Recurring now to the findings of fact, we see that in every case the rate by the longer line to the more distant point is not only controlled but absolutely fixed by competitive conditions. If the lines from Charleston to Valdosta have a right to compete at that point for traffic in commercial fertilizer, the rate which they make is determined by competition alone, and that rate is not in fact made under the same circumstances and conditions as are the rates to intermediate points, if such railway competition is to be taken into account. It is our opinion, therefore, that the higher intermediate rates involved in this case are not in violation of the fourth section.

XIII

JOINT THROUGH RATES AND PRORATING:
JOBBING COMPETITION 1

REPORT OF THE COMMISSION

CLARK, Commissioner:

Complainants are individuals, partnerships, and corporations engaged in jobbing trade at Kansas City and St. Joseph, Mo., and Omaha, Nebr., to which points they ship via the lines of the defendants large quantities of goods from the Atlantic seaboard, largely under class rates, and from which points they distribute such goods throughout a large territory to the southwest, west, and northwest and also to a comparatively small and limited territory east of the Missouri river.

In sale and distribution of their goods, complainants come in competition with jobbers located at Minneapolis and St. Paul, hereinafter referred to as the Twin Cities, and the complaint alleges unjust and unreasonable discrimination in favor of the Twin Cities and undue prejudice against Kansas City, St. Joseph, and Omaha, hereinafter referred to as the Missouri River Cities, due to and measured by the difference in the class rates from the Atlantic seaboard to the Twin Cities, as compared with like rates from same points to the Missouri River Cities.

In testimony, briefs, and argument complainants make a strong attack upon the long-established system of rate making under which rates to points west of the Mississippi river are made upon the basis of the rates to the Mississippi river crossings.

1 Burnham, Hanna, Munger Co. v. C., R. I. & P. Ry., etc. Decided June 24, 1908, by the Interstate Commerce Commission (14 I. C. C. Rep., 299); upheld by the United States Supreme Court, 1910. The legal significance of this case is discussed in Ripley's Railroads: Rates and Regulation, p. 542. Prorating will be treated in the volume on Finance and Organization. Jobbing rates and commercial competition are analyzed in the former volume (see Index).

As railroads were constructed into the undeveloped West and, for a time at least, had their western termini at the east bank of the Mississippi river, it seems natural that when the river was crossed, and rates were established to points beyond, they should be constructed by adding certain sums to the rates already established to the river, and as additional lines were built and additional railroad crossings over the Mississippi river were constructed, competition between carriers and localities naturally established common rates to the Mississippi river crossings, especially when applied to traffic going beyond.

As the West was further developed, this same condition and like results followed at the several crossings of the Missouri river, so that to-day the rates from the Mississippi river crossings to the Missouri river crossings, Kansas City to Omaha, inclusive, are the same, and from points east, to the Missouri River Cities, are the same via any of the Mississippi river crossings, East St. Louis to East Dubuque, inclusive.

Complaint alleges unreasonableness of the class rates from the Atlantic seaboard, and the defendants named in the complaint were the Chicago, Rock Island & Pacific Railway Company, the Chicago, Burlington & Quincy Railway Company, the Chicago, Milwaukee & St. Paul Railway Company, the Chicago & Northwestern Railway Company, and the Chicago Great Western Railway Company. All of these are carriers whose lines do not extend east of Chicago, and all of them have lines from Chicago, through the several Mississippi river crossings, to the Missouri River Cities. The defendants whose lines are east of Chicago were made defendants upon application of the Chicago & Northwestern Railway Company. It will, however, be seen that the complaint, the testimony, and the argument are all against the rates charged west of Chicago and the Mississippi river crossings.

The Sioux City Commercial Club intervened and supported the complainants' request, introducing and emphasizing, however, the view that whatever might be done for Omaha should likewise be done for Sioux City, and arguing that as Sioux City was also a Missouri river crossing it should be placed upon a parity with Omaha. The St. Paul Jobbers and Manufacturers'

Association, of St. Paul, and the Commercial Club of Minneapolis intervened and in substance joined with and supported the defendants. The Chicago Association of Commerce and the Merchants' Traffic Bureau and the Business Men's League of St. Louis appeared at the hearings on behalf of the commercial interests of their respective cities, offered evidence and were heard on brief and in oral argument in defense of the system of rate construction based upon the Mississippi river, and in opposition to a rate adjustment that would give the Missouri River Cities an advantage at the expense of Chicago and St. Louis.

Complainants allege that the class rates from the Atlantic seaboard, of which New York will be taken as representative, to the Missouri River Cities, to wit, in cents per 100 pounds,

are unjust and unreasonable; that they are unjustly discriminatory against the Missouri River Cities as compared with the class rates from New York to the Twin Cities, to wit, in cents per 100 pounds,

and they ask that the Commission establish from New York to the Missouri River Cities the following through class rates in cents per 100 pounds,

together with proportionate reductions from eastern producing points as shown in Western Trunk Line Tariff No. 786, I. C. C. No. 678, or such other rates as may be found just and reasonable.

Defendants, Chicago, Rock Island & Pacific Railway; Chicago, Burlington & Quincy Railway; Chicago, Milwaukee & St. Paul Railway; Chicago & Northwestern Railway, and Chicago Great Western Railway are parties to the tariff so referred to. It contains rates on classes and commodities from "Atlantic seaboard and points west thereof, east of the western termini of the trunk lines" to St. Paul, Minneapolis, etc., and the term "Atlantic seaboard" is used herein in that sense.

Defendants admit the correctness of the rates stated in the complaint, and the divisions thereof between the several carriers, and the distances via the various routes, but they deny that such rates are unjust and unreasonable, or unjustly discriminatory in comparison with the rates to the Twin Cities. Of the five original defendants, the Rock Island, the Northwestern, and the Great Western, allege justification for the lower rates to the Twin Cities on the ground of competition by water as well as of competition via the Canadian Pacific and the Minneapolis, St. Paul & Sault Ste. Marie Railway, hereinafter referred to as the Soo Line.

Of the numerous complainants only representatives of the dry goods interests appeared to give evidence at the hearings, with the exception of one wholesale grocer, introduced by the intervenor, Sioux City Commercial Club. The jobbers of Sioux City sell goods in northwestern Iowa, southwestern Minnesota, South Dakota, northern Nebraska, and a part of Wyoming. They come into competition with jobbers at Chicago, Omaha, the Twin Cities, and other intermediate jobbing points, their strongest competition being with Omaha on the south and the Twin Cities on the north.

With the exception of North Dakota, western and northwestern Minnesota, and Canada it may be said in general that the dry goods concerns in the Missouri River Cities compete in all the territory from the Missouri river to the Pacific Ocean and from the Canadian boundary to the Gulf, and in much of this territory they meet competition more or less keen from jobbers at Chicago, St. Louis, the Twin Cities, Denver, San Francisco, and various smaller jobbing points. In Montana, Washington, and commonpoints territory the Missouri River Cities jobbers meet strong