which will obstruct the freedom of movement of interstate traffic over their lines in accordance with the terms it establishes."

In a very recent decision by the Supreme Court the decision in this section considered was referred to in the following manner: "But a relation is asserted between the state and interstate haul, because it is said to be manifest that the order of the state commission gives commercial advantages to shippers and producers of coal in Illinois over shippers and producers outside of the state. But there is nothing in the record that justifies the confidence of the assertion. There are too many factors to be considered for such offhand declarations to be accepted. Some relation we may admit between the state and interstate service, but the evidence does not bring it within that certainty and precision of influence that induced the decision" in that case. It was said the Minnesota Rate Case, supra, rather controlled that case. We have seen in section 156, supra, what that case held. The far-reaching effect of the principle announced by Justice Hughes in the final excerpt from his opinion, supra, is that Congress may, if it sees fit, take over all rate regulation for a carrier engaged in interstate and local commerce, or it may so confine state regulation to a point that is fairly negligible so far as intrastate rates are concerned. It is true, that neither Congress nor a state may prescribe confiscatory rates. This ought to mean that neither the interstate nor a state commission can surrender its judgment of what is a compensatory rate "fair to the carrier and fair to the public"-to

34 Chicago M. & St. P. Ry. Co. v. State Pub. U. Commrs., 242 U. S. 333, 37 Sup. Ct. 173, 61 L. Ed.

another. But, if a state is bound so as to avoid injurious discriminations against interstate traffic to reduce its local rates to a standard the Interstate Commerce Commission fixes, it can fix no local rate at all except in a purely tentative way. Neither can it fix a rate to conform to such commission's rate, unless it finds as a fact that it is fair to the carrier and fair to the public. That basis is presumed as a constitutional sine qua non of all rate fixing.

By a ruling as late as June 11, 1917,35 the Shreveport cases has been reaffirmed and in the reaffirmation, it is pointed out that only is the discrimination condemned as it directly conflicts with some order of the Interstate Commerce Commission. Thus in the South Dakota case the ruling of Supreme Court of South Dakota was that the South Dakota Commission had the power and was the proper tribunal to fix the rates between South Dakota points, notwithstanding the Interstate Commerce Commission had ruled as to particular points in South Dakota there was unlawful discrimination against jobbers of Sioux City, Iowa. The railroad conceiving that the Interstate Commerce Commission's order covered the rates it was charging set it up as justification. The opinion said: "The answer (of the railroad) does not allege that all the intrastate rates to and from the five cities have been advanced in compliance with the order of the (Interstate Commerce) Commission. It alleges merely that the

35 American Express Co. v. South Dakota, 244 U. S. 617, 37 Sup. Ct. 656, 61 L. Ed.

36 Houston, E. & W. T. R. Co. v. United States, 234 U. S. 342, 34 Sup. Ct. 833, 58 L. Ed. 1341.

37 State ex rel. Attorney General v. Adams Express Co. (S. D.) 161 N. W. 132, P. U. R. 1917-C 417.

rates applied were those prescribed 'for interstate traffic between points within and points without the state of South Dakota,' and it is clear that the special tariffs here in question include advances of rates between the five cities and many 'points' in the state to which the commission's order did not apply. It could not therefore afford a justification for putting into effect those intrastate rates without first making the publication required by the state law and securing the approval of the state board." The state ruling, therefore, was modified and as so modified was approved.

§ 154.

155.

CHAPTER XXXI.

REGULATION OF INTERSTATE RAILROADS

Scope of regulation.

Inconsistent positions of carrier.

156. Rates by state commission working discrimination against interstate rates.

§ 154. Scope of Regulation.-Chief Justice White lately has said,1 in speaking of the reach of the commerce clause and regulation thereunder: "That the power to regulate . . extends to many phases of the business of carriage, and embraces the right to control the contract power of the carrier in so far as the public interest requires such limitation, has also been manifested by repeated acts of legislation as to bills of lading, tariffs and many other things too numerous to mention." While the opinion in this case was vigorously dissented from by a strong minority, there seems to have been no controversy as to the above proposition. All such regulation, however, as indicated, supra, is subject to the rule against the taking of property without due process of law under the Fifth and Fourteenth Amendments to the Constitution.

$155. Inconsistent Positions of Carrier.-It has been said that: "It cannot be challenged that the great purpose of the act to regulate commerce, whilst seeking to prevent unjust and unreasonable rates, was to secure equality of rates as to all and to destroy

1 Wilson v. New, 243 U. S. 332, 37 Sup. Ct. 298, 61 L. Ed. 2 Sec. 151.

-.

favoritism, these last being accomplished by requiring the publication of tariffs and by prohibiting secret departures from such tariffs and forbidding rebates, preferences and other forms of undue discrimination.'" The opinion in this case considers whether the purpose to secure equality in rates was defeated or seriously interfered with by a railroad carrier being a dealer in the commodities it carries. It was said that a construction which would permit this "would not only destroy its (the statute's) entire remedial efficacy, but would cause the statute to accentuate and multiply the very wrongs which it was enacted to prevent." The two railroad defendants, one selling and carrying its own product and the other purchasing were enjoined from carrying out the contract entered into between them. This indirect favoritism was held as much forbidden as were it direct.

Following this decision Congress enacted what is known as the Commodity Clause of the Hepburn Act whereby railroads were forbidden to occupy the inconsistent positions of public carrier and private shipper. This clause has been considered in several cases and its validity affirmed.*

There was as full power to do this in the regulation of commerce as there was in holding an initial carrier liable for the loss of any shipment by a connecting carrier, or to provide as to limitation on value, speed or

5

8 New York N. H. & H. R. Co. v. Inters. Com. Com., 200 U. S. 361, 26 Sup. Ct. 272, 50 L. Ed. 515.

4 United States v. Delaware & Hudson Co., 231 U. S. 366, 29 Sup. Ct. 527, 53 L. Ed. 836; Delaware L. & W. R. Co. v. United States, 231 U. S. 363, 34 Sup. Ct. 65, 58 L. Ed. 267; United States v. Delaware L. & W. R. Co., 238 U. S. 516, 35 Sup. Ct. 873, 59 L. Ed. 1438.

5 Atlantic C. L. R. Co. v. Riverside Mills, 219 U. S. 186, 31 Sup. Ct. 164, 55 L. Ed. 167, 31 L. R. A. (N. S.) 7.