New York v. United States

v. UNITED STATES NEW YORK et al. et al. NO. 34 3.

Argued May 12, 1947. 3, 4, 5, 1947.—Decided March appellants argued for Parker McCollester the cause L. Kenneth Sater No. him the brief were 343. With on Attorney appellant Goldstein, L. States, for the Nathaniel York, and State of New General, Frank J. Clark for the Attorney Killoran, for General, the State Clair John Attorney Karl Delaware, Emmert, General, A. and James Deputy Attorney Stipher, for the State General, J. Attorney Hammond, Indiana, Hall for State General, Maryland, Attorney and Eldere, General, Foss 0. James Attorney Williams, General, W. Assistant for the State Attorney Michigan, Riper, General, D. and Walter Van Attorney Deputy Peacock, General, Robert for State Hugh Jersey, Attorney Jenkins, General, of New S. for the Attorney Martin, Ohio, State of John E. and General, Ferguson, Attorney T. Herbert General, Assistant for Jam,es Attorney State Wisconsin, Duff, General, H. DeLaney, Deputy Attorney and E. A. General, for the Pennsylvania. Commonwealth of Henry Foley argued for F. cause and filed brief appellants in No. 344.

Douglas appellants argued for F. Smith the cause Barron, C. W. H. C. No. 345. With him the brief were Muckley, B. Fiddes, Boe, Gault, H. E. H. Elmer P. F. G. Thompson Taylor, Collins, D. Rob- Carson L. Robert Thomas. ert argued for the cause United

Edward H. Miller argued the cause Knowlton States Daniel W. appellees. Commission, With Interstate Commerce Acting them on the brief were Solicitor General Wash- ington Attorney Berge. and Assistant General argued

J. V. Norman cause for the Southern States appellees. and Southern Governors’Conference, Byron Gray argued M. Ar- for cause the State appellees. et al., kansas With him J. C. on the brief were Murray Johnson, for the State of R. Arkansas, Walter Attorney Kokjer, Deputy General, and H. Emerson At- torney for General, Neis John- Nebraska, State G. Attorney son, General, E. Neal and James Williams Hanley for the Dakota, of North B. State C. Bee for the Williamson, State William At- Oklahoma, Assistant torney General, for Dakota, the State of South and Price Attorney Daniel, General, James D. Smullen and Charles Attorneys Methews, D. General, Assistant for the State of Texas. Burnguist, Attorney George A.

J. A. General, and T. Simpson appellee. filed Minnesota, brief State of Attorney Dummit,

Eldon S. General, Holifield, M. B. Atorney General, Assistant E. J. Marks and L. F. Orr filed Kentucky, on brief behalf of the State of as amicus urging

curiae, affirmance. Opinion Court an- Douglas, Mr. Justice nounced by Mr. Justice Burton. orders of Commission, the Interstate Commerce appellants

which separate investigations seek to aside, have set resulted from two

instituted the Commission inquire its own motion 1939 to into the lawfulness or existing rate-making unlawfulness most of then for interstate standards railroad class rates in the investigation United States. One related to classifica- 290 freight.' move rail under which commodities

tions1 investigations two to class rates.2 The The other related report, covered one and were were consolidated closely are and of class rates3 problems of classification Commission as to classi- findings The of the interrelated. of For the orders directly are not involved here. fications are interim orders which Commission under attack and rates, them some areas only increasing affect class summary a and decreasing them in others. But review of both on classifications findings the Commission’s 1 grouped classes, commodities in each Commodities are into those per Frequently a paying freight pounds. 100 class the same rate commodity depending upon is or in several classes whether carload involved, upon packag are the method of less-than-carload lots ing. One class is called first-class or class 100 and each other class multiple, Thus the percentage, or of first-class. has been fixed as a containing freight of lists involved these cases consist classifications freight every commodity moving by class or descriptions and the ratings. rating assigned, e., i. its classes to which it classification pp. C. C. 465-472. See 2621. 2 price rates in the form of a schedule which shows class are every per pounds moving possible for distance first-class may given commodity is shipment it for be moved. The cost a by ascertaining rating, determined its classification the first-class involved, percentage per pounds and the for the haul subject. rating question classification rate to which the first-class pp.C. 515-519. See 2621. C. are other kinds of rates: There three commodity Exception resulting rates from the transfer rates are assigned regularly class in the and into another out of its classification class.

Commodity special particular com- rates are rates established commodity given purposes of is not For these rates a modities. no commodity rating; is that the rates have the result classification relationships rates. percentage first-class fixed rates percentages definite of first-class are fixed as rates Column commodity they only particular apply commodities like but assigned regular no class. C.p. 2621. C. 562. See understanding class essential for rates are an

problem. territories, classification major

While are three there Territory, major rate Official there are five territories.4 Mississippi and north roughly lies east of the speaking, of the Ohio and Potomac also includes most Rivers; Virginia. south of Terri- Territory Southern lies Official tory Mississippi. and of the Western Trunk-Line east Territory approximately between Ter- located Official Terri- ritory Rocky and the Mountains. Southwestern tory Territory and lies south Western Trunk-Line Mississippi Arkansas, Texas, west of the and includes Oklahoma, part of and Louisiana. Mountain-Pacific Territory Montana and New and all includes Mexico territory Only west Rockies. Mountain-Pacific Territory is not involved these cases. major

The three classifications are Southern Official, But and Western.5 there is lack of great uniformity problem The classifications. is one with which the long Commission has But prior present wrestled.6 to the 4 Some territories have subdivisions in which rate differentials applicable vary territory are the class rates within the question. 5 applies Territory Official Classification within Official and Territory from Western Trunk-Line to Official. The Southern Clas applies Territory, sification within Southern between Official and Southern, and from Western Trunk-Line to Southern. Western Trunk-Line, Classification includes Western Southwestern and Moun tain Pacific rate applies territories, territories. within those three Official, between Southwestern between Southwestern and South ern, from Trunk-Line, Official to Western between Mountain Pacific Official, from Southern to Trunk-Line, Western and between Mountain-Pacific and Southern. 6 Classification, 442; Classification, Western 25 I. C. Consolidated C. 1; Investigation, 513; I. C. C. Class Rate C. Southern 100 I. C. Cases, 203; Consolidated Southwestern 123 I. C. C. Western Trunk- Rates, 1; Line Class Investigation, 164 I. C. C. Eastern Class-Rate C. 164 I. C. 314. had in this field accomplishment its chief

investigation sep- within the uniformity classification been establish uniformity classification National territories. arate between differences lacking. Many main in the still of sub- matters rating are particular classifications Moreover, matters of nomenclature. others are stance'; against to work tendency among carriers there has been excep- by making uniform classifications the evolution classifications commodities from the tions which remove rate-making purposes. Act (4)1 of the Interstate Commerce Section (4)1C. § S. amended, 899,900,49 24 Stat. Stat. U. carriers duty that it be the of common provides shall just applicable establish and reasonable classifications 1(6) charges. prohibits Section freight rates through Section classification. every unjust and unreasonable empowers 15 (1) And (1) prohibits § discrimination. classifi- prescribe just, fair, and reasonable Commission to un- finding existing after a classifications cations, existing classifi- that the lawful. The Commission found until and will to be unlawful cations are unlawful continue It found uniformity of classification. there is national affect the classifications applicable differences that in- more, some of the class rates as much as levels of the class the levels stances, than the differences shippers one It found that rate scales themselves. territory in another territory pay shippers more than differences; on the same article because of classification ter- separating that territorial boundaries classification that complications; ritories are artificial and cause serious rev- produce divergent costs, geographic conditions where ad- requiring rate or other conditions requirements, enue in the adjustments should be made not justments, but in the rate levels or itself basic classification exceptions classification; to the legitimate creation of uniformity there was no real the classifications amongst ratings although classification classification the same principles con- applicable throughout are nation. It cluded uniformity impossible that without such it is maintain just and relationships reasonable between class rates for for competing commodities; it is feasible a carriers establish uniform The classification. Commission gave opportunity railroads the to take the initiative new preparing the uniform classification— an which, invitation advised, accepted. we are been has four proceeding

Prior to this made major rate class each of rate investigations —one except territories Mountain-Pacific.7 These established i. e. basis, class rate a regional they structures on estab- degree lished uniformity some rates within each class territory or territory. they subdivision of But did deal with interterritorial class re- by harmonizing rates gional adjustments rate one with the other. As result separate there are appli- interterritorial rate structures cable to moving traffic from into territory one another.

These territorial exceedingly class rate are structures complicated. uniformity amongst There is no basic them and they computed by varying formulae. within class Southern, Commission found that rates territories, Trunk-Line

Southwestern Western Territory, from generally those territories to Official were article, much than the within higher, article for Territory. Official have higher found that class rates impeded development and movement of class Investigation, Eastern Class-Rate 164 I. C. C. 171 I. C. C. 481, 156, Investiga 357; 203 Class 177 I. C. C. I. C. C. Southern Rate tion, 513, 300, 200, 100 I. C. C. 109 I. C. C. 113 I. C.C. 128 I. C. C. 567; Rates, 1, 637, Western Trunk-Line C. 173 Class 1641. C. I. C. C. 301, 619, 494, 197 178 I. 181 I. 57, C. C. C. C. 196 I. C. I. 204 C. C. C. 595, I. 312, 119; C. C. 210 I. C. C. 246 I. C. C. Consolidated South Cases, western 123 I. C. C. 205 I. C. C. See 601. the discussion seq. in pp. 262 I. C. 526 et C.

294 and Western Southern, Southwestern within

freight to Official territories from those and territories Trunk-Line comparative neither that Territory. It concluded in the con- nor variations service transportation costs justified the territories of traffic within volume and sists also in The the class rates. differences those depend- rates is equalization of class determined rates and interterri- on of non-class equalization ent establishing only by can be solved problems torial rate rates. uniformity ratings and substantial class (4) (5) (a) require and the Act rates and Section just reasonable. The Commission charges to be applicable found that the intraterritorial class rates to rates question territories and the interterritorial class provisions. between the territories violate those (1) Section 3 of the Act outlaws undue or unreasonable preferences district, or to terri- advantages any region, tory. The Commission found that the relation between from Territory the interterritorial rates to Official class other intraterritorial question territories in and the unreason- Territory class within Official results an to preference Territory whole, able Official shippers freight there, and receivers of located violation (1). of 3 pursuant § The au- acting its Commission, thority (1) Act, prescribed under § reasonable preference nondiscriminatory class rates cure the to exist, applicable found the new rates to become simulta- neously with the new revised classification as we which, noted, have the Commission ordered to be established. But time will be required to formulate a uniform classi- And the Commission that pending fication. concluded completion of that interim undertaking readjust- certain ments existing rates, existing basis class based given territory totality consist is the of com territory. modities carried in that

295 classifications, could be readjustments made — just would be and and reasonable, which would to reduce the preferences minimum and prejudices which the found Commission be to unlawful in the existing system. It determined the several intraterritorial freight-rate should brought structures be closer and to the same level be pattern constructed the same or scheme. It con- cluded that as many possible differences as between interterritorial and rates rates the intraterritorial should be eliminated. It in- accordingly existing ordered that applicable terstate class rates9 freight moving to traffic at the classification ratings within Southwest- Southern, interterritorially ern, territories, and Western Trunk-Line interterritorially territories, between and between those Territory, each of re- those territories Official be per subject duced 10 cent qualifications impor- It tant here. also ordered that interstate class rates at moving ratings traffic classification within Offi- per subject cial be Territory cent, qualifi- increased 10 cations not relevant the new problem. our found interim just 447, class rates 262 I. C. C. reasonable. supplemental 2641. C. report, C. 41.

The new interim rates to become effec- were ordered York January 1, date, tive 1946. Prior to that New 343, other No. filed their appellants northern States, petition in the District the orders Court to aside set A con- judge Commission. was statutory court three vened and temporary injunction preventing was issued 208, orders from going 220, into effect. Stat. U. C. England S. six § 47. Governors of the New (three States have been whose successors office sub- appellants stituted as on the 344) No. intervened side plaintiffs, appellants did most of the change any No in intrastate made. Nor was class change existing commodity made in See exception, column or rates. supra. note intervened on and others10 345. The

No. in No. Appellants States. the United side the railroads, also filed of the western 345, including most substantially seeking in Court the District petition their 343. The cases appellants No. as the same relief Court together, tried District and were consolidated western rail- receiving additional evidence offered of the Commission the orders roads. court sustained injunc- Supp. F. but continued respects, 856, in all 65 210, Code § Court.11 Judicial appeal tion to this pending 47a. 28 U. C. § S. Com- at which the Interstate principal

First. The evil various Act aimed its merce was discrimination States, R. v. United Louisville & N. Co. manifestations. 1935, pro- Act 740, (1) 282 U. S. 749-750. 3 of the § Until only against company, hibited discrimination a “person, any particular description or firm, corporation, locality, or 379, question . . 24 Stat. 380. The arose of traffic . “locality” port port as included a insofar whether point a origin gateway or destination but was not shipments which were made. The Court held through closely divided and to the of the vote, contrary ruling v. it did not. & R. Co. Texas Commission, Pacific States, Congress U. S. 627. Thereafter 289 United prohibition against as extend (1) so § amended 3 port district, “port, gateway, to include a discrimination Albany And Port Dis- point.” 49 Stat. 607. see transit 10 Louisiana, Alabama, Arkansas, Florida, Georgia, Kansas, Mis Minnesota, Carolina, Dakota, sissippi, Nebraska, North North Okla Tennessee, Texas, homa, Carolina, Dakota, South State South States, of a number of these the Southern Governors’ Commissions Conference, and Southeastern Association Railroad and Utili Commissioners. ties 11 injunc of the United States dissolve the denied the motion We (g). 62 R. Civ. P. 328 U. 824. See Fed. tion. S. Co.,

trict Commission v. I. Ahnapee & W. R. 219 C. C. Congress 151. That was in 1935. In 1940 further. went (b) By Transportation § Act of Stat. 899, 902, known Resolution, as the Ramspeck it authorized investiga- and directed an the Commission institute points tion rates one into on commodities between territory points territory classification another like within of de- purpose into territories for termining “unjust whether those rates were and unreason- any able in and of respect or unlawful other themselves other, their relation to each to enter orders such may appropriate any be removal of unlawfulness may be found to . exist . . .” also Congress ex- prohibition against tended the discriminations adding to the words (1) “region, 3 district, territory.”13 §

It is now asserted the that Commission has misunder- stood its duties under these 1940 amendments. It is said that the Commission has construed this of Con- mandate mean gress to that identical rates, mile for be mile, should Congress investigations The Commission advised that its insti (the cases) challenged tuted in 1939 of present basis the orders in the pursuant would carried this be out to mandate. See I. C. C. p. 689. 3(1) Section now reads: any subject pro-

“It be shall unlawful common carrier to part make, any give, visions of this or to cause undue or unreason- preference advantage particular firm, any person, company, able or to corporation, association, port district, gateway, locality, port, transit point, region, district, any territory, particular description traffic, or of respect subject any whatsoever; any particular person, com- or to firm, district, gate- pany, corporation, association, locality, port, port any point, region, district, particular way, territory, or de- transit any scription prejudice or or traffic to undue unreasonable disadvantage respect however, any Provided, whatsoever: That discrimination, prej- paragraph apply this be shall not construed to to udice, any disadvantage to the traffic of whatever other carrier of description.” long- country, in face of everywhere in the

established legislative rate-making (which the standing practice of not shows intended 1940 amendments history in rates changed) that allowed differences to be haul, character length were based differences of the density of and other elements terrain, traffic, argued of service. Thus it is cost States, 281 S.U. R. Co. v. United runs afoul of Ann Arbor joint of a resolution 658, the construction which involved an inves- make directing Commission to Congress charges existing tigation to determine whether discriminatory so unjustly unjust, unreasonable, or were locali- the various advantage to undue “as between give 802. . 43 Stat. country . .” parts ties . mandate, condemned Commission, on that relying and eastern existing rates between California certain Com- The Court order of the points. set aside the mission, purport holding joint that the resolution did not existing change validity law but left of rates be determined that law. present proceed cases did

But the Commission in the changed Ramspeck assumption on the that the Resolution the Commis- report, the substantive law. As we read its investigate only sion took resolution as directive correct violations law as it deemed of substantive by law (1). § broadened amendment to 3 It said: “By the substantive antidiscrimi- amendment to the provisions 3 discriminations (1) nation of section all or preference in the form of undue or unreasonable prejudice or dis- advantage, undue or unreasonable or regions, territories, as between or districts, advantage, entities, brought directly separate viewed as were with purview along within the act all the other previously included. were then au- inhibitions We provisions by thorized and directed the other men-

299 found to any tioned to remove such discriminations in a that proper proceeding. exist This means such which result from discriminations as those mentioned in the general differences methods of distributing rate-making rate burden in the several or territories, any if cause, justified proper from other upon recognized consideration of making elements of rate applied light of the amended law are unlawful and should be corrected.” 262 p. I. C. C. 692. this apparent

From statement it is that the Commis- sion concluded 3 (1) § that amendment to of in- enlarged scope Commission, section. deed, “it purpose stated that is clear that main which Congress had mind to a bring greater degree about equalization, harmony, uniformity the different regional or territorial country.” structures Id. p. suggested 692. And see id. pp. But it is 688-691. that were geographic discriminations based on factors out- lawed prior to the amendment evidenced (1), § long-standing its condemnation “undue or unreason- prejudice able disadvantage” any “locality” and, any “port, port district, gateway, since transit point.”14 It moreover, suggested pro- even is, against hibition shippers discriminations was broad enough along all to ban geo- discriminations based on the graphic shippers. location of the The contention is that a without in the law the change present orders were un- warranted; it pointed out that the class rates now con- had demned been found the Commission itself to be just and years. reasonable recent And it is asserted pointed out this connection that Texas & R. Co. Pacific United, States, holding swpra, v. port “locality” while a was not only through gateway shipments when it was made, were recognized “locality” port that a point was a origin when was a p. or destination. 289 U. S. 638.

300 aon action present its not take did Commission

that the times. those since changed circumstances showing of are orders present therefore, that the conclusion, (1). by 3§ warranted 1940 the to whether, prior

. not determine need We discrim- on unlawful by its ban amendment, (1), § permitted have “locality,” would against inations discriminations regional to eradicate Commission the may have existed For doubt rates. whatever class which 1940 amendment law removed the in the thought that abundantly Congress clear that made neglected had been regional discriminations problem found discriminations were that, any if such to. But, they should be eradicated.15 present, be concedes, “region, the addition of dis- territory” (1) to did not law re- trict, change § specting authorizing discrimination uniform rates, mile, mile for regard differing without costs of the Congress, by adding service. words, plain those made duty Commission, determining whether discrim- practices exist, to inatory consider the interests of re- districts, territories, and to gions, territorial eliminate not justified by rate differences differences In territorial conditions. other Congress words did not introduce a new standard of discrimination by its amend- §3(1); merely ment made purpose clear its that regions, districts, territories should be the benefici- against aries of the law discrimination. charge Senator Wheeler who had of the bill floor of concerning (1): previous Senate stated the amendment “The §

provision regard simply with to ‘discrimination' referred to discrim 'locality, port port, district, gateway, point’ ination as to transit region, district, territory. specifying So we felt without away excuse, by broadening language we would at least take provide expressly should not dis and we would that the Commission Cong. Rec., p. 5889. criminate in rate structures.” 84 its argued, however, findings It is Second. concerning regional discriminations class supported by

rates are not substantial evidence. great differences betwen territorial class rate levels following gives are shown a comparison table. (in per pounds) cents between the first-class rate scale Territory within Official and that within each the other territories: rates are used as bases

These intraterritorial first-class re- formulating rates on other classes spective territories.16

The following compiled by tables Government counsel show the first-class rates for interterritorial movements to Official Territory from the other territories as each of compared with for approxi- intraterritorial movements mately equal Territory: distances within Official 2, sufrg,. See note shipper disadvantage or Western Southern Territory attempts product who to market his Official that a is obvious. Thus first tables shows of these Nashville 39 100 shipper pays pounds cents more on each of who moving Indianapolis, Indiana than one ships substantially equal from a Indianapolis point of in away (Kent, Ohio) Territory. distance Official Similar shippers disadvantages suffered and Western Southern in comparable are revealed the other interterritorial freight movements set forth in the tables. disadvantage emphasized

That if the effects classi- of fication differences on for rates identical are commodities considered. A comparison of in per cents 100 pounds for 200 that, miles shows though shippers even in South and West have the same or lower classification for ratings identical commodities, they nevertheless on the pay higher charges whole than in shippers Official Territory equivalent for service. Thus there in are class (first class) 100 for less-than-carload lots 2092 items

304 In Classifi- three Official to the classifications.

common per of 100 all these move at a rate 80 cents of cation Southern, In of a haul of 200 miles. 2075 pounds for of $1.12. 100 move at a rate items are classified these in remaining 17 items 5 are classified Southern Of 78, 2 in 70 with a rate of 95, rate class class 85 with a of 50, 62,2 45, a in class with a rate of in class with rate of 7 55 a In Western Trunk-Line 1 in 40 with rate of 45. class are classified 100 with a I, Zone 2076 of 2092 items a rate 10 82, of in 85 with of in 70 with a rate 97, rate 53. 68,2 55 with rate of In class 100 for carload lots there are 213 common items. In Official Classification all of these move at a rate of 80 Southern, for haul 200 miles. In 199 of these cents $1.12 are 100 and at a items classified move rate of 14, miles. Of remaining 7 are classified Southern 95, 84, with a rate of 2 in with a rate class 85 In I, 5 in 70 with a rate of 78. Western Trunk-Line Zone 202 of 97, the 213 items are classified 100 with a rate of 1 in 68, a rate of 3 in 70 with a rate 85 with illustrations too 55 with a rate 53. Additional are But opinion. detailed to include in this numerous and representative ones are of the rest and show given disparities in rate aggravated how levels are when of classification differences on rates are con- the effects sidered. in the record ten-

There is rather voluminous evidence competitive situations dered show effect concrete in the The instances were inequalities. of these class They attacked main reviewed the Commission. grounds here on various some of them involved rates —that rates, by ship- than class were testified to other others rates, who made no class that' pers others complaint paying higher yet rates shippers maintaining showed their positions and competitive prospering. We do not stop th,at beyond saying them them some analyze or discuss support what is to be inferred specific plainly instances figures from the we have rates summarized —that class Southern, territories, within Southwestern and Western and from those territories to Official Territory, gen- higher, much erally article, article for than the rates Territory. within Official That was the finding basic Commission; supported by and it is abundantly the evidence.

Thus in class favor of Official discrimination rates against Territory and Southwestern and the Southern, is established. But that Western Trunk Line territories end the matter. For “mere discrimination is not the United States v. illegal not under § does render a 3.” Co., R. con Illinois Central 263 U. S. Section 3 515, 521. “any or unreasonable or advan preference demns undue tage” “any prejudice undue unreasonable or dis advantage” any territory. And, said, as we have 3, by the 1940 amendment “region, § its addition of district, territory,” change did not the prevailing rules unlawful respecting merely discrimination; enlarged it reach of 3.§ Hence we must from pre determine existing law whether a against territory discrimination is obnoxious to 3.§ stated United The rule is States v. Illinois R. Central Co., supra, p. 524, as follows:

“To bring a difference within the prohibition § must be shown that the prac- discrimination ticed is unjust when measured the transportation standard. In other words, the difference in rates cannot be held illegal, unless it is shown that it justified by the respective cost of the by their services, or values, other transportation conditions.” on this principle that the' findings of the Commis- sion under 3 are § both defended and attacked. first (1) are findings § under The Commission’s

Third. that finding no is that there ground challenged on the charged to or actually corresponding class rates territories. in the several competing shippers demanded a favor of discrimination unlawful say, no That is shipper a Territory against Official shipper unless shown to exist Territory can be said Southern required pay actually competitor is southern that is contended class rates. interterritorial higher which of facts negatives the existence the record that finding such finding and that no support such could In the two circumstances. placed made. Reliance is place, first reference made to the effect classification briefly above. ratings on class rates we summarized shipper noted, example, It is that the southern in some for actually pays shipment of the instances less for same commodity shipper g., than the in Official e. Territory, where the commodity Southern Classification carries the which in exacts less that class, a lower turn a rate than required higher by classification granted Official. It is from the apparent given illustrations we have that is true in such some cases. But that is not the dominant In pattern. the vast majority the instances the classi- ratings, fication like the rate structure, class work benefit of Territory against Official the others. But greater placed reliance is on the second circumstance— only a portion minor moves class rates and of that greater percentage moves Official Terri- tory than in the point others. This requires a more extended answer.

The Commission, indeed, found reason of non- use the rates have class become obsolete and longer no serve the purposes which they designed. were They a relatively move small amount of freight. The following table indicates the percentages of carload traffic carried at class rates within and between territories 1942: ratings In September, 1940, example, less-than-carload 3,000 on from the about commodities removed were by exceptions. Southern Classification classification great of exception bulk the on freight moves commodity trend, according rates.17 This to the Commission, has been competitive the result of forces. exceptions The creation of the ratings has “shorn the in the classifications of much of their usefulness and proper func- tion.” 262 I. p. C. C. 504. The record is replete with supporting evidence finding this of the Commission. And appellants it seize on their claim that since supporting largely they class rates have are paper rates, become not injury the shippers source to from the South and the if West; prejudiced latter the struc- ture, injury must exception flow from rates and not commodity rates this and that proceeding; involved in any event the case unlawful discriminations favor Territory of Official and against the other territories has actual disadvantageous been founded use by shippers class rates Southern, Southwestern, and Western Trunk-Line territories. too problem

But takes narrow view the con- We start with fronting Commission. course some showing against of actual discrimination shippers by rea- son use of class rates. But of their main case of discrimination made against out the record is one 3, supra. See note case of unlaw- that a We assume and territories. regions geo- of their by reason shippers against ful discrimination discrimination an unlawful would be location graphic But originate. shipments where the regions against territories against regions or discrimination an unlawful we stated showing. As on such a dependent is not “Dis- Co., 439, 450, S. Pennsylvania R. 324 U. Georgia v. barriers.” form of trade are but one criminatory rates industries established only impede is not Their effect arrest ones, newof the establishment prevent but to region, make difficult of State development industrial into an economy to evolve agricultural for an that barrier remove Non-discriminatory class rates one. designed law to equality that which the was by offering that only not They prospective shippers insure afford. just they but that are per the rates are reasonable se competitors. properly Shippers related to those of their dependent ability exception not their get are then on to commodity rates or rates after their industries are estab- shipments ready They lished and their to move. have a planning basis for relying ahead on coherent reflecting competitive structure factors.

If a showing against territory of discrimination or region dependent showing were on a of actual discrimina- against tion shippers sections, located these case could never be discriminatory made out where rates had proved to be such effective prevent trade barriers as to outlying regions. establishment of those industries If test, (1) that were then the 1940 amendment 3§ to purpose. would cannot at- not have achieved its We futility' by Congress tribute such to the effort made to regions, territories, make as well as shippers, districts policy expressed the beneficiaries of its anti-discrimination (1). in 3§ concerned, remedy present cases

So far if be had might' course, different the Commission ño (1) prescribe classifications. But power § finding it full that a grants power, Act on classification unjustly or “unjust discriminatory or unreasonable or preferential or determine and unduly prejudicial,” pre- “just, what classification will be fair, scribe and reason- able.” The Commission’s over-all conclusion was that the classifications force and computed the class rates inequities from them harbor which result in unlawful against discriminations favor of Official Territory and territories. The fact relatively other that small of freight amounts move class rates not proves that regional and territorial slight, discrimination is but promise the rate structure as no constituted holds affording regions the various parity territories that of treatment which conditions territorial warrant. The substance concluded that result could main, be achieved unless traffic was, moved rates. will class We discuss later the appropriateness granted by the relief interim challenged. orders here It is case of unlawful dis- sufficient here note that the chiefly crimination founded against these territories non-discriminatory on the absence of class and uni- form which would features of classifications remove the prejudicial Southern, rate South- existing structures to western, and Western Trunk-Line territories. primarily adequa- are thus not concerned with the

We discrimina- findings showing cies of Commission’s in a shippers territory (cf. tion against actual located States, 282 194; Florida v. United U. S. North Carolina States, 507; v. United 325 U. Interstate Commerce S. Mechling, Commission v. but with 567), U. S. a a territory prejudice whole. into the effect the Commission inquiry of

Fourth. The Southern, of development the economic rates on class of took territories Trunk-Line Southwestern, and Western terri- to the prejudice range. It concluded wide a We think been established. in had question tories by substantial evidence. finding supported be- causal connection obvious that is, course, injury is not and territorial discrimination tween extent of The proof. of conclusive always susceptible with any case be shown relation cannot that causal inference from It is a matter of exactness. mathematical recognized, example, for data. The Commission relevant than the has fewer industries fact that the South that the the “indus- complex from causes —that East results development many of the East is due to factors other trial climate, such as transportation costs, than services soil, resources, power, supplies natural available water coal, early popula- natural settlements of gas and building tion which antedated the of railroads.” p. I. C. 619. It noted that in 1939 revenues C. on commodities the manufactures and miscellaneous 5.3 destination value of group per were but cent and that goods freight charges manufactured differences from resulting only differences class rate levels were figure. fraction of that But it small nevertheless con- that “Nearness to ability cluded markets and ship markets, fairly on a basis and reasonably related to the competitors, rates of are nevertheless potent factors manufacturing the location of a In plant. fact, rate rela- important tions are more to the manufacturer and shipper than levels the rates.” 262 I. C. C. 619-620. great advance industrialization of Official Terri- the other territories need not tory labored, over be Some manifestations of that development obvious. may following be illustrated tables:

311 from The value added manufacture all industries 1849 to 1939 is shown all the chart for the territories following page. has apparent Territory From this chart it is that Official commanding spite maintained its lead in of recent marked elsewhere, Similarly, increases especially the South. for the 1929 period wage to 1939 number of earners in manufacturing industries de- country the entire per cent; creased 11 Territory, cent; Official per while in the South there was an per increase cent. For period, the same products values of manufactured per they increased cent while decreased South, 21 per per country cent the entire cent Offi- Territory. cial From 1930 to 1940, gain- the number of in Terri- manufacturing Official in workers

fully occupied of the cent per 69.4 cent to per from 70.5 tory decreased increase was an there in the while South total, nation’s of manu- A number cent. per 11.9 per cent from 10 in rapidly more increased have facturing activities has the reverse Territory, though in Official than South growth spite But industries. in other been true ap- (which and West South activities industrial comparisons pellants heavily), percentage stress revealing great particularly are not because dis- they computed. between the parity bases on fact development remains that economic lagged lags South and West has and still behind Official Territory. average per In 1940 the annual dollar income Territory $1,988; Official person employed in in $940; $1,177; Western Southern, Southwestern, all Trunk-Line, $1,411. Official has 69 cent of work- per manufacturing in in and engaged ers the United States has, in It per 29 cent of all extractive industries. workers high example, for concentration in the manufacture of copper per and less than 4 cent products, though steel iron reserves, copper. ore and no of metallic reserves and The South West furnish raw materials to Official and buy finished products They dependent back. are also great in products Official, extent on the markets for their the coun- per population 48 which has over cent market industrial try, per 76 cent of the national for materials, goods raw 64 for all and machinery per cent sources, per luxuries, per 62 for and 53 cent cent consumer Yet for consumer necessities. the South and suffer West handicaps they when seek to reach those markets.18 many will One of illustrations suffice. Cottonseed oil agricultural ais basic commodity. Class on it are 18 stated, pp. The Commission 2621. C. C. 695-696: “Although manufacturing grown in has the South and Southwest lesser territory to a extent decade, western trunk-line in the last vastly it is still less diversification and amount than official territory. The in manufacturing increases in these territories has cre- ated permit a demand rates which will at once the free movement articles, of the manufactured but because of the level of the intraterri- rates, torial and interterritorial such free class movement has been impeded insofar as such commodities move at class In rates. most it necessary has been instances either to reduce the class-rate levels or exception commodity to establish rates in order that the manufac- products may tured freely, move frequently this action has been higher Territory from to Official than cent Southern per Official If

they Territory. are within the cottonseed oil is into from oleomargarine, manufactured the rates South- Territory per higher ern to Official cent than the Territory. Official rates within in reply, however,

It is said that which disparities only advantages we have mentioned reflect natural justify differences great rates. concentration in the population said to show that its more favor- East justified many fact more able rates are has income people support the roads. The unfavorable comparisons thought with the East are to establish one handicaps under which the roads South and West operate. pointed heavy pre- out ponderance energy of the nation’s total natural resource of supply Territory per is located Official to 45 cent —40 of the total bituminous and semi-bituminous coal supply, all of practically resources; per the anthracite cent of energy originates all there. It is said that Official electric Territory logical is the location for industries which use territories, metals from other it natural sup- since has the plies of It is pointed coal. also out that gross income from crops and livestock in Official Territory highest is the subject long delays to because of the of failure individual carriers or groups agree upon of carriers to a basis. territory greatest consuming territory country, is the

“Official in the nearly and is the market that reach, par- all manufacturers desire to ticularly they surplus products where have a ship- their sell. In to of ping territory, to official manufacturers in the other territories not only disadvantage location, subjected have the but are to an addi- tional they pay burden those instances where must class rates on a higher competitors territory. much level than their in official This disadvantage situation reacts to the of manufacturers in the other territories, advantage and territory, to the of those official tends to growth expansion restrict the manufacturers in the other territories, and, extent, prevent to some to the establishment of new manufacturing plants in those territories.” country, per total. amounting to cent comparable argued From these and data is that the lower Territory only in Official advantages reflect inherent which the other enjoy. is, therefore, territories do not It argued that what the sought Commission has to do tois equalize economic to enter field of advantages, eco a arrange designed rate planning, nomic structure industries, cause a population, to relocate redistribution of ways advantages to offset the natural other territory one has over another. is asserted that program unlawful under Interstate Commerce such a Diffenbaugh, Commission v. 222 U. 42, 46, S. where the Court held Act, that the its condemnation of discrimi “does nation, attempt equalize fortune, not opportuni see United States Illinois Cen ties And or abilities.” v. Co., tral supra, R. Texas & R. Co. v. United 524; p. Pacific States, supra, pp. 637-638. revert matter when we come to consider

We will to this justify territorial conditions the differences whether say It is at this the record point rates. sufficient strong case that natural makes out for the inference disadvantages responsible are not for the retarded alone South dis- development West, and the criminatory played part. has also How structure determined, a part every much cannot be effect is the many preju- result of factors. But inference discriminatory dice from the rate structure irresistible. If discriminatory justified this rate structure is conditions, territorial then its continued maintenance pre- serves not the natural man- advantages region one but made trade upon barriers which been imposed have country. Such a result cannot be reconciled with the great purposes (1) of 3 § amended 1940. The Commission peculiar found that conditions

Fifth. respective to the territories did not justify the differences in the territorial class-rate structures. In reaching that in the the differences first whether inquired

conclusion railroad the several furnishing service costs of in the levels justified existing differences territories of of class rate scales.19 The basis its patterns and For study a cost submitted its staff. inquiry purposes the States is divided into analysis cost United exactly but the classi roughly approximating areas Thus East fication territories. there are three districts: ern, and Southern district is further Southern Western. region region. divided into Pocahontas Southern plus region substantially Eastern district Pocahontas of In territory.20 Official the cost equivalent study, assigned geographical expenses railroads were areas; roads were divided groups, group individual into each being appropriate associated with service units which in car-miles, gross ton-miles, cluded revenue revenue cars unit costs then ob originated terminated; were expenses by dividing aggregate tained of the territorial applicable in each group units; territorial the costs particular up were built services then from the unit put (1) costs. were into two out-of-pocket Costs classes — expenses vary directly or variable which kind with the handled; (2) traffic constant capable or fixed costs not particular assignment kinds of traffic costs21 19In Dakota, Northern R. v. 585, 597, Co. North 236 U. S. Pacific stated, outlays the Court exclusively pertain given “The ato class assigned be class, expenses traffic must to that and the other must fairly apportioned. may be be apportion difficult to make such an ment, when but conclusions are based on must cost entire cost be taken into account.” description boundaries, For of exact see 262 I. 605. C. C. For , purposes some cost the United States is also into 11 cost divided territories, equivalent various combinations of which are to the rate territories, territories. For definitions of these cost collection and a portion a substantial data, Commission’s cost see S. Doc. 63, 78th Cong., No. 1st Sess. out-of-pocket plus pro The sum of the costs rata distribution of fully or fixed constant costs is referred to as distributed cost. normally by must be borne the various of traffic types proportion ability in to the each to pay. of The details study of cost voluminous are too intricate and to relate They by here. have been summarized the Commission. noted, 262 I. C. C. be pp. however, 571-592. should computed per that allowances for at cent both return — per among cent —were included costs. The allow 5¾ for ances return were based on recommended rate-making by values furnished the Bureau of Valuation. The terri comparisons 4 per torial cost were principally based figure, cent return noting figure the Commission that the was relatively close to the return earned the carriers in viz., the year covered the study, 1939! expenses of the carriers very briefly,

To summarize into territorial were first broken down and translated serv- average unit costs of each of the kinds of performing moving furnishing in in specific ices involved or shipment given transportation territory. amount of service each These unit costs were multiplied by then the number of employed units each the services found to be in mov- ing specific shipment furnishing given amount territory. service for process repeated shipments a series of different or services sufficient to make result representative of territorial Once conditions. the average costs for each territory computed, were average territorial compared. costs were The principal comparisons year were based on the 1939, although sup- plementary studies were also made for 1930- periods 1939, inclusive, 1937-1941, inclusive, and 1941. The ter- comparisons ritorial cost for showed, example, the costs of hauling given weight loads a certain type car' given distances territory. each They also showed the handling relative costs of the entire traffic each consist of territory. designed This was to eliminate the effects of any differences consists of traffic between territories compared, by first determining the cost in the territory each the cost then moved and actually

in.which consideration gave study cost The territories. other equip- kinds of all distances for various moving freight refrig- tank, stock, flat, hopper, gondola, box, ment — loads identical compared for Costs were cars. erator Standard types equipment. principal in the hauled experi- average weight loads taken. loads were then types equipment were territory for various in each enced for the adjustment to make aim was taken. The also average used and the different equipment types different comparisons were Likewise, loads between territories. of the traffic hauling of the cost of the entire consist made territory, average ap- at the loads and unit costs one plicable territory, hauling in that with the cost of the iden- at average applicable tical traffic loads unit costs Comparisons (for to the other territories. were also made actually moved, by the distances the traffic classes of equipment, loads) and at actual average of the relative hauling cost of the consist of traffic of the entire United States, and the of carrying Eastern, costs Southern and Western respectively consists each of the several territories.

When it computations came to the Eastern district, were made which both excluded and included the region. region, Pocahontas That purposes for study, represented operation of three railroads— Chesapeake & Ohio, Norfolk & Western, and Virgin- per ian'—about 84 cent of whose traffic is coal. For purposes comparative study this, of such a as the exclusion desirable, of Pocahontas considered since its costs very heavy tonnage.22 low because of the coal p. 262 I. C. C. 578. Similar conditions call for the exclusion Kentucky figures considering region. for the Southern And see Commodity Increases, General Bate 223 I. C. 657. C. principal weight attached to the haul

The Commission shipment of 300 miles per originated, as distance most length closely of haul in approximated territory each distributed) 1939. Relative territorial23 (fully costs moving traffic distance and gondola box cars cars were follows: analysis computed foregoing

The that on the for the distributed costs for miles, fully 300 500 East, than the generally the South are a little lower for excluded, the distributed costs fully Pocahontas while 15 per the from 6 to West exceed those of the East several comparisons cent. Similar cost were made for the tank-car, stock-car, refrigerator-car, for territories flat-car traffic. Based on average the actual loads ex- perienced for equipment, each class of the Commission found costs the for South lower than those for East (Pocahontas excluded) for traffic all moving in those classes equipment. The costs for are also the West lower than those for the East as to refrigerator- stock-car, car, traffic, and flat-car higher but for tank-car traffic.

23 including Not Territory Pocahontas in Eastern figures. Relative costs separately were not shown Trunk-Line, for Western South western, territories, noting and Mountain Pacific the Commission differences between costs for total West and for each those relatively three were p. rate territories small. 262 I. 578. C. C.

320 distributed costs for comparison fully

A territorial moving equipment in all traffic 300 miles classes carload 24 following: shows in the South identical loads fully distributed costs on Poca- excluding East, for the per are 4 cent below those for comparison the costs hontas. The same shows excluding per higher East, cent than those West on the actúal South, Costs in the based Pocahontas. ex- per East, for the average loads are cent below those per In cent cluding they Pocahontas. the West are 8 higher than the latter. average net ton-mile comparisons based on

Territorial (1930-1939) adjusted for carload differences costs of haul and the the traffic were made. length consist of approxi- for They showed costs the South per East, excluding mately cent below those hand, On the other for the West Pocahontas. those costs East, excluding from by exceeded those Pocahontas to 7 per cent. comparisons of the less-than-carload costs Territorial ’ prepared. They also showed that those are were costs than in in South whether iden- lower East assumed average taken, tical loads or actual loads are even if given 24 Weighting equipment to the costs for each class of was type equipment based on the volume of traffic'handled in each equipment in Terminal costs for the United States. each class weighted for the traffic in were total United States handled each class by equipment originated plus measured tons tons terminated. weighted equipment Line-haul costs classes of were for the ton- equipment. miles in of traffic handled each class of is included They higher Pocahontas in the East. are in in the West than the East. If Pocahontas is excluded from the East the following table comparison shows the for a 300 mile haul:

In (1939) all territories traffic less-than-carload making carried at a Southern deficit, showing, the best Western in following the worst. That is revealed table: dis- fully

The Commission found that the difference the West tributed costs for all traffic between the East and pas- largely expenses the constant or fixed and the senger Out-of-pocket ex- less-than-carload deficits. penses in as, the South and as low or frequently West than, even lower out-of-pocket East. The costs further found that increase traffic volume received to 1939 subsequent carriers served reduce the unit of transportation costs in the South and greater West a proportionately degree than A the East. larger somewhat percentage out-of- pocket expenses in the East is variable with added traffic than true of the South and due West, apparently to the fact that East, the with higher its traffic is density, closer

322 Thus others. than true capacity is maximum

to its average costs reducing in traffic of added influence costs hand constant other On the in the West. greater West) do in the South larger (proportionately cir- of those As illustrative with added traffic. increase increases the effect the Commission noted cumstances in- They freight. of revenue ton-miles in 1941 of the in the per 43 cent 1939, with 1941, compared in as creased 44 in Southern Pocahontas, per cent in East, per 27 cent rev- Territory. per The cost in per cent Western in the per about 5 cent by only decreased enue ton-mile compared with decreases Pocahontas, East and in cent in the South and West. per of 10 excess terri- results of the summarized the The Commission signifi- is little comparisons as follows: There cost torial furnishing transportation in the cost of cant difference East, Pocahontas ex- with the compared the South as terminal principally the low costs cluded. low total costs. relatively that account for its South 1930-1939, the costs year period Based on the 1939 and in the equal in the are to or a little lower than those South period Based 1937-1941, East. the costs than East.25 substantially lower those South year period 1930-1939, Based on the 1939 and the the cost rendering transportation in the service West is between higher cent than in per excluding 5 and 10 Poca- East, 1941, hontas. Based on that difference is per reduced to 5 cent or less.26 recognized, course, that carriers

must obtain their revenue from the traffic which moves East, If Pocahontas is included in South, the costs for the year 1939, based on per are between 3 and 6 cent above those East; years 1930-1939, for the for the per between 6 and 8 cent higher; years 1937-1941, for the about the same. 1930-1939, If Pocahontas is included in the East for the cost per higher; 1939, in the approximately West is 18 cent based on per higher; higher. per cent based on about 10 cent respective their territories. the revenue-producing Hence or rate-bearing characteristics of different commodities compose e., territories, the traffic of the several i. consists and volumes traffic, important also in de- whether termining justify territorial conditions differences in territorial rates. total percentage

The distribution of tons carried and by commodity groups revenue for 1939 is shown in the following table: also the distribution of car- considered

load traffic based on revenue ton-miles for 1939 which as follows: summarized major

And classes of commodi- the contribution which the (carload lots) of out-of-pocket ties make excess costs (1939) appears as follows: of all traffic moves territorial

A across large volume or more becomes common to two therefore boundaries and respects balance, the the Commission And as territories. traffic so striking similarity the consists of the found revenue-producing far as are concerned. its characteristics commodity group and miscellaneous The manufactures e., relatively which %. high rates, traffic moves at embraces substantially for which, ton-mile, rates ton-mile make a greater average than contribution to the constant costs. percentages group The of the tons in that total carried corresponding percentages produced revenue quite them are close to each particularly other — East and the West.

The Commission stated that the revenue-producing qualities, rate-bearing characteristics, or of the commodi- ties compose which the traffic in those several territories governing constituted “the factor” so far problem as the of the consists volume of traffic concerned. I. It appraised C. C. 694. p. the evidence we have related as meaning that “the that differences exist the consists of respective traffic these territories are so substan- present tial of such character as to warrant differ- Id., p. ences class rates.” 695. of findings both to the as consists freight rendering and the costs the service respective territories are vigorously challenged, es-

pecially by the western roads. consists,

As to the it is said that eastern roads have percentage freight much heavier pro- of a kind that carry duces excess revenue general expenses. Find- ings Commission are upon showing relied preponderance the eastern roads’ of high-grade traffic greater affords a source revenue high than does the percentage products low-rate carried the west- ern roads.27 These undisputed facts disprove are said to found, pointed out, that livestock as the Commission pay way; prod commodity cannot more than its own do subject higher brackets; below the forest ucts of carry products rate. The western district agricultural a low orig originated per cent of the total tons of carload traffic roads 36.91 Pocahontas) (excluding in the the States while inated in United disparity originated per To that added the roads 47.40 cent. is eastern originated country agricultural products in in fact of the total the originated per 68.82 cent 1941 the western district roads as contrasted by per excluding For to cent the eastern carriers Pocahontas. 20.88 tonnage percentages manufactures and miscellaneous the were 28.06 per per cent, respectively. pointed cent and 60.66 It is out that while agricultural origi percentage products the the difference between of (68.82 cent) per percentage nated the western carriers the of originated by manufactures and miscellaneous the eastern carriers (60.66 only cent) per cent, per tonnage is eastern of the roads’ the (which traffic) group high-grade latter of commodities are almost is tonnage products agriculture originated by of three times the the comparisons western carriers. Like groups are made between other commodities carried the eastern respectively. and western carriers products originated Of total country the tons of animals and in the in Pocahontas), 1941 (excluding originated the per western roads 63.03 in of traffic the that the consists finding Commission’s the differ- present warrant the territories do not respective in class rates. ences traffic,28the density relate to facts, however,

These figures. final But in the cost merged of which is effect of rate problem problem to the relation of the consist the in It is relevant order is different. structures somewhat traffic are determine whether the consists of so different separate in several territories that rate structures transportation burden with different distributions necessary. commodities and classes of are amongst from the which apparent statistics we have reviewed that, diversity in while there is traffic moved in the sev- territories, diversity largely eral disappears when com- modity groups are considered. Then, also, percent- ages territory of the total traffic each fall under commodity groups the several only very similar East, South, West, yields but each about group percentage the same of the total revenues each of the territories. The groupings plainly special- choice of problem transportation upon ized economics which the peculiarly competent pass. judg- Commission is Its ment that the differences consists between the territo- justify present ries do not differences interterri- an is, indeed, expert judgment torial class rates entitled great weight. We could not findings disturb its of this record invading the facts without the province expert body. reserved administrative eastern, cent, per products cent. 28.51 Of total tons of originated 1941, respective percentages per forests in the were 58.73 per products 7.52 percentages cent and cent. And for of mines the per per cent, respectively. were 33.31 cent and 49.85 per The 1941 revenue ton miles mile of line were follows: as Pocahontas). 3,392,964 (excluding Eastern District Region. 7,519,840 Pocahontas 1,358,041 Western District. As to the study concerning cost little need be said the integrity study South. Once the assumed,29 the cost is finding signifi- is there little in cant difference the cost of furnishing transportation compared South as with the East support has Moreover, facts. the data on rates of return operating ratios, to shortly refer, which we will corroborate the conclusion reached from study the cost that the dif- ferences class rates between the East the South justified not territorial finding conditions. The against discrimination is South unlawful (1)3 is amply § under thus supported conclusion that —a the southern carriers not challenge do here. question is a closer one when we turn to the West. we

For, seen, average as have the costs on the West higher run those in the year than East. Based on the period 1930-1939, 1939 and the the cost rendering trans- portation service West 5 and 10 cent per between higher than in the East, excluding Pocahontas. Based per that difference reduced to 5 cent or less. developed in the cost Costs scales and the carriers’ known total expenses very were margin cost territories reconciled within a close appears following from the table: stated, “Judging table, from the above whatever The Commission they may studies, the . . . have had the effect errors exist understating overstating aggregate in the carriers’ costs degree.” p. any appreciable 262 I. C. C. 587. is the rate structure discrimi- seen, we class

As have level of the East and West. The natory between per higher in West is from 30 to 59 cent rates class problem East. The of the Commis- that in the than to that therefore, disparity determine whether sion, territorial The Commission justified by is conditions. justified. problem that was not The for us so found whether the Commission had a for its conclusion. is basis challenge vigorously

While western roads the Com- is in main finding, argument mission’s their directed point that some between East disparity justified differing West No territorial costs. prove those a particular effort is made to costs are existing fair measure of rate differences. start, course, subject premise

We from the that on a transportation one, economics, such as this the Com- great judgment weight. ap- mission’s entitled to figures cost is itself praisal experts, task since costs involve many assumptions and, these estimates and problem unlike calculus, proved right cannot be or wrong. are, They indeed, only guides judgment. weight significance require Their expert appraisal. The Commission has concluded that while cost studies highly problems relevant rate are not they these conclusive. this case: said rea- flexibility judgment within “Discretion always limits have attended of costs sonable the use do not making of rates. Costs alone determine they the maximum limits of rates. Neither do control fix of rate the contours scales the relations between along rates or between scales. Other rate factors weight must be given with costs considered and due p. 262 I. aspects making.” these C. C. 693. here Com figures

In the cost relevant appraising traffic proceeded assumption on the mission prevail postwar period. level is most in the likely assumption therefore started with that the margin the of difference between the costs in in the West and those slight East was and accurately the not measured 1939 figures, that if, freight has been fact,30 car ried in the West increased the unit above level costs transportation the West greater would be reduced ato degree than those for East, reasons which we have already stated.

The Commission also had before it certain data relative financial condition of the roads, various data which yet we have discussed. comparative analyses Thus of the rates return of the roads in the several territories showed that while the western roads had many have lean years, the recent period put has them ahead the roads in the East. following table shows the rates of re- turn in percentages based on railway operating the net income and the book investment, cash, increased for supplies: materials and freight

The Commission also the territorial considered from operating per operating cent of revenues ratios —the by operating attributed to the expenses absorbed freight.31 They following table: are shown 1946, 31, In the twelve months revenue tons ended October year per higher carried the West were cent than per higher ton miles revenue were 43 than in 1941. cent Operations (1946) pp. 14r-15, White, Analysis of Railroad See 681; seq.; Locklin, Transportation (1938) p. 69, et pp. Economics of Transportation (1933) pp. Miller, Inland 500-502.

In light of such data the Commission said: a substantial decline

“Making due allowance for for the peak traffic from the war fact earnings western preceding 1940 the decade relatively low, nevertheless, respondents were rail in of and the prospects as the traffic revenues insofar foreseen, can be there is no reason immediate future any will have adjustment that the interim to conclude I. effect 264 C. C. upon respondents.” those serious 63-64. that intrastate class went to note

The Commission many the in most of western States generally rates territory rates in western were interstate class the in than the interim orders. already prescribed lower those “cannot accordingly concluded western roads It the rates, consistently maintain these sub-normal class relatively high continue to maintain the of interstate basis .” class . . . 264 I. C. C. p. rates 64. as

Moreover, already noted, we have rates class have to a extent fallen into This great disuse. fact relevant respects. here in two In the place, first the orders of the Commission affect rates alone, class and class rates the not with dealing exception and commodity by the interim action it has far taken. So as rates present freight is concerned, movement the orders affect a much in smaller in fraction of traffic West than the East. The Commission said:

“The not support record does the contentions that rail respondents the revenue needs of western with than respect greater to their class-rate traffic are those rail respondents. of the eastern From the carriers’ in reports years 1942, 1943, to us for the as shown original report, clearly appears our greater is a there need revenue rail carriers in eastern with carriers compared district rail in region. the western district or in the southern report larger percentage shows also that a much traffic the eastern on class total district moves rates than the western district or the southern region.” 264 I. pp. C. C. 64-65. existing singles

In rate structure place, the second payment the class rate traffic the West for the out largely unusually high The class rate traffic is rates. ability to shippers, that of small who do have the exception commodity obtain the benefit of the lower rates. therefore, treat this case as if it were one cannot,

We in- some Commission, spite showing of a where the West, all reduced creased cost with East. a case of determin- equality level against one small class ing whether the discrimination showing increased is warranted of some of traffic carriers, their earning power in the The cost West. the estimate operating ratios, return, their rates of freight future, in nature and the volume traffic the the presently traffic involved the class rate move- amount of finding all relevant to the of unlawful dis- ments are say We cannot that these considerations do crimination. outweigh in costs be- disparity counterbalance or the appraisal East and West. The of these numerous tween experts. They may err. But transportation factors is for any, egregious type if is not of the which is error, judicial review. within our reach on noted, Interstate Commerce Commission

As we have Diffenbaugh, supra, p. 46, Act, held that its v. discrimination, attempt condemnation “does not opportunities equalize fortune, abilities.” But Commission made no such effort here. in- It eliminated equalities the class rates because it concluded that the in them were differences not warranted by territorial con- think findings ditions. We that the supporting that con- are adequate clusion based on evidence. argued comparison

It is that of rates of return operating freight and ratios overlooks the fact that both freight prevails level higher reflect revenue that urged And is rate advan- the West. that without tage enjoy, any compari- which the western now carriers which now appears son to favor the western carriers disappear. argument would That a constancy assumes traffic assumption and that could be mathe- matically dealing demonstrated. we But here with a problem of discrimination —a western rate structure compared with eastern, which, is not warranted territorial conditions which prejudices growth dévelopment- of the West. would large be a order to say that the removal of that will trade barrier have no increasing effect in traffic. assumption on which the finding prejudice is is, indeed, made to the contrary. Moreover, argument protect would a discriminatory rate structure power from the granted of revision the Com- (1) mission under § 3 the easy assumption that without discrimination the carriers would not thrive. But that flies the face history to the contrary Com- expert judgment mission’s on these facts.

Sixth. An argument extended is made by the western roads, challenging the class rate reduction on less-than- argument carload lots. The first, twofold— case of unlawful discrimination has not been made out type for this of class rate traffic; second, that the new less- than-carload class rates are confiscatory. on less- figures to some of the cost have referred

We figures We have seen that those cost lots. than-carload in East; when higher in the West than that even run common to all traffic are allocated to costs no constant is sub- traffic, the deficit in the West less-than-carload than stantially higher that in the East. The Commission a whole is carried noted less-than-carload traffic as in in South. territories, except possibly at a deficit all bearing noted that all territories was not its also that, apart transportation; share of the costs of proper loading, average, on the yielding, from wartime it was solely expenses costs constant re- out-of-pocket plus its of collec- plus lated to less-than-carload traffic32 cost delivery, except possibly any territory tion and p. 2621. C. C. 697. Southern. concerning argument need said that a case

Little be has not established of unlawful discrimination been case of less-than-carload traffic. The Commission if less-than-carload were left concluded that class rates Southern, carload South- unchanged while class rates and Western Trunk-Line reduced western territories were competitive “the per cent, shippers relations between shipping quantities ship- less-than-carload and those ping carloads” materially would be affected. p.

I. C. C. 66. 2 per Less-than-carload traffic is than less cent of total railroad freight tonnage, much moves, not on rates, class but on exception rates com- modity In rates. Western Trunk-Line and Southwestern many territories intrastate and interstate class rates are now voluntarily maintained less-than-carload traffic which are than corresponding lower reduced interstate class rates required by interim orders. There are other solely Constant costs related less-than-carload traffic are those vary costs which do not with the traffic, volume of the but which if could be no eliminated less-than-carload traffic were handled. advert, which rein- shortly will

circumstances, which we reducing class force the action the Commission have on But the we men- less-than-carload traffic. ones adequate to the Commission on the support tioned are phase problem. discrimination The Commission dealing against was with a particular not discrimination commodity with against regions. but discrimination entire complete subject was a inquiry rate structure that was and revision. Once the Commission concluded that un- lawful discrimination existed main of that features structure, justified it was In removing it. elim- inating the discrimination and establishing uniformity required by the law, minor making was warranted in readjustments collateral so that the Commission itself would not in turn create new discriminations. ad- justment of the less-than-carload permis- class rates was on sible that ground alone. The only traffic affected was a fraction of 2 per cent the total traffic. Without that readjustment that class of traffic would prejudiced. be With readjustment that prejudice would be removed and the entire rate and structure —intrastate interstate— would be more nearly rationalized.

That does not, course, answer argument on con- fiscation. requires The latter more extended treatment.

The western petition their rehearing roads for before the Commission raised the point. confiscation But doing so they rested on the record before the Commission and tendered no additional In evidence. the District Court, however, they presented further evidence which was objection received over considered court.

This, R. not like Baltimore & Ohio therefore, is a case Co. States, v. United 349, 363, 371-372, 298 U. S. where the Commission proffered refused to receive evidence point of confiscation. Here, said, as we have all received evidence was offered; order made known and the when its was announced and filed, rehearing opportunity was tender petition point bolster the confiscation additional evidence to R. Co. v. accepted. As stated Manufacturers States, in St. Joseph United 457, 489-490, 246 U. S. States, Co. v. Stock Yards United 53-54, 298 U. S. cor practice opportunity exists, requires that, rect where the issues the bearing evidence on the tendered pertinent all it in the first be submitted to instance Commission should District and should not be received Court novo. The de conducting a trial though it were reason enough. transportation eco problems These of plain is and For complicated example, nomics are involved. and their allocation transportation

determination of costs is among various of trafile not a mere mathematical types in accounting, it Like cost problems other exercise. intimate knowl judgment born of the exercise of volves activity making adjust of and the edge particular of qualifications too subtle for the uninitiated.33 and ments particular a order on revenues Moreover, impact of it mat ability enterprise thrive under and part of those who know the judgment on the ters for flexibility and the the revenues which create conditions we reasons, For stated managerial controls. such of States, Board Trade v. United 314 U. S. 546: of essentially empiric. process making “The of rate changing process The stuff of the fluid —the Price, Contemp. Hamilton, for 4 Law & Cost as a Standard See 321, 329: Prob., hardy soul, equipped simple faith a cal- then a with

"Now and machine, upon true culating essays based the adventure of rates course, technically impos- particular is, feat services. The costs judgments empirical dis- sible, value rules are essential to the transpbrting real cost A calculation of the of overhead. tribution Lampassas, Kan- lots Texas to carload from less than cotton-seed imputation.” Illinois, exercise kakee, is stubborn resultant factors that be must valued as well as weighed. Congress delegated has therefore the en- of transportation policy permanent forcement ato expert body charged being has with duty responsive to dynamic character of transportation problems.”

Thus we think if that the additional evidence was neces- sary pass on the issue of confiscation, the cause should have been remanded to the Commission for further preliminary appraisal of the facts which bear question. But we do not take that course here for reasons will shortly appear. explained finding its less-than- traffic being large carload carried at deficits and was bearing proper its share of transportation costs. That was based on finding operation of the roads in 1939 average when the load car of per less-than-carload ship- ments amounted only to 4.3 tons in the West. Since 1939 there has been a substantial in average increase the load- ing of such shipments, brought which was under about wartime conditions and has materially which decreased the unit costs attributable to less-than-carload traffic. In judgment of the Commission it shown that loadings postwar the immediate period likely were to to levels. decline Moreover, the cost data on less- than-carload traffic related to such traffic a whole as and not solely moving to that on class rates. As we have of noted, much this traffic on moves not class rates but on exception commodity rates. The class-rate highest past traffic bears rates. failure of this traffic, whole, carry as a proper its share of the costs may large well have been due measure to the main- exception and commodity tenance rates. present analysis (based

The western roads elaborate figures both on the Commission’s cost costs as adjusted by Court) introduced evidence District largely traffic carried at which shows less-than-carload interim of the class rate under the irrespective paid deficits figure 4.3 tons They loading contend that the orders. the costs and only projecting reliable one to use in fact postwar period, into the since was revenues loading more, and will be average prior war, to the once Transportation of the Officeof Defense as soon as the order compu- is revoked. And loading ten-ton requires figure based on that which show presented tations are are in- traffic, in less-than-carload deficits which deficits adjusted figures when the Commission’s cost creased All 1946. of those January reflect cost increases only costs those which include constant computations if all pointed this traffic. And it is out that related to deficits included, computed were would constant costs substantially increase. that on the hand the Commission shows other

On the in West would new interim rates traffic basis of the this out-of-pocket expenses plus revenues excess produce delivery plus expenses return collection and per cent computation That damage payments. plus loss loading figure. And on the based on a ten-ton basis costs, is an excess of revenue even types those there January 1,1946 level. though the costs are increased to less-than-carload costs34 the West were 30 The 1939 If per greater cent than revenues from all such traffic. portion taken, of less-than-carload traffic is the class-rate per provided revenues, the costs are 81 cent of the certain (1) are made: revenues from the adjustments increased to per shipment minimum from 55 charge in the increase proceed- authorized this which the Commission 75 cents mov- less-than-carload traffic (2) the elimination of ing; (3) rates; and intrastate exception, commodity, on ing of which (4) per return, 2.47 cent rate load; 10-ton was the actual rate of return of 1939. plus solely constant Out-of-pocket costs related costs. analyze not stop computations

We do to the various order to ascertain the exact relation between revenues of less-than-carload That, indeed, costs traffic. would be on feasible this For even the record. made attempt no to determine what share of all should be fairly costs allocated to less-than-carload traffic. if Hence, final spoken Commission had its if word, and it were necessary believed as a matter law, constitutional see Northern R. Co. v. North Pacific Dakota, 236 U. v. 585; S. cf. Federal Power Commission Co., Hope Natural Gas S. to fix a 591, 602, U. less- produced than-carload a fair on class rate return that particular traffic, the case would have to be remanded appropriate the Commission for findings on phase. this difficulty treating present issue on the record way. illustrated another traffic, Less-than-carload traffic, more than carload carries costs which to a degree are dependent on the carrier. Heavy light loadings, speed service, empty ratio of return cars, methods of loading freight so as reduce damage claims, substitu- auxiliary tion of truck service and like turn on com- petitive Certainly conditions. rates need not compensate expensive carriers for most way handling less-than- present carload service. findings Yet the do not illumi- problem provide nate that nor the standard in terms service for measuring the compensatory character of the less-than-carload class rates. And problem on such a highest expert Commission’s judgment would be called play. into

But the Commission has not with problem. finished this In place, hereafter, the first as we out point Commis- subsequent sion, orders, issuance of these interim granted in freight rates, including a nationwide increase an increase less-than-carload rates. The temporary injunction prevented has the interim reducing orders class per going the West cent from into effect. therefore, the interim When, go effect, orders do into the chargeable presumably actual rates will be increased from by the level fixed the interim orders to level prescribed by the recent increasing order all Thus rates. no by per loss has been suffered cent reduction on rates; any less-than-carload class loss would which by have been suffered that rate probably reduction has been lessened, at least if not by general eliminated, Though argued rate increase. is that such is not the speculative case, showing too on this record us decide what precise effect of the revised class rates on less-than-carload will In traffic be. the second noted, as place, pres- we have the Commission made the ent interim adjustment class rates on less-than-carload as consequence traffic a of its reduction carload class shippers rates so that less-than-carload would not suffer a from disadvantage major the removal of the discrimi- nation rate structure. class The interim or tem- adjustment by recognized nature of the porary “to give Commission when it admonished the carriers to the rates them careful consideration maintained making on less-than-carload traffic with view to read- justments ratings rates, promptly possible, as will insure that rates on are on such traffic compensatory level.” I. C. C. 66-67. And it problem but left untouched the recognized determin- ing what would be the proper transportation share of costs to be borne less-than-carload traffic. justification leaving the Commission had for at

problem stage proceedings that condition this apparent. preparing The carriers are now the new uni- They it within their power form classification. have suggested by pro- follow the lead the Commission and to pose classification differences between carload and less- which will any than-carload traffic obviate issue respecting confiscation less-than-carload rates. And it readjustment question open likewise left has the total traffic when less-than-carload rates on class part, but a orders are interim which these program, into effect. put clearly shown rate order of a result Where opera await must effect precise confiscatory but its be to despite aside to set it refused has it, the Court under tions v. Knoxville See consequences. to its as doubts grave And see Willcox Co., 1, 17-18. 212 U. S. Knoxville Water v. Darnell 19, 54-55; Co., 212 S.U. Gas Consolidated v. v. Galves Co. Brush Electric 564, 570; Edwards, 244 S.U. v.Co. Yards Joseph Stock ton, 443, 446; St. S. 262 U. a following for States, reasons p. 69. The supra, United like The Commission impelling here. equally course are It jacket. in a strait the western roads placed has not class an reduction less-than-carload made interim has an to its removal discriminations rates as incident fol It indicated the course be class rates. has carload a classifica carriers, part as the overall lowed problem, to make certain that these tion and class rate a compensatory. dealing We are thus with rates are flux, necessary an problem which is interim order made comprehensive of a result revision of entire rate struc Moreover, tures. the conclusion to drawn from be general recent increase rates is too uncertain speculative pass on this record us to on the con Galveston, fiscation issue. See Brush Electric Co. v. supra. amply protected appellants The District Court when overruled their claim that the interim rates are confiscatory prejudice without to challenge another suit legality if, of those a fair test, they after prove be below the lowest reaches of reasonable minimum or if permanent rates do not meet that standard. See Edwards, Darnell v. supra, p. 570.

Seventh. was held Texas & R. Co. v. United Pacific States, supra, p. 650, where the Commission makes an order under 3 to remove an discrimination, § unlawful the carriers must the opportunity be afforded to “abate the discrimination raising rate, one. lowering other, altering ruling both.” But that qualified by the statement the Commission need not follow Id., that course case it acts (1). under p. 650, § 1 (5) note 39. Section (a) of the Act provides that all charges transportation just for the of property “shall be and reasonable, every unjust and unreasonable charge for such service or any part prohibited thereof is and declared to be unlawful.” And see (4). Section § (1) provides 15 that when the Commission that finds joint “any charge” individual or fare, or of a common rate, “unjust is carrier or unjustly unreasonable or discrimina- tory unduly or preferential prejudicial,” or the Commis- may prescribe sion determine just “what will be the and reasonable” (3). § rate. And see 15 The words “unjustly unduly preferential or or discriminatory preju- plainly practices refer (1). dicial” to condemned 3§ A proper finding (1) of unlawful 3 discrimination under § car- only thus enables Commission not to direct practice also, pursuant 15, riers eliminate § but prescribe Youngstown the alternative. See Sheet & Tube States, Co. v. 295 United U. S. 476. Thus the Commission type situation, in this as in the case where intrastate involved, Georgia commerce is Public Service Commission States, v. United S. may U. remove unlawful dis- prescribe criminations and new rates. States,

In Texas & R. Co. v. United supra, p. 650, Pacific “A that, it was also stated or group carrier of carriers must be the common source of the discrimination —must effectively participate rates, in both if an order for the disparity correction of the is to run against it or them.” States, And it held in Central R. Co. v. United 247, 259, S. that participation joint U. mere rates does connecting partners not make carriers in discrimination; unjust discrimination for responsible can be held they in way has some participated if each carrier only discrimination, “as where a which causes the practice than to another given locality to one joint lower same, ap- rule similarly argued situated.” It is carriers since, the western example, this case plies Official in the lower participation have no control of or in the rates, although they participate intraterritorial do joint through in ter territorial rates. Territory con-

In said that carriers Official reply it is control, jointly and also with within that area trol rates from each territories, the rates in each of the other carriers of discrimina- of them into Official. That common source is said to be sufficient to sustain the Commission’s tion Louis Southwestern R. United v. action. See St. Co. States, I. L. R. v. United Chicago, & Co. 136; U. S. States, 270 U. S. 287. But we do not need to decide the R. Co. Central principle For question. announced R. United States Texas & Co. United v. v. Pacific States, supra, applicable only where the Commission is Those the carriers to remove the discrimination. directing may that the carriers to require cases hold powerless perform. to But the Court they do what States, supra, in Central R. Co. v. United recognized pursuant to 1 p. 257, that where the Commission acts to § through in with require establish, carriers to connection joint rates, regulations, reasonable rules and routes and is not involved. For then the Commission problem that in of discriminatory practice corrects the unlawful the case by prescribing just each carrier and reasonable rate here, where, The same is true the Com- practice. or in territorial discriminations mission order to eliminate If (1) 15 fix new reasonable rates. proceeds under to § powerless are tied and it the hands of Commission territories from discrimination un- protect regions to in are con- relationship less all rates involved

343 then carriers, trolled the same the 1940 amendment (1) fell far its We goal. § short of do not believe Congress impotent. left the Commission so may

It Texas case, not be said this as it was held States, R. Co. v. supra, p. 633, & United that there Pacific was no evidence of the unreasonableness rates, of the question that that was not in issue. The Commission here that unjust found the rates were unreasonable under fix proceeded new (1). § rates under 15§ The facts which establish that the differences rates as between the several territories are not warranted by terri- torial plainly findings conditions sustain its under 1.§

As we said, pertains have this proceeding only class rates, which move but a small percentage of the traffic. It is, therefore, argued that the Commission should not adjustments have made in those bringing rates without about equalization exception some and commodity rates under which the bulk of the traffic is moved. there But why is no reason law the Commission need tackle all evils the rate structure or may step none. It take one aat Co., Cf. United R. time. States Wabash v. U. S. per 403. The 10 cent interim rate order did attempt to bring about complete discriminatory elimination features the class only rate structure. ap- was an proximation result, step the complete awaiting justify- new uniform classification. But the reasons ing partial measure support likewise the action of in commencing Commission with class rates when it problem tackled territorial discriminations.

Eighth. problem presented A when different we turn cent per to the increase class rates which the Com- prescribed Territory. Appellants mission for Official urge that this action strenuously if Act, portions even other under

unauthorized justified. were of its orders

344 phase on this of the

The of the Commission finding present Territory was rates in Official case that class just and reasonable and should be were below a level adjustment 10 cent as of per part increased a both order to remove the unlawfulness rate structure unduly low level and their respects their unreasonable as 700-701, 704-705; I. character. 262 C. C. preferential That finding sup- C. 62. said to be without 264 I. C. findings port in the record and lack the preliminary it. necessary support vio- unreasonably low in rates are not argued

It is that noncompensatory 1 or they are either of unless § lation upon the revenues and harmful effects otherwise threaten efficiency question, of carriers transportation no said, fact, of is the competitors. their findings by were made the Commission and such support such on this record are no facts which could there finding. a existing determining a whether

If this were case highest reaches passed below the lowest or above the See well taken.35 reasonableness, point might be Co., M., Chicago, P. R. United States St. P. & v. 294 U. S. prob- do here a 499, 506. But we not have such revenue presents problems relationships, lem. This case say, problems discriminatory that is to rate structure (1). condemned may § The Commission remove by rates, effected discrimination even when they reasonableness, if within zone the discrimination is (1). forbidden As Mr. § Justice Brandéis stated Co., United States v. Illinois R. Central supra, p. 524, the point might be also well taken if proceeding this were a (4) under to determine whether traffic producing intrastate § earnings required its fair share to meet maintenance and operating yield costs and to property a fair return devoted interstate transportation. and intrastate States, Florida v. United supra; United Louisiana, v. 70; States 290 U. North S. Carolina v. States, supra. United mere fact that is “inherently reasonable, one rate that the rate from competing is not shown points to be unreasonably low, does establish that the not discrimina- just. may tion is Both within rates lie the zone rea- yet sonableness and The prejudice.” result undue the power adjust upwards Commission has to the rates downwards, within zone, in order to eradicate the discrimination. power unlimited; That not there standards control its as we shall exercise. But see, the Commission permissible acted within limits here. “unjust has rates to be

Once the Commission found discriminatory unduly unjustly or unreasonable or or preferential prejudicial,” empowered pre- or or maxi- “just scribe rates which are and reasonable” “the mum minimum, or maximum and to be minimum, Youngstown In Sheet & Tube . . .” charged §15(1). . States, Co. v. supra, United Commission, under acting (1), increased rail rates what prescribing § it found' to be reasonable minimum finding rates. There was no existing, compensatory. lower rates not were finding reasonableness on premised grounds that “lower rates would create undue discrimination shippers in against origin districts who cannot use the route, disrupt water-rail and would tend the rate struc- ture, and destroy proper vari- differentials between ous on producing shipments districts to Ohio destinations.” P. only 479. The Commission relied on evidence bear- ing upon the character of the service and also cost but comparison of other adjacent the same or terri- tory. The Court sustained the saying, order existing “The support structure furnished finding for the of reason- States, ableness.” P. 480. In Scandrett United v. 32 F. Supp. 995, 996, aff’d U. S. the Commission had found that proposed reduced rates were “compensatory, considering all they costs” but that were below minimum ac- It took that unlawful.

reasonable level therefore rail, competition tion to prevent destructive between water, the order. and motor carriers. The court sustained States, And Island Min. Co. v. see Salt United Jefferson 6F. 2d 315. cases, recognize

These to be the of the sure,, power fix rates in com- keep Commission so to minimum as to petitive types pre- balance the various of carriers and to vent ruinous rate wars them. That is plainly between of objectives Act, one the the and one of the reasons mini- why fix granted power the Commission was the to mum by Transportation rates the Act of H. R. 1920. See Rep. Cong., Sess., p. Mississippi No. 19. 66th 1st Cf. Valley States, Barge Co. v. United 292 U. But the S. 282. occupies elimination of equally high discrimination an place statutory in the And, said, scheme. as the we have power granted the Commission 15 (1) under includes the § rates will power to lawful for prescribe substitute discriminatory rate structures. If the were Commission powerless increase a in to rates to reasonable minimum order to an unlawful ex- discrimination, eliminate unless isting rates were shown unless non-compensatory to be ruinous competition result, would it in cases would some powerless be prescribe remedy to prac- unlawful tices. present good per The case is a A illustration. cent reduction of rates in South and West would remove only part of the discrimination. On this record doubtful full most a reduction rates of those to the Official Territory level of would be Yet warranted. if the rates Official Territory may be increased not unless the ones are be present non-compensatory, to shown against discrimination in favor South West and Territory of Official ship- would continue to thrive. For pers Territory rate, Official would still have preferred a shippers with compared West, from the South and markets reaching great preference East —a The shown to be warranted territorial conditions. was, therefore, minimum raising reasonable rates Sheet & Tube Youngstown as it as relevant here States, supra, Co. v. United to the Commission’s task of providing rational rate structure. authority of the Commission to increase rates though

order to remove discrimination, existing even rates may compensatory, be 15a (2) not unlimited. Section Act provides:

“In power just the exercise of its prescribe rates give reasonable shall due con- sideration, among factors, other to the effect on the movement of traffic carrier or carriers for which the prescribed; need, rates are public interest, adequate railway and efficient at transportation service the lowest cost consistent the furnishing service; with of such and need to the the carriers, of revenues sufficient enable under honest, economical, management pro- and efficient such vide service.” balancing weighing

The of these interests is a delicate task. “Whether a in discrimination rates or services of a is undue or always carrier unreasonable has been re- peculiarly as garded question the judg- committed to appreci- ment of the body, upon administrative based an ation all affecting the facts circumstances the Swayne Hoyt, States, & Ltd. v. United traffic.” 300 U. S. Chicago Heights see United States And v. 297, 304. Co., Trucking Barringer & Co. v. U. S. 344, 352-353; 310 States, United may assume, 319 U. S. how- 1, 6-7. We if ever, the rates of return the carriers eastern substantially above that for the South the were for former would not of the rates the West, an increase in order to remove a discrimina- permissible, be even in seen, the of return But, have rate recent tion. as we as carriers, and western has favored the southern years36 took operating ratios. Commission have the reviewed, have into factors, well as others we those in determining in in that an increase consideration Territory 264 I. C. Official was warranted. C. 61-62. needs, rendering the transporta- Revenue like costs service, germane tion differ- question whether justified by ences in territorial rate structures are territo- rial They are written amongst conditions. standards 15a; they into totality § reflect the of conditions under which the in the respective operate. carriers territories Should the Commission fail to consider them determin- ing whether the discrimination inherent rate struc- point hereafter, present As we out after the interim orders were issued, granted general freight the Commission rate increase. See parte 162, Ex No. note In that case it reviewed the infra. rates of return of the roads in the several territories based on the rates time, per in effect at the which of course did not include the 10 cent Territory pro in class increase rates for Official authorized in this ceeding stayed but the District said Court. What parte finding present Ex No. corroborates its in the case con cerning greater relative revenue needs of the roads Official Territory: July 1, 1946,

“On basis of the interim rates in effect since considerably for of return the eastern will be district less in the region, region, than Pocahontas southern or the district, though percent western even an additional increase of 5 territory certain rates official authorized and has been in July 1, appears effect since 1946. It also that even the basis of sought the in Ex Parte No. 162 the estimates increases railroads’ revenue, the rate of return in for will the eastern district 1946 region, be rate of in the less than the return Pocahontas the southern region, or the western district.” 2661. C. 548. C. per latter estimates of the rate return in cent are follows: 2.06

Eastern District. Region. Pocahontas 6.26 4.01 Region. Southern 3.31 Western District. 349 its completed it would have not tures unwarranted, may concerning task. There be opinion differences weight given be factors, especially weight those to be given in years the rate of return the current as opposed to that the preceding decade. But their significance the Commission to determine; and, though doubts, we had would usurp we administrative function of the Com- if mission we overruled and substituted our ap- own of these praisal factors. interim present issued,

Ninth. After the orders were granted freight a nationwide increase all argued rates.37 It is that this rate increase has rendered the interim orders with which we are here concerned in making obsolete and unenforcible. It is said that general rate increase, greatly dif- Commission found ferent affecting transportation conditions rates from those it found proceedings; greater these increases allowed in Official Territory38 undo the uniformity policy on which the framed; interim orders are light enforcement changed of the interim orders of these conditions would produce results plainly not contem- plated. changed

This not a case where reason conditions changed the record is stale. The do not circumstances affect the issues here. Cf. Interstate Commerce Com- Jersey City, mission v. 503, 515; U. S. United Lines, v. States Pierce Auto 327 U. 515, repeat, S. 535. To parte 162, report Ex report No. interim 264 I. C. C. final 5, 1946, December 266 I. C. C. 537. This most increased basic per gen 15 to 25 cent. Rates on articles under commodity grouping Miscellaneous, eral of Manufactures and class any-quantity rates and rates on less-than-carload and traffic were per Territory, per cent increased 25 cent Official within and territories, Territory per cent between Official between other and 22.5 points Express rates were increased October other territories. parte 28,1946. 163, 266 Ex No. C. 369. I. C. 37, supra. See note differences proceeding a to eliminate territorial rate this is general conditions. The rate justified by not territorial a recently granted by the Commission was reve- increase adjustments can be and are Revenue proceeding. nue The fact on rate structures as exist. superimposed such uniformity adjustments may lack of produce that revenue in present in is with decision the rates not inconsistent the policy a not dictate §3(1) does earlier, As we said case. requires in the uniformity rates; only that of national it in territories uniformity among lack and between finding territorial conditions. justified by be that the revenue by evidence, if Commission, supported a in demand a lower or territory one needs of carriers a differ- justification is for higher territory rate that territory as that and other terri- in rates between ence general the granting order of the Commission tories. The opinion us and we intimate no rate increase not before present say that purposes it. is sufficient our and rate- emphasizes the distinction between revenue relationship way impairs cases and in no finding the present existing case class-rate structure prevailed has the several territories stands con- (1). any § demned under Nor there inherent incon- sistency reducing between interim orders class rates increasing and the recent order all rates. The latter was based on conditions period subsequent dis- general in- proceedings. crimination Whether require adjustments will new permanent crease scale which awaits the new uniform uniform classification is a for the Commission when the new question classifica- ready.39 tion is granting general freight That the order rate increase did present proceeding orders in the clear affect the is made

following provision: outstanding unexpired proceedings hereby

“That orders in other permit charges modified so increases rates and not discussed. appellants Other issues raised need be injunction staying the of the Commission orders dismissing and the judgment vacated the District Court petitions is the

Affirmed. Frankfurter, Me. dissenting. Justice In a those involving case issues much narrower than Court, only day, now the other struck down here, an for want order of the Interstate Commerce Commission Commerce adequate findings. Interstate Commission Mechling, v. in that 567, Although 330 U. S. at 583. them explicit case there were the Court deemed findings, inadequate they were based on aver- because “unsifted In Court set ages.” series cases the has aside orders of the Interstate because Commerce Commission of the failure of the Commission ascertain and formulate with clarity transporta- definiteness tion and economic circumstances alone could justify order, and thereby afford this Court assured basis for concluding that the had duly exer- its cised allowable judgment on the factors underlying ultimate issues. States, See Florida v. United 194; U. S. United v. Co., States & Baltimore Ohio R. Atchison, 454; U. S. & Topeka Santa Fe R. v.Co. States, 193; United 295 U. S. United States v. Carolina Freight Corp., 475; City Carriers 315 U. S. Yonkers States, 685; v. 320 U. S. United Eastern-Central Motor States, Association v. 194; Carriers United 321 U. S. States, United 507; North Carolina v. 325 U. S. Alabama established; Provided., however, pro- herein authorized to be that the paragraph suspend not super- visions of shall be construed to this or modify findings sede or affect and order entered in Class Rate Investigation, 1939, operation Docket No. of which is stayed by court order . . . .” parte 163, supra,

See Ex No. note 37. States, one of cases

v. United 325 U. S. 535. Not these an to the reach having involved order a reach comparable of the order now us. We are asked sustain before readjusts country rates an order that the class of the whole only barring west of the Rockies—-an order territory changes only rates within the various but the relation changes in this vast region, territories I unmindful of inter-territorially. am not complicated problem which confronted nature of the Commission, empiric process of the character of the scope judicial of of the limited review rate-making, this to Com- process, respect of the to be accorded States, mission’s v. United conclusions. Board Trade of legal U. S. 534. But the outcome of issues when a to on such deeply bound cut into economic relations it is to scale, asking too much to ask explicit be and definite in its findings on elements are indispensable validity to the its order. of of, complained inter-territorial discrimination is When Is (1) two at least basic issues Commission: confront If there is the discrim (2) is, there discrimination? how ination to abated? cannot eliminate be The Commission e., discrimination —i. harmonize the relations between of the re disregard territories —in of the reasonableness adjusted territory. rates within each Interstate Com The applied merce Act be entirety must in its and the different sections which make an cannot be articulated whole disjointedly. cases, treated teaching Such is the of our of especially Texas & R. Co. v. Abilene Oil Cotton Pacific Co., Cases, U. S. Intermountain Rate U. S. 476 — the two give cases which all beyond others the controlling considerations in construing Interstate Commerce Act.

And so is not remove empowered the Commission at between two territories without the same discrimination considering proposed time whether the remedies for such of rates. requirement fit the of reasonableness removal beyond not lower the a the level may territory rates gives enable them carriers an income sufficient to operate effectively part transportation as of the nation’s And rates to a system. may the Commission not raise freight charges shippers level which would exact from beyond rate pro- structure is reasonable. The small portion of that moves on class rates is no measure importance of earnings those to the total unreasonably carriers. Unreasonable rates —whether high unreasonably on a low—even fraction freight, may make the difference between earnings which carriers are entitled the Interstate under Commerce Act and they those to which for discharg- not entitled ing duty part their of the national transportation system. findings We are without is- informing these if But questions sues. even one were to consider dis- in isolation, crimination inequality essence dis- —the mechanically crimination —cannot be dealt with by taking a percentage territory off one adding it to another. Procrustean bed is not symbol equality. It is no inequality less equality have among unequals. The do not findings reveal how it happened that putting 10% taking on and off respectively beget will just right 10% adjustment. I am not suggesting that might dig one not out inexplicit, record argumentative support for the view that an increase in Official Classification Ter- 10% ritory rates will still leave the level of rates within that Territory not unreasonable, and that a decrease of 10% in Western will Territory leave the required carriers the reasonableness of within rates that Territory. But it is not a fair conducive to administration of the Interstate Act, Commerce nor is it consonant with proper dis- charge task, this to require Court’s us to dig out indica- tions or giving appropriate evidence answer to these issues from a record consisting of nearly 13,000 pages spread over by report ato volumes, which led pages. finding absence of acknowledged District Court that argued “it has been court: Said the

on such issues. Territory in Official in rates increase class be no there can finding, supported primary a first so-called there is unless are not present that rates evidence by substantial have proved, if would While that compensatory. fact, it and the prove the failure to significance of much been finding present rates are confis- consequent lack of finding that Commission’s not leave the catory does evidence.” unsupported substantial rates are unlawful in Of- But the fact that the rates Supp. 856, 65 F. 873. comparison, a matter of abstract Territory may, ficial in Ter- line with the rates Western or Southern be out of Territory in hardly proof the rates Official ritory percentage increased the same flat as the should be in the other territories should be decreased. rates Such Territory may a flat increase Official make the proposed new rates unlawful because unreasonable. While a 10% Territory may decrease rates Western eliminate un- shippers in that fairness to it does not follow that territory, corresponding increase Official Territory 10% will not result unfairness to shippers there. hardly concurring

One can read the and dissenting views Report being to the Commission’s with without left un- certainty regarding the basis of the Commission’s order. does report show, except fashion,

“The nebulous figures represent apportionment that the cost of totals, estimates; that they many assump- based on involve judgment; computations tions and acts of and are not figures direct, original particular from cost move- These, ments. are the facts. however, It omits showing evidence that 59 out of 117 items of basic data used were estimated, studies and that 458 sequences wholly out of 500 were or partly estimated. making clearly to that when fails disclose of the traffic studies was assumed that the consist when is the same the different the fact territories, I is, pointed out, as have that the traffic consist differs widely in the The respective territories. result theoretical costs are upon based as- produced, sumptions which are not facts, upon comparisons things.” (Commissioner of unlike Porter, dissenting, I. 447, C. C. 717; see dissenting views of Commissioner Barnard, id. at 725.) According two the Commissioners the wholly record is inadequate support a finding that class rates within Official Territory unreasonable under of the Act. § See 264 I. C. C. 69-70. Certainly the did Commission make an explicit finding they are unreasonable. If any there is such finding, sought it must be for as would haystack. a needle in a ought order Commission’s not to be allowed to rest on such dubious foundations.

Nor can such a abstractly mechanical or mathematical readjustment of rates justified inter-territorially be adjustment. a tentative Of course, may Commission generalize a sufficient number of typical instances and readjustment make fiat a territory, within in- leaving stances unreasonableness to be taken out of such an upon order application. individual This is what Com- did, mission and what in the New sustained, this Court Case, England Divisions 261 U. S. 184. The order in that case, directing a increase in the share of the 15% England New joint railroads through-freight rates, upon was based evidence “which the as- sumed was typical character, ample in quantity, justify finding made in respect to each division of each of every carrier.” 261 U. S. at 196-97. The Court found that the practice established in rate litigation, the nature of the hearing before the Commission, the evi- dence submitted, findings made, the opportunities to sup- amply situations, in typical for modifications

apply present record, findings. ported the Commission’s present a report, not does the Commission’s reflected the gets impression that comparable situation. One outside in the rates decrease of a flat adjustment 10% that within increase of Territory and a flat Official 10% de- to a laudable fundamentally, Territory attributable, is to uniform clas- Commission secure part on the sire country. The Commission throughout sification made classification, but it a to make such prepared pres- exert hope they that would changes rate these classification. upon a uniform agree on the carriers sure urged the order that it is that hope It is relation that merely a conditional or tentative order —conditioned is upon a uniform classifica- by the carriers upon agreement of that the realization But to condition the order on tion. if on the experience any be hope it, condition guide, Greek kalends. Mil Chicago, v. this Court said in United States

What waukee, Co., 499, 510-11, St. Paul R. U. S. & Pacific involving adjustment very a within a limited terri order far-reaching consequences with no as the tory, such review, pres now under to the applicability has enhanced ent order of the Commission. would under “We not be saying report phrases stood as there do not lurk in this suggestive meaning. or sentences of different One gains a impression at places upon looked the proposed reduction as some [initiated carrier] thing disruptive tendency more than The dif .... ficulty is that has not with simplicity said so through halting impression ripens clearness which a into In spell out, reasonable certitude. the end we are left to to argue, conflicting to choose between inferences. Some precise requisite thing quasi-jurisdictional more Beaumont, of an findings agency. administrative L.S. Ry. States, v. 74, & W. Co. United U. S. v. 86; Florida States, United 282 U. S. 215. We must know what a decision the duty say means before becomes ours to whether it right is or wrong.” experts

Administrative no doubt have not antennae possessed with by charged reviewing courts their action. And may justifiable so it well be that expert to the feel the of an correction imbalance Territory between Official rates and the rates of other territories is a shift of in the 10% respective rates —Official Territory rates increased 10% and rates elsewhere decreased courts, But charged 10%. they as are with the review of the action the Commis- sion, ought not to be asked to sustain a such mathematical coincidence as a matter of unillumined faith in the conclu- sion of the experts.

I would reverse the decree and order the proceedings returned to the Interstate Commerce Commission.

Mr. Justice Jackson, dissenting.

I it impossible find with agree extraordinary to this decision. I will discuss but of its phases one —that is treated Eighth subdivision of the opinion. Court’s This holds that the Interstate Commerce has, and rightfully exercised, has the power to add 10% certain basic affecting part Northeastern of the United States. This increase was not asked railroads, goes prosperous and the insolvent alike, ones is necessary even claimed to be to pay the cost of service and a fair return on the property used in rendering it. This additional assessment is in no sense compensation handling for the traffic which the railroads concede was compensated adequately before. It is really a surtax, Brandéis, see inJ., England New Case, Divisions 261U. S. added solely 184, 196, shipping to increase costs in part Northeastern of the United for purpose States of handicapping economy its and in order to make trans portation cost much there as it does areas where there surcharge burdens traffic divide the cost.

is less consuming popula- fifty where territory percent adding resides an estimated tion of the United States that to its bills. adds per year shipping $15,000,000 with of the Northeastern railroads much to the revenues finding meet costs of showing no needed to furnishing railroad service. sustaining advanced for important reason

The most this is to surcharge cure order is the claim this territory of the Northeastern favor discrimination Briefly and generally, and West. against South Mile for is said to consist in this: the discrimination transportation mile, higher average charge made sparsely present more under classifications in the and than made settled areas of South West Why, then, regions the denser traffic Northeast. low- be removed alleged discrimination not the should and West? answer high the South ering of percent further the ten they is that cannot be reduced than railroads this because the proceeding, ordered in already costs, in of their could West, view of the South equaliz- of only way other bear further decrease. So goods costly as move there ing making the rates and it to States, anywhere shippers in the is to make the United addi- territory the railroads this pay in the Northeastern need. they have not asked and do not tional 10% this order is based on an en- of approval The Court’s It has never theory of “discrimination.” tirely new be an unlawful discrimination to thought before been which it cost more to render. for a charge more service only has been found to heretofore exist Discrimination service, charge was exacted for like unequal when an it is held to be an unlawful dis- But now or vice versa. if railroads of the Northeast do not make the crimination West, in for charge as other the South same railroads different cost conditions. transportation under a different frankly concept The Government this new of advocates necessary popu- discrimination as some redistribution lation relation to reshape resources that will the nation’s social, economic and perhaps political nearly its life more to its heart’s desire. It brief says its to us:

“There is no direct relation between the distribution natural resources and distribution popula- in the tion United States. It happens that some of areas richest natural resources the United States are sparsely populated. If the raw materials making up those natural resources are to be converted into products finished vicinity, allowing area some economic their benefit from conversion, will be necessary transport considerable volumes goods of finished for long Necessarily distances. deposits minerals are obtained where the occur, agricultural products produced must be areas suitable soil climate. task of the trans- portation system to carry points commodities from production to consuming throughout centers United States the ports export. and to The more freely and cheaply products the more carried, competition there will be, production more there be, will and the better will our transportation system serve our national economy.

The of maintenance a sound national economy re- quires proper of use natural to insure resources reasonable opportunity economic of a stable nature people for the regions each of the of the country. As indicated, population distribution not in accord with the distribution of natural resources, it and require would many years for people to where move to are, these resources it assuming possible to induce such millions to or that migrate, would be wise to do if policy so even possible. There are also areas agriculture of one-crop which the people face read- 360 and to obtain protect the land and

justments to restore sources of livelihood. additional principles of the basic this, In of all one view elimination of freight rates should be the making change regional development, not to against barriers discriminatory to remove condi- economy, but our unfairly unlawfully prevent and tions which change.” possibility of fea- discrimination

The entire discussion Court’s acceptance an of the Government’s of ture this case support for this order which the last position without would fail. Congress Act of any can be found authority

No solely surcharge on the Northeast of this imposition transport goods cheaper due being to to it for able penalize The of trafile. and volume density population to its of “adequate long as it has stood: Congress remains policy transportation service at lowest railway efficient . .” service . . furnishing with the such cost consistent Act, (2), 220, 15a 48 Stat. Stat. § Interstate Commerce (2). Congress intimated, U. 15a has 912, § S. C. never deprive declared, purpose territory less to much percent of the nation’s reside fifty consumers policy. Ramspeck benefit of did this resolution no more than direct the Commission’s attention complaints being earnest the South and West were very mistreated the matter of rail properly rates, their they complaints to direct that determine such provision prohibiting in 1940 the undue True, merits. addition prejudice preference was amended district, territory,” persons to the list or “region, things preferred. not to or unduly prejudiced be Trans- 1940, 5 portation Act, (a), § Stat. 49 U. C. S. (1). already prohibited But the prejudice § Act undue preference any “locality” and it is conceded that 1940 Act change made no law of the substantive discrimination. In- Wheeler, Senator Chairman terstate Commerce Committee of Senate, showed clearly that it while would equalization “make toward the of rates,” 84 Cong. Rec. was 6072, it not intended to ac- complish what here attempted. following colloquy occurred:

“Mr. Frazier. Is it the com- expectation mittee that amendment section 52 [now (b) section 5 of the in the various the rates Act] classification territories will be or made the equalized same in different territories?

“Mr. I do not think possible. Wheeler. that is “Mr. I Frazier. do not I possible. see how it is wondering what the intention was. “Mr. possible Wheeler. is not for a number of reasons. For example, it costs more to carry over the mountains two it on carry than to trains plains in one train. Likewise, recognize we must the fact that transportation railroad service and rates depend somewhat on intensity of the traffic. In long stretches of territory traffic, shippers with no must pay more for railroad service shippers than do in a densely part settled of the where country trafile is plentiful and where there is competition much from trucks, busses, things of that However, kind.

seems to me from my study question ap- inequalities parent ought . to be corrected. . .

“Mr. In large Frazier. North Dakota we have a wheat to transport volume of year, the fall of the and because we have large and because volume, territory practically our level, we have a rather beneficial rate on wheat compared with some other Our railroad territories. commission and traffic ex- afraid perts are that the provision to which reference 362 away special that will take made

has been from us. help will provision I believe this

“Mr. Wheeler. harm than rather of the Senator’s State people many respects. them than lower rate have a much Frazier. We “Mr. If country. of the many other sections prevails raising our will mean equalized, be rates are to rates. that rates The does not mean bill

“Mr. Wheeler. of the Senator’s people . . . The equalized. are to be minds just disabuse their might as well State bene- any will lose they of the bill fear that as result Cong. (84 have. . . Rec. they now fit 5890.) regulatory any confided to

The never before has Court Texas In economy. of our national body reshaping States, follow & R. Co. United v. 289 627, U. S. Pacific published “A of the law made: tariff ing statement destroying building up one, purpose for the a market or injury from a diverting particular place traffic place, other, unlawful; that aid of some and obvi may lawfully do, what the carrier not the Commis ously, may compel.” sion 289 U. S. at 637. See also C., I. Southern Co. v. C. I. C. C. 219 v. 433; U. S. Pacific Diffenbaugh, v. Illinois 42, United States 46; U. S. Co., Central R. 515, 524. U. S. accepted Interstate Commerce Commission also Boilers, Stoves, Ranges, etc., In law. as the

this said, 59, majority power “It is not within our I. C. C. equalize disadvantages locations,” natural 182 I. C. C. explicit, at was even more and Commissioner Eastman saying, 182 I. C. C. at 74: undeniable, think, it is I in the

“However, car- past both southern manufacturers southern riers shown a tendency have to demand that to the be equalized North with those within level the North, ground on the equalization that such commercially essential to the southern industries.

is a sufficient say answer to it is not province our equalize However, commercial conditions. evidence case has a this served useful purpose making quite it clear that the southern manufacturers have certain advantages rivals, over their northern so far as operating and concerned, overhead costs are which would have to be taken into consideration if duty were our to equalize commercial conditions through adjustment an freight of rates.” The Court shrouds this simple legal issue to whether there is power levy to Northeast, this surtax on elaborate discussions of of existing evils classi- fications and affirmations of the power Commission’s correct them. Neither of propositions these have ever been But importance doubt. what can the Commis- power sion’s over in testing classifications have validity of this order? To classification correct was the asserted object of proceeding, this power but that not been has exercised at all. Not changed. one In- classification is stead, a flat boost is made against traffic in the Northeast and a flat reduction for traffic the South and West is ordered, leaving every inequality, discrimination, injustice or illegality just in classifications where the Commission specific found If is proof discrimination, them. there of injustice and illegalities case, they this are not why now ordered corrected? If there is not proof sufficient any specific discrimination, how can we hold that there is general a discrimination so extensive as to warrant this on the levy Northeast to correct them? incomprehensible the most

Perhaps of the Court’s grounds for this sustaining is that we order do not have that the North- admitted It is problem.” a

here “revenue found nor proved increase rates before eastern railroads, to the noncompensatory be upon the revenues harmful effects to threaten otherwise get the efficiency of the carriers who transportation of such also is admitted the absence increase. rate, be fatal to this increased findings might proof existing determining whether “If this case were highest lowest or above the reaches below the passed reasonableness, might well taken.” Can point be under proceeding legal to a make what the label affixed proceeding would be invalid? Because the another label classifications, purpose long now to correct professes deferred, may incidentally it be used indefinitely territory whole raise the rates Northeastern with- out therefor? any showing need Whether we call the “revenue something else, case a case” or and whether we problem problem” the a to denominate “revenue decline else, it style something and the order under review is a nothing and else. adds to revenue order the 10% roads from moving revenues of the Northeastern traffic in it question; the rates knocks off from under 10% the and traffic under them. It exacts Southern Western it revenues; lays shippers the railroads added on burden of those providing added revenues. This order admittedly might be invalid if the increased revenue were given they to the railroads because had claim to made it, present and had only need evidence and findings an support allowance of their claim. So the conclusion is that the order is valid only because railroads have no revenue and problem have not entitling made case them to increased revenue. That all I get can from the answer that it ais valid order only because “we do not have here such a problem.” revenue I long complaint freight have heard the rates dis- against criminated I the South. have been inclined to suspect to be and hoped true have to see an impartial study subject. exhaustive decision But this case does not meet that description. The student of economics will be puzzled at the Court’s citation of the fact that average in employed person the South only earns half as much as in being those the Northeast as in way some attributable to these rates. And judicial student will find process instruction decision and that of Interstate today’s contrast between Commerce v. Mechling, 330 U. S. in its regard for inherent in its attitude “un- advantages, averages sifted” as a for raising basis rates and in its deference expertise administrative the Interstate Commerce Commission.

I position am not unaware of the difficult which the Interstate Commerce Commission itself in finds cases gave this character. Commissioner Eastman voice to it Co., State Alabama New York Central R. dissent v. 255, 333, 235 I. C.C. as follows: upon Commission is called to decide this case,

“The record, decided, on the after it has effect been advance and regard record, by many without to the men in public high low who have life, degree, freely proclaimed their they views on what conceive to be the basic Their issues. thesis has been that the section country of our generally known as South is our 1’, ‘Economic Problem No. because, among things, develop- other it is low in industrial ment, major and that a reason for this condition has been and adjustment is an unfair of rates which has the producers favored of the North and burdened those of the South. has become a politi- cal issue. While, however, gave South birth to cry- now public representatives of West issue, rep- public and supposed against oppression, like

out variously East, it of North resentatives their section. have risen defense of called, easy conditions, it is not to decide “Under such reactions, emotional being influenced without case no play part other, or the which should way one the decision.” judicial fiat succession

But administrative com- the Federal Government over regulatory power of transportation on of merce is now used to force a surtax to country admittedly not needed com- one section carriage away to from pensate the railroad but take advantages of the inherent in its its inhabitants one population, regardless disadvantages density density population also causes. The observation of Commissioner MahafEe this case appropriate seems me to and accurate: In . . country widely so vast as this with its differing varied resources and transportation needs try compel seems me a mistake to general equal- ity except justified to the equality extent by transportation I conditions. think the effort do so must I necessarily fail. But am afraid the process finding out whether it can be done will be painful costly. prejudice findings on which adjustment the new predicated is largely are calcu- if lated, logical carried to a to lead to a conclusion, rigid structure based on mileage. While this seem its may face to be equitable accomplish- its would entail agricultural ment radical industrial readjustments. I if country doubt re- be should quired to incur the expense making them.” (262 708.) C. at C. I. Frankfurter Justice joins

Mr. in this opinion.

Case Details

Case Name: New York v. United States

Court Name: Supreme Court of the United States

Date Published: Jun 9, 1947

Citation: 331 U.S. 284

Docket Number: NO. 343

Court Abbreviation: SCOTUS