"until the Commission can make a complete examination of the matters alleged."

An order of this nature was made on the application of the Southern Pacific Company, dated April 23, 1887, by which said company was relieved from the operation of Section IV of said Act for a period not greater than seventy-five days, upon the following traffic, to wit:

"1st. Between San Francisco, Sacramento, Stockton, Marysville, San Jose, Oakland, Los Angeles, and San Diego, in California; Portland and Astoria, in Oregon; Tacoma, in Washington Territory; Victoria in British Columbia, and El Paso, in Texas, on the one hand, and New York, Boston, Philadelphia, Baltimore, Newport News, Richmond, and all points commonly rated with them or either of them, on the other hand,

"2d. Between the same western points and Chicago, St. Louis, Memphis, New Orleans, and points east thereof.

"3d. Between the same western points and El Paso, Galveston, and Houston, in Texas, and points on the Missouri river and east thereof."

This order was subject to the restriction that the rates at intermediate stations should not be raised from the rates in force prior to April 20th.

Similar orders were made upon the application of the other trans-continental lines, limited in like manner to traffic between the Pacific Coast on the one hand and the Missouri river and points beyond on the other. All of said orders expired early in July, 1887.

The subject of the application of the fourth section to the business of the trans-continental lines was quite fully investigated by the Commission, in connection with their general examination of the short-haul question during the ninety days first ensuing its organization.

Immediately upon the issuing of the aforesaid temporary ord. r the defendant carriers announced a tariff to take effect

April 27, 1887, under the Pacific Coast East-Bound Classification, which established a line of rates from $3.50 on the first class to 85 cents on the ninth from San Francisco to the Missouri river. These rates, on May 25, 1887, were further materially reduced, and as so established remained in force on August 1, to wit:

Class... 1

4

5

6

7

2 3 8 9 2.80 2.24 1.75 1.50 1.40 1.23 1.05 .88 .70 Meanwhile no substantial change was made during the year 1887 in respect to the tariffs established April 5 for all intermediate points between the Pacific Coast and the Missouri river; the only important modification being that which was effected under the circulars mentioned above which operated to give shippers residing in the vicinity of the Missouri river and of the Pacific Coast the benefit upon direct shipments of the right which they had to ship to the terminal and return over the same ground.

The reduction to the rate which was established for through business on April 27 was made by the carriers with full knowledge of all existing water competition, the facts concerning which were laid before the Commission at that time with great detail. In justification of the subsequent reduction on through business which took effect May 25, 1887, the carriers pointed to the competition of the Canadian Pacific railway, which was practically a new factor in the situation, and which became energetic and active in the spring of 1887, contemporaneously with the taking effect of the Act to regulate commerce. A new line was thus opened, running for sixteen hundred miles or more through a foreign country, which competed on the streets of San Francisco for business from the Pacific Coast to the Missouri river, Chicago, New York and Boston. This competition was so managed as to make itself felt successively upon one commodity and another and at various points, forming a continual menace to the through business of the trans-continental lines in both directions, without undertaking the carriage of any very considerable amount of tonnage, except at the outset, when large consignments of sugar were shipped east for a few weeks over the Canadian line.

A steamer of the Pacific Coast Steamship Company left San Francisco weekly for Vancouver, where its freight was loaded upon the cars of the Canadian Facific Company and taken east across the mountains to be delivered via St. Paul or via more eastern routes, according to its destination. The rates of freight established for each sailing of these steamers have been regularly filed with the Commission; and the Commission has also obtained accurate information respecting the amount and destination of all goods shipped in each steamer sailing from San Francisco to Vancouver between April 1st and December 31st, 1887. The shipments of May 13th and May 21st were each a little over one thousand tons; the average of the thirty-four remaining shipments was about 150 tons each. The goods carried by this route to strictly Missouri River points were, 944 tons of refined sugar (900 tons of which were carried on May 13), 7 car-loads of beans, 2 car-loads of dried fruit, 4 car-loads of canned fruit, and 1 ear-load of bags. These articles were taken at rates lower then the rates in force at the time on the defendant roads. El Canadian Pacific rate on dried fruit to Chicago was at , different times ninety cents and one dollar.

It does not appear that the Canadian Pacific line charged a less rate to St. Paul and other points in the United States near the northern boundary than it charged to Omaha, Kansas City, Chicago, New York, and other more distant points in the United States on the same line in the same direction. It is not known, however, that any limitation exists upon the said line in respect to charging any desired rate to and from intermediate points in the Dominion of Canada, without reference to the rates established at more distant points, either in Canada or in the United States; and higher rates to and from intermediate points are in fact there charged. Nor does it appear that the Canadian business of this carrier is subject to any statutory prohibition of rebates, drawbacks, or other forms of unjust discrimination, or to any restrictions in respect to preferences between persons or localities. So far as appears, its Canadian rates may be changed at will and be varied from at pleasure. A general revision of railway laws now pending in the Canadian Parliament, introduced pursu

ant to the report of a Commission which has given much consideration to the question, provides as follows:

"No company in fixing any toll or rate shall, under like conditions and circumstances, make any unjust or partial discrimination between different localities, but no discrimination between localities which, by reason of competition by water or railway, it is necessary to make to secure traffic, shall be deemed to be unjust or partial."

The policy of the Canadian Pacific Company during the period following the taking effect in the United States of the Act to regulate commerce was to maintain its rates between San Francisco and the Central and Eastern States, upon leading articles, a little below the rates made by the transcontinental lines in this country; this was designed to compel the recognition by the latter of the general principle which it asserted, that rates upon a circuitous line between like terminals should be lower than rates upon the direct line, in order to enable the longer route to obtain a certain portion of the traffic. In other words, that natural disadvantages, operating to the prejudice of a route competing for the business in question, should be compensated by the privilege of offering to the public a lower rate.

And that policy was pursued with sufficient energy to produce at last the effect desired. On January 16, 1888, an arrangement was made by which the Canadian Pacific Railway became a member of the Trans-Continental Association. The trans-continental lines, including the Canadian Pacific, are now working under a tariff which fixes rates from Pacific Coast points to Missouri River common points and easterly to New York, that are considerably advanced from the low rates which prevailed after May 25th, 1887. The new tariff provides that on rates from San Francisco to Chicago and the East, via the Canadian Pacific Railway, certain differentials are to be deducted amounting to a reduction of from five to ten per cent in favor of the Canadian road. No differentials are given that line on shipments to and from the Missouri river; the result of which is that business from the

Pacific Coast to Missouri River points is not now competed for by the Canadian road.

The competition of the Canadian Pacific Railway, a foreign railroad not subject to the provisions of the Act to regulate commerce is the only justification relied upon by the defendants for charging higher rates at intermediate points in the case now under consideration.

The foregoing facts present the following question: Under the circumstances and conditions stated, is a higher rate justifiable for the shorter haul from San Francisco and Pacific. Coast common points to Green River, Cheyenne, Denver, and common points, than for the longer haul to Kansas City, Omaha and other Missouri River points?

Before proceeding to the consideration of this question it is important to obtain exact knowledge of just what disparity now exists between the rates in question, and how it is practically effected.

It appears from the proofs, and from the files in the office of the Commission, that the rates in force August 9th, 1887, from San Francisco to Denver, upon the ten classes of the Western Classification, were as follows:

Class... 1 2 3 4 5 A B C D E 8.00 2.65 2.30 1.95 1.70 1.50 1.20 .95 .85 .80

It also appears that the rates in force at the same time from San Francisco to the Missouri River, upon the nine classes of the Pacific Coast East-Bound Classification, were as follows:

Class... 1 2 3 4 5 6 7 8 9 2.80 2.24 1.75 1.50 1.40 1.23 1.05 .88 .70

It further appears that the class rates from the Pacific Coast to Denver, under the Western Classification, since February 14, 1888, are as follows:

Class... 1 2 3 4 5 A B C D E 3.00 2.60 1.90 1.55 1.30 1.40 1.20 .95 .85 .80

And that the class rates put in effect January 16, 1888,