The Birmingham age-herald., 1911-12-21
Sharp Issue Taken With the Commerce Court by
 Commission
TRANSCONTINENTAL
 RATE CASES CAUSE
Cannot Fix Rate From New York to San Francisco Below Which Rail Line Shall Not Go Because
 of Lack of Authority

Washington, December 20.-Sharp is sue is taken by the interstate com merce commission with the commerce court in the twenty-ffth annual re- port of the commission transmitted to Congress today.
 The issue is made principally upon what popularly is known as the trans continental rate cases" involving freight rates from the Atlantic to Pa cific coast terminals and to intermediate points. Existing rates of the trans-con- tinental lines from eastern points to r-Rocky mountain cities are ma terially higher than to Pacific coast terminals. In decision interpreting the long and short haul provision of the present law the interstate com merce commission directed, by order. that a relation of rates should be es- tablished between the Pacific coast and points of origin in five zones into which the United States was divided.
 The effort of the order was to re- duce rates to inter-Rocky mountain cities and prevent the railroads from exacting from shippers the Pacific coast rate plus the local rate from Pa cific coast terminals to the intermediate points The orders of the commission, on application of the trans-continental carriers, were enjoined by the com merce court and the matter has been carried, on appeal, to the United States supreme court.
 In it's report to Congress today the commission declares that "it is a waste of transportation and therefore un- economical and wrong to maintain a intended to develop the Pacific coast cities and to arrest the development of the interior points,.
 .'It is impossible to disassociate the intermediate from the long distance point. Whether the intermediate rate is reasonable depends upon what rate Is made to other points on both sides of it and to permit the railroads of this country to select points where they will, and where they will not, com pete would be intolerable."
 In discussing the effect of water com petition upon rates the commission says that it cannot fix a rate from New York to San Francisco below which the rail line shall not go, for it has no to fix minimum rate. There is, therefore, no way in which it can prevent discrimination by the fixing of an absolute rate at San Francisco and another absolute rate at Reno It can only accomplish this purpose by pre- scribng the difference which may prop erly exist owing to the effect of this competition and allowing the carrier to make whatever rate it sees fit to the more distant points so long as it observes this differential.
 The report indicates the desire of the country to obtain the same rates to the Pacific coast that are accorded by the railroads to their competitors on the Atlantic seaboard. The rates are made the same by the rans-continental lines on the ground of market com- petition.
 "To justify their rates from coast to coast says the report the rail- roads advanced water competition and lO Juotily lllt Sdlllc idltS ltOlH lflltIlOI points to Pacific coast points they re- ly on market competition, under which they give lower rates from all the interior cities two-thirds of the way across the continent to the same coast cities than to inter-mountain points. This is the kind of discrimination the commission has attempted to min imize.
 While the commission recognized the full effect of water competition upon the rail rates it says we have the frank ad- mission of the railroad managers that they have subsidized or bought some of the steamship lines and terrorized others until they can make the boast that the effect of the sea has been neutralized.
 "A railroad policy of rate making must certainly be subject to limitations of the law, or else there is no law. To say that there is long and short haul sec iion under which a carrier may not charge more for the shorter than for the longer haul. but that the railroads may, to any extent they please, carry out policy of blanketing the country for the benefit of the farther points and not the nearer points, is to say that railroad may, without restraint, effect a ruihous discrimination and give no justification save it's own determination or whim Inere can pc no regulatlon Of rates as ro discrimination or preference under such an interpretation of the law.
 "The commerce court inthnates that the mistake of the commission is in hay ing attempted to fix a relation of rates instead os establishing reasonable rates; but as we have already pointed out there is no way in which the discrimna- ton found to exist In these tariffs can be prevented except by fixing a differentia,, since we have no power to establish an absolute rate or fix minimum charge be- low which the carrier is not free to go
 We feel strongly that water competi- ton. even when the widest reasonable latitude is given to the effect of market competition, cannot by any possibility justify a higher rate from Omaha to Reno than from Omaha to San Francisco; ; from St. Paul to Spokane than from S, Paul to Seattle.
 Upon the other hand it should be noted that the opening of the Panama canas may so add to the intensity of this water competition as to call for some modifica- ton of the conclusion now reached"
 The commission holds the fixing of req