such as interest on capital in¬
vested, taxes, etc., are greater.
Moreover, as the length of the haul increases,
the greater is the value of the service to the shipper.
It is thus seen that not only the expense of the
actual service of transportation, but also the fixt
charges are to a large extent dependent on distance.
Distance, therefore, may be said to be the control¬
ling element in ratemaking.
This fact is universally recognized and acted
upon by carriers. When rates are divided between
carriers composing a thru line the proportion
of each carrier is determined by its mileage and
the tariffs, as an almost invariable rule, provide
higher charges as the length of the haul increases
from station to station.
24
VII.
MEBIDIAN AND MOBILE BATES EEMDNEBATIVE.
This Being So, the Much Higher Rates for the Shorter Hauls
to tlie Aherdeeu Group Are Uureasouably High.
The haul to Meridian being from 70 to 144 miles
longer than to the Aberdeen Group and the haul
to Mobile being from 205 to 279 miles longer than
to the Aberdeen Group, the expense of transporta¬
tion to Meridian and Mobile must be very much
greater than to the Aberdeen Group.
The testimony is that the relatively low rates to
Meridian and Mobile are remunerative to the de¬
fendant—in other words, they yield the defendant
a remuneration over and above the cost of trans¬
portation to Meridian and Mobile.
Mr. Williams, of counsel for the defendant, in
his oral argument before the Commission, speaking
on the question whether the rates from St. Louis
and East St. Louis to Mobile were remunerative to
the defendant, said :
If the rate did not produce a revenue to the
defendant, as held by Judge White in 181 U. S., 20,
that of itself would create a prejudice against inter¬
mediate points—I mean a reasonable profit. The
testimony on that point is that the rate is low.
The railroad company would he glad to have a
higher rate than that to Mobile, but it is reason¬
ably remunerative to the railroad company.
(Page 18, Argument before the Commission.)
Mr. Gibson testified on this point as follows :
I believe that the rates themselves into Mobile
are fair and reasonable, producing a fair return for
the service rendered. The fact that they have
been in operation for a number of years, and that
25
the collateral benefit accruing to the railroad com¬
pany from the increase in the population of the
city of Mobile, increase in travel to and from that
city, as generally increasing the revenue of that
company. Therefore, these rates, from the very
fact of their continuance, we are obliged to con¬
sider reasonable and just."
(Com. Test., 202.)
If the rates for the hauls to Mobile, ranging from
205 to 279 miles longer than the hauls to the Aber¬
deen Grroup, yield a revenue in excess of the cost
of the service to Mobile, the same rates applied to
the Aberdeen Grroup would yield very much more
in excess of the cost of the service to that group.
When we consider that the rates to the Aber¬
deen Group are not only not the same or as low as
the rates to Mobile, but are about 50 per cent
higher than rates which are remunerative for the
longer hauls to Mobile, we can not escape the con¬
viction that the Aberdeen Group rates are in them¬
selves excessive or unreasonably high.
If Mobile and Meridian Rates are Unreasonably Uow, That
Brings About an Unlawful Prejudice to the Aberdeen
Group.
There was testimony before the Commission to
the effect that the Mobile rates were " abnormally
low ' ' and that the road could not be operated with
rates fixed on the same basis applied to all of its
business.
It is admitted by counsel for the defendant (Mr.
Williams), in the extract above from his argument
before the Commission, that if the rates to Merid¬
ian and Mobile ' ' did not produce a revenue to the
defendant, that of itself would create a prejudice
26
against intermediate points," such as the Aberdeen
Group. On this point the Supreme Court says:
" Take a case where the carrier can not meet the
competitive rate to a given point without trans¬
porting the merchandise at less than the cost of
transportation and therefore without bringing
about a deficiency, which tvoidd have to be met by
increased charges upon other business. Clearly in
such a case the engaging in such competitive traffic
would bring about an unjust discrimination and a
disregard of the public interests, since a tendency
toward unreasonable rates on other business would
arise fi'om the carriage of traffic at less than cost
of transportation to particular places."
{East Tenn., etc., Ry. Co. v. I. C. C., 181 U. S.,
20.)
(See also Smythe v. Ames, 169 U. S.)
There is thus presented to counsel for the de¬
fendant two horns of a dilemma; if the Mobile
and Meridian rates are reasonably high the Aber¬
deen Group rates are excessive ; if the Mobile and
Meridian rates are unreasonably low, that operates
an unlawful prejudice to the Aberdeen Group.
VIII.
RATES PER TON PER MILE.
Those Rates to Ahercleeii Group Higher than on Traffic in
General.
The rates per ton per mile from St. Louis and
East St. Louis and from Cairo to the Aberdeen
Group, and also to Meridian and Mobile, are shown
below in cents and fractions of a cent :
27
To—
From St. Louis and
East St. Louis.
From Cairo.
Com, corn
meal, and
oats.
Wheat and
flour.
Com, corn
meal, and
oats.
Wheat and
flour.
Cents.
Cents.
Cents.
Cents.
Tupelo
1.2 +
1.3 -f-
1.5 +
1.7Í-I-
Aberdeen
1.1 +
1.2 +
1.ZÏ +
1.5 +
West Point
1.1 +
1.2 +
1.8 +
1.5 -H
Starkville
1.04+
1.1 d-
1.2 +
1.4 +
Columbus (via Artesia)
1.0 +
1.1 -h
1.2 +
1.3 +
Meridian
.68+
.78+
.86+
1.0 -H
Mobile
.¿fid-
.5^+
.52+
.52+
The revenue per ton per mile on freight in gen¬
eral on roads thruout the United States is given
in fractions of a cent in the table below for the
years named therein :
1899.
1900.
1901.
1902.
1903.
1904.
Revenue per ton per mile
0.72-H
0.72+
0.75+
0.75+
0.76+
0.78+
(Statistics of Railways in the United States for
the year ending June 30, 1904, p. 97.)
From the above two tables it will be seen that
the rates per ton per mile to the Aberdeen Group
are very much higher, not only than to Meridian
and Mobile but also than the revenue per ton per
mile on trafhc in general thruout the country,
being in some instances double and in others
nearly double that revenue. As grain and grain
products are low-class trafl&c (Classes C and D,
Southern Classification), the rates per ton per mile
on those commodities should be lower instead of
higher than the revenue per ton per mile on traffic
in general. The fact that they are higher tends
strongly to show the unreasonableness per se of
the Aberdeen Group rates.
On the other hand, the rates per ton per mile to
28
Meridian and Mobile are in most instances lower
than the revenue per ton per mile on traffic in
general.
IX.
THE GREAT DISPARITY IN RATES PLACES THE BURDEN
OF JUSTIFICATION UPON THE DEFENDANT.
Competition at Mericliaii and. Mobile Set Up.—Competition
in Transportation to the Aberdeen Group.
While the burden is upon the party attacking a
rate as unreasonable to show that unreasonable¬
ness, that burden is shifted by proof of great
disparity between the rates complained of and
other rates of the carrier, such as is shown to
exist in this case. (See Subdivision Y, supra, of
this argument.)
Principal Justification Set Up.
The defendant realizing this has undertaken to
justify the rates to the Aberdeen Grroup mainly on
the ground that the relatively low rates to Meridian
and Mobile are forced upon the defendant by water
and rail competition.
The Commission finds that the competition in
transportation to Meridian and Mobile creates a
substantial dissimilarity in circumstances and con¬
ditions affecting rates to those points, and it is
conceded that that competition has brought about
lower rates to those points than would otherwise
have been charged.
Auswers to the Plea of Competition.
This is no excuse, however, for unreasonable or
excessive rates to the Aberdeen Group. ■ Compe-
29
tition in transportation to Meridian and Mobile
can have no bearing on the rates to the Aberdeen
Group.
Competition in Transportation to tlie Aberdeen Group.
At the outset the fact is to be noted that on
transportation from St. Louis, East St. Louis, and
Cairo to Tupelo, Aberdeen, West Point, Starkville,
and Columbus, the elements or factors of competi¬
tion exist to as great an extent as they exist on
transportation to Meridian, if not to Mobile (see
diagram), and the question is presented. Why has
not competition at Tupelo, West Point, Aberdeen,
Starkville, and Columbus reduced the rates to those
points as well as to Meridian and Mobile?
At Tupelo the defendant's road is crost by the
"Frisco" road and the defendant should meet at
that point the competition of the line formed by
the Mississippi River from St. Louis, East St. Louis,
and Cairo to Memphis and by the "Frisco" road
from Memphis to Tupelo, and also of the line from
Kansas City, over which grain and grain products
are transported via Memphis to Tupelo.
It is contended in behalf of the defendant that
the lower rates to Meridian than to Tupelo and
the remainder of the Aberdeen Group are brought
about by the competition of the line by the Missis¬
sippi River from St. Louis, East St. Louis, and
Cairo to Yicksburg, and thence by the Alabama
and Yicksburg road to Meridian. The distance by
that road from Yicksburg to Meridian is 140 miles,
while the distance from Memphis to Tupelo via
the " Frisco " road is only 105 miles, and Memphis
is about 200 miles above Yicksburg on the river.
30
and therefore that much nearer by river to St.
Louis, East St. Louis, and Cairo than Vickshurg.
There is no satisfactory reason given why com¬
petition by river and rail via Memphis to Tupelo
should not be as controlling as, if not more con¬
trolling than, competition via Vickshurg to Meri¬
dian. The testimony before the Commission of
J. T. Poe, traf&c manager of the defendant, shows
there is no such reason.
(Com. Test., 13-16.)
It was insisted before the Commission that the
Alabama & Vickshurg road from Vickshurg to
Meridian, being wholly within the State of Missis¬
sippi, was under the control of the Mississippi
State railroad commission. This may he true as
to intrastate traffic, originating at a point in the
State of Mississippi on the line of the road and des¬
tined to another point on the road in the same
State, hut it is not true as to interstate traf&c
shipped from points outside the State, like St.
Louis, East St. Louis, or Cairo, to points like
Meridian inside the State and passing over the
road as part of a thru line en ronte to Meridian.
As to such interstate traffic and the rates thereon,
the carriers are wholly independent of the State
railroad commission and may establish such rates
as they see proper, subject only to the regulating
authority of the Interstate Commerce Commission
under the commerce act.
J. T. Poe testified before the Commission that
the fact that a road is entirely within a State did
not necessarily lower its rates, and that the line
via Vickshurg and thence over the Alabama &
Vickshurg road to Meridian " did not establish any
31
lower rate than the route " (over the Frisco road)
"from Memphis to Tupelo."
(Com. Test., 16, 32.)
Aberdeen has three lines of railway, the line of
the defendant and the lines of the Frisco and Illi¬
nois Central roads, and the defendant should meet
the competition of the last two lines and their con¬
nections, both rail and water, in the transportation
of grain and grain products to Aberdeen from St.
Louis, East St. Louis, and Cairo, and also from
Kansas City.
West Point is also reached by three lines of rail¬
way, the line of the defendant and the lines of the
Illinois Central and the Southern Railway, and the
line of the defendant should meet the competition
of the last two lines in the transportation of grain
and grain products to West Point. West Point,
moreover, is directly connected with the Missis¬
sippi River at Greenville by the Southern Rail¬
way, the distance from West Point to Greenville
being 150 miles. Haiden Miller, general freight
agent of the defendant, being interrogated in ref¬
erence thereto before the Commission, could give
no reason why competition by the river and rail
line via Greenville should not lower the rates to
West Point and Columbus. He testified that the
' ' conditions of the river and towns at the two
points" (Vicksburg and Greenville) "are prac¬
tically the same, only there is no railroad imme¬
diately across from Greenville."
(Com. Test., 145.)
32
Columbus is, or should be, a competitive point as
to grain and grain products, being located on the
line of the defendant and of the Southern Railway
and also on the Tombigbee River. By the South¬
ern Railway Columbus has direct communication
with the Mississippi River at Greenville. The
Tombigbee River is navigable for boats for from
three to seven months of the year during the busi -
ness season and sometimes all the year, and Co¬
lumbus has in the past competed and might still
compete with Mobile for the grain and grain-
product business on that river but for the high, and
practically prohibitory, rates complained of in this
case to Columbus from St. Louis, East St. Louis,
and Cairo.
(Com. Test., Pentacost, 189, 190, 193, 194, 195,
198, 199, 200; Gibson, 219, 220, 221, 223; Peebles,
221, 222, 223.)
Starkville also is reached by two railway lines—
the line of the defendant and that of the Illinois
Central road ; and is, or should be, a competitive
point as to grain and grain products from St. Louis,
East St. Louis, and Cairo.
X.
WHY THERE IS NO COMPETITION IN BATES TO THE
ABERDEEN GROUP.
It is Because Competition is Stifled by an Agreement Fixing
Kates.
The reason why there is no competition in trans¬
portation to the Aberdeen Group lowering the rates
thereto, was clearly disclosed by the evidence to be
the fact that those rates were made by agreement
33
between the defendant and other carriers as mem¬
bers of the Southeastern Mississippi Valley Asso¬
ciation.
The findings of fact in the report of the Commis¬
sion are made by the statute prima facie evidence
of the facts so found (sec. 14 and 16 of the act
to regulate commerce). The Commission finds on
this point that—
"Eate schedules established for the Aberdeen
Group * * * are made thru agreement or under¬
standing arrived at by representatives of the vari¬
ous roads forming the association (The Southeast¬
ern Mississippi Valley Association) of common
carriers who meet and consider the subject; and
the rates thus made are generally closely adhered
to." (Com. Eep., 297.)
The testimony of the railway officials examined
as witnesses in behalf of the defendant shows that
each railway company, member of the Southeastern
Mississippi Valley Association, has a representative
on what is called the Association's Conference
Committee, which committee meets at stated in¬
tervals for the consideration only of rate questions ;
that joint thru rates are agreed upon in this com¬
mittee by the vote of a majority of its members,
and the rates so agreed upon are published and
promulgated by the Association in a tariff sheet
issued in the name of the Association, to take ef¬
fect on the same day on the roads of all its mem¬
bers, and are put in force by all on that day ; and
that this tariff sheet is filed by the Association with
the Interstate Commerce Commission, as required
by section 6 of the commerce law.
(Hayden Miller, Com. Test., 108, 109, 147, 153,
157. J. T. Poe, Com. Test., 20-22, 95-99.)
34
No change can be made in the rates so fixed
except by the vote of a five-sixths majority of the
members.
(J. T. Poe, Com. Test., 97, 98.)
Claim That Agreement Is Lawful Because There Is No
Binding Contract To Maintain Rates Agreed Upon.
Nevertheless, it is claimed in behalf of the de¬
fendant that the fixing of the rates is in fact the
independent or individual action of each member
of the association, because, it is said, the members
are not bound by the action of the association and
may at will depart from the rates agreed upon, and
there is no mode, by fine or otherwise, in which
the association can compel the observance of such
rates.
The evil or vice of an agreement fixing or naming
rates is that it restrains or stifles competition, and
in order to do that it is not necessary that the
agreement be binding. Concert of action or a
previous understanding are all that is required.
As said by the Commission in Central Yellow Pine
Association v. Illinois Central Railway et al.—10
I. C. C. R., 541:
" Where 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 fixt 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."
35
XI.
MEBIDIAN AND MOBILE NOT SUBJECT TO THE SOUTH-
EASTEBN MISSISSIPPI VALLEY ASSOCIATION, WHILE
THE ABEBDEEN GBOUP ABE.
It is a significant fact that Mobile and Meridian
are not made subject to the association and there¬
fore their rates are regulated by competition while
the Aberdeen Group are made subject and their
rates are fixt by agreement. At the time of its
adoption, the Mobile and Ohio Company expressly
excepted Meridian and Mobile from the association
agreement. (Com. Rep., 297.)
The reason given for this distinction is, in the
case of Meridian, that Meridian meets competition
with Jackson and Yicksburg, and, in the case of
Mobile, that Mobile meets competition with New
Orleans, and that both Meridian and Mobile should
he left free to cope with that competition. Mr.
Miller says that the Mobile and Ohio Road did not
put Meridian in the association because it "did
not want to restrain competition " at Meridian.
(Com. Rep., 298, 297. J. T. Poe, Com. Test.,
25-27-29, 31-34; Hayden Miller, Com. Test., 150,
151.)
This is a distinct and emphatic admission that
as to points outside the association competition in
rates is given free play, while the reverse in the
case as to points inside the association. This ac¬
counts for the difference in rates between Mobile
and Meridian on the one hand and the Aberdeen
Group on the other.
If competition were allowed free play at the
Aberdeen Group their rates might be less—certainly
not higher—than the Mobile and Meridian rates.
36
Why is not Tupelo left free to compete with
Memphis'? Memphis is nearer to Tupelo than
Vicksburg is to Meridian. Why are not West
Point, Columbus, etc., left free to compete with
Greenville and Meridian?
XII.
COMPETITION FAVORED BY LAW; IT IS A -PREVENTIVE
OF EXCESSIVE OR UNREASONABLY HIGH RATES.
In this connection I again quote from the opin¬
ion of the Commission in Central Yellow Pine Asso¬
ciation v. Illinois Central Railway Company et al.
(I. C. C. R., 541.)
The Commission says ;
Competition is favored by the laws. The object
of the pooling section (Section 5) of the interstate
commerce act is to prevent "any contract, agree¬
ment, or combination" between otherwise com¬
peting carriers by which competition between them
may be done away with. In East Tenn., Fa., c&
Oa. Railway Co. v. Interstate Commerce Commis¬
sion^ it is said: "The interstate commerce law, it
is conceded, was intended to encourage normal
competition. It forbids pooling for the very pur¬
pose of allowing competition to have effect."
(99 Fed. Rep., 61. ) The Supreme Court holds that
the suppression of competition is violative of the
so-called "anti-trust act," in that such suppres¬
sion restrains trade and commerce by "keeping
rates and charges higher than they might other¬
wise be under the laws of competition." {Joint
Traffic Association Case., 171 U. S., 569, 571, 577;
U. S. V. Freight Association., 166 U. S., 341.)
The ground upon which competition is favored
is that it conduces to the reasonableness of rates
or to the protection of the public from unreason-
37
ably high or excessive rates. In United States v.
Freight Association (166 U. S., 339), the Supreme
Court says : "Competition will itself bring charges
down to what may be reasonable." The act to
regulate commerce (sec. 1), in prohibiting un¬
reasonableness of rates in effect forbids the
restraint or suppression of competition, because
such restraint or suppression conduces or opens
the door to unreasonableness in rates. On the
other hand, as said by the Supreme Court, "the
natural, direct, and immediate effect of competi¬
tion is to lower rates" (171 U. S., 577). In any
event, it is incumbent upon the courts, when the
reasonableness of rates is in issue, to consider how
those rates were brought about—whether they are
the product of untrammeled competition or the
result of concert of action or combination between
the carriers establishing and maintaining them.
XIII.
LARGER POPULATION AND GREATER COMMERCIAL IM¬
PORTANCE OF MOBILE AND MERIDIAN GIVEN AS A
JUSTIFICATION OF THE LOWER RATES TO THOSE CITIES
THAN TO THE ABERDEEN GROUP.
One of the grounds of justification strenuously
urged for the high rates to the Aberdeen group
and the much lower rates to Mobile and Meridian
is the larger population and greater commercial
importance of the latter cities.
The practise of making rates to large cities and
trade centers lower, relatively or absolutely, than
the rates to smaller cities of less commercial
importance, does not appear to prevail in all
instances; for example, the population and busi¬
ness of New Orleans are many times in excess of
38
the population and business of Mobile, yet Mobile
bas the same grain and grain-product rate from
St. Louis, East St. Louis, and Cairo, as New Or¬
leans. Numerous other instances might be given.
Carriers are departing from the safe rule and
treading upon dangerous ground when they take
into consideration in making rates the relative im¬
portance, commercially and otherwise, of the dif¬
ferent localities on their lines.
The safe rule, to which there should he few, if
any, exceptions, is to give to all points rates rea¬
sonable in themselves and leave them to work out
their own destiny.
A departure from this rule, by giving advantages
in rates to commercial centers like Meridian and
Mobile, opens the door to one of the principal evils
the commerce law was enacted to remedy—
namely, the promotion of one or more localities at
the expense of numerous others.
In Interstate Commerce Commission v. the Cincin¬
nati, New Orleans & Texas Pacific Railway Com¬
pany (167 U. S., 506), the Supreme Court says that
it is the duty of the Commission to see that "no
undue preferences are given to one place or places
or individual or class of individuals, hut that in all
things that equality of right which is the great pur¬
pose of the interstate-commerce act shall be secured
to all shippers."
The natural tendency of preferential rates is to
increase the population and business of the locali¬
ties to which they are given and to prevent the
growth in those respects of the localities discrim¬
inated against. This has been the result of the
rates complained of in this case (Com. Test., 202),
and to claim that the greater population and busi¬
ness of Mobile and Meridian entitle them to lower
39
rates is for the carriers to take advantage of their
own wrong. They bring about the inci-ease in
population and business of localities by giving
them relatively low rates and then set up this in¬
crease in population and business as a justification
of their action.
Laws are made for the protection of the weak
from the encroachments of the strong. The strong
can take care of themselves.
The Aberdeen Group is located "in a rich agri¬
cultural country, perhaps the richest between Cairo
and Mobile." (Com. Rep., 292.) The cities of
that group should be allowed to avail themselves of
their natural advantages and should not be handi¬
capped by rates either unreasonable in themselves
or unduly preferential to other localities with which
they compete. Meridian and Mobile are compet¬
itors with the Aberdeen Group for business in ter¬
ritory surrounding the latter, and by reason of the
rates complained of have the advantage in that
competition. (Com. Test., 193,194,197,220-222.)
The situation of the Aberdeen Group in respect
to the rates complained of in this case is just such
a situation as the interstate commerce law was
enacted to remedy.
XIV.
PROMOTION OP MOBILE, THE CONTROLLING MOTIVE OF
DEFENDANT IN ITS ADJUSTMENT OF RATES.
This is Shown hy the Kates Out of as Well as to the Aber¬
deen Group.
Evidence of design on the part of the Mobile &
Ohio road to promote Mobile, at the expense, or
regardless, of the interests, of the Aberdeen Group,
40
is seen not only in the rates to the Aberdeen Group
but also in the rates out to points in surrounding
territory at which the Aberdeen Group encounters
competition with Mobile.
The local-distance rates out from the Aberdeen
Group are much higher for a given distance than
out from Mobile. For example:
From Mobile, 63 miles out, 10 cents.
From Aberdeen, etc., 63 miles out, 16 cents.
(J. T. Poe, Com. Test., bottom p. TO.)
From Mobile, 135 miles to Meridian, 16 cents.
From Aberdeen, 97 miles to Meridian, 21 cents. (J. T,
Poe, Com. Test., 71, 201-202.)
Corn can be shipped from St. Louis to Mobile
and from Mobile back via Artesia and Columbus
to Reform, Ala., for less than to West Point direct
and then to Reform, as shown below:
Cents.
Corn rate, St. Louis to Mobile 15
Corn rate, INIobile to Reform 20
35
Corn rate, St. Louis to West Point 23
Corn rate, West Point to Reform 16
39
(J. T. Poe, Com. Test., 65.)
The above are a few out of many similar ex¬
amples drawn out on cross-examination of J. T.
Poe. (J. T. Poe, Com. Test, from p. 64 to 84.)
Prom the testimony of Haiden Miller it appears
that the Mobile & Ohio road makes no thru rates
from grain-producing territory to landings on the
Tombigbee River, but that rates are so adjusted
that business can be done from Mobile on the river
41
but not from Columbus. (Haiden Miller, Com.
Test., 135, 136.)
The promotion of Mobile must be with strict regard
to the interests of other localities.
It is conceded that the defendant has a right to
advance the interests of Mobile in any legitimate
way, but when that advance is at the expense of
other localities it is unlawful and can not be sane -
tioned by the courts.
In Interstate Commerce Commission v. L. <& N.
R. R. Co.., the question was presented whether the
Louisville & Nashville road had the right to charge
unreasonable rates on naval stores consigned from
points on its road to Savannah, with the view of
diverting the traffic from Savannah to Pensacola.
This diversion of the traffic promoted the interests
of the road by building up Pensacola, a port on its
own line, and also by giving it the long haul over
its own line to the West, and it was claimed that
this Justified unreasonable rates on traffic con¬
signed to Savannah. But the court overruled this
contention, saying:
" Conceding that the railroad may, to a reason¬
able extent, so adjust its rates as to promote its
own interests by favoring and building up a sea¬
port on its own line at the expense of another on
a rival road, it can not, with that purpose, adopt
rates unreasonable in themselves or which are
unduly preferential to its own or unduly preju¬
dicial to the other or to the public."
(7. C. C. V. L. and N. R. R. Co., 118 Fed. Rep.,
614.)
In promoting Mobile, therefore, the defendant
must keep within the law and avoid the exaction
42
for that purpose of unreasonable rates either to or
out of the Aberdeen Group. {L. & N. R. R. Co. v.
Behlmer., 175 U. S., 649.) The defendant can not
thus violate the law in order to advance its own
interests by protecting Mobile in its competition
with New Orleans, a port on the line of its rival,
the Illinois Central road.
XV.
Financial Condition of Defendant Immaterial—That
Condition Good and Improving-.
We have shown that the income of a road from
all its traffic can shed no light on the reasonable¬
ness of the rate on a single article or class of
traffic. (See page 17 supra.)
In fixing rates carriers should always bear in
mind that the public is a party in interest, and,
no matter how deprest or unhealthy the finan¬
cial condition of a carrier may be, the public, in
the language of the Supreme Court, is entitled to
"demand that no more be exacted from it for the
use of a public highway than the services rendered
are reasonably worth." {Smythe v. Ames, 169
U. S., 544, 547.)
"It can not be admitted that a railroad corpora¬
tion maintaining a highway under the authority of
the State may fix its rates with a view solely to its
own interests and ignore the rights of the public."
{Ib., 544.)
"It can not be said that a corporation is entitled,
as of right, and without reference to the interests
of the public, to realize a given per cent upon its
capital stock. * * * The public can not prop-
erly be subjected to unreasonable rates in order
43
simply that stockholders may earn dividends."
{Covington & Lexington Turnpike Co. y. Sanford,
164, U. S., 596,597.)
Even, however, if the financial condition of the
defendant could be lookt to in determining the
reasonableness of the rates in question, that finan¬
cial condition can not be said to be bad, and has
steadily improved from year to year, with the
exception of the year 1901, when there was a small
deficit of about $17,000. From 1896 to 1902 the
gross earnings from operation and other income
of the defendant increased from $3,620,065.37 to
$6,643,522.80, an increase of $3,023,457.43. (Com.
Rep., 303.)
The surplus from operations grewfrom $90,591.77
in 1896 up to $124,050.22 in 1902. (Com. Rep.,
303.)
In 1905 the gross earnings from operation alone
were $7,699,738, net earnings $2,191,956, and sur¬
plus from operation $165,270.
XVI.
The Order Prima Facie Lawful; the Commission Has Made
Out a Prima Facie Case by Proving- the Issuance and
Service of the Order and Its Violation.
Burden upon the Carrier to Show Clearly the Unlawfulness
of the Order; îîot Sufheient to Raise a Doubt; Must he
Enforced unless Clearly Erroneous.
The Commission an Expert Tribunal.
The statute (sections 16 and 14 of the act to reg¬
ulate commerce) provides that on the hearing of a
case like the present ' ' the findings of fact in the
report of the Commission shall he prima facie evi¬
dence of the matters therein stated."
44
Not only are the findings of fact of the Com¬
mission made prima facie evidence of the matters
therein stated by express provision of the law, hut
the order of the Commission, which embodies or
formulates its conclusions from the facts found,
must be presumed to be lawful until the contrary
is made to appear clearly.
In Interstate Commerce Commissions. The Louis¬
ville and Nashville Railroad Company et al. the
United States Circuit Court for the Southern Dis¬
trict of Alabama says :
" The findings of fact in the report of the Com¬
mission are made by law prima facie evidence of
the matters therein stated, and the conclusions of
the Commission., based upon such findings, are pre¬
sumed to be well founded and correct, and they
tvill not be set aside unless error clearly appears.
The record does not clearly show that the Com¬
mission's findings and conclusions * * * are
erroneous—are uot in accordance with the law and
the evidence, and the court should not overrule
or in any other manner interfere with them."
(102 Fed. Rep., p. 709.)
Proof of Issuance and service of order and its disobedi¬
ence makes ont a prima facie case. To raise a mere
donbt of tlie iegality of the order not snfflcient.
The Commission has made out a prima facie
case by showing the issuance and service of its
order and its violation, and the burden is thereby
shifted to the defendants to show clearly to the
satisfaction of the court that the order is unlaw¬
ful and should not be enforced. To raise a mere
doubt is not sufficient. In Missouri Pacific Rail-
46
way Company v. Texas and Pacific Railway Com¬
pany Judge Pardee says:
" Where the matter is not clear, the object and
policy of the law should prevail.(31 Fed. Rep.,
p. 862.)
The maxim that all things are to be presumed
"to be rightly done until the contrary is made to
appear," which is invoked in aid of acts of public
officers, tribunals, and administrative boards, per¬
formed in the discharge of their duties, applies
with equal if not greater force to an order of the
Interstate Commerce Commission, which is a
bureau, tribunal, or administration board of the
Government, established by the law of the land
and whose orders are not ex parte, but the result of
judicial investigation.
The Commission an Expert Tribunal.
Moreover, as heretofore shown, (see p. 20, supra)
the courts hold that the Interstate Commerce Com¬
mission is an "expert tribunal," and by "reason
of the experience of its members in this kind of
controversy and their great opportunity for full
information," its opinions and determinations are
entitled to great weight with the courts. {East
Tennessee, Virginia and Georgia Railway Company
et al. V. The Interstate Commerce Commission. (99
Fed. Rep., 64.)
By section 12 of the act to regulate commerce
the Commission is "authorized and required to
execute and enforce its provisions," and is created
for that purpose expressly and solely. In such
case the rule is well settled, as laid down in United
46
States v. Moore (95 U.S., 763) and in many prior
and subsequent cases, that—
"The construction given to a statute by those
charged with the duty of executing it, is always
entitled to the most respectful consideration, and
ought not to be overruled ivithout cogent reasons.''''
Respectfully submitted.
L. A. Shavek,
Solicitor.