made an order which, among other things, provided as follows: "Imported traffic transported to any place in the United States from a port of entry or place of reception, whether in this country or in an adjacent foreign country, is required to be taken on the inland tariff governing other freights." Thirteen roads alleged conformity to the order of the Commission, three complied with the same within three months, and eight continued to charge less on imports than on the carriage of domestic traffic. Business organizations of New York, Philadelphia, and San Francisco brought action against the railways violating the order of the Commission with respect to the relative rates on imports and domestic freight, and on January 29, 1891, the Commission handed down the decision1 known as the Import Rate decision-one of the most important decisions in the history of the federal regulation of railways.

Ample evidence was introduced by the complainants showing that certain carriers were charging less on imported goods than on domestic goods or on freight originating at seaboard points and shipped, perhaps, on the same train with goods of foreign origin to interior or other seaboard points. "Not only was there a lower rate for the inland carriage of foreign traffic, but in numerous cases the total charge from the foreign place of origin through our seaports to destination in the interior of the United States was much less than

14. 448.

the rail charge alone on domestic goods of like description from the same seaports to the same destination." 1 On certain classes of domestic goods the freight rates from New Orleans to San Francisco were more than three times the through rates from Liverpool to San Francisco on similar goods. The defendant carriers justified their action on the ground that the imported goods were carried under circumstances and conditions substantially dissimilar from those under which domestic goods were carried, because of the competition of ocean lines and ocean and rail lines. They also maintained that the rate on foreign goods from the seaboard to interior towns was a part of the through rate from the foreign point of origin, and that this part of the through rate could, under the law, be less than the local rate over the same line for the same distance. But the Commission denied the right of the railways to discriminate between domestic and foreign goods, and furthermore maintained the opinion that extraterritorial influences, such as the competition of ocean lines or circumstances affecting the movement of foreign commerce before reaching our own country, did not constitute a dissimilarity of circumstances and conditions within the meaning of the act to regulate commerce, and insisted on obedience to the order of March 23, 1889. Some of the carriers refusing to obey, a petition was filed against one of them for the enforcement of the order by a United 1 Annual Report, I. C. C. (1896), p. 8.

States Circuit Court from which an appeal was taken to the Circuit Court of Appeals, and finally to the Supreme Court of the United States.

The two lower courts upheld the decision of the Commission, but the Supreme Court refused to accept the interpretation of the lawas construed by the Commission and lower courts, and held 1 that "among the circumstances and conditions to be considered as well in the case of traffic originating in foreign ports as in the case of traffic originating within the limits of the United States, competition that affects rates should be considered." In other words, extraterritorial influences, as well as competitive conditions arising wholly outside of the field occupied by the carrier, may be considered in determining similarity and dissimilarity of circumstances and conditions; and consequently the Commission erred in not considering all the circumstances and conditions entering into the case.

In thus widening the meaning of the phrase "circumstances and conditions," the Supreme Court entered the wedge which the Troy case 2 drove in full length half a decade later, and which reduces the long and short haul clause of the act to nullity, so that no tangible meaning can be assigned to the same at present. Troy is a city in Alabama reached by two railways and situated fiftytwo miles from Montgomery. Montgomery may be reached by a number of different railways. The rates on traffic going over one of these railways 2 168 U. S. 144.

1 162 U. S. 197.

through Troy to Montgomery were higher to Troy than to Montgomery, the railway in question justifying this greater charge for the shorter distance. to Troy on the ground that the competition in Montgomery made the circumstances and conditions. under which traffic was conducted in Montgomery different from those prevailing in Troy. The Commission ruled that the competition of the railways centring in Montgomery, all of which are subject to the act to regulate commerce, did not justify any one or all of them in violating the long and short haul clause. The Commission has repeatedly held, as stated in Part I above, that not one or several, but all the circumstances and conditions must be drawn into consideration, but the competition of carriers subject to the act had been considered outside of the scope of this principle.1 Not so with the Supreme Court. It reaffirmed the Import Rate decision, and held that railway com

1 "It is improbable that the Commission will interpret the act in the sense that the words 'under substantially similar circumstances and conditions' justify all existing differential rates due to competition. This would practically emasculate the law. . . . The act is an expression of a correct principle, but the limitations of the principle are no less obvious." -Seligman, "Railway Tariffs and the Interstate Commerce Law," Political Science Quarterly, II, 263 (June, 1887).

With remarkable insight Professor Seligman outlined probable consequences of the act which subsequent experience has amply demonstrated. Written immediately after the passage of the act, the analysis of railway problems presented in the article is the more striking in the accuracy with which the generalizations foreshadow the events which future years were to bring upon us.

petition can create discriminating circumstances and conditions, and that therefore the higher rate to Troy is not prohibited by the long and short haul section.1 "Competition is one of the most

obvious and effective circumstances that make the conditions, under which a long and short haul is performed, substantially dissimilar, and as such must have been in the contemplation of Congress in the passage of the act to regulate commerce." Competition which affects rates must be considered in section IV, but not in section II. "Under substantially similar circumstances and conditions," as used in the second section, refers to the matter of carriage, and does not include competition between rival routes. "The mere fact of competition, no matter what its character or extent, does not necessarily relieve the carrier from the restraints of the third and forth sections." It should be noticed that in a different case,2 arising under section II, which prohibits discrimination among persons, the Supreme Court held that the phrase, "under substantially similar circumstances and conditions," does not include competition, and that this phrase "may have a broader meaning or a wider reach in section IV (long and short haul) than the same phrase found in section II."

The Import Rate and Troy cases, by extending the "reach" of the phrase "substantially similar circumstances and conditions" to include competition among railways subject to the act, opened the 2 167 U. S. 512.

1 Sec. IV.