rate of 55 cents from New York to Chicago. In this southern territory they are carried by rail and water at a commodity rate of 41 cents from Augusta to New York.

Except for a few days in April, 1887, there has never been a difference between the carload and less than carload rate on cotton piece goods from this territory. The rate, like that on cotton, being adjusted to give the same rates to the large and small shipments.

The rates were for many years the same both by all rail and by sea and rail, and during that period nearly the entire traffic in cotton goods was carried from the complainants' mills by the all-rail routes, as the all-rail lines had a slight advantage in time of transit and in the matter of marine insurance. Early shipments were carried at actual rates as low as $1 or 75 cents per bale to New York, Philadelphia, and Baltimore. The nominal rate from Augusta proper is now 38 cents per 100 pounds on cotton, but this is not a measure of the actual rate paid on any great quantity, as Augusta is a concentrating point, and the shipment of cotton north on the balance of the through rate from its point of origin results in a rate less than that named in the tariff for Augusta cotton, of which there is probably an inconsiderable amount shipped to northern points.

DIFFERENTIALS.

Previous to 1889 the rates by the all rail and rail and water routes were identical, but on June 15 of that year a differential of 3 cents per 100 pounds in favor of the rail and water lines was agreed upon, and this differential prevails throughout all the successive changes in the through rates, having no proportional relation to the rate itself.

So long as the steamship lines and the Savannah River boats worked in harmony the differentials by the all water route. were whatever they pleased to make them, as no tariffs were required to be filed and no records kept.

On May 1, 1889, the Southern Railway Company leased the South Carolina & Georgia Railroad, extending from Augusta to Charleston, and applied the local rates of the Southern Railway to this acquired line, which resulted in reductions, claimed by defendants to cover about five thousand rates. On September 12, a conference committee of the Southeastern Freight Association held a meeting in New York, when for the first time was established a fixed differential in favor of the Savannah River boat route of 3 cents per 100 pounds on shipments in lots of less than 5,000 pounds and 5 cents on 5,000 pounds or over. These were, however, to be considered tentative, and a resolution was passed providing that statistics were to be kept for sixty days and furnished the carriers weekly, and in case of the dissatisfaction of any line with these established differentials a meeting of the

committee was to be called to reconsider the same. Another meeting of the committee was held July 25, 1901, at Savannah, with representatives of all the interested lines present, except the Merchants & Miners' Transportation Company and the Georgia Railroad, and the following resolution was passed:

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Resolved, That the differentials enjoyed by the boat line on cotton factory products from Augusta to southern points be changed to read: Quantities of less than 5,000 pounds, 2 cents per 100 pounds; quantities 5,000 pounds and over, 4 cents per 100 pounds," and that the Ocean Steamship Company and the M. & M. T. Co. agree to advance their proportions from Savannah if necessary to protect these differentials; that this adjustment become effective August 1, 1901, and that statistics of the movement from August 1, 1901, to November 1, 1901, be considered at meeting to be called by chairman of the committee during the first week in November to give further consideration to this matter.

This resolution was the subject of a proceeding instituted by the Department of Justice against the carriers under the provisions of the so-called Sherman antitrust act; also, of a suit in behalf of some of the complainants and possibly others for damages under the provisions of that act.

The rates from Augusta to New York, by reason of the water competition, are lower than from any other point in the South and lower than from many points less distant from New York that do not have the benefit of such water competition.

The consumption of cotton in southern mills has greatly increased in the last ten years, and is to-day nearly 2,500,000 bales, a greater quantity than is supplied to northern mills.

In the transportation of cotton goods they are not cased, but the bales are wrapped in 6 or 7 pounds of burlaps and paper. These bales weigh from 200 to 400 pounds, with an approximate average of 270 to 300, though there is constant variation, depending on the fineness of the fabric, etc. The value of the goods varies with quality and weight, but the products of the complaining mills average about 20 cents per pound, or $20 per 100 pounds.

Special care is required in the handling and carriage of this class of goods, and the use of hooks is forbidden. The cars, warehouses, and decks or holds of the vessels must be free from projecting nails, bolts, and ragged floors; and must be clean, since rust, oils, and dampness are all liable to injure the goods. It was also claimed by the defense that the extra services of careful and expert handlers are necessary.

LIGHTERAGE.

In the rate from Augusta is included lighterage at New York, whether by all rail or sea and rail. This is not true for domestic points other than Augusta. The Spartanburg rate of 49 cents be

comes 53 cents to points beyond New York or 52 cents for export when the lighterage charge is added, but the 41-cent rate from Augusta includes this lighterage charge of 4 cents for domestic points and 3 cents per 100 pounds when for export, this being deducted from the through rate before prorating.

INSURANCE.

Testimony of the defendants, as well as the records of the Commission, seem to establish the fact that the rates quoted prior to 1890 in no case included insurance. Following that date rates were frequently given with and without insurance. The rail and water rate of 41 cents here complained of includes marine insurance, and out of this is paid 3 cents per 100 pounds to cover that item before prorating.

The principal grounds upon which it is contended that the rates in controversy are unreasonable are:

First. That for about thirteen years prior to the establishment of the present rates lower rates had been in effect.

Second. That the existing rates are the result of unlawful agreements between the carriers.

Third. That the terminal and transfer charges at the ports and the insurance rates are unduly excessive, and being included in the freight rates result in making the latter unduly high.

While it is true that the long existence and use of a rate is an important fact tending to show that it is sufficiently high and properly requires the carriers to explain or justify an increase thereof, it has never been held to be conclusive upon the question. Furthermore, the facts do not show that the rate of 37 cents, which we are asked to establish, was in effect, prior to the increase complained of, for the long period alleged in the complaint.

It appears that the rates complained of are the result of concerted action between the several defendant carriers in restraint of competition, but the Commission has repeatedly held that this fact alone, though it may properly be considered as bearing upon the reasonableness of the rates involved, does not necessarily show such rates to be unreasonable.

The testimony is not convincing that the insurance and terminal or transfer charges borne by the carriers and included in the rates here involved are excessive.

The rates on these manufactured products are, as shown, not greatly in excess of the rates on the raw material of which they are made, while the values of the former are much in excess of the value 12 I. C. C. Rep.

of the latter, and the expense of handling the goods is materially greater than that of handling the cotton.

Upon the whole, we do not feel justified in ordering a reduction of the rates complained of. It follows that reparation must be denied and the complaint dismissed.

No. 916.

RIVERSIDE MILLS

v.

SOUTHERN RAILWAY COMPANY; ATLANTIC COAST LINE RAILROAD COMPANY; CHARLESTON & WESTERN CAROLINA RAILWAY COMPANY; SEABOARD AIR LINE RAILWAY; CENTRAL OF GEORGIA RAILWAY COMPANY; CLYDE STEAMSHIP COMPANY; OLD DOMINION STEAMSHIP COMPANY; AND OCEAN STEAMSHIP COMPANY OF SAVANNAH.

Submitted April 30, 1907. Decided July 11, 1907.

It appears that defendants' rate on cotton waste, in bales, a by-product of cotton goods, from Augusta, Georgia, to New York is 41 cents per 100 pounds, or the same as their rate on cotton goods between the same points, though cotton waste is considerably less in value and involves much less risk and expense in transportation than cotton goods. Held, That cotton waste should be transported at less rates than cotton goods, and that no higher rate than 35 cents per 100 pounds should be charged for its transportation by defendants, sea and rail, from Augusta to New York.

R. J. Southall for complainant.

Ed. Baxter, Claudian B. Northrop, and S. F. Andrews for defendants.

REPORT OF THE COMMISSION.

CLEMENTS, Commissioner:

The Riverside Mills, a Georgia corporation, with mills located in Augusta, Ga., engaged in the manufacture and sale of cotton waste and its shipment to various market points in other States, complains that the rates by defendants' lines to New York are unjust and unreasonable; that the rail and water rate to New York City from Augusta is 41 cents per 100 pounds, though for ten years prior to

December 15, 1897, the rate was 37 cents per 100 pounds; that factors included in the rate are exorbitant terminal charges at Savannah, Charleston, and Norfolk, and excessive marine insurance charges; that shipments over defendants' lines to New York from December 16, 1897, upon which complainant was compelled to pay the excessive and unreasonable rates, subjected complainant to loss and damage upon which reparation is asked.

Defendants deny the existence for ten years prior to 1897 of the 37-cent rate, averring that the rate fluctuated under competitive conditions and that the existing rate of 41 cents from Augusta to New York is forced by water competition by way of the Savannah River, requiring a less rate on waste than is collected on similar goods from other localities where competition is not so severe, and deny that the rate is unreasonable, the terminal charges exorbitant, the insurance excessive, or any violation of the act. The commodity rates upon cotton waste, baled, from Augusta to New York are the same as those upon cotton goods.

This complaint was first filed as case No. 872, March 26, 1906, and answered by defendants, but by an order entered October 30, 1906, on motion of complainant, said complaint was dismissed, and the present case, No. 916, against the same defendants, alleging the same facts, was filed November 1, 1906. The defendants made substantially the same answers in this last proceeding as they had made in the first.

The Warren Manufacturing Company et al. filed their petition, August 29, 1904, against the Southern Railway Company et al., docket No. 772, complaining of said rate on cotton goods to New York, under which complaint and answers thereto much testimony was taken, and, by agreement of counsel, said testimony, so far as relevant, is to be considered as having the same effect as though retaken in this case.

The average value of cotton waste, baled, is about $5 per 100 pounds, selling at the mills in various grades from $2.50 to $7.25. It is refuse of cotton spinning mills-that is, soft white threadwhich is used for packing in railroad boxes, wiping oil off engines, etc., and is shipped, baled, to dealers and railroads throughout the United States. It is an important by-product, and the complainant, the Riverside Mills, is said to be the only mill in the South which prepares this waste for market, using not only the waste from its own mill, but purchasing the waste of other mills to be prepared and baled.

The total output of complainant's mill is about 50,000,000 pounds a year, of which this manufactured waste is from ten to fifteen million pounds. It also manufactures cotton batting from the same raw