because the provision relates primarily to the interchange of traffic between railroads. It is now provided that railroads "shall not discriminate in their rates, fares, and charges between such connecting lines." The old act only specified "rates and charges." The word "fares" is included in the amended

act.

The paragraph omits that clause contained in the old act to the effect that the provisions for an interchange of traffic should not be construed as requiring any carrier to give the use of its tracks or terminal facilities to another carrier engaged in like business, and concludes with the statement that railroads shall not "unduly prejudice any such connecting line in the distribution of traffic that is not specifically routed by the shipper."

Just how it is intended that this last provision shall operate is difficult to understand. If it means that there shall be an equal distribution of unrouted freight to connecting lines, how is the equal distribution to be arrived at and who is to police it? Are the fast freight lines to be abandoned and is no working arrangement between connecting lines to be lawful unless an equivalent amount of traffic be given to the connecting line's competitor? It is not clear just what is intended to be accomplished by the provision. It is an inter-carrier matter and no question may ever arise under it unless some carrier that deems it has certain rights thereunder invokes its application if those rights are breached.

Paragraph 4 is new and contemplates an important change in railroad regulation. It gives the Commission the power to require railroads owning terminal facilities to permit other railroads not owning terminals to enjoy the same at terms to be fixed by the Commission, in cases where the carriers themselves cannot agree. This is just the opposite of what was provided under the old act. Before this jurisdiction can be exerted the Commission must find that the joint use is in the public interest and practicable and will not substantially impair the ability of the owning carrier to handle its own business. The owning carrier is permitted certain recourse to the courts to fix damages sustained by reason of any such requirement imposed by the Commission and to fix just compensation for such use if not satisfied with the terms fixed by the Commission.

SECTION 4

See Appendix, Page 89, for text of both
the former and present Acts.

The fourth section has been enlarged and is now composed of two numbered paragraphs. The first paragraph carries forward the first part of the old provision verbatim with certain qualifying additions and a certain change worthy of note. The second paragraph is a verbatim reproduction of the last paragraph of the old fourth section relating to the increasing of rail rates which had been previously reduced to meet water competition.

The additions now appearing as a part of paragraph 1 provide: (1) That the Commission in granting fourth section relief thereunder may not permit the establishment of any charge to or from the more distant point that is not reasonably compensatory; (2) that if fourth section relief is granted because of the circuity of the petitioning line, higher rates shall not be applied to or from intermediate points as to which the haul of the petitioning line is not longer than that of the direct line or route between the competitive points; (3) fourth section relief cannot be granted by the Commission on account of "merely potential water competition not actually in existence."

Under the first addition it would seem that there is a burden on the petitioning carriers in all fourth section cases hereafter to establish that the rate to or from the more distant point which it desires to establish or continue is reasonably compensatory. "Reasonably compensatory" is not defined. The Commission will have to make its own interpretation of what is required at a rate for it to be "reasonably compensatory." Just what is required under the second addition is better understood by reference to a specific situation. Say the direct line distance from "A" to "B" is 500 miles and the rate is 50 cents. The circuitous route is 750 miles via which the petitioning line wishes to apply the 50-cent rate, charging 75 cents at intermediate points, including “C” a point on the circuitous route just 500 miles from "A." This provision requires the rate from “A” to "C" to be 50 cents, no higher than the rate for the 500-mile haul over the direct line between the competitive points. To the points between “C” and "B" a higher rate might be permitted, but the higher rate could not be extended back past "C." The third addition seems to eliminate potential water competition as a ground for relief from the fourth section. The wording of this particular provision is confusing. What is "potential water competition not actually in existence.' Potential water competition is never actually in existence. If the water competition is actually in existence it ceases to be potential. The phrase seems to be a pleonasm and might be more readily understandable if the word potential were omitted. It would then read that fourth section relief should not be granted on account of "water competition not actually in existence." These additions seem to have the effect of limiting the number of cases in which fourth section relief can be granted.

The change referred to is in that clause of the old provision added by the amendment of June 18, 1910, which gave the carriers six months in which to file fourth section applications to protect their fourth section violations. The specific terms of that clause are as follows:

That no rates or charges lawfully existing at the time of the passage of this amendatory act shall be required to be changed by reason of the provisions

of this section prior to the expiration of six months after the passage of this act, nor in any case where application shall have been filed before the Commission in accordance with the provisions of this section, until a determination of such application by the Commission.

In order to intelligently discuss the nature of the change made in this provision by the new act it is necessary to understand the legal effect of the old provision, and for this understanding it is in turn necessary to go back one step further and consider another change which was also made in the original fourth section by the amendment of June 18, 1910, which struck from the section the phrase, "under substantially similar circumstances and conditions." The effect of this later change is discussed at length by Chief Justice White in Intermountain Rate Cases, 234 U. S., 476. The gist of that discussion is that this amendment striking this phrase from the section "takes from the carriers the deposit of public power previously lodged in them and vests it in the Commission as a primary instead of a reviewing function." Further the court said: "The situation under the amendment is this: Power in the carrier primarily to meet competitive conditions in any point of view by charging a lesser rate for a longer than for a shorter haul has ceased to exist, because to do so, in the absence of some authority, would not only be inimical to the provision of the fourth section, but would be in conflict with the preference and discrimination clauses of the second and third sections." In other words, that thereafter no rate could lawfully depart from the provisions of the fourth section without the sanction of the Commission. This being so, some routine had to be provided for obtaining the Commission's approval of fourth section violations then in existence. This routine was supplied by the clause above quoted. That routine provides that as to then existing violations, application to protect them must be filed within six months of the effective date of the amendment, and that prior to the six months no rates or charges were required to be changed. What of these rates ofter the six months' period? If they have not been protected by an application they ceased to continue in force, it would seem. In U. S. vs. L. & N. R. R. Co., 235 U. S. 323, the court said, in speaking of this amendment of 1910:

For the purpose of making the prohibitions efficacious it was enacted that after a time fixed no existing rate of the character provided for should continue in force unless the application to sanction it had been made and granted.

There are, of course, in every fourth section violation, two rates, either the higher rate to intermediate point and the rate to the farther distant point, or the through rate which is higher than the aggregate of intermediates. In either case where the violation is unprotected, which rate is it that ceases to continue in force? This query is answered, it would seem, by the terms of the fourth section. The fourth section provides that no carrier shall charge or receive greater compensation for a shorter than for a longer distance, et cetera, or greater compensation as a

through rate than the aggregate of intermediates. It seems plain that it is the higher intermediate or the higher through rate that ceases to continue in force. The section itself seems to fix the lower rate to the more distant point, or the lower aggregate of intermediates as the maximum rates that may be charged in lieu of the rates which violate the rule of the section and which for that reason cease to continue in force. If this is true, it would seem that unprotected fourth section violations fall into the class. with all other "overcharges."

Under the changed provision of the new act, these unprotected violations continue to be "overcharges" where the freight charges are based on the higher rates which, by the amendment of 1910, ceased to continue in force after the six months period. There is no change in this respect. The difference lies in the fact that although the additions which have been made to the substantive provisions of the section, render certain rate situations now in conflict with the fourth section which before were not specifically unlawful, the act makes no provision for their protection. It would seem, therefore, that as to any rates which are violative, say, of the provisions of the second addition as above outlined, they ceased to continue in force from the effective date of the transportation act, if they were not the result of an order of the Commission or not protected by an application previously filed. The corresponding provision of the new act simply provides :

That rates, fares, or charges existing at the time of the passage of this amendatory act by virtue of orders of the Commission or as to which application has heretofore been filed with the Commission and not yet acted upon, shall not be required to be changed by reason of the provisions of this section until the further order of or a determination by the Commission.

It will be understood that the fourth section as it is now amended makes certain rate situations violative of the section which before may not have been violative thereof, if, in the judgment of the Commission, certain dissimilar conditions prevailed-potential water competition for example. It seems clear, however, that under the changed provision above quoted only such situations may be continued where they exist as a result of an order of the Commission or under an application still to be passed upon. Any other rates which violate the section even as it has been amended, ceased to continue in force from the effective date of the transportation act, if the authority of the U. S. vs. L. & N. R. R. Co. case, supra, is to be followed. See McGrew Coal Co. vs. Mo. Pac. Ry. Co., 217 S. W. 984.

SECTION 5

See Appendix, Page 90, for text of both

the former and present Acts.

The fifth section of the old act embodied two provisions, speaking generally-the anti-pooling provision and the so-called Panama Canal act.

The Panama Canal act appears as paragraphs 9, 10 and 11 of the fifth section of the new act, and the last paragraph of the old section, prohibiting violators of the Sherman anti-trust act from using the canal, which has been transposed to page 82 of the Commission's publication of the new act under "Miscelaneous Acts and Additional Provisions." See Appendix, page 151.

The anti-pooling provision has been amended so that under paragraph 1 the Commission, after a hearing may authorize the pooling of traffic or earnings betwen competing railroads when such pooling "will be in the interest of better service to the public, or economy in operation, and will not unduly restrain competition." All carriers involved must assent to the arrangement. The rules, regulations, and terms are to be fixed by the Commission.

Paragraph 2 confers on the Commission the authority to authorize one carrier to acquire control of any other carrier by purchase of stock or by lease or in any other manner not involving the consolidation of such carrier into a single system for ownership and operation. This authorization can be exercised on application by any carrier of passengers or property after a hearing, if the Commision conceives the desired acquisition to be in the public interest.

Paragraph 3 authorizes the Commission to make orders from time to time supplementary to the orders it may make pursuant to its powers under paragraphs 1 and 2.

Paragraph 4 directs the Commission to prepare and adopt a plan for the consolidation of the railway properties of the continental United States into a limited number of systems. Any plan shall preserve as fully as possible competition and existing routes and channels of trade wherever practicable. The several systems shall be so arranged that the cost of transportation as between competitive systems and the values of the consolidated properties are the same as nearly as practicable, so that such systems can employ uniform rates in the movement of competitive traffic and under efficient management earn substantially the same rate of return upon their respective values.

Paragraph 5 provides for the holding of hearings on any such plan as the Commision, under paragraph 4, may adopt. As a result of such hearings, the Commission "shall adopt a plan for such consolidation and publish the same," but may thereafter make such changes or modifications. as in its judgment will promote the public interest. These provisions are noteworthy because of their novelty and because there is no enforcing. clause to give effect to the plan the Commission shall adopt and publish. The carriers involved in any such plan are not required to carry it out as it may affect them. Congress will no doubt make any such plan that is