APPENDIX II

DECISION OF THE INTERSTATE COMMERCE COMMISSION IN THE RENO, NEVADA, RATE CASE

THE Interstate Commerce Commission, in 1909 and 1910, decided a number of cases involving transcontinental rates. Among the decisions of exceptional importance were the City of Spokane, Washington, et al. v. Northern Pacific Railway Company et al. (XV I. C. C. Reps., 376–426; XVI I. C. C. Reps., 179-181; XIX I. C. C. Reps., 162– 217) and the Railroad Commission of Nevada v. Southern Pacific Company et al. (XIX I. C. C. Reps., 238-256). The latter one of these two decisions is reprinted in full here because it describes clearly the main features of the transcontinental rate system and also indicates a disposition of the Commission to require lower relative rates to "intermediate" points, as compared with the "Pacific Coast Terminals."

DECISION OF THE INTERSTATE COMMERCE COMMISSION IN RAILROAD COMMISSION OF NEVADA

vs.

SOUTHERN PACIFIC COMPANY et al.1

Submitted February 7, 1909. Decided June 6, 1910

Class rates from points in eastern defined territory to points in Nevada found unreasonable; reasonable rates prescribed for the future.

H. F. Bartine and R. C. Stoddard for complainant.

F. C. Dillard, P. F. Dunne, and C. W. Durbrow for Southern Pacific Company and Nevada & California Railroad Com

pany.

Seth Mann for Traffic Bureau of the Merchants' Exchange of San Francisco, intervener.

Edward G. Kuster and Joseph P. Loeb for Associated Jobbers of Los Angeles, intervener.

REPORT OF THE COMMISSION

LANE, Commissioner:

The highest main-line rates to be found in the United States are those from eastern points to stations in Nevada. For carrying a car load of first class traffic containing 20,000 pounds from Omaha to Reno the Union Pacific-Southern Pacific line charges $858. If a like car load is carried 154 miles further, to Sacramento, the charge is but $600. The first-class rate to the more distant point, Sacramento, is $3 per 100 pounds, and to the nearer point, Reno, $4.29 per 100 pounds. If a like car load of freight originates at Denver, 500 miles west of Omaha, the same rates to Reno and Sacramento apply; and if the freight originates at Boston, 1,700 miles east of Omaha, the rates are the same. This interesting rate condition arises out of two simple facts: (1) The whole of the United States from Colorado common points to the Atlantic seaboard, barring a few of the southeastern states, is one wide group or zone from which practically uniform rates to Pacific coast water points are made, and (2) the rates to Reno are based upon these blanket rates to coast cities, and amount to the sum of the rates to the coast plus the local rates back to point of destination.

This great zone, extending from the Rocky Mountains to the Atlantic, a distance of over 2,000 miles, from which practically uniform rates are made to Pacific coast terminal cities, is probably without parallel in the railroad world, excepting for a similar eastward blanket extended to Pacific coast producing points. The zone in which the same rates apply on California citrus fruits, for instance, extends from Salt Lake City

on the west to Portland, Me. It is manifest that the transcontinental railroads have made a near approximation to the postage stamp system of rate making. Their policy has been to give to all eastern producing markets an opportunity to sell to the terminal cities upon a parity as to transportation charges and to give to Pacific coast producing points access to all eastern markets upon a like basis. To the great basin lying between the Rocky Mountains and the Sierra Nevadas the carriers have in a limited degree extended this same policy by making rates into Nevada base on the coast cities, and thus, the carriers say, they give to this territory the advantage of its proximity to the Pacific seaboard; that the rates to the latter are made low because of water competition between the Atlantic and Pacific ports-lower than would be justified were Sacramento and San Francisco not upon the water-and that Nevada rates would be still higher but for its nearness to the Pacific coast.

The state of Nevada, through its railroad commission, now comes asking that Nevada points be given the same rates as are now given to Pacific coast terminals, urging that these coast rates are not unreasonably low in themselves, and are not the product of any real water competition.

The complaint originally filed in this case made the Southern Pacific the sole defendant; the reasonableness of the rates from the east to Nevada were not attacked, excepting in so far as they are based on the rates to further western points, and include a back-haul charge. As the complaint then stood the petition was that this Commission should hold it to be unreasonable for the Southern Pacific, delivering freight at Reno and other points in Nevada, to charge for a back haul which is not in fact given, and that we should adjudge the rates to Sacramento to be reasonable as applied to the intermediate points. Later the complaint was amended by adding carriers east of Ogden forming a single through route from the Atlantic coast. So that the petition of Nevada now is that from all points upon this through route reasonable rates shall be fixed which shall not exceed those now applicable on shipments from such points to the more distant coast terminals. It is suggested by the complainant that we bring in other carriers as