absorption of the South Carolina & Georgia Railroad by the Southern Railway Company, it is contended by complainants, was illegal under the constitution and statutes of the State of South Carolina. While it is within the province of the Commission to consider the suppression or diminution of competition by the merging of competing lines as a fact bearing upon the reasonableness of the rates, it is not its province to enforce any laws, State or Federal, prohibiting such mergers. If this transaction is illegal under the laws of South Carolina it can be nullified by the courts of that State, but in this proceeding the issue is confined to the question of rates alone.

Augusta is 203 miles from Savannah by the river and two lines of boats ply between these points. The boats make two trips per week, and, as appears by the testimony, have succeeded in absorbing almost entirely certain traffic, principally heavy commodities, such as starch, clay, etc., for the neighboring mills, which articles are carted to the depot and shipped by rail to these mills. The differential between rail and water and all-rail rates is 12 cents on first class to Augusta, or $1.08 per 100 pounds all rail as against 96 cents per 100 pounds rail and water. The differential by river from Savannah to Augusta is 10 cents on first class, but defendants' witness testified that the schedule is not adhered to in river transportation. There is apparently not a great movement on the river of the higher class commodities, but a substantial monopoly seems to exist in the carriage of many lower class articles.

The Southern Railway and the South Carolina & Georgia Railroad had mileage schedules of rates prescribed by the South Carolina State Commission which controlled as maxima their interstate rates. These were not identical, but were lower for the Southern Railway than for its rival. On the absorption of the South Carolina & Georgia Railroad by the Southern the latter applied the scale of maximum charges to its new line on the theory that as it was now part of the Southern system the rates prescribed for its line by the State commission must be applied. This change, it is alleged, resulted in a general reduction of intrastate rates, and affected some of the interstate rates as well when the latter were made up in part of such intrastate rates. At the same time the old arrangement of the Augusta mill group was ignored or set aside and combination rates applied to Langley, Graniteville, and Aiken, somewhat less than the sum of the through rates to Augusta and full locals back to those points, resulting in the rates above set forth.

The active competition of the all-water route from eastern ports to Augusta is sufficiently effective to make the transportation of such commodities to that point far from identical with the carriage to the so-called mill group in the circumstances and conditions surrounding

traffic destined to those respective points, and therefore under the frequent rulings of this Commission and the courts the prohibitions of the fourth section do not apply to such transportation, and the lower rate to Augusta is therefore not such a discrimination in itself as to be illegal for that cause alone. The existence of the Augusta rates to this mill group for ten or twelve years preceding the absorption of the South Carolina & Georgia Railroad by the Southern Railway Company does not present such a case of vested rights as entitles these points to an indefinite continuation of that method of rate making, notwithstanding investments at these points may have been encouraged and even inaugurated by this group arrangement of rates.

The existence of rates for so long a period gives no right by prescription either to the carrier or shipper to their continuance. There is, however, no question that the fact that the original carrier having for so long a time treated these shorter distance points as suburbs of Augusta and granted them like rates during this extended period is, if not conclusive, at least presumptive evidence that this carrier considered such rates reasonably remunerative and relatively just. The present system groups Langley and Aiken, which are 9 miles apart, and this is no less inconsistent than the former system which grouped Augusta and Langley, also 9 miles apart. From the defendants' testimony and argument the inference was inevitable that the restoration of the old group rates would result in increased revenues to the rail lines, since under like rates for traffic destined to these points it would not longer be carried by the river route, and would to that extent increase the tonnage of the railways. The tendency of reductions in rates toward increase of revenue is suggested by the Supreme Court in the Chicago Grand Trunk Railway v. Wellman, 143 U. S., 339, citing other earlier cases. The court pertinently asks:

Must it be declared as matter of law that a reduction of rates necessarily diminishes income? May it not be possible—all experience suggests the probability that the reduction of rates will increase the amount of business and therefore the earnings? At any rate, must the court assume that it has not such effect, ignoring all other constructions wholly as matter of law that a reduction of rates necessarily diminishes the earnings?

This consideration of increasing the income by such action would amply justify the carrier in establishing such group rate if it had elected to pursue that policy. In reply to a question as to whether the Augusta rate to the Aiken group would be sufficient to take the heavy traffic by rail instead of by the river to those places, the traffic manager of the defendant, the Southern Railway Company, said, "I think it would." But though such advantage to its revenue from the restoration of the former rates might well induce the railway to meet

the water competition, which, it is now claimed, secures from 75 to 98 per cent of certain commodities to said points, that reason alone-the advantage to its own revenues-does not make it compulsory upon the carrier to reestablish such rates. Nor, on the other hand, is the carrier prevented from making such changes through any accompanying obligation to revise its schedules for all other points on its line on the ground that the water competition at Augusta, being the only defense for the lower rate to that terminus than to shorter-distance points, does not apply to points not on the water, since the former lower rates directly establish the existence of a like competition at this suburban mill group sufficiently active to secure the great bulk of the heavy traffic to those points. Consequently, this argument is quite as potent if applied in favor of these localities as in respect to Augusta, notwithstanding the former are served but by one railway line.

Taking the first-class rate as an illustration, the rate which prevailed so long at these points, 96 cents, or $19.20 per ton, which was unchanged for ten or more years under the older company, neither unduly developed this mill group during its existence, as unreasonably low rates tend to do, nor was it apparently considered unremunerative by the road which established it. In ten or twelve or more years this line did not disturb this group, and for shipments in the opposite direction the group is still recognized, and these points take the Augusta rate. The first intimation of a movement to change this came, it is true, before the actual absorption of the South Carolina & Georgia Railroad by the Southern, but emanated not from the line which had established and maintained these rates it presumably still considering them reasonable and remunerative but from a committee of the Southern Railway and Steamship Association, at a meeting held a few months before the control of the line passed to the Southern Railway Company.

Upon full hearing and consideration of the issues, it is the opinion of the Commission that the present rates on freight included in the classes mentioned from the points of origin herein set forth to Aiken, Langley, and Graniteville, South Carolina, by the defendant carriers, in view of all the circumstances, facts, and conditions, are unreasonable and unjust in so far as they exceed the rates from the same points of origin to Augusta, Ga.

Blackville is situated 46 miles east of Augusta and we are not satisfied that it should be included in the same group with the other places.

An order will be entered in accordance with these conclusions.

No. 1008.

RAILROAD COMMISSION OF OHIO ET AL.,

v.

HOCKING VALLEY RAILWAY COMPANY.

No. 1009.

RAILROAD COMMISSION OF OHIO ET AL.,

v.

WHEELING & LAKE ERIE RAILROAD COMPANY.

Submitted June 29, 1907. Decided July 11, 1907.

Defendants are engaged principally in transportation of coal from mines located upon their lines. Certain other railways purchase their fuel supply from coal operators owning mines upon the lines of defendants and send their own cars upon the lines of defendants, consigned to the coal companies with which railways so sending their cars have contracts for fuel supply. Certain other coal operators have upon the lines of one of the defendants leased, or so called " private" cars, devoted exclusively to the use of such lessees. During a part of the year defendants are unable to furnish all of the cars desired by coal operators along their lines, and at such times the available cars not specially consigned or restricted as to use are divided among the several coal companies according to the capacities of their several mines. But in such distribution the foreign railway fuel cars and the leased or "private" cars are excluded from consideration and are given to the coal companies to which they are consigned or assigned in addition to the full share of cars allotted to such mines in the proportionate distribution. Complaint alleges unjust discrimination against other coal operators along the lines of defendants, in that such distribution of cars and such failure to count the foreign railway fuel cars and the leased or "private" cars gives the coal operators to whom such cars are consigned and assigned unwarranted advantages over other operators in the mining and marketing of coal. Held, That a carrier should give to owner or lessee of private cars the use of such cars; and should also give to a coal company the foreign railway fuel cars consigned to it; but that such "private" and foreign railway fuel cars should, in the distribution of cars, be counted against the company to which delivered and such company should not be given, in addition to such delivery, a share of the system cars except when the number of "private" and foreign railway fuel cars so delivered to it is less than its distributive share of the available cars, including system cars, foreign railway fuel cars, and so-called private cars, in which event it should be given only so many of the system cars as are necessary,

when added to the number of private and foreign railway fuel cars assigned to it, to make up its distributive share of the total available cars, including system cars, foreign railway fuel cars, and so-called private cars.

W. H. Ellis, Attorney-General of Ohio; H. B. Arnold. R. J. Mauck and S. W. Bennett for complainants.

J. H. Hoyt, Doyle & Lewis, H. M. McKeehan and W. N. Duncan for defendants.

REPORT OF THE COMMISSION.

CLARK, Commissioner:

The complaints in both of these cases were brought by the Railroad Commission of Ohio and the individual members of that body. The attorney-general of the State appeared for the complainants. Although a separate record was made in each case, both were heard at the same time and argued together. The decision of the Commission is therefore included in one report.

The basis of both complaints is that the owners and operators of coal mines along the lines of the defendants engaged in shipping coal to other States are unjustly discriminated against in the distribution of cars, although there are two features, one peculiar to each case, as follows:

In the complaint against the Hocking Valley Railway Company, it is alleged that it owns a large percentage of the stock of the Sunday Creek Company, owning and operating mines in Ohio and West Vir ginia, on the lines of the Hocking Valley and of the Kanawha & Michigan Railway companies, and that while it has not adequate equipment of its own, it has loaned, leased, and furnished cars to the latter company.

In the complaint against the Wheeling & Lake Erie Railroad Company, it is stated that certain so-called "private" cars, claimed to have been purchased by the Massillon Coal Mining Company and the Wheeling and Lake Erie Coal Mining Company, are not included in or charged against the percentages in distribution of cars to coal mining companies.

Paragraph III of the complaints is identical in that it alleges that defendants unjustly discriminate against the owners and operators along their lines of railway engaged in shipping coal by not considering "foreign railway fuel cars" in the percentages or distributive number of cars according to ratings established by them based on the capacities of the mines.

"Foreign railway fuel cars" are cars sent onto the lines of defendants by other railway companies for the purpose of being loaded with fuel coal for the use of such other railway companies. The cars are consigned to certain coal companies with which the railroad companies