Proportional rates on reshipments from Chicago to eastern
destinations of grain coming from distant points Northwest on
through shipment with transit privileges and arriving at Chicago by
rail or by lake steamer, became applicable by reason of tariff
wordings to grain coming from points close to Chicago arriving by
barge over the Illinois Waterways route which was established after
the tariffs were adopted. The railroads filed tariff amendments
which would deny to the ex-barge grain the privilege of moving
eastward on the proportional rates, and remit it to the higher
local rates which grain entering Chicago by truck or from local
origins by rail was obliged to pay.
1. That an order by the Interstate Commerce Commission in a
proceeding under § 15(7) of the Interstate Commerce Act which
relieved the proposed tariff amendments from suspension, as not
"unlawful," but which did not prevent future adjustments on
specific complaint of the rates on the ex-barge traffic, was a
determination within the administrative competency of the
Commission with which the District Court should not have
interfered. P. 319 U. S.
2. Proportional rates differing from each other according to the
origin of the commodity may be fixed lower than local rates, and
may apply to outbound movements after stopover in transit. P.
319 U. S.
3. Since the Commission refused to approve or prescribe the
rates here in controversy, they stand only as carrier-made rates,
and are subject to possible recovery of reparations. P.
319 U. S.
4. To perpetuate the existing rate structure by sustaining the
District Court's injunction would favor the ex-barge grain over
Page 319 U. S. 672
moving east from Chicago on local rates, thereby entailing
violations of § 4(1) of the Act as it stood before and after
amendment by the Transportation Act of 1940. P. 319 U. S.
5. Nothing in the Transportation Act of 1940 warrants holding
that the ex-barge grain (mostly corn), merely because it moved over
a comparatively slight distance by water, must as a matter of law
be given the benefit of proportionals fixed with reference to grain
(mostly wheat) from the Northwest, including points in Canada and
as far west in the United States as Washington and the Dakotas. P.
319 U. S.
6. Sec. 15(7) of the Interstate Commerce Act, providing that,
after suspension of a carrier-proposed rate, the Commission "may
make such order with reference thereto as would be proper in a
proceeding initiated after it had become effective" did not oblige
the Commission, in the circumstances of this case, to continue the
suspension proceedings and establish special proportionals for the
barge lines under § 6(1) of the Act. P. 319 U. S.
7. The function of this Court does not permit it to prescribe or
approve rates, and the decision in this case carries no implication
of approval of any rates here involved; nor can the Court prescribe
general attitudes the Commission must adopt towards the exercise of
discretion left to it, rather than to the courts, by the Act of
Congress. P. 319 U. S.
44 F. Supp. 368 reversed.
Appeal from a decree of the District Court of three judges
enjoining the enforcement of an order of the Interstate Commerce
Commission. The bill was filed by the Inland Waterways Corporation.
Other parties, including the Interstate Commerce Commission and the
Secretary of Agriculture, were allowed to intervene as plaintiffs
or defendants. The Attorney General, for reasons explained in the
(p. 319 U. S.
), did not participate.
Page 319 U. S. 673
MR. JUSTICE JACKSON delivered the opinion of the Court.
By schedules filed with the Interstate Commerce Commission to
become effective October 15, 1939, the appellant eastern railroads
] sought to deny
grain arriving at Chicago by barge over the Illinois Waterways the
privilege of moving out of Chicago by rail on "proportional" rates
applicable to competing grain arriving at Chicago by lake steamer
or rail. The only other rates on which the ex-barge grain could
move eastward by rail from Chicago were "local" rates, which were
in all cases higher than the existing "proportional" rates. The
proposed schedules were protested by barge lines and others
desirous of maintaining the existing proportionals as to ex-barge
Understanding of the controversy thus precipitated and the
consequent litigation which has brought it to this Court requires a
statement of the rather complicated rate structure to which the
proposed schedules related.
The proposed schedules applied to grain, grain products, and
grain byproducts, but, for convenience, we refer to them all as
"grain." They dealt not only with grain coming
Page 319 U. S. 674
by barge via the Illinois Waterways to Chicago, but also with
grain so arriving at Peoria, Illinois, St. Louis, Missouri, and
other related rate-break points. Chicago is illustrative of all,
and, for convenience, we shall follow the practice employed by the
parties in briefs and argument, and confine our discussion to
Grain originating at Chicago, grain brought there by truck, or
by rail under intrastate rates, and grain which had forfeited its
transit privileges, moved eastward by rail from Chicago on local
rates. Their validity as such has not been questioned in this
Grain originating at certain places distant from Chicago had the
privilege, however, of moving eastward from Chicago by rail on the
lower proportional rates, although it came to rest at Chicago for
marketing or processing. These "proportionals" varied according to
the region of origin or the region of destination, and, in some
instances, according to both.
"Official Territory" lies east of Chicago, and is divided into
"Central Territory," "Trunk-line Territory," and "New England
Territory." Central Territory lies west of a line drawn through
Pittsburgh and Buffalo. To this territory there were three
different sets of proportionals, set with reference to the
territory of origin.
Grain originating at certain points in Illinois moved out of
Chicago by rail to Central Territory on "Illinois Re-Shipping"
proportionals, which, however, did not apply to ex-barge grain and
were not affected by the proposed schedules.
Grain originating in "Northwest Territory" moved out of Chicago
by rail to Central Territory on "Northwest" proportionals, which
were in some instances higher, and in others lower, than the
Illinois Re-Shipping proportionals. As first published, these
proportionals applied only to grain originating in Northwest
Territory, which comprises generally North Dakota, South Dakota,
Page 319 U. S. 675
Wisconsin, the upper peninsula of Michigan, Montana, Wyoming,
Idaho, Oregon, Washington, and certain Canadian provinces. The
Northwest proportionals were originally and have continued to be
applicable on grain arriving at Chicago by lake. In 1932, the
Northwest proportionals were amended to make them apply to
shipments which "arrived by boat line at Chicago. . . ." At the
time this wording was put into the tariffs, the only water-borne
grain to which they applied was that arriving from the Northwest by
boat over the Great Lakes. The Commission has decided that the
effect of this amendment was to make the Northwest proportionals
apply to grain arriving by barge over the Illinois Waterways, which
were opened in the following year, 1933, and we accept its
determination of this issue. While shipping points along the
Waterways vary from 57.5 to 200.9 miles in distance from Chicago,
some grain arriving there by barge originated at points as far
beyond as Kansas City and St. Louis. The Northwest proportionals
were the only ones which applied to ex-barge grain moving out of
Chicago by rail to Central Territory, and the proposed schedules
cancelled them as to such grain.
Grain brought by rail from "Trans-Mississippi Territory," which
included, among other places, Kansas City and St. Louis, moved out
of Chicago to Central Territory on "Trans-Mississippi"
proportionals, which had been set by the Commission 3 cents lower
than the Northwest proportionals in order to equalize the Twin
Cities with Kansas City. The Trans-Mississippi proportionals did
not apply to grain coming from these points by barge, and therefore
such grain had to pay a higher rate for the outbound haul than was
required of grain coming from them by rail. No complaint has been
made, however, of this, and the appellees have been content to
assert that they are entitled to the Northwest proportionals as to
Page 319 U. S. 676
"Trunk-line Territory" lies between Central Territory and New
England Territory, which comprises the New England States. To
Trunk-Line and New England Territories the proportionals did not
vary with the point of origin of the grain. These proportionals
applied to grain coming to Chicago by barge over the Illinois
Waterways, and the proposed schedules cancelled them as to such
grain. The existing schedules provided that
"in no case shall the combination through rate to and from the
reshipping point via rail be less than the local rate from the
reshipping point to destination, the difference necessary to
protect the local rate from the reshipping point to be added to the
reshipping rate therefrom."
No such provision was made with respect to the barge-rail
traffic, and the Commission found, accordingly, that
"the barge-rail rates are far below the local rates from the
reshipping points in contravention of the fourth-section rule,
] while the all-rail
rates are in strict conformity with that rule. "
Page 319 U. S. 677
When the proposed schedules were filed with the Commission, that
body, acting pursuant to its authority under § 15(7) of the Act,
] suspended them for
Page 319 U. S. 678
period of seven months and entered upon a hearing of their
lawfulness. The last testimony was heard, and the record in the
case closed, on January 26, 1940. On September 18, 1940, the
President approved the Transportation Act of 1940. [Footnote 4
] Thereafter, the appellee
Page 319 U. S. 679
Waterways Corporation requested the Commission to dispose of the
proceeding in the light of the new Act. On July 31, 1941, Division
2 of the Commission found that "the proportional rates here in
issue have never been applicable on this barge traffic moving on
unfiled rates," and that "the schedules under suspension are not
shown to be unlawful." It announced that an order would be entered
vacating the already expired order of suspension and discontinuing
the proceedings. [Footnote 5
When the period of compulsory suspension ended, the carriers had
voluntarily continued the suspension.
In its petition for rehearing and reconsideration of this
report, the Inland Waterways Corporation asserted that the
Commission had permitted discrimination against a connecting line
forbidden by § 3(4) of the Interstate
Page 319 U. S. 680
Commerce Act as amended by the Transportation Act of 1940.
] It suggested that
the Commission fix the existing proportional rates as the proper
ones, stating that:
"Theoretically, the Commission is not limited to a choice
between the unlawful proposed rates and the present rates, but may,
upon an adequate record, prescribe some different basis of rates
for the future. Actually, no different proposal has been introduced
which could support a different basis of rates than those presently
in effect. That fact, however, cannot possibly militate to justify
the proposed rates, but could only compel the postponement of any
change in the present tariffs pending further hearing, and the
introduction of a lawful proposal. [Footnote 7
The decision of the whole Commission on reconsideration was
announced on December 1, 1941. [Footnote 8
] In it, the Commission took official notice
that certain of the protestant barge carriers had attained common
carrier status under the Act, and stated that "no useful purpose
would be served by further hearing or reargument." [Footnote 9
] The Commission reviewed the
existing rate structure and the probable effects of the proposed
changes in operation as contrasted to the effects of denying them,
"The proposed schedules will not prohibit the movement by
barge-rail even to trunk-line territory, their principal
Page 319 U. S. 681
commercial effects being to reduce the profits of the Chicago
elevator operators. . . . [Footnote 10
"Protestants maintain that the proposed schedules will be
unreasonable, unjustly discriminatory, and unduly prejudicial . . .
and unduly preferential. . . . This is based primarily on the fact
that, under the proposed schedules, the ex-barge rates will be
higher than the ex-rail or ex-lake rates, although in each instance
the physical carriage beyond the reshipping point is substantially
the same. But the latter is also true of local grain, grain brought
in by truck or by rail under intrastate rates, or grain which has
forfeited its transit privileges. To adopt protestants' premise
would mean that all proportional rates lower than local rates and
differing from each other according to the origin of the commodity
would have to be condemned. As pointed out by the division,
reshipping or proportional rates are, in their essence, balances of
through rates. Such balances are, of course, determined by the
measure of the in-bound and through rates, and properly may vary
according to the relative length and nature of the in-bound and
through service. It follows that the protestants' allegations
cannot be sustained in this proceeding, although in a proper
proceeding we might prescribe proportional rates on the ex-barge
traffic lower than local rates or joint barge-rail rates lower than
"The facts of record, as detailed by the division and summarized
herein, clearly show that respondents are justified under section 1
in treating the ex-barge traffic the same as local or ex-truck
traffic, and that the proposed
Page 319 U. S. 682
schedules cannot be condemned as unlawful under sections 2 and 3
of the act."
"On reconsideration of the record in the light of the petitions
and replies thereto and our prior decisions, we find that:"
"(1) The proportional rates here under consideration were
legally applicable on the ex-barge traffic where the so-called
policing provisions were strictly complied with."
"(2) The proposed schedules are shown to be just and reasonable,
and are not shown to be otherwise unlawful."
Accordingly, the Commission ordered:
"That the order heretofore entered in this proceeding,
suspending the operation of the schedules enumerated and described
in said order, be, and it is hereby, vacated and set aside as of
December 22, 1941, and that this proceeding be discontinued."
After the Commission had announced its decision, and on December
12, 1941, appellant Mechling Barge Lines sought to intervene on the
ground that, since the record had been closed, it had become a
regular common carrier by water of grain by barge to Chicago and
other rate-break points, and was entitled to the protection
afforded to such carriers by the Transportation Act of 1940. It
urged that the decision be set aside and, if it should be thought
necessary to this end, that it be given an opportunity to introduce
evidence. This was the first offer to assist the Commission in any
way in the establishment of proportional rates fixed with reference
to the ex-barge grain. No specific suggestion was made, however, as
to the amount of such rates or as to the evidence which would be
introduced in support. This petition was denied by the Commission
on January 21, 1942.
On January 16, 1942, the Inland Waterways Corporation had filed
its complaint in the United States District Court seeking an
injunction against the enforcement of the Commission's order.
Various other parties were allowed to intervene in the case as
plaintiffs and defendants.
Page 319 U. S. 683
The Attorney General did not participate, giving as his reason
the existence of a conflict in litigation between coordinate
agencies of the Government, the Agricultural Adjustment
Administration and the Interstate Commerce Commission. The opinion
of the specially constituted three-judge District Court was
announced on April 16, 1942. [Footnote 11
] It stated that
"The Interstate Commerce Commission took no evidence addressed
to the issue whether the rate proposal in question is in violation
of Section 3(4) of the Interstate Commerce Act, as amended by the
Transportation Act of 1940, or contrary to the National
Transportation Policy enacted by the last said act; but the
Interstate Commerce Commission passed upon the legality of said
rate proposal upon evidence taken without reference to such issues
and before they existed."
It concluded that the order was of a "character which this Court
is authorized to enjoin and set aside," and should be set aside on
the ground that it "discriminates against water competition by the
users of barges." It decreed that the Commission's order vacating
the already-expired suspension of the proposed schedules and
discontinuing the proceedings be annulled, and that the railroads
be "permanently enjoined . . . from acting upon the authority of
the aforesaid order."
The case is here on appeal. [Footnote 12
In the proceedings before the Commission, the protestants
pitched their case upon two propositions: (1) to deny the ex-barge
grain the benefit of proportionals sought to be cancelled was
necessarily unlawful, since the physical carriage beyond Chicago
was substantially the same no matter where the grain originated;
(2) since denial of that benefit was necessarily unlawful, the
Page 319 U. S. 684
bound to maintain the status quo
by cancelling the
proposed schedules and thus perpetuating the existing rate
structure, whatever might be its defects.
As the Commission correctly observed with reference to the first
"to adopt protestants' premise would mean that all proportional
rates lower than local rates and differing from each other
according to the origin of the commodity would have to be
Proportional rates so differing and lower than local rates for
like outbound transportation have a long history, antedating the
Interstate Commerce Act itself. Long hauls have generally been
thought entitled to move at a rate less than the sum of the rates
for local or short hauls between intermediate points. The practice
of routing commodities such as grain to centers for marketing and
processing has been widespread, and often a necessary feature of
the process of distribution. In many instances, stopovers for
marketing and processing have not been considered as disrupting the
continuity of transportation to more distant points, and
consequently the grain has been allowed to move on at a rate lower
than the outbound rate on grain originating locally, and not from a
distance. [Footnote 13
get the outbound business, competing carriers frequently would
offer rates similarly computed. [Footnote 14
] Proportional rates established on this
reasoning [Footnote 15
become deeply embedded in the transportation system of the country,
and have been approved by the Interstate Commerce Commission,
] by the federal
courts, this one included; [Footnote 17
Page 319 U. S. 685
and, so far as it has spoken on the subject, by Congress itself.
] We see no
reason for repudiating them now.
Having pointed out the error of the protestants' basic
contention, the Commission stated that:
"It follows that the protestants' allegations cannot be
sustained in this proceeding although, in a proper proceeding, we
might prescribe proportional rates on this ex-barge traffic lower
than local rates or joint barge-rail rates lower than the
Pending the commencement of such a proceeding it ordered the
vacation of the already-expired order of suspension and ordered the
discontinuance of the instant proceedings.
Despite this statement, much of the argument in this Court has
proceeded upon the assumption that the Commission's order resulted
from its belief and findings that the discrepancies between the
proportional rates not cancelled in the proposed schedules and the
local rates as applied to ex-barge grain were in all respects
lawful, and that it actually approved or prescribed a rate
structure containing such discrepancies. We do not so understand
the action of the Commission.
True, the Commission stated that the railroads "are justified
under section 1 in treating the ex-barge traffic the same as local
or ex-truck traffic," and found that "the proposed schedules are
shown to be just and reasonable." But this does not constitute a
finding that the rates were lawful; they "may lie within the zone
of reasonableness and yet result in undue prejudice" or otherwise
violate the Act. [Footnote
] The Commission also stated that the facts of record
Page 319 U. S. 686
show that "the proposed schedules cannot be condemned as
unlawful under sections 2 and 3 of the act." [Footnote 20
] But this statement followed
immediately upon the Commission's statement that, from its
conclusion that protestants' claim as a matter of right to the
existing proportionals was erroneous,
"It follows that the protestants' allegations cannot be
sustained in this proceeding, although, in a proper proceeding, we
might prescribe proportional rates on the ex-barge traffic lower
than local rates or joint barge-rail rates lower than the
Read in the context, we think it meant only that the proposed
schedules could not be struck down upon the erroneous view advanced
by the protestants. The finding of the Commission that the proposed
schedules "are not shown to be otherwise unlawful" is, we think, to
be similarly read. This form of finding has been held by the
Commission not to constitute an approval or a prescription of the
rates under suspension. [Footnote 21
] Since the Commission refused to approve or
Page 319 U. S. 687
them, they stand only as carrier-made rates which, under the
Commission's decisions, leaves them open to possible recovery of
reparations. [Footnote 22
Like the Commission, we also refrain from approving or prescribing
The case had been developed before the Commission upon the
theory that the proposed schedules must stand or fall in their
entirety. There has been no suggestion, nor is it apparent, that it
would have been feasible for the Commission to pick and choose
among the items in the existing and proposed schedules.
To perpetuate the existing rate structure by sustaining the
District Court's injunction would entail numerous and serious
violations of § 4(1). [Footnote
] Under that rate structure, ex-barge grain moved from
Illinois River points to Baltimore, New York, and Boston at
combination rates lower than the local rates for domestic grain
from all points in Central Territory west of a line running south
from Bay City, Michigan, through Fort Wayne and Indianapolis,
Indiana. So also did the ex-barge grain move out at combination
rates lower than local export rates on grain from all points in
Central Territory west of a line running southwardly and south
along the Indiana-Ohio line, and lower than the local export rates
on corn from all points in Central Territory west of a line between
Paynesville and East Liverpool, Ohio, near the Pennsylvania line.
Unlike the barge-rail rate, the all-rail-rates are, as the
Commission has found, in strict conformity with § 4(1). Congress,
by the Transportation Act of 1940, amended § 4(1), but nowhere in
the Act or in its legislative history is there any suggestion that,
from the mere fact that grain moving from beyond Chicago to New
York travels by barge for the 60-mile leg of its journey to Chicago
Page 319 U. S. 688
than one percent of the total haul -- it shall, as matter of
law, be entitled to a rate from beyond Chicago to the seaboard less
than that from the Pennsylvania line to the seaboard. [Footnote 24
Appellees make no better showing with respect to the effect of
the injunction on the rate structure west of Chicago. To sustain
the injunction would require a holding that grain originating 60
miles from Chicago must, as matter of law, be given the benefit of
proportionals fixed with reference to grain from the Northwest
Territory, embracing points in Canada and as far west in the United
States as Washington and the Dakotas. In addition to the disparity
in distances, there is the further fact that the grain from the
Northwest is predominately wheat, while that from the territory
served by the barge lines is predominately corn from Illinois.
Nothing in the Interstate Commerce Act as amended by the
Transportation Act of 1940, or in the statements of even the most
ardent Congressional champions of water transportation, affords the
slightest warrant for a decision that the Commission must treat as
legally identical such widely disparate factual situations.
Finally, it is claimed that the Commission was obliged to
continue the § 15(7) proceedings and establish special
proportionals for the barge lines under § 6(11) of the Act.
Page 319 U. S. 689
This duty is claimed by appellees to derive from the provision
of § 15(7) that, after suspension and hearing of a proposed rate
change, the Commission "may
make such order with reference
thereto as would be proper in a proceeding initiated after it had
become effective." (Italics supplied). The construction contended
for would have the effect either of imposing a practically
impossible burden upon the Commission or of making resort to the
Commission's powers under § 15(7) so rare as to make such powers of
little practical significance. Suspension cases are very numerous,
and, in many of them, the construction contended for would require
the Commission to "readjust the entire rate structure of an
important section of the country." [Footnote 26
] We have already noted the breadth of the
rate structure here involved. To require the present proceedings to
be continued until proportionals can be set with reference to the
barge transportation would hardly be within the intention of
Congress, which in terms made the Commission's power discretionary,
and legislated upon the assumption, formed after much
experimentation with the period of suspension, [Footnote 27
] that suspension cases could
Page 319 U. S. 690
be carried to completion within seven months, and, to that end,
commanded in § 15(7) that
"the Commission shall give to the hearing and decision of such
questions preference over all other questions pending before it and
decide the same as speedily as possible."
The record had been closed on January 26, 1940, when the last
testimony was heard. The Transportation Act of 1940 was not enacted
until September 18. At the time the evidence was taken, it was not
clear whether some of the barge lines operating in the waterway
were common carriers, and none had obtained certificates of
convenience and necessity from the Commission, as now required.
They had not filed reports with the Commission from which the
results of their own operations might be judged, and they had not
filed tariffs showing their rates. All of this has since changed.
The applicable law has changed. The issues raised by the position
of the parties did not call
Page 319 U. S. 691
for a fixing of new combination rates, for it was contended
barge grain was entitled to the existing proportionals.
The policy provisions of the Transportation Act of 1940, as well
as the specific statutory provisions, provide only standards of
considerable generality and some overlapping. It requires
administration to "recognize and preserve the inherent advantages
of each" -- rail, water, and motor transport. It also seeks "sound
economic conditions" for all kinds of transportation. [Footnote 28
] For more than a year
after the enactment of this Act, and until after the Commission had
finally disposed of the case, appellees showed no disposition to
make proposals or to develop a record upon the basis of which the
Commission might prescribe rates in view of their particular
circumstances and under the provisions of the Act designed with
reference to them. Instead they relied upon the erroneous view that
they were by law entitled to the fortuitous, and in many respects
unlawful, benefits of the existing rate structure. Their nearly
four years of litigation have not, however, been in vain, for,
during all this time, they have managed to keep the proposed
schedules in abeyance -- first by compulsory suspension for the
allowable period of 7 months at the hands of the Commission, then
by the railroads' voluntary act at the expiration of that period,
and finally by the compulsion of the District Court's
Our function does not permit us either to prescribe or approve
rates, and our decision carries no implication of approval of any
rates here involved. Nor are we at liberty to prescribe general
attitudes the Commission must adopt towards the exercise of
discretion left to it, rather than to courts. We decide only
whether the Commission has acted within the power delegated to it
by law. We are of
Page 319 U. S. 692
opinion that it has, and that the decision of the court below
MR. JUSTICE RUTLEDGE did not participate in the consideration or
decision of this case.
Baltimore & Ohio Railroad Company, New York Central Railroad
Company, New York, Chicago and St. Louis Railroad Company,
Pennsylvania Railroad Company, Erie Railroad Company, and the
Chesapeake & Ohio Railway Company.
"§ 4. (1) It shall be unlawful for any common carrier subject to
this part or part III to charge or receive any greater compensation
in the aggregate for the transportation of passengers, or of like
kind of property, for a shorter than for a longer distance over the
same line or route in the same direction, the shorter being
included within the longer distance, or to charge any greater
compensation as a through rate than the aggregate of the
intermediate rates subject to the provisions of this part or part
III, but this shall not be construed as authorizing any common
carrier within the terms of this part or part III to charge or
receive as great compensation for a shorter as for a longer
That, upon application to the
Commission, such common carrier may, in special cases, after
investigation, be authorized by the Commission to charge less for
longer than for shorter distances for the transportation of
passengers or property, and the Commission may from time to time
prescribe the extent to which such designated common carrier may be
relieved from the operation of this section, but, in exercising the
authority conferred upon it in this proviso, the Commission shall
not permit the establishment of any charge to or from the more
distant point that is not reasonably compensatory for the service
performed, and no such authorization shall be granted on account of
merely potential water competition not actually in existence:
And provided further,
That tariffs proposing rates subject
to the provisions of this paragraph may be filed when application
is made to the Commission under the provisions hereof, and, in the
event such application is approved, the Commission shall permit
such tariffs to become effective upon one day's notice."
54 Stat. 904, 49 U.S.C. § 4(1).
44 Stat. 1447 as amended by 54 Stat. 912, 49 U.S.C. § 15(7),
"Whenever there shall be filed with the commission any schedule
stating a new individual or joint rate, fare, or charge, or any new
individual or joint classification, or any new individual or joint
regulation or practice affecting any rate, fare, or charge, the
commission shall have, and it is hereby given, authority, either
upon complaint or upon its own initiative without complaint at
once, and if it so orders without answer or other formal pleading
by the interested carrier or carriers, but upon reasonable notice,
to enter upon a hearing concerning the lawfulness of such rate,
fare, charge, classification, regulation, or practice, and, pending
such hearing and the decision thereon, the commission, upon filing
with such schedule and delivering to the carrier or carriers
affected thereby a statement in writing of its reasons for such
suspension, may from time to time suspend the operation of such
schedule and defer the use of such rate, fare, charge,
classification, regulation, or practice, but not for a longer
period than seven months beyond the time when it would otherwise go
into effect, and, after full hearing, whether completed before or
after the rate, fare, charge, classification, regulation, or
practice goes into effect, the commission may make such order with
reference thereto as would be proper in a proceeding initiated
after it had become effective. If the proceeding has not been
concluded and an order made within the period of suspension, the
proposed change of rate, fare, charge, classification, regulation,
or practice shall go into effect at the end of such period; but, in
case of a proposed increased rate or charge for or in respect to
the transportation of property, the commission may be order require
the interested carrier or carriers to keep accurate account in
detail of all amounts received by reason of such increase,
specifying by whom and in whose behalf such amounts are paid, and,
upon completion of the hearing and decision, may by further order
require the interested carrier or carriers to refund, with
interest, to the persons in whose behalf such amounts were paid,
such portion of such increased rates or charges as by its decision
shall be found not justified. At any hearing involving a change in
a rate, fare, charge, or classification, or in a rule, regulation,
or practice, after September 18, 1940, the burden of proof shall be
upon the carrier to show that the proposed changed rate, fare,
charge, classification, rule, regulation, or practice is just and
reasonable, and the Commission shall give to the hearing and
decision of such questions preference over all other questions
pending before it, and decide the same as speedily as
The provisions of the Interstate Commerce Act particularly
relied upon by appellees which were amended or added by the
Transportation Act of 1940 read as follows:
"It is hereby declared to be the national transportation policy
of the Congress to provide for fair and impartial regulation of all
modes of transportation subject to the provisions of this Act, so
administered as to recognize and preserve the inherent advantages
of each; to promote safe, adequate, economical, and efficient
service and foster sound economic conditions in transportation and
among the several carriers; to encourage the establishment and
maintenance of reasonable charges for transportation services,
without unjust discriminations, undue preferences or advantages, or
unfair or destructive competitive practices; to cooperate with the
several States and the duly authorized officials thereof, and to
encourage fair wages and equitable working conditions -- all to the
end of developing, coordinating, and preserving a national
transportation system by water, highway, and rail, as well as other
means, adequate to meet the needs of the commerce of the United
States, of the Postal Service, and of the national defense. All of
the provisions of this Act shall be administered and enforced with
a view to carrying out the above declaration of policy."
54 Stat. 899.
"§ 3(1). It shall be unlawful for any common carrier subject to
the provisions of this part to make, give, or cause any undue or
unreasonable preference or advantage to any particular person,
company, firm, corporation, association, locality, port, port
district, gateway, transit point, region, district, territory, or
any particular description of traffic, in any respect whatsoever,
or to subject any particular person, company, firm, corporation,
association, locality, port, port district, gateway, transit point,
region, district, territory, or any particular description of
traffic to any undue or unreasonable prejudice or disadvantage in
any respect whatsoever: Provided, however,
paragraph shall not be construed to apply to discrimination,
prejudice, or disadvantage to the traffic of any other carrier of
54 Stat. 902, 49 U.S.C. § 3(1).
"* * * *"
"§ 3(4). All carriers subject to the provisions of this part
shall, according to their respective powers, afford all reasonable,
proper, and equal facilities for the interchange of traffic between
their respective lines and connecting lines, and for the receiving,
forwarding, and delivering of passengers or property to and from
connecting lines, and shall not discriminate in their rates, fares,
and charges between connecting lines, or unduly prejudice any
connecting line in the distribution of traffic that is not
specifically routed by the shipper. As used in this paragraph, the
term 'connecting line' means the connecting line of any carrier
subject to the provisions of this part or any common carrier by
water subject to part III."
54 Stat. 903, 49 U.S.C. § 3(4).
"Part III, § 305(c) . . . Differences in the classifications,
rates, fares, charges, rules, regulations, and practices of a water
carrier in respect of water transportation from those in effect by
a rail carrier with respect to rail transportation shall not be
deemed to constitute unjust discrimination, prejudice, or
disadvantage, or an unfair or destructive competitive practice,
within the meaning of any provision of this Act."
54 Stat. 935, 49 U.S.C. § 905(c).
246 I.C.C. 353.
See footnote 4
for the text of this provision.
Petitions for reconsideration were also filed by "Chicago
protestants," operating elevators and dealing in grain at Chicago;
Illinois Agricultural Association, representing shippers located on
the Illinois Waterways; Finnegan Warehouse Company, operating an
elevator on the Waterways, and the United States Department of
Agriculture. These petitions are not incorporated in the record,
but it appears that the action of Division 2 was assailed by these
protestants under § 3(1), set out in footnote 4
Grain Proportionals, Ex-Barge to Official Territory, 248 I.C.C.
From the report of the Commission, it appears that the Inland
Waterways Corporation was the only one asking further hearings. It
stated that further hearings could be useful only to establish the
information of which the Commission took official notice, and
suggested that the Commission avoid the necessity for them by
taking such notice.
Even under the proposed schedules, the combination barge-rail
rates are in many instances lower than the all-rail rates. Much
grain that arrives at Chicago is consumed locally or is shipped out
by lake. In the case of grain arriving by rail, such disposition
often leaves the elevator with a "transit balance" as a result of
which ex-barge grain may move eastward by rail on the proportional
The District Court apparently did not find that there was no
evidence to support the Commission's finding that it was the
elevator operator, rather than the farmer, who is affected by the
proposed schedules. In any event, the foregoing would seem
sufficient support for the Commission's finding, and we do not
suppose that the finding makes any difference in the law to be
44 F. Supp. 368, 375.
Urgent Deficiencies Act of October 22, 1913, 38 Stat. 208, 220,
28 U.S.C. §§ 47, 47a; § 238 of the Judicial Code as amended, 28
U.S.C. § 345.
Unlawful Rates in Trans. Cotton by K.C., M. &
B.R. Co., 8 I.C.C. 121; Central Yellow Pine Association v.
Vicksburg, S. & P. R. Co., 10 I.C.C.193.
Berry, A Study of Proportional Rates, 10 I.C.C. Practitioner's
Journal 545, 602.
For the variety of practices so sustained, see
Economics of Transportation (1935), pp. 122-123, 629-631.
the dissenting opinion of Chairman Eastman in the
present case. Other cases are collected in Berry, supra,
Atchison, T. & S.F. Ry. Co. v. United States,
279 U. S. 768
Great Northern R. Co. v. Sullivan, 294 U.
; cf. Board of Trade v. United States,
314 U. S. 534
§ 11 of the Panama Canal Act, 1912, 37 Stat. 566, now 49 U.S.C.
§ 6(11), set out in its present form in footnote 25 infra. Cf.
433, 76th Cong., 1st Sess., p. 10.
United States v. Illinois Cent. R. Co., 263 U.
, 263 U. S.
§ 2, 49 U.S.C. § 2, reads as follows:
"If any common carrier subject to the provisions of this chapter
shall, directly or indirectly, by any special rate, rebate,
drawback, or other device, charge, demand, collect, or receive from
any person or persons a greater or less compensation for any
service rendered or to be rendered, in the transportation of
passengers or property, subject to the provisions of this chapter,
than it charges, demands, collects, or receives from any other
person or persons for doing for him or them a like and
contemporaneous service in the transportation of a like kind of
traffic under substantially similar circumstances and conditions,
such common carrier shall be deemed guilty of unjust
discrimination, which is prohibited and declared to be
The pertinent provisions of § 3 are set forth in footnote 4 supra.
Standard Packing Co. v. Union Pacific R. Co., 190 I.C.C. 433;
Parkersburg Rig & Reel Co. v. Chicago & N.W. Ry. Co., 198
I.C.C. 709; William Kelly Milling Co. v. Atchison, T. & S.F.
Ry. Co., 211 I.C.C. 53; Kansas City Ice Co. v. Atchison, T. &
S.F. Ry. Co., 215 I.C.C. 616, 619; Halifax Coal & Wood Co. v.
Atlantic & Y. Ry. Co., 219 I.C.C. 594; Morehead Cotton Mills
Co. v. Chesapeake & O. Ry. Co., 231 I.C.C. 437.
cases cited in footnote 21 supra. Compare Arizona Grocery
Co. v. Atchison, T. & S.F. Ry. Co., 284 U.
; 50 Yale Law Journal 714.
See footnote 2
for the text.
Indeed, the legislative history shows that the water interests
vigorously championed the "long and short haul" clause as a measure
necessary to prevent ruinous competition.
§ 6(11) provides:
"When property may be or is transported from point to point in
the United States by rail and water through the Panama Canal or
otherwise, the transportation being by a common carrier or
carriers, and not entirely within the limits of a single State, the
Interstate Commerce Commission shall have jurisdiction of such
transportation and of the carriers, both by rail and by water,
which may or do engage in the same, in the following particulars,
in addition to the jurisdiction otherwise given by this
"* * * *"
"(b) To establish proportional rates or maximum, or minimum, or
maximum and minimum proportional rates, by rail to and from the
ports to which the traffic is brought, or from which it is taken by
the water carrier, and to determine to what traffic and in
connection with what vessels and upon what terms and conditions
such rates shall apply. By proportional rates are meant those which
differ from the corresponding local rates to and from the port and
which apply only to traffic which has been brought to the port or
is carried from the port by a common carrier by water."
49 U.S.C. § 6(11).
Salt from Louisiana Mines to Chicago, 69 I.C.C. 312, 313.
Livestock to Eastern Destinations, 156 I.C.C.
In the original form provided by § 12 of the Mann-Elkins Act,
1910, 36 Stat. 539, 552, the period of suspension was not to exceed
120 days, with the proviso that, if the hearing could not be
concluded within that period, the Commission might, in its
discretion, extend the time for a further period not exceeding six
months. § 4 of the Commission Division Act, 1917, 40 Stat. 270,
272, provided that, until January 1, 1920, Commission approval must
be had for the filing of increased rates. By § 418 of the
Transportation Act of 1920, 41 Stat. 456, 486, the initial
suspension period of 120 days was retained, but the permissible
period of further suspension was shortened to thirty days. "The
increased size of the Commission and its divisional organization
rendered the shortening of the suspension period feasible." 1
Sharfman, The Interstate Commerce Commission 203. The Commission
was authorized, however, to require the carrier to keep accurate
account in detail of all amounts received by reason of an increase
going into effect at the end of the period of suspension, and to
require at the end of the hearing that they be refunded. The
present provisions with regard to the Commission's power of
suspension and of requiring an accounting were enacted by § 2 of
the Mayton-Newfield Act, 1927, 44 Stat. 1446, 1447.
See footnote 4
MR. JUSTICE BLACK, dissenting.
The issue in this case is whether the farmers and shippers of
the middle west can be compelled by the Interstate Commerce
Commission and the railroads to use high-priced rail instead of
low-priced barge transportation for the shipment of grain to the
east. I agree that, in the words of Division 2 of the Commission,
"this record is replete with complexities and technicalities" which
have almost, but I think not quite, successfully obscured that
simple issue. The District Court, which held that the Interstate
Commerce Commission's order "discriminates against water
competition by the users of barges," understood the issue.
] The railroads, which
proposed the increase in the cost to barge shippers, also
understood the issue, as is shown by the frank statement of their
representative at the Commission hearing:
"We made this proposal, as I have stated several times, and
filed these tariffs with the hope that we could drive this business
off of the water and back onto the rails, where it belongs. . . .
We are not in love with water transportation . . . , and we believe
that we are entitled to that grain business."
From behind a verbal camouflage of "complexities and
technicalities" there emerges one single easily understandable
question: railroads pick up grain in Chicago which may be brought
there by rail, lake transport, or inland waterway barge. Is it
lawful for a railroad to deprive midwestern grain farmers and
shippers of the benefits of cheap barge transportation by charging
a higher tariff for reshipment of grain originally transported to
Chicago by barge than
Page 319 U. S. 693
the same railroad charges for reshipment of the same grain from
Chicago to the same places when the grain is brought to the
reshipping point by rail or by lake?
The record shows, and it was admitted at the bar, that barges
can, by reason of their inherent advantages, carry grain more
cheaply than railroads. The Commission found that inbound grain
barge rates to Chicago ranged from 2.75 to 4.5 cents per hundred
pounds for hauls of distances of 57 to 200 miles, as contrasted
with rail rates for the same distances ranging from 9.5 to 13
cents. Grain can thus be brought to Chicago far more cheaply by
barge than by rail. However, only a small proportion of the grain
which is sent to Chicago stays in that city, and the new tariff
approved by the Commission and by this Court will charge so much
more for the shipment of grain to the east when the grain is
brought to Chicago by barge than is charged for shipment of grain
brought in by rail that this natural advantage of barge
transportation will be destroyed. Hereafter it will cost 8.5 cents
more to ship ex-barge than ex-rail grain to the east. [Footnote 2/2
] Under the existing rates, a
farmer can ship his grain from Kansas City to New York by barge to
Chicago and rail from Chicago to New York for 4.625 cents less than
if he uses rail transport all the way from Kansas City to New York.
Under the new schedule approved today, that differential is wiped
out, and he will hereafter pay 3.875 more to ship by barge and rail
than if he ships rail all the way. This order, in substance, gives
ex-barge traffic a 4 cent disadvantage where it previously had a 4
cent advantage. Similar penalties are imposed upon shippers who use
barge lines in Missouri, Iowa, and Illinois. The Commission, as its
sole finding on the impact of the rates on the barge lines, found
that the new rates would not "prohibit" barge shipments.
Page 319 U. S. 694
Such a finding is irrelevant. A rate need not be prohibitive to
be discriminatory. The new rate is manifestly intended to, and
will, have the effect of transferring most of the barge traffic to
the railroads, since shippers will not customarily pay 10% more to
ship by barge-rail than by rail alone. [Footnote 2/3
Certain questions may be put to one side without elaborate
discussion. The new rates cannot be justified on a theory of
distinction between long and short hauls, since the distances
covered are substantially the same whether barge-rail or all rail
transportation is used. The Court asserts that the existing
all-rail rates are lawful under the long- and short-haul clauses,
while the existing barge-rail rates are unlawful. But there is
nothing in the long- and short-haul clause which requires that
shippers by rail to Chicago from points in Illinois, Iowa, Kansas,
and Missouri must be granted a low rate for shipment beyond Chicago
which is denied to those who ship into Chicago by barge. Nor is the
fact that the rates directly affected by the new tariff are
"proportional" of any significance. [Footnote 2/4
Page 319 U. S. 695
A through rate may be invalid because of one factor only of the
combination of rates which make it up, "and that factor may be a
proportional rate." [Footnote 2/5
The only issue to be decided is whether the barge shipper shipping
from a given point to Chicago should be given any different
proportional rate than rail shippers shipping from the same point
to Chicago for equal service out of Chicago, and, for reasons to be
set forth below, I find no justification for such a discrimination.
There is no factual issue here on which we are bound to accept
the Commission's judgment, as we were in United States v.
Chicago Heights Trucking Co., 310 U.
. Here, we have a rate revision which can serve no
conceivable purpose except to force shippers to use railroads
instead of barge lines. Reasonable persons may differ as to the
wisdom of such a policy, but not as to the certainty of its result;
and, as will be shown, Congress has made the policy judgment, and
has flatly forbidden the Commission to do what it has done. The
situation is similar to Mitchell v. United States,
313 U. S. 80
313 U. S. 97
which the Commission sought to shelter a flatly forbidden
discrimination behind the shield of expertise. There, too, we were
cited to the Chicago Heights
case and our many other
Page 319 U. S. 696
decisions upholding the right of administrative agencies to make
factual judgments. We replied that,
"On the facts here presented, there is no room, as the
Government properly says, for administrative or expert judgment
with respect to practical difficulties. It is enough that the
discrimination shown was palpably unjust and forbidden by the
Such, I think, should be our answer here.
This tariff is an unjust discrimination within the meaning of §
2 of the Interstate Commerce Act, 49 U.S.C. § 2, which prohibits a
carrier from demanding a charge either higher or lower than is
charged by any other person for doing for him "a like and
contemporaneous service in the transportation of a like kind of
traffic under substantially similar circumstances and conditions."
Many decisions make clear that this section does in fact require a
real equality. Interstate Commerce Commission v. Baltimore
& Ohio R. Co., 225 U. S. 326
Atchison, T. & S.F. Ry. Co. v. United States,
279 U. S. 768
Commission counters with a contention that here there is "a
dissimilarity of conditions prior to the rendering of the
transportation service for which the charge in issue is assessed."
True, there is a difference, if only one, in the conditions prior
to the rendering of the service from Chicago to the east. The
difference is solely that one class of grain moves in to Chicago by
barge, and another moves in by other means, and this is a ground
not of legitimate distinction, but of unfair discrimination. The
discrimination would be no worse if the benefits of the cheap
through rates were given only to shippers on a favored railroad
coming into Chicago, and not to other shippers by rail.
Atchison, T. & S.F. Ry. Co. v. United States, supra,
279 U. S. 773
Here, all circumstances and conditions are substantially similar,
and the Court ought to require the Commission to obey the law by
following its own previously announced rule in Chattanooga Packet
Co. v. Illinois C.R. Co., 33 I.C.C. 384, 392, 393, in which the
Page 319 U. S. 697
carriers are permitted to apply higher rates for the same
service on traffic routed over connecting water lines than on
traffic via their all-rail connections, they will be in a position
to destroy all water competition, and to deprive shippers of the
advantage of their location upon navigable waters. . . . We are of
the opinion, and find, that, by restricting their proportional
rates to traffic routed over their southern rail connections,
defendants are unjustly discriminating against complainant and
against shippers who desire to route their goods over complainant's
The decision of the Commission also violates § 3(4) of the
Interstate Commerce Act, 49 U.S.C. § 3(4), which, under the 1940
amendment to the Interstate Commerce Act, is applicable to the
appellees, and which forbids carriers to "discriminate in their
rates, fares, and charges between connecting lines." This section
became applicable to the appellees in the course of the
Commission's disposition of this case, but before its opinion was
filed. This circumstance is not, as the Commission seems to have
supposed, a reason for ignoring the section. No more obvious
"discrimination in their rates, fares, and charges" can be
imagined, particularly in the light of the general policy of the
Transportation Act of 1940.
I think that approval of this tariff is a defiance of the
Transportation Act of 1940. 54 Stat. 899. This Act declared it to
"the national transportation policy of the Congress to provide
for fair and impartial regulation of all modes of transportation
subject to the provisions of this Act, so administered as to
recognize and preserve the inherent advantages of each."
Title I, § 1. The Act commands the Interstate Commerce
Commission that "all of the provisions of this Act shall be
administered and enforced with a view to carrying out the above
declaration of policy." Congress, fearful, in the words of several
members, that the Commission was "essentially a railroad-minded
Page 319 U. S. 698
body," [Footnote 2/7
] took every
precaution to prevent discrimination against water carriers.
Page 319 U. S. 699
Senators, particularly those from the midwestern states where
the barge lines involved here were operating, were especially
fearful that the Commission would do substantially what it has done
in this case. They required repeated assurance by the Chairman of
the Interstate Commerce Committee of the Senate that the bill was
written in such manner that the Commission could not, if it
desired, permit discrimination against water carriers. At great
length, the Chairman of that Committee explained to apprehensive
Senators that the bill contained provisions in three different
places which imposed upon the Commission the imperative duty of
standing in constant opposition to discrimination against shippers
by water. [Footnote 2/9
House Members shared the same fears. The first conference report
was defeated in the House because it was believed that the bill did
not offer adequate protection for water carriers against hostile
Interstate Commerce Commission action. [Footnote 2/10
] A proponent of the bill told the House
"It is not fair to suggest, in my opinion, that the Commission
and the courts will not look to this declaration of policy whenever
they are called upon to make such construction of the statute and
application of it. . . . The specific provisions of the bill carry
out the declaration of policy. The courts and commissions will
recognize that. . . . [Footnote
Defending the policy provisions as a complete protection against
Commission action antagonistic to barge transportation, another
sponsor of the bill, opposing a safeguarding amendment, declared
that, to consider it necessary,
"You will have to further assume that the Interstate Commerce
Commission will not enforce it. You will
Page 319 U. S. 700
have to assume that, if a case goes to the courts, the courts
will neither construe nor enforce the provisions of this policy.
As I see it, the Commission in this case has declined to enforce
Congress' policy, and the Court has failed to construe and enforce
the Act as Congress clearly intended it should.
This is not all. The first conference report having been
defeated, the second conference report brought in changes intended
to offer more protection to water carriers. The conferees reported
"This measure will place upon the Interstate Commerce Commission
not only the power, but the duty, to protect and foster water
transportation and preserve its inherent advantages. [Footnote 2/13
As a closing, clinching argument intended to persuade the House
that the Commission would be fair to water carriers, the statement
of Commissioner Eastman (who dissented from the order of the
Commission here) was quoted. Eastman assured the Congressmen
interested in water transportation that certain provisions of the
"coupled with the admonition in the declaration of policy in
section 1 that the provisions of the act be so administered as to
recognize and preserve the inherent advantages of each mode of
transportation, will afford adequate protection in this respect. If
experience should show that further protection is needed, contrary
to our expectation, Congress can amend the act, but such a
restriction as is now proposed is, we believe, both unnecessary and
undesirable. [Footnote 2/14
Page 319 U. S. 701
The final statement of the last proponent of the 1940 Act,
spoken just before the vote was taken on the second conference
report, were these:
"There is nothing whatever in the pending measure which could by
any fair interpretation be regarded as unjust to water
transportation or to any other kind of transportation."
The speaker then read the policy provisions of § 1, and
"How much plainer could language be than that is? It is crystal
clear that there is no basis in the bill for the apprehension
expressed by those opposed to the measure. [Footnote 2/15
Although these proceedings were not initiated under the 1940
Act, [Footnote 2/16
Commission should have felt itself bound by that congressional
expression of policy. Yet the legislative history just recited
makes it clear that the Commission has flagrantly flouted the
express mandate of Congress. It is said, however, that the
Commission reserves the right to take further action in a "proper
proceeding" in which it "might
rates [on the ex-barge traffic] or joint barge-rail rates lower
than the combinations." At some future day, the Commission may
correct this discrimination. But the day for Commission action was
the day this case was decided, and the day for action by this Court
is now. The Commission is not bound by the technical procedures of
the common law, and it should not strain to avoid the enforcement
of congressional will because of the formal fashion in which
questions are presented to it. In this proceeding, it was the
"to protect and maintain a transportation
Page 319 U. S. 702
system free from partiality to particular shippers. The
Commission acted in its capacity as a public agency,"
and was obligated to carry out "duties imposed upon it by
Congress in the interest of shippers generally, the national
transportation system, and the public interest." United States
v. Chicago Heights Trucking Co., supra, 310 U. S. 354
fact that this was not a formal proceeding to fix proportional
rates under § 6(11)(b) did not detract from the Commission's
powers. Chicago R.I. & P. Ry. Co. v. United States,
274 U. S. 29
274 U. S. 36
United States v. New York Cent. R. Co., 272 U.
, 272 U. S. 462
The Commission itself, in cases where the command of Congress was
far less emphatic than here, has stated that an investigation and
suspension proceeding such as this one "opens for consideration the
lawfulness of the suspended rate under all provisions of the act."
Sugar From Gulf Coast Port Groups To Northern Points, 234 I.C.C.
247, 251. "The reproach of dealing with the matter piecemeal" is
incurred by the Commission here, as it was in United States v.
Chicago, M., St. P. & P.R. Co., 294 U.
, 294 U. S. 510
It cannot, with due regard to its duty, shift responsibility "from
the shoulders of the present to the shoulders of the days to come."
Here, as in that case, postponement serves to leave "this
particular carrier helpless in the interval." [Footnote 2/17
Congressman Bland, who opposed the 1940 Act on the ground that
it lacked sufficient safeguards to prevent action by the Commission
hostile to water transportation, called
Page 319 U. S. 703
attention to the procedural delays in rate cases before that
body, delays which he declared would be used to strangle
financially weak water carriers, forcing them to "yield or transfer
their operation to other streams." He pointed out this "would mean
the death of water carriers;" that the railroads knew how to obtain
delay, and knew the disastrous consequences that would follow to
their competitors; that railroads "seek to profit" by procedural
delay, and that the diversity of their interests and extent of
their revenues was so great that they could survive delays which
would be unendurable for competitors. [Footnote 2/18
] The Congressman was a good observer, and
a sound prophet.
The judgment of the District Court enjoining enforcement of this
order was correct and should be affirmed.
MR. JUSTICE DOUGLAS and MR. JUSTICE MURPHY join in this
44 F. Supp. 368, 375.
The figure given is the increase in cost of shipment to the best
eastern market. The cost varies, depending on the destination of
The new rates for shipment from Chicago to the east, of course,
do not "prohibit" barge shipments to Chicago, since the small
amount of grain consumed in that city will not be affected by the
outgoing rates, and some grain can still be carried to the east by
lake transportation for so much of the year as the lakes are open
The Court quotes the finding of the Commission that "the
proposed schedules are not prohibitive" and that their principal
effect will be to reduce the profits of the Chicago elevator
operators. If the schedules operate unfairly, as I think they do,
it is immaterial whether the farmers or the elevator operators bear
the burden of the unfairness; but the Court, in relying on this
finding, pays little regard to the fact that the court below found
as a fact that the saving from barge transportation "accrues to the
producer" and "does not accrue to the Chicago elevator operator."
Unless the Court is willing, as apparently it is not, to reexamine
the evidence and to conclude that the court below is in error, we
must take the facts as they are given to us by the district court.
In any case, I think the district court was correct.
"A through rate is ordinarily lower than the combination of the
local rates. When a through rate is made by combination of rates
for intermediate distances, the rate for the later link in the
shipment is, when lower than the local, spoken of as a proportional
Atchison, T. & S.F. Ry. Co. v. United States,
279 U. S. 768
279 U. S.
Ibid., 279 U. S.
The Commission and the Court refer to the fact that ex-barge
rates are now equal to ex-truck rates. This is irrelevant. If there
is a discrimination against truck shippers, the remedy is an
improvement of their situation, not a destruction of barge
shipping. In the words of Chairman Eastman in his dissenting
"My tentative opinion upon it is that, where the movement by
truck is from territory from which grain can be moved by rail or by
water to Chicago subject to the application of the reshipping rates
east-bound, the failure to apply such rates to the grain brought in
by truck does result in violation of sections 2 and 3, provided
adequate provisions for the identification policing of such
shipments are practicable and enforceable."
84 Cong.Rec. 5965, 5883, 5880-81. Legislation similar in purpose
to the 1940 Act was considered by Congressional committees in the
74th and subsequent Congresses. Opposition to legislation giving
the Commission authority over water transportation came from
representatives of the water shippers. A typical protest was made
by Cleveland A. Newton, General Counsel, Mississippi Valley
Association, in the hearings before the Committee on Merchant
Marine and Fisheries, House of Representatives, 74th Cong., 2d
Sess., on H.R. 5379: "This bill if enacted into law will place
water carriers along the coast and upon our inland rivers under the
absolute domination and control of the Interstate Commerce
Commission. That Commission was created to regulate, conserve, and
control railways. It is a railway-regulating agency. It naturally
has the railway viewpoint, and past experience convinces us that
the Commission, as now constituted, is railway-minded and that it
would not be in the public interest to place water services under
its domination and control. . . . We have observed the performance
of the Commission in the past, under a comprehensive declaration of
policy enacted by Congress, and that experience, we regret to say,
has not inspired confidence." Hearings, p. 471.
"Mr. Lucas: . . . Under the bill, as I understand it, the
Interstate Commerce Commission would have the power, and it would
be its duty, to fix rates on the Illinois River with respect to the
transportation of that wheat and corn. Would it be possible for the
Interstate Commerce Commission to fix the rate the same as the
railroad rate from that point to St. Louis?"
"Mr. Wheeler: Not if the Commission does its duty, because the
bill specifically provides that it must take into consideration the
inherent advantages of the water carrier. Everyone agrees that
goods can be shipped more cheaply by water than by rail."
84 Cong.Rec. 5879.
The following Senators and Representatives, among others, either
required assurance that the Commission would not discriminate
against water carriers or expressed the conviction that, under the
statement of policy, the Commission would be unable to discriminate
against water carriers: Senators Austin, Clark of Missouri,
Connally, Ellender, Lucas, Miller, McNary, Norris, Pepper,
Shipstead, Truman, and Wheeler; Representatives Bland, Bulwinkle,
Crosser, Culkin, Halleck, Lea, Pierce of Oregon, Sparkman, and
84 Cong.Rec. 6125-6128.
The first conference report was rejected by the House on May 9,
1940, 86 Cong.Rec. 5886. The second report was accepted on Aug. 12,
1940, 86 Cong.Rec. 10193.
84 Cong.Rec. 9865.
84 Cong.Rec. 9863.
86 Cong.Rec. 10172.
86 Cong.Rec. 10191. In his dissenting opinion, Chairman Eastman
"The report states that the 'proposed schedules will not
prohibit the movement by barge-rail even to trunk line territory,
their principal commercial effect being to reduce the profit of the
Chicago elevator operators.' I do not so understand the evidence. .
. . As I understand it, the effect of the proposed schedule, unless
the prices paid to the farmers whose grain is barged are reduced,
will be to limit the outlet of the ex-barge grain to local
consumption in Chicago, and to the lake and lake-rail routes to
86 Cong.Rec. 10192.
The 1940 Act gave the Commission jurisdiction to regulate water
transportation directly. Here, the same effect is achieved under
the Commission's other powers by a tariff aimed at shippers who
have previously used water transportation. For the background and
nature of the 1940 Act, see
Eastman, The Transportation
Problem, 30 Amer.Econ.Rev. 124; Stein, Federal Regulation of Water
Carriers, 16 Jour.Land and Pub.Util. Econ. 478; Harbeson, The
Transportation Act of 1940, 17 ibid.
291; Regulation of
Water Carriers, 50 Yale L.Jour. 654.
The Court interprets the Commission's order as leaving open the
right of the shippers affected to bring actions for reparations for
injuries suffered under the new rates. This will bring small
practical comfort to the barge lines, since the shippers will be
unlikely to ship by barge when the price of every shipment is
dependent on future legal proceedings. The barge lines, "helpless
in the interval" pending new legal proceedings, risk serious
financial injury, if not bankruptcy. While the shippers can ship by
barge now and sue later, they are presumably interested in buying
transportation, not lawsuits.