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and the demands of commerce will be better served, it is reasonable to give it a carload classification and rate. The carload is probably the only practicable unit of quantity."

While, as stated by the Commission in the Thurber case, supra, shippers usually load and unload carload freight, such is not the universal custom. Speaking of the practice, the Commission has said: "While there is every reason for holding that the shipper should load and unload freight handled as a strictly carload proposition, there seem to be many reasons why, with respect to commodities handled by the package, the carrier should load and unload even though the rate applied may be the carload; and such we think has been the usual practice in the past. Our conclusion, therefore, is that no general and invariable rule can be laid down applying to all business which takes a carload rate. ''636

§ 119. Establishing Carload Rates. While the principle of a difference between carload and less-than-carload shipments is recognized by the Commission, and while, to prevent discrimination, it could prescribe such a differential, that tribunal is disinclined to exercise such power. Mr. Commissioner Clements, voicing the opinion of the Commission, said:637

"The commission has held that differentiation by the carriers of carloads from less than carloads in the application of rates may be warranted under certain conditions. Here, however, we are asked to enter an affirmative order establishing a differential. What would be the effect upon all the business interests involved in this traffic should the commission take such action? No doubt its effect upon the jobbers at southeastern points would be beneficial; traffic would move into the southeast in such manner as to give the longest possible haul in carloads to the local dealers, who, securing these long haul carload rates, would be the beneficiaries. Other classes who would be affected by the change would be the small dealers and consumers, and it appears that the necessary operation of such a change would be to cut off these classes from purchasing in small quantities at Nashville and Ohio River points and

636 Wholesale Fruit & Produce Assn. v. Atchison, T. & S. F. Ry. Co., 14 I. C. C. 410, 419.

637 Duncan v. Nashville, C. & St. L. Ry. Co., 16 I. C. C. 590, 593, 594,

595.

compel them to deal with jobbers in their immediate vicinity, who would purchase in large enough quantities to secure the benefits of the lower rates on the long carload haul from the Ohio River to Nashville. The entire record points to the fact that a differential on this traffic would have the effect of enhancing the price of those products to the consumer.

"A railroad cannot be compelled, as prayed in this case, or even permitted, to adopt a system of rate-making which enables a large dealer to drive a smaller dealer out of the market. We must have some other motive upon which to act in a matter of this kind than that the trade of a particular community is a vested right belonging to any particular class in that community. We are not permitted so to narrow our view of all the interests involved as to look only to the interests of a particular class in the community, and this for the sole purpose of vesting in that class what they claim to be their inherent rights, more especially when the enjoyment thereof is to be at the expense of the community at large."

The Commission has, where any-quantity rates were in force, distinguished the Duncan case, supra, and required that carload rates be established.638

§ 120. Same Subject-Rule in Duncan Case Criticized. With great deference to the learned lawyer and experienced commissioner who wrote the opinion in the Duncan case, it is submitted that he failed to give due effect to the rule of cost of service. It does not necessarily follow that a higher rate on less than carloads increases the price to the consumer, and, if it did, it does not necessarily follow that one man should receive for his money a greater service than another receives for the same amount of money. Carriers must ordinarily receive from the total of all commodities transported by them enough to pay all operating expenses and a fair return on the investment. If fifty per cent. of these commodities are transported in less-than-carload lots, it is fair to say that more than sixty per cent. of the cost of all transportation is caused by this moiety and less than forty per cent. by the half

638 Mutual Rice Trade & Development Assn. v. International & G. N. R. Co., 23 I. C. C. 219, 224. See also

Taylor Dry Goods Co. v. M. P. Ry.
Co., 28 I. C. C. 205.

transported in car lots. But, while the carload shipper costs the carrier but forty per cent. of the transportation charge, he pays fifty per cent. thereof. If the carload shipper paid only the forty per cent., the maximum which he should pay, and the less-than-carload shipper should pay his sixty per cent. and more, the total transportation charges paid by the consumer would be the same that he pays when there is no differential, and there would be no discrimination. The jobber is sometimes regarded as a mere parasite, but this view of his function is incorrect. He fills an important position in commerce. Without him, or some other equally effective agency, the producer and the consumer could not be got together. The Kansas wheat farmer could never market his wheat directly by dealing with the Georgia consumer. There must be one or more intermediaries who collect the product and distribute it to the consumer. He who collects the grain at the primary markets of Kansas City, St. Louis, Omaha, Chicago, and perhaps other cities, the jobber at Nashville, Atlanta, and other cities, and the retail dealer who sells direct to the consumer, each performs a necessary service in enabling the producer to sell and the consumer to buy. When a producer controls all, or a large part, of a commodity, he may himself perform all these intermediary services, but such services must be performed by some agency. The agencies performing this necessary service will be compelled by the laws of trade not to charge more than is reasonable for the service. It is not a question of a large dealer driving out the small dealer, but a question of those intermediaries paying for only what service they obtain from the carriers. The total transportation charges which the consumer pays are not increased, but decreased, and these charges are equitably distributed. The justice of a carload and less-than-carload differential is shown by the general application by the carriers themselves of such differential.

In the Western Classification case,639 the rule for determining when a carload rating should be established was stated as follows: "A carload rating should be established for a commodity when that commodity can be offered for shipment in carload quantities, unless public interests or other valid con

639 Re Suspension of Western Classification No. 51, 25 I. C. C. 442, 446.

siderations require the contrary." In a subsequent case, this rule was quoted, the Duncan and other cases cited, and it was said: "The Commission has always recognized the propriety of carload ratings. It has, in many cases, established carload and less-than-carload rates upon the same commodity, but whether a carload rating should be accorded in a particular instance, depends not only upon whether that commodity is offered for shipment in carload quantities, but also upon other considerations."640 What the Commission meant is, that when commercial usage makes a carload of a particular commodity a greater quantity than is ordinarily used by the average shipper, the advantages to be obtained by the lower cost of movements in carloads must yield to the customs of trade. Somewhat more liberal was the rule applied in permitting the carriers to increase the minimum carload for grain products.641 The round-bale cotton case642 was based upon a special situation, and in declining to fix a carload rating which would have applied only to cotton compressed to a stated density, it cannot be said that the Commission has determined that in no case will it require the establishment of carload ratings.

In a later case,643 in speaking of any-quantity rates, the Commission said: "The maintenance of any-quantity ratings for commodities which can reasonably be concentrated into carloads is clearly an inducement to uneconomical operation and ultimately imposes a burden on the consuming public."

§ 121. Proper Differential Between Rates on Carload and Less-Than-Carload Freight; Carload Minima. On this subject, the Commission has stated the rule as follows: "The differential, like the rate itself, should be fixed with a view to the just interests of all parties concerned. In fixing upon a rate or a rate adjustment a carrier may always properly consider the cost of service, and that factor should have great influence with the commission in passing upon the rea

640 Taylor Dry Goods Co. v. M. P. Ry. Co., 28 I. C. C. 205, 207, 208, 209. 641 Western Rate Advance Case 1915, 35 I. C. C. 497.

642 American Round Bale Press Co. v. A. T. & S. F. Ry. Co., 32 I. C. C. 458.

*

*

643 Manville Jenckes Co. v. A., C. & Y. Ry. Co., 148 I. C. C. 109. See also Cotton Mills Products Co. v. A. G. S. R. R. Co., 148 I. C. C. 633.

sonableness of the carrier's action. If it actually costs these carriers. less to handle this transcontinental freight in carloads than in less-than-carloads we ought not in the absence of a controlling reason to the contrary, to deny the carrier the right to make a difference in its tariff corresponding to the difference of expense. The defendant carriers have somewhat elaborately estimated the relative expense of carrying this freight in carloads and less-than-carloads. The nature of that testimony fully appears in the statement of facts, and need not be repeated. We have found that it costs transcontinental carriers approximately 50 per cent. more to handle transcontinental traffic in less-than-carloads than in carloads. The less-than-carload rate in many of the instances called to our attention by the complainant exceeds the carload rate by somewhat more than 50 per cent., but on the whole we are inclined to think that, on the average, the difference between carloads and less-than-carloads established by the tariff of June 25, 1898, does not generally, if at all exceed the actual difference of cost in the service rendered. ''644

The questions discussed in Sections 118 to 121 are here discussed as they affect the reasonableness of rates. The issue of unlawful discrimination is discussed in Section 166, post, where it will be seen that the Commission has changed its attitude from that adopted in the Duncan case, supra.

It is usual for the carriers to provide that a specified weight of a commodity shall be required to constitute a carload in order to obtain a rate different from the rate on the same commodity moving in less-than-carloads. This minimum must be reasonable and must not exceed the capacity of the car. Where no minimum was established, the Commission said:

"The absence of a legally-established minimum carload weight suggests the inquiry as to the quantity upon which a shipper might claim the benefit of the carload rate in preference to the less-than-carload rate. And for the purpose of laying down a general rule we hold that when a car is demanded and loaded by the shipper and is tendered and other

644 Business Men's League of St. Louis v. Atchison, T. & S. F. Ry. Co.,

9 I. C. C. 318, 358, 359. See Sec. 166,. post.

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