ville, and that this competition was not subject to the control of the defendant lines. But the commission held that, as the east and west trunk lines and the Louisville & Nashville Railroad Company were all subject to the interstate commerce law, competition maintained by them did not constitute such a dissimilarity of conditions as to take the case out of the fourth section of the act, and that the only remedy of the defendant companies was to apply to the commission for relief, under the proviso of the fourth section, by which the commission, upon proper application, is empowered to authorize carriers, in special cases, to charge less rates for the longer than for the shorter distance. Accordingly the commission found that the defendant carriers had violated the fourth section of the act, and made an order requiring the defendant carriers "to cease and desist from charging or receiving any greater compensation in the aggregate for the transportation of like kind of property from New York, Boston, Philadelphia, Baltimore, or other Atlantic Seaboard cities, for the shorter distance to Chattanooga, than for the longer distance, over the same line, in the same direction, to Nashville." The order was entered December 30, 1892; but its operation was suspended until February 1, 1893, to enable the defendants to apply to the commission for special authority, under the proviso of the fourth section, to charge the less rate for the longer distance to Nashville. The commission did not definitely decide that the rates to Chattanooga were unreasonable in and of themselves, and they did not decide whether the competition at Nashville was of such a character that, if application had been made to them, they would have made it a special case, and authorized the less charge for the longer distance, though there are sentences in the opinion of Commissioner Knapp from which it is to be inferred that the commission were inclined to think that the rates to Chattanooga were unreasonably high, in violation of the first section, and that the competition at Nashville would not justify making the case an exception to the general operation of the fourth section. The carriers failed to apply to the commission for relief as suggested in the order, or to comply with the order. Thereupon, on March 24, 1893, the interstate commerce commission filed the petition in equity against the defaulting carriers upon which the decree appealed from is founded. The petition set out, by averments and exhibits, the proceedings before it, its findings of fact, its conclusions of law, its order thereon, and the refusal of the defendants to obey, and concluded with a prayer for process, hearing, and enforcement of the order by injunction.

Because of the disqualification of Judge Clark, who had been of counsel, and also because of the pendency of cases in the supreme court, the decision of which it was thought by counsel for both parties would be controlling, the cause did not come on for hearing until December, 1897. Judge Severens decided the case in February, 1898. He held that the commission erred in its view that the defendant carriers were not entitled to rely upon competition of other carriers subject to the interstate commerce law as a condition rendering the fourth section of the act (the long and short haul clause, so called) inoperative without making special application to the commission for relief from its provisions, and thus did not concur in the sole ground upon which the commission expressly based its order. Proceeding to review the whole body of the evidence, however, he found that the competition at Nashville did not render the conditions and circumstances under which defendant carriers conducted transportation thither so unlike those existing at Chattanooga as to take the case out of the long and short haul clause, and that, even if the contention of counsel for the carriers that any real dissimilarity, however slight, in conditions of transportation, took the case out of the fourth section, could be sustained, the discrimination against Chattanooga in the existing rates was so great as to be undue and unjust, within the third section of the act. He therefore concluded that the order of the commission was a proper one on other grounds than that upon which it was based, and entered a decree enjoining the carriers in accordance with its terms. He intimated in his opinion that there was sufficient evidence to sustain a finding that the Chattanooga rates were unreasonably high in and of themselves, but he deemed it sufficient merely to enforce the order of the commission as drawn.

The evidence shows that merchandise consigned from New York and other

Eastern Seaboard points (and for the purposes of this case it will hereafter be sufficient to instance the typical case of New York) to Nashville is shipped by a great many different lines, but they are of two classes. One class is made up of east and west trunk lines (so called) lying north of the Ohio river to Cincinnati, and of the Louisville & Nashville Railroad to Nashville. The other is made up of a line, either all rail or by water, to a point in Southern territory, i. e. in Virginia or further south, near or on the seaboard, and thence by the Southern lines to Chattanooga, and thence by the Nashville, Chattanooga & St. Louis Railroad to Nashville. The business of the east and west trunk lines north of the Ohio river is so great that the rates of freight in force on them are generally much lower (perhaps 33% per cent.) than those in force on the Southern lines, which embrace, generally, all lines in states south of the Ohio and east of the Mississippi. The Louisville & Nashville Railway Company, though a Southern line, has put in force from Cincinnati to Nashville, a distance of 295 miles, the trunk-line rates, so that freight rates on merchandise coming to Nashville, by way of Cincinnati, are substantially less than they would be were the usual Southern rates of freight charged from Cincinnati to Nashville. Of the Southern lines from New York to Nashville, the chief ones are the ocean lines, either to Norfolk, to Charleston, to Savannah, and to Brunswick, and thence by rail through Chattanooga to Nashville, or the all-rail lines to Hagerstown, Maryland, and Alexandria, Maryland, and thence by the Southern Railway through Chattanooga to Nashville. Eighty per cent. of these all-rail lines are in Southern territory, and all the railroads connecting with the Southern steamship lines are also in Southern territory. If Southern rates on Nashville business were charged on that part of the through lines lying in Southern territory, the total freight rate to Nashville would be much higher than that charged via the trunk lines to Cincinnati, and via the Louisville & Nashville road to the same point. Therefore the Southern lines reduce their charges to such a figure that the total rate becomes the same at Nashville by the Southern lines through Chattanooga, as by the Louisville & Nashville road from Cincinnati and New York. As a result, more than 50 per cent. of the through Eastern business to Nashville is carried over the Southern lines. The Southern lines, however, maintain the Southern rates to Chattanooga.

Chattanooga is 330 miles from Cincinnati, with which it is connected by the Cincinnati Southern Railway, under lease to the Cincinnati, New Orleans & Texas Pacific Railway Company. The latter company does not charge east and west trunk-line rates on through business from New York to Chattanooga, but fixes its rates according to the Southern tariff, though they are less than local rates; and in this way Chattanooga rates, from the East through Cincinnati, are maintained on a Southern basis. The rates in the South at Chattanooga and elsewhere are fixed or agreed upon by the Southern lines through an association known at different times by different names,-at one time as the Southern Railway & Steamship Association, at another as the Southern States Freight Association, and now the Southeastern Freight Association. The association has pursued the policy of grouping towns for the same through rate from the Eastern Seaboard. Chattanooga is for this purpose grouped with many cities to the south. As to this the commission made the following finding:

"As appears from tariffs on file with the commission, the following cities and towns, among others, are grouped with Chattanooga, and take the same rail and water rates on classified traffic, to wit: Dalton, Rome, Atlanta, Americus, Athens, Columbus, Ft. Gaines, and Griffin, in the state of Georgia; Huntsville. Decatur, Sheffield, Tuscumbia, Florence, Gadsden, Oxford, Talladega, Anniston, Birmingham, Opelika, Montgomery, Selma, and Eufaula, in the state of Alabama; and Enterprise and Meridian, in the state of Mississippi. Of these, Dalton, Rome, Atlanta, Americus, Athens. Columbus, Griffin, Anniston, Gadsden, Oxford, Opelika, and Eufaula have higher all-rail class rates than Chattanooga, their all-rail rates on the six numbered classes being as follows: 5 6

1

2

4 77

"The rates to Chattanooga and the above-named common points, both rail and water and all rail, are established by the Southern Railway & Steamship Association, of which the defendant lines herein are members, and all traffic to those points is governed by the classification of that association."

The grouping is illustrated by the following sketch taken from the brief of counsel for the carriers:

With this explanation of the way in which the differing rates have come to be fixed, it is proper to make a definite statement of exactly what the differing rates are, and their effect. For transportation and rate fixing, merchandise is classified. There are six classes. The Southern classifications differ somewhat from the trunk-line or official classification, but the differences are not great enough to be material in this discussion. The commission found as follows:

"The following are the through rates from New York and Boston to Chattanooga, Nashville, and Memphis, respectively:

Classes

To Chattanooga..

To Memphis, 310 miles further..

To Nashville, 151 miles further...

1 2 3 4 5 6

.114 98 86 73 60 49 .100 85 65 45 38 35 91 78 60 42 36 31

"It thus appears that the rates from New York and Boston are less to Nashville than to Chattanooga, on the six classes, respectively, by 23 cents, 20 cents, 26 cents, 31 cents, 24 cents, and 18 cents; and less to Memphis than to Chattanooga by 14 cents, 13 cents, 21 cents, 28 cents, 22 cents, and 14 cents. These differences prevail in favor of Nashville and Memphis on all goods transported to those cities from Eastern Seaboard points through Chattanooga; the distance to Nashville being 151 miles, and to Memphis 310 miles, further than to Chattanooga.

"The following comparison shows the difference between the local rate from Cincinnati to Nashville, and the amounts added to the trunk-line rate to the former place to make the through rate to the latter from New York:

39 C.C.A.-27

Local rate, Cincinnati to Nashville..

-13-18

.53

48 39 31

=| cti| ཁ་

Additions to trunk-line rate to Cincinnati.........26 21 16 12 10 9

"A similar comparison between the local rate from Cincinnati to Chattanooga, and the amounts added to the trunk-line rates to Cincinnati to make the through rate from New York to Chattanooga, is shown in the following table:

1815

Additions to trunk-line rates to Cincinnati........49

41 42 43 34 27

"The proportion of the Nashville through rate charged on a ton of first-class goods from Cincinnati to Nashville via the Louisville & Nashville Railroad. a distance of 295 miles, is $5.20, while the proportion of the Chattanooga through rate charged from Cincinnati to Chattanooga via the Cincinnati Southern Railway, a distance of 335 miles (only 40 miles further), is $9.80."

The distances by various routes from New York to Nashville and Chattanooga are shown below:

The city of Chattanooga is in Southeastern Tennessee, on the river bearing the same name as the state. During the last 10 years, especially, its growth has been extremely rapid, and it has become a manufacturing and commercial point of considerable importance. It competes for the trade of the surrounding country largely in the same territory as Nashville. By reason of the disparity in charges on shipments from the East in favor of Nashville, Chattanooga is placed at serious disadvantage in this competition, and its business materially lessened. The tendency of existing rates to these rival towns is to limit the area in which Eastern merchandise can be profitably distributed from Chattanooga, and to impede the growth and prosperity of that city which would naturally result from the development of its wholesale trade. Under the tariffs now in force, goods may be carried from the East through Chattanooga to Nashville, and back through Chattanooga to points south and east, and there sold at lower prices than Chattanooga merchants can sell for; and this appears to have actually occurred in many instances. On a car load of first-class

freight, 40,000 pounds, the charges to Chattanooga, at $1.14 per 100, amount to $456; while to Nashville, at 91 cents, the charges are only $364, making a difference of $92 in favor of Nashville, the longer haul by 151 miles. On fourth-class freight the advantage in favor of Nashville is $124 per car, and on sixth-class, $72.

Only two railroads enter Nashville. These are the Louisville & Nashville Railroad, from the north and south, and the Nashville, Chattanooga & St. Louis Railway, from the east and west. The railroads entering the city of Chattanooga are: (1) The Nashville, Chattanooga & St. Louis Railway, which runs from Chattanooga to Nashville and St. Louis. (2) The Memphis & Charleston road, which runs from Chattanooga to Memphis, where it connects with the Mississippi river, and forms a line thence via New Orleans. (3) The Alabama Great Southern road, which runs from Chattanooga to Birmingham, Ala., and Meridian, Miss., connecting with a road entering New Orleans. (4) The Chattanooga Southern Railway, from Chattanooga to Gadsden, where it makes several connections. (5) The Chattanooga, Rome & Columbus road, which runs from Chattanooga to Rome, where it connects with various rail lines running through Atlanta to the South Atlantic ports and on to Carrollton, where it connects with the Central Railroad of Georgia System. (6) The Southern Railway (south of Chattanooga), which runs from Chattanooga via Rome to Atlanta, and there connects with the numerous lines, either all rail or rail and water, via the South Atlantic ports, and the Southern Railway (east of Chattanooga), which runs from Chattanooga via Knoxville to Bristol, and thence forms lines, all rail, through Hagerstown or Alexandria, or rail and water via Norfolk. (7) The Western & Atlantic Railroad, now under lease to the Nashville, Chattanooga & St. Louis Railway Company, which runs from Chattanooga to Atlanta direct. (8) The Cincinnati, New Orleans & Texas Pacific Railway, which runs from Chattanooga to Cincinnati.

The seaboard traffic which is carried to Nashville through Chattanooga reaches the latter place by several different routes. The most important of these appears to be the East Tennessee, Virginia & Georgia Railway (now the Southern Railway), with its Eastern connections by rail and water. The water portion of this route is by the vessels of the Old Dominion Steamship Company from New York to Norfolk. where they connect with the Norfolk & Western Railroad, which extends to Bristol, Tenn., the Eastern terminus of the East Tennessee, Virginia & Georgia; the rail portion of this route consists of the Pennsylvania System, and possibly other lines, reaching Roanoke, Va., on the main line of the Norfolk & Western, by way of the Shenandoah Valley. All traffic over this route passes through Knoxville, Tenn., the rates to which point are about the same as to Memphis. Another route is by the Clyde Steamship Company to Charleston, connecting at that port with rail lines running through Augusta and Atlanta. A third route is by the Ocean Steamship Company to Savannah, and thence by rail through Macon and Atlanta. A fourth route is by steamer to Brunswick, and thence by Southern Railway to Chattanooga. There is no testimony in the case indicating the relative portion of Nashville traffic via Chattanooga which passes by either of these routes, but the commission found that the greater portion of it went by the allrail route via Alexandria, Va.

The Louisville & Nashville Railroad Company has not been a member of the associations of lines fixing Southern rates. It owns, however, more than one-half the stock of the Nashville, Chattanooga & St. Louis Railroad Company; which always has been a member of these associations, and it jointly operates the railroad of the Georgia Central Railroad & Banking Company, which is also a member of the association. The Georgia Central Railroad & Banking Company owns all the stock of the Ocean Steamship Company which has also been a member of the associations. The Nashville, Chattanooga & St. Louis Railroad Company is the only railroad connecting Nashville and Chattanooga. It has under lease the Western & Atlantic Railroad, running from Chattanooga to Atlanta. The railroad of the Georgia Central Railroad & Banking Company under the control of the Louisville & Nashville Railroad Company runs from Atlanta to Savannah. And the steamers of the Ocean Steamship Company run from Savannah to New York and Boston. The offi