The complainant competes with jobbers upon the Missouri River who buy their goods in the same eastern markets with it. Since the all-rail rate to Kansas City is 57 cents less and the rail-and-water rate 44 cents less than to Wichita the jobber located at that point owns his goods cheaper by that much than the complainant. It must be evident, therefore, that when the local rate to the retail customer is the same from Kansas City and Wichita the Kansas City jobber has the advantage to exactly this extent; and further, that unless the complainant can reach the retailer at a local rate 44 cents below that paid by the Kansas City jobber he can not compete upon an equal basis so far as the freight rate is concerned. It is this differential, not the absolute rate, which concerns the complainant, and the real purpose of this complaint is to secure a reduction of this differential.

It may be observed at this point that the treatment accorded Wichita in the construction of these rates is exactly the same, in one sense, as that accorded St. Louis and Kansas City. There is no carload rate upon cotton piece goods, and therefore the jobber in New York can ship to the retailer in St. Louis a consignment of cotton piece goods upon exactly the same rate of freight that the jobber in St. Louis can transport his goods, no matter in how large quantities they are purchased. In other words, the jobber at St. Louis can not sell to the east of that city without being at a disadvantage in the freight. Exactly the same thing is true at Kansas City. The wholesaler in St. Louis can lay down goods at the very doors of the Kansas City jobber for precisely the same rate that this jobber can obtain his goods. If the same rule were applied at Wichita which is applied at St. Louis and Kansas City the Wichita jobber would be charged the full local from Kansas City in addition to the rate up to that point. In fact, he obtains an all-rail rate from New York, which is 9 cents below, and one from East St. Louis which is 6 cents below, the combination.

There is, however, this difference against Wichita: Rates from east of the Mississippi River to points west are made by the full combination to and from, and the same is ordinarily true of Kansas City; that is to say, the jobber at East St. Louis can not lay down his goods at a point beyond Kansas City, in the State of Kansas, at a less through rate than the jobber at Kansas City can bring his goods to that point and send them on to the interior destination. Now, with Wichita this is not true. The rate to points beyond is not made up by adding together the locals from Kansas City to Wichita and from Wichita to destination, but is a through rate, which is less than the sum of these locals, and proceeding both toward the west and the southwest a point is presently reached where rates from Wichita and Kan

sas City are the same. The result is that the complainant in most territory is at a serious disadvantage in the freight rate as compared with the Kansas City jobber.

While the real object of the complainant is to better its condition in this respect, and while that fact must be kept in mind in disposing of this matter, the only question raised by the complaint, and therefore the only question directly before us, is upon the reasonableness of these rates from East St. Louis to Kansas City, from Kansas City to Wichita, and from East St. Louis to Wichita. Are these rates excessive?

The distance from East St. Louis to Kansas City is 277 miles by the short line and the rate 35 cents. In this territory the Western Classification is in force, and under that classification cotton piece goods are rated as first class. The first-class rate from East St. Louis to Kansas City is 60 cents, the 35 cents being a commodity rate just equal in amount to the third-class rate. To hold, therefore, that this rate is excessive would require us to decide either that the Western Classification was utterly wrong or that the class rates between East St. Louis and Kansas City were grossly excessive. We do not think that this rate upon this commodity between these points can be regarded as unreasonable in the absence of special conditions which require a lower one.

The rate from Kansas City to Wichita, as we have already said, is 66 cents per 100 pounds and the distance 222 miles. This, in comparison with either the rate from New York to East Louis or from East St. Louis to Kansas City, is extremely high. Should it be reduced in this proceeding?

Its reduction would not apparently benefit the complainant, for whatever rate is substituted for it it becomes available to its competitor at Kansas City for the distribution of his goods and inures to the benefit of that competitor precisely as much as it does to the benefit of the complainant. Its reduction might weil work to the disadvantage of the complainant, since the gulf-and-rail lines might not see fit to maintain the same wide differential between gulf-and-rail and all-rail rates which now obtains if the rail rate were materially reduced. Looking, therefore, to the interests of this complainant as a jobber we find no reason for a reduction of these rates.

The rate from Kansas City to Wichita is the regular first-class rate. In order, therefore, to reduce it we must either hold that the Western Classification is wrong in rating cotton piece goods as first class or that the class rates between the Missouri River and Wichita are too high.

There is but little relation between the actual cost of transporting this commodity and the rate charged. The nature of the article is

such that the freight rate enters but to a small extent into the price which is finally paid by the consumer, and its use is so general that whatever transportation charge is exacted is generally diffused among the entire community and therefore equitably distributed. In Southern Classification cotton piece goods are rated as fourth class and in Official Classification as 15 per cent below second class. This is evidently due to competitive conditions, just as competition has called into effect the commodity rate between East St. Louis and Kansas City. In the case before us there are no such competitive conditions. So far as we can perceive, it would not benefit any particular individual or community to place this commodity in a lower class. If by doing so we could benefit Wichita as a distributing center, a different question would be presented.

If the classification should not be changed, then this rate ought not to be reduced unless we are prepared also to reduce these class rates generally. No special reason is shown for a reduction of this rate which would not apply to all first-class rates, and there is no claim that first-class rates are unduly high as compared with the other classes.

Substantially these rates from Kansas City west were established long ago, when traffic and operating conditions were much different from what they are now. Since they were put in effect tonnage has enormously increased and the railways over which they apply have developed from feeble lines into vast and powerful systems. Ordinarily speaking, this change in conditions ought to be accompanied by a reduction of rates. It may be that these rates must finally be reduced; but it does not seem wise to enter upon any general reduction of rates upon these lines at this time unless there is some special reason for it. There are now pending before this Commission complaints asking for reductions in grain rates from southern Kansas and Oklahoma Territory to Texas points and the Gulf; in rates on coal in Indian and Oklahoma Territories; in rates on live stock from various points in the Southwest to northern markets and pastures. In all the rates thus drawn in question these defendants are interested. The amounts involved are very large and the rates are more immediately felt by the shipper than are these class rates. In addition to this, the expenses of operation in many particulars are increasing. These defendants either have been or will in the near future be compelled to make advances in the wages paid their employees, which will aggregate very considerable sums. They must expend a great amount of money in improvements and the purchase of additional equipment to handle the traffic which is even now offered. While it is probable that increase in business will offset all this, still it seems wiser on the whole not to order any reductions of the character called for in this case until these other complaints

have been disposed of and until it is known from actual experience what the effect is to be upon net revenues. We shall therefore at this time decline to reduce this rate on cotton piece goods, without, however, any prejudice to the right of the complainant or other parties to present the same question for consideration in the future. As we have already observed, the real thing aimed at by the complainant is the differential between Kansas City and Wichita, and this subject has been extensively discussed by the attorney for the complainant in his brief. The defendants insisted upon the trial and renew that objection in their briefs, that this question can not be passed upon in this proceeding, and we are forced to agree with them. If Wichita is entitled to a better differential than it now enjoys on cotton piece goods it is by virtue of its proximity to Galveston. This it is which gives to it its present rate of $1.36, which is 17 cents lower than the combination upon East St. Louis. There is no allegation in the complaint that this rate is unreasonable, nor that it discriminates against Wichita in comparison with the rate of 92 cents at Kansas City. The Gulf lines are not even made parties to this proceeding. If we sustained the contention of the complainant no order could be made.

We have considered the advisability of holding the present complaint for the purpose of allowing the complainant to amend it and cite in the additional necessary parties; but there seems to be little in favor of that plan either in the way of expense or convenience. No costs are taxable before the Commission and the complainant can file a new complaint with the same ease that he could amend the present complaint. The testimony already taken can be introduced upon a future hearing for what it is worth, and complications which might arise in proceeding with the present investigation will be avoided by beginning de novo.

The complaint is dismissed without prejudice.

12 I. C. C. Rep.

No. 891.

JOHNSTON-LARIMER DRY GOODS COMPANY

v.

NEW YORK & TEXAS STEAMSHIP COMPANY (MALLORY LINES); ATCHISON, TOPEKA & SANTA FE RAILWAY COMPANY; CHICAGO, ROCK ISLAND & PACIFIC RAILWAY COMPANY; CHICAGO, ROCK ISLAND & TEXAS RAILWAY COMPANY; GULF, COLORADO & SANTA FE RAILWAY COMPANY; INTERNATIONAL & GREAT NORTHERN RAILROAD COMPANY; MISSOURI, KANSAS & TEXAS RAILWAY COMPANY; AND MISSOURI PACIFIC RAILWAY COMPANY.

Submitted March 14, 1907. Decided March 25, 1907.

On complaint that a rate of $1.61 per 100 pounds on knit goods from New York and New York rate points via water and rail through Galveston, Tex., to Wichita, Kans., is unlawful, and with which is compared defendants' rate of $1.31 on that traffic through Wichita to Topeka, Kans., Held, (1) That the difference in rates is justified by competition for traffic to Topeka which does not exist and apply with like force at Wichita; (2) that the rate to Wichita is not, under the circumstances, shown to be unreasonable.

A. E. Helm for complainant.

M. A. Low and E. B. Peirce for Chicago, Rock Island & Pacific Railway Company.

A. A. Hurd for Atchison, Topeka & Santa Fe Railway Company.

REPORT OF THE COMMISSION.

PROUTY, Commissioner:

The complainant alleges that the defendants maintain rates on knit goods from New York City and New York points to Wichita and Topeka which are, respectively, $1.61 to Wichita and $1.31 to Topeka, and that in transporting this traffic to Topeka the defendants carry it through Wichita and 189 miles beyond. The complainant insists that the rate to Wichita is excessive and that the defendants, by making a lower rate to Topeka, the more distant point, violate both the third and the fourth sections of the act to regulate commerce.