CHAPTER XV.

LONG-HAUL DECISIONS OF THE SUPREME COURT.

The long-haul clause did not realize the intent of its framers. It

received a series of shocks from the United States Supreme Court, which

produced, if not paralysis, at least a bad case of nervous

prostration.[134]

At first, believing that the law would be enforced in accordance with

its purpose and intent to get rid of unjust and needless discrimination

between localities, the Northern and Western roads revised their tariffs

in good faith in reference to long and short haul rates, but, later,

when they found that the Supreme Court did not intend to enforce the 4th

section, they joined the Southern roads in practical disregard of it

wherever they found it convenient to do so, and only in a few cases has

their disregard been checked.

Within 5 days after the Commission was appointed a large number of

railroads applied for relief from the long and short haul clause; and in

many cases, on the ground of water competition, etc., relief was

given.[135] The Commission held that dissimilar circumstances existed

under the 4th section in case of competition with water carriers, or

railroads not under the Act (foreign railroads and railroads lying

wholly within a single State), and in “rare and peculiar cases of

competition between interstate railroads, when a strict application of

the rule would be destructive of legitimate competition,”[136] but

ordinarily competition between interstate roads was not regarded as

sufficient to relieve them from the 4th section.

In November, 1892, the Commission decided the famous Alabama Midland

Case. The complaint was that rates from the East and Northeast to Troy,

Ala., were higher than to Montgomery, a longer haul passing through

Troy. The railroads pleaded competition at Montgomery. The Commission

held that railway competition would not justify departure from the rule

of Section 4 of the Interstate Act. Five years later, in November, 1897,

the United States Supreme Court sustained the judgment of the Circuit

Court and Circuit Appeals Court, overruling the Commission, and held

that the existence of railway competition at Montgomery made a

substantial difference of circumstances within the meaning of the

exception in Section 4.[137]

The Court held that competition even of interstate lines is a

substantial difference of conditions which may justify a greater charge

for a short than for a long haul, but said, “We do not hold that the

mere fact of competition, no matter what its character or extent,

necessarily relieves the carrier from the restraints of the 3rd and 4th

sections.”

In the 2d section, which prohibits any rebate or discrimination and is

intended to enforce equality of shippers over the same line, “‘similar

circumstances and conditions’ refers to matters of carriage, and does

not include competition between rival routes;” but in the 3d and 4th

sections “similar circumstances and conditions” includes competition,

which “is one of the most obvious and effective circumstances that make

the conditions under which a long and short haul is performed, and

substantially dissimilar.” The railroad people think the circumstances

are very dissimilar also when the Oil Trust or the Beef Combine

threatens to take hundreds of thousands of dollars worth of business if

they don’t get the rates and facilities they want, while Messrs. A. B.

C., etc., ship their goods and pay the schedule rates without suggesting

any reduction. This dissimilarity is harder for the railroads to deal

with than the other. They can stop competing among themselves on

long-haul schedule rates more easily than they can enforce equal rates

on the big shippers.

In the Chattanooga Case it appeared that rates from New York and other

points via South Atlantic points to Chattanooga were higher than to

Nashville, 152 miles further on. The Commission in December, 1892,

ordered this discrimination to cease. The order was not obeyed. Suit to

enforce it was brought in the Circuit Court, and a decision sustaining

the Commission was rendered in February, 1898. And in November, 1899,

the Court of Appeals confirmed the decision, holding that the ruling of

the Supreme Court in the Midland Case did not apply, because “normal

competition” would give Chattanooga the same rates as Nashville.[138]

But the Supreme Court in 1901 reversed the lower courts and decided

against the Commission.[139]

The Georgia Railroad Commission Cases, also decided by the Interstate

Commission in 1892, went the same way, the United States Supreme Court

again deciding against the Interstate Commission on the long and short

haul clause, holding that any substantial competition of markets or

railways creates dissimilar conditions within the 4th section.[140]

The result is that dissimilarity of conditions created by the railroads

themselves becomes the means of freeing them from the long-haul rule of

the 4th section of the Interstate Act.

In the South a method called the “basing-point system” is in vogue. The

railroads name certain towns as distributing centres and competing

points, fix the rates to and from these points, and make rates to and

from other localities by adding to such through rates the local charges

in force between the distributing centres, or “basing-points” and the

said other localities.

The Commission says: “Our annual reports to Congress and reported

decisions in cases have uniformly condemned this distributing centre

theory of rate-making, but the Southern carriers have resisted our

efforts to correct the practice.”[141]

A thoughtful writer in the _Popular Science Monthly_ says: “The most

serious class of unjust discriminations includes those which have for

their victims the entire populations of towns, cities, and even

extensive districts, which are made to suffer from the unfair adjustment

of railway rates. Practically the whole region south of the Potomac and

Ohio and east of the Mississippi has continuously suffered from

discriminations of this kind through the system of making charges to a

few selected cities the basis for through rates to all other points.

Through rates are made to and from about two hundred of the larger

towns, including Atlanta, Birmingham, Chattanooga, Vicksburg, New

Orleans, and Mobile, and traffic shipped from or to all other points is

charged the rate to one of these basing-points plus the local rate from

such basing-points to final destination. In practice it is common to

make the combination by the use of rates to and beyond whatever

basing-point will give the lowest total, whether on the line traversed

by the shipment or not. Thus a shipment from Cincinnati to a point on

the line from that city to New Orleans may be charged the full rate to

New Orleans plus that from the latter back to the local point. The

condemnation of such a system cannot be too severe. It not only limits

the commercial activities of the towns unjustly discriminated against

and restricts the sources from which they can directly draw supplies,

but by hindering their growth it retards the development of the entire

section, including the cities supposed to be favored.”[142]

In a case decided in 1894 it was found that hay was being carried from

Memphis through Summerville to Charleston for 19 cents a hundred,

against 28 cents a hundred from Memphis to Summerville, the 9 cents

difference being equal to the local rate from Charleston back to

Summerville. “The difference of $1.80 per ton was sufficient to preclude

the Summerville dealer from selling in neighboring towns in competition

with Charleston dealers. The Summerville dealer was thus practically

confined to Summerville for a market, and even there had to compete with

dealers doing business at Charleston 19 miles away. If $3.80 per ton is

profitable to the carriers for bringing hay in carloads from Memphis to

Charleston, then $5.60 per ton, nearly 50 percent more, from Memphis to

Summerville, which is nearer than Charleston is to Memphis, represents

an extra profit of $1.80, which the carrier did not and could not show

to be equalled by extra cost of transporting a car of hay and delivering

the same at Memphis.” The Commission (June 1894) ordered the carriers

not to charge more from Memphis to Summerville than from Memphis to

Charleston, holding that competition of markets or of railways would not

justify a higher charge for a shorter than for a longer haul. The order

was made in September. In its report to Congress in December the

Commission said, “The order has not been obeyed.”[143]

Social Circle, situated between Atlanta and Augusta in Georgia, was

required to pay a rate from Cincinnati made up of the rate to Atlanta

plus the local rate from Atlanta to Social Circle, while Augusta,

considerably more distant, had rates from Cincinnati no higher than

those to Atlanta. The Commission in June, 1891, ordered the railroad to

cease charging more from Cincinnati to Social Circle than for the longer

distance to Augusta.[144]

Hill and Brother, in the wholesale grain, flour, and hay business at

Cordele, Ga., were in competition with dealers at Albany, Americus, and

Macon, which were made basing-points and had lower rates than Cordele

from the common source of supply. Cordele was shown to be nearer the

coast than the other points, and to have several railway routes from

Nashville, so that it could not be excluded from the low rate list on

competitive grounds. The railroad men said it was excluded because it

was not so large a distributing point as the other places, but admitted

that if it had equally low rates it would largely increase as a

distributing centre; so that the case stood thus: The railroads did not

give Cordele equally low rates because it was not a sufficiently large

distributing centre, and it was not a sufficiently large distributing

centre because it was denied equally low rates; _i. e._, the railroads

sought to excuse themselves for wrongdoing by offering the results of

the wrong in justification. The Commission refused to allow the

railroads to take advantage of their own wrong and condemned the Cordele

rates.[145]

The Louisville and Nashville charged $3.69 per ton on pig iron from

Birmingham, Ala., to Cordele, Ga., 267 miles, and only $1.80 a ton from

Birmingham to Macon, 332 miles. On coal the rate was $2.60 to Cordele

and $1.60 to Macon. The Commission decided that the rates to Cordele

should be no higher than to Macon.[146]

La Grange is 71 miles nearer New Orleans than Atlanta, yet the rates to

La Grange were made so much higher than to Atlanta that an Atlanta

dealer could ship goods from New Orleans through to Atlanta and then

back to La Grange as cheaply as the goods could be shipped direct to La

Grange.[147]

To keep traffic from going to Savannah and make it go to the Northwest

or to Pensacola, the Louisville and Nashville made very high rates on

shipments to Savannah. On Savannah traffic the Nashville haul was short

and the receipts small; on shipments to the Northwest the Nashville

receipts were much larger, and in Pensacola it had a special interest.

So the Savannah cotton rate was advanced from $2.75 to $3.30 a bale, and

the rates on naval stores were also made much higher than to Pensacola

or to the Northwest.[148] The Commission ordered the railroad to

discontinue the discrimination against Savannah, January, 1900, and the

Circuit Court sustained the decision, July, 1902.

The Commission has condemned the rates from New Orleans to Danville,

Va., as excessive in comparison with the rates on the longer haul to

Lynchburg;[149] also the rates on sugar and molasses from New Orleans to

Nashville as higher than on the long haul to Louisville;[150] the rates

from New York, Cincinnati, Chattanooga, Nashville, and New Orleans, as

discriminating against Dawson and in favor of Americus, Eufaula, and

Albany;[151] undue preference to Sioux City against Sioux Falls, in the

rates from Chicago and Duluth;[152] and many other discriminations

between localities, and violations of the long and short haul

clause;[153] yet all the complaints and decisions, numerous as they have

been, are but a cupful from the sea; and the evils removed in pursuance

of orders of the Commission which the Courts neglected to overrule form

an insignificant group compared to the mass that remained untouched.

The heart of the railroad problem The history of railway discrimination in the United States, the chief efforts at control and the remedies proposed, with hints from other countries · 第 15 / 31 章