distance being in favor of one of two competing points, and neither cost, the value of the service, nor other conditions of transportation in favor of the other, the shorter distance point cannot justly be denied at least equal rates with the longer.1 The market value of a commodity, the value of the transportation service to the commodity, its cost of production, and the actual cost of carriage are elements of importance in establishing rates.2 Value is another important element, but it cannot be made an arbitrary standard independent of all other considerations.3 Rates should bear a fair and reasonable relation to the antecedent cost of the traffic as delivered to the carrier and to the commercial value of such traffic; but it is incumbent on parties invoking this rule to make satisfactory and reliable proof as to such antecedent cost and commercial value, and in case of competitive articles 5 over the same line the relation of rates should be determined by reference to the respective costs of service ascertained with reasonable

1 6. 342.

2 The writer refrains from discussing in this place the meaning of the terms "value," ," "cost," "expense," etc., as used in transportation matters. A variety of definitions can be constructed synthetically from the decisions. The writer is inclined to restrict the use of the term "value of service" to value of service to the commodity considered as an object of purchase and sale on a competitive market; and "cost of transportation" to material sacrifices made by a railway in carrying a particular article at a certain time (which, as is well known, cannot be accurately determined for a particular service).

8 8. 158.

4 5. 529.

5 4. 611.

accuracy.

3

Although rates should bear a reasonable relation to cost of production and to the value of the service to the producer and shipper, they should never be so low as to impose a burden on other traffic;1 nor can small earnings,2 extraordinary or unnecessary cost of operation or management, or other financial necessities and conditions of the carrier justify excessive rates. The degree of risk to the carrier 5 and the capitalization of a railroad have a bearing upon rates. The latter, in order to have consideration, should be accompanied by a history of the capital account, the value of the stock and various securities, and the actual cost and value of the property itself. To make the capital account of railways the measure of legitimate earnings would place, as a rule, the corporation which has been honestly managed from the outset under enormous disadvantages.

Classification. That rates can be changed by modifying classifications is an elementary proposition of transportation. That principles of railway rates constitute the decisive factors in classifica

tion is its corollary. A study of classifications is inseparable from a study of rates, and vice versa. The great classifications in force in the United States to-day are the result of years of effort in improving some original schedules and in consolidating and eliminating scores of others.

The

more than seven thousand specifications, are a great advance upon the schedule of 1856 with thirty-three specifications. This development has been one steady march toward uniformity, in which the Interstate Commerce Commission has always stood on the side of progress, and arguments in favor of a uniform classification have been repeated many times in its reports. "The Commission has repeatedly said that the rearrangement of rates and the simplification of classifications are matters which the carriers should undertake and should carry forward for themselves."1 While the Commission has been reluctant to enter upon active classification making, its decisions are not without direct bearing upon specific questions relating to classifications, especially in matters of principle. Classification is deemed convenient and essential to any practical system of rate-making, and is so recognized, though not enjoined, by the act to regulate commerce.2 And when a classification is used as a device to effect unjust discriminations, or as a means of violating other provisions of the statute, the act requires the Commission to so revise and correct such classification and arrangement as to correct abuse. A manufacturer of A manufacturer of soap advertised and sold as toilet soap made complaint against a railway company for classifying his soap with other toilet soaps, and not with the lower class of laundry soaps. The Commission held that a manu

facturer's description of an article designed to induce its purchase by the public also describes it for transportation, and carriers may accept his description for purposes of classification and rates.1 In another case 2 the Commission held that two kinds of soap advertised as alike, and substantially equal in value, should be classified alike for transportation purposes. Products classified alike are presumptively entitled to equal rates;3 in classifying them, cost, bulk, weight, value, and their general characteristics should be chief considerations ;5 clearness and simplicity should be aimed at and irregularities and inconsistencies eliminated; and a classification must have the same construction

in favor of all persons.7 Unjust discrimination against a commodity is not shown by evidence of a lower classification for articles widely dissimilar in the elements of risk, weight, bulk, value, or general character. The proper method of comparison is the classification accorded by the carriers to similar articles.8 Railway officials who have made a classification cannot testify to their understanding of its construction. A classification sheet is put before the public for general information; it is supposed to be expressed in plain terms, so that the ordinary business man can understand it, and in connection with the rate sheets can determine for himself what he can be

The persons

lawfully charged for transportation. who prepared the classification have no more authority to construe it than anybody else, and they must leave it to speak for itself.1

Through Rates. - Through rates and through billing are matters of agreement among carriers engaged in interstate commerce. The Commission has no power to compel them against their consent to enter into arrangements for through rates and for through bills of lading, although the statute encourages such connections, because they furnish cheapened rates and greater facilities to the public, while at the same time they give increased employment and earnings to a larger number of carriers.1 Railway companies may make whatever rates, form whatever lines, and establish whatever differentials they deem best for the purpose of securing and conducting transportation, provided the just interests of the public are not sacrificed thereby; and whether in so doing they deal with each other wisely or unwisely, fairly or unfairly, is not a matter for the Commission to decide. A through bill of lading is evidence of a through rate. It is not necessary that it should be formally "quoted" by one of the carriers to another who is engaged in the making of it to constitute it a through rate. Names are nothing in such a transaction; the law looks at the elements and substance of the transaction itself. The fact that the initial or an inter