tainly a persuasive argument that if the actual cost of hauling wheat is less than 14 cents per 100 pounds for 950 miles, a just rate for transporting wheat over the last 724 miles of that distance would not equal 28 cents.

The same sort of an argument is to be found in the divisions which are accepted by lines carrying this grain south from north Texas junctions. The Rock Island lines, for example, terminate at Fort Worth, and this traffic may be handled south of that point over several different connections. It is stated by the International & Great Northern in its answer to another complaint of this same character, which was heard in this connection, that its division upon this business on wheat originating in Kansas and Oklahoma Territory is 5.58 cents per 100 pounds, the distance being about 340 miles. In the same case the answer of the Houston & Texas Central Railroad Co. states that it and its connection receive for carrying this grain from Denison to Galveston, 396 miles, the same division of 5.58 cents. It was said upon the argument that the divisions now paid by the Rock Island were larger, being in some cases as much as 7 cents per 100 pounds. These divisions are of course agreed to under the compulsion of intense competition, but it is still significant that this traffic is sufficiently attractive so that carriers at Fort Worth are willing to receive and transport it for one-half the entire distance from Wichita to Galveston for not exceeding 6 or 7 cents per 100 pounds.

In Mayor, etc., v. Atchison, Topeka & Santa Fe Ry. Co. et al., 9 I. C. C., 534, this same rate from Wichita was under consideration, and speaking of the desirability of the traffic we then said:

To say that this traffic is among the most desirable of any handled by these defendants would be to repeat what has often been stated by this Commission and what is familiar knowledge to all persons having any acquaintance with the subject. Cars are loaded without expense to the carrier; they can be loaded to their full capacity, whatever that may be; they are collected without undue expense and are hauled as a through proposition for nearly or quite 700 miles, often in solid train loads. The cost of delivery is not excessive. Formerly most of these cars came back empty, but to-day the greater part over most lines return loaded with traffic, which pays a rate almost or quite equal to that charged on grain.

None of the elements of desirability above mentioned are less to-day than then. The roadways of these defendants are better, their traffic is more dense, their earnings, both gross and net, are larger, and the return loading upon at least one of the defendant systems has increased since 1903.

Taking into view the whole situation, we feel that a rate of 281 cents from Wichita to Galveston for export is excessive and that the same ought not to exceed 25 cents. The complainants insist that the Commission should put in effect a blanket export rate from all these

Kansas stations mentioned in the complaint; but we can see no good ground for doing so. Blanket rates are often applied for competitive reasons, but there is no condition of that sort which should control these rates. In long-distance rates like these it is proper and, indeed, almost necessary to extend the same rate over a considerable territory; but there seems to be no ground for extending this over the whole State of Kansas. These export rates have always been graded, to an extent, according to distance, and values of real estate have more or less accommodated themselves to this system of rate making. There appears to be no sufficient reason why the disability of distance should be entirely removed. We do think, however, that in view of the long haul of this traffic to Galveston, difference in distance should perhaps be given somewhat less effect than it has been hitherto. Our conclusion is that rates from the stations named in the complaint, between 700 and 750 miles from Galveston, should not exceed 25 cents and that cent per 100 pounds should be added or subtracted for each 50 miles in fixing the rate from the stations involved. Thus, stations between 750 and 800 miles should take a rate of 25 cents; those between 650 and 700 miles, of 24 cents.

We are confirmed in the impression that these rates will be just by comparing with them the cost of moving to the port of export grain from other grain-producing sections of the United States. We have already remarked that there is no reason in the construction or operation of, or amount of business upon, these railroads which would impose upon this region rates which are unusually high.

We find upon examination that the distance from Columbus, Ohio, to New York is 637 miles, and that the export rate in effect upon January 1 was 10 cents for both wheat and corn. This has been advanced at the present time to 13 cents, and probably fairly represents the cost to the shipper of transporting grain to the port of New York for export from the State of Ohio. The distance from Indianapolis, Ind., to the same point is 825 miles. The rate on January 1 was 12 cents, now 15 cents. This probably fairly represents the cost of moving grain for export from the State of Indiana to New York. From Springfield, Ill., to New York the distance is 1,009 miles. The rate on January 1 was 16 cents, the present rate 19 cents, probably expressing the general cost of carrying wheat and corn from the State of Illinois to New York for export. To Des Moines, Iowa, is 1,270 miles, the present export rate to New York being 26.9 cents on wheat, 25.5 cents on corn, which perhaps is about the average cost of transporting export grain from Iowa. In all the above instances the cost of carriage to the ports of Philadelphia and Baltimore for export is somewhat less.

The rates to Galveston above indicated apply to wheat. Corn rates from this territory for export have been lower than those on wheat by about 3 cents per 100 pounds. We think that this same differential should be preserved and that the rate on corn from Wichita to Galveston for export should not exceed 22 cents; other stations accordingly.

Applying these principles to the different stations named in these complaints, the following rates result, and should not, in our opinion, be exceeded.

Export rates on wheat and corn, C. L., in cents per 100 pounds, from stations in Kansas on the Atchison, Topeka & Santa Fe Railway to Galveston.

Export rates on wheat and corn, C. L., in cents per 100 pounds, from stations in Kansas on the Chicago, Rock Island & Pacific Railway to Galveston.

The defendants argued that the Commission in Mayor, etc., v. Atchison, Topeka & Santa Fe Ry. Co. et al., supra., decided, in 1903, that 28 cents was a reasonable rate for the carriage of this export grain from Wichita. This is not correct. The rate which we exam

ined in that proceeding had been advanced from 28 cents to 301 cents. What the Commission did was simply to order the original rate restored. It was said in disposing of the matter that no opinion could be fairly expressed upon the record as to what a reasonable rate would be. We were also met with an even more earnest claim then than now that increased expenses of operation would seriously impair net returns, and we were at that time without much practical evidence of the actual result upon net revenues of these advances in supplies and wages.

But aside from that it should be observed that it would not by any means follow, because the Commission declined to reduce this Wichita rate more than 2 cents in 1903, it ought not to be further reduced at the present time. When systems of rate making have become established and business conditions have adjusted themselves, it is a very delicate process to interfere with those systems, even though they are manifestly wrong. These rates from southern Kansas have been constructed upon a false basis for many years, but they have come to be a part of the rate adjustment of that country, and any alteration or correction must be gradual in its application. We hesitate to-day to change these rates because of the effect which it may perhaps have upon the milling industry of that locality.

So long as flour is shipped to market over the same route which the wheat out of which that flour is ground ordinarily takes, an advance in both rates is not likely to produce an ill effect upon the miller. But where the flour moves in one direction and the wheat in another an alteration of the relative rates may injure the miller by raising the price of his wheat without a corresponding advance in the price of his flour. These rates which we have reduced apply to the movement of wheat for export. Flour ground in southern Kansas from this wheat is sold largely in eastern markets, and when it moves for export is generally carried out through the Atlantic ports. A reduction of this export rate without a corresponding reduction in rates from other wheat-producing sections will tend to increase the price of this grain for export and to devote it to that trade. The price may therefore be advanced to the miller, although the competitive market in which he sells his product will remain the same. This complaint is, however, preferred by the grain growers of Kansas and is urged by the board of railroad commissioners of that State, which has intervened for the purpose. It seems to be our duty, therefore, to put into effect what seem to us, under all the circumstances, to be just and reasonable rates, having in mind, among other things, the existence of this important industry.

While these reductions are considerable in amount, it is not believed that their effect upon the net revenues of these defendants will

be serious. That we might have some opinion upon this subject, the defendants were requested by the Commission to furnish it with information showing the movement of grain from the Kansas fields to the various markets. From the statements thus filed it appears that the bulk of the movement is to the Missouri River, and that the direct movement from the field to Galveston for export is comparatively small. The Rock Island lines, for example, moved, in 1906, 2,969 carloads of wheat and 1,380 carloads of corn to the Missouri River, while they moved to Galveston for export but 624 carloads of wheat and 76 carloads of corn. Assuming that our average reduction amounts to 4 cents per 100 pounds-which is probably too high—and that 50,000 pounds is the average car loading, the total loss to the Rock Island Co. would be $14,000. The movement upon the lines of the Santa Fe is larger, having been during the same year to the Missouri River 5,918 cars of wheat and 1,007 cars of corn, and to Galveston 2,039 cars of wheat and 867 cars of corn. Upon the above assumption as to loading, this would involve a loss of $68,120 to that system.

To these apparent losses are certain offsets. The export rate from Kansas City to Galveston has been advanced 1 cents. The Santa Fe moved from the Missouri River to Galveston for export, in the year 1906, 1,270 cars; the Rock Island, 343 cars. The advance of 12 cents would apply upon this movement and would also probably extend, in a measure, to a certain part of the export movement which we have treated as a loss in all cases. Moreover, and more important still, the putting in effect of these new rates will doubtless tend to divert from Kansas City directly to Galveston considerable quantities of grain which hitherto have moved into the Missouri River over the lines of the defendants and thence to some port of export by some other line. This will materially add to the revenues of these defendant lines, and it is not at all clear that the putting in of these lower export rates to the Gulf from Kansas points will not actually increase their receipts.

DOMESTIC RATES TO TEXAS POINTS.

The third class of rates attacked in this proceeding are those from these same stations in Kansas to points in Texas for domestic consumption. For the purpose of naming these rates Texas is divided into four groups. Taking Wichita again as an illustration, the rates on wheat are to group 1, 33 cents; group 2, 35 cents; group 3, 38 cents; group 4, 38 cents. Rates on wheat and corn from the stations under consideration seem to be in all cases the same to groups 3 and 4. Group 1 extends nearly across the entire breadth of the State of Texas east and west and is from 100 to 150 miles from north to south. Group 4 includes most of the southern portion of the State, groups 2