cially bothersome or even particularly expensive. Those who profess a public employment must fulfill their public duty to all who apply, and must realize that this will be more troublesome in some cases than in others; and indeed, so long as the business as a whole is profitable, they should not complain if some occasional services may result in loss. This was pointed out very clearly in State v. Citizens' Telephone Co.,1 where the defendant telephone company relied upon the fact that in order to serve the plaintiff applicant it would be obliged to install a new switch-board at great additional expense; but the court felt that this furnished no sufficient ground to justify a refusal to serve this member of the public upon the same terms as any other person. Whatever serious loss may result from being obliged to serve in small units, may be avoided by the practice of establishing fixed units of reasonable size in which alone services will be rendered. This system. of minimum rates has been supported by several cases, among them the case of Gould v. Edison Electric Co., in which it was held that an electric company might fairly charge a consumer $1.50 a month even if less electricity by measure was used in that month.4

It is common knowledge that in the conducting of many large public services discounts have been made to large customers in order to get their trade and to retain it, and although this practice is not often made public at the present time, still it is the policy sometimes adopted and, when attacked, openly defended. That this policy may be often advantageous in public, as it is in private business, may be admitted. But it has already been seen that public duties may conflict with business policies; and that such a policy does conflict with public business may be argued from its deplorable results. The undue favoring of large customers will

1 61 S. C. 83.

2 Harp v. C. O. & Gulf Ry., 125 Fed. Rep. 445, which held that a railroad may take the attitude that it will deal only with large customers who have special equipment for shipment, must be wrong; the contrary is held in Thompson v. Pennsylvania Ry., 10 I. C. C. Rep. 640.

8 60 N. Y. Supp. 559.

4 Upon similar principles a water company may refuse to supply water for less than a period of three months (Harbison v. Knoxville Water Co., 53 S. W. Rep. 993 (Tenn.)); while it would be unreasonable to make the unit so long as a year (Rockland Water Co. v. Adams, 84 Me. 472). Perhaps more familiar examples are the flat five cent fare upon street railways, even if the passenger rides but one block (Milwaukee Electric Ry. Co. v. Milwaukee, 87 Fed. Rep. 577), and the one hundred pound minimum rate upon package freight (Wrigley v. C. C. C. & St. L. Ry., 10 I. C. C. Rep. 412).

give them such commercial advantages that they will crush out their smaller competitors; and this is particularly true when a railroad company adopts the policy of making lower proportionate rates to large customers as such. This was the line of argument relied upon by the court in the leading case of Hays v. Pennsylvania R. R. Co., where the rather plausible scheme was adopted of a sliding scale by which the amount of rebate was graduated by the quantity of freight furnished by each shipper, a scheme which the railroad urged was adopted in good faith for the purpose of stimulating production and increasing its tonnage. But the court said that if the rate was fixed by the business furnished the railway, the smaller operator must sooner or later be forced to abandon the unequal contest and surrender to his more opulent rival. Although this case now represents the great weight of authority, it must be admitted that there is still a respectable minority which holds that lower relative rates may be made to large customers despite the injury which small customers must suffer thereby. In the case of Silkman v. Water Commissioners, for example, it was held that lower water rates might be given to large consumers than to small consumers, the court saying that to make such differences was a business principle of general application. The courts which take this view profess to limit their doctrine by the qualification that the differences between the rates for large and small customers must not be unreasonable, but it is difficult to see any standard by which that difference may be tested if it is once permitted; and indeed it may be asserted with confidence that it is opposed to fundamental principles whenever the services to large customers and to small customers are practically identical, as they usually are.3

Although it may fairly be said that the services are practically identical when it is simply a question between two customers, one of which pays larger agregate bills than the other by reason of the fact that his total requirements may have been greater, it is necessary to point out that there are differences in the cost of

1 12 Fed. Rep. 309.

2 152

N. Y. 327. make reductions to large cus161 U. S. 92, affirming s. c.,

By the undoubted weight of authority it is illegal to tomers as such. Western U. T. Co. v. Call Pub. Co., 44 Neb. 326; Hays v. Pa. Fuel Co., 31 Fed. Rep. 652; Kingsley v. B. N. Y. & P. Ry., 37 Fed. Rep. 181; United States v. Tozer, 39 Fed. Rep. 369; L. E. & St. L. R. R. v. Wilson, 132 Ind. 517; Cook v. C. R. I. & Pac. Ry., 81 Ia. 551; Scofield v. Ry. Co., 43 Oh. St. 571; Fitzgerald v. Grand Trunk Ry., 63 Vt. 169. But see the elaborate opinions to the contrary in C. & P. R. R. v. Forsaith, 59 N. H. 122, and Silkman v. Yonkers Water Commissioners, 152 N. Y. 327.

service by reason of the ways in which business is handled; and in so far as these economies in handling business in large units are real, a proportionate reduction may be made to the customer who has services in more convenient units. For example, the economies of transportation in carload lots are very great, and recognizing this fully in an early ruling, Scofield v. Lake Shore & Michigan Southern R. R. Co.,1 the Interstate Commerce Commission held not unreasonable a rate per hundred pounds upon refined oil in less than carload lots one hundred per cent greater than the rate upon carload lots, remarking that there was fully that difference in the cost of handling the freight. And in a recent United States Supreme Court decision, Western Union Telegraph Company v. Call Publishing Co.,2 it was recognized that lower proportionate rates might be made upon long press messages than upon ordinary short commercial messages, the court saying that the principle of equality forbids any difference in charge which is not based upon difference in service, and that even then it must have some reasonable relation to the amount of difference. Neither of these holdings, it will be noticed, would justify the granting of lower proportionate rates to large customers, as such. Under the first ruling a lower proportionate rate should not be made to the shipper of many car loads as compared with the shipper of one carload; nor under the second decision should a lower proportionate rate be given a newspaper which sent many separate messages than one which sent few. It may also be pointed out that the customer whose annual bills are the largest, or whose business is largest in the aggregate, may be the one who asks services in the most inconvenient units and in the most expensive ways. All this being so, granting a special concession to large customers as such is in the face of the public service law, which requires that all should be served without discrimination, — an unanswerable objection, however advantageous this policy may be in obtaining business.

1 2 I. C. C. Rep. 90.

2 181 U. S. 92.

* It is generally recognized that the more convenient service may be charged for at a proportionately less rate. Thus a shipper who furnishes his own terminal facilities may be given a lower rate to that extent. Root v. Long Island R. R., 114 N. Y. 330 And, again, a shipper who furnishes his own cars may properly be allowed their rental value. State v. C. N. O. & T. P. Ry., 47 Oh. St. 130. So well agreed is it that the difference in cost of service must be demonstrated clearly, that in the United States, at all events, the granting of a lower rate per car for a train load is forbidden. Paine Bros. v. Lehigh Valley R. R., 7 I. C. C. Rep. 218. But see an English case, Nicholson v. Great Western Ry., 5 C. B. (N. s.) 366, holding it justifiable to make a concession to the shipper of regular train loads.

IV.

In pursuance of the same policy of increasing the total profits by reaching out for additional business which may be obtained by making concessions from the ordinary rates charged regular customers, many managers of public services claim the right to make special concessions for special kinds of business, in which the ordinary prices could not be afforded. The same argument is made here which is made elsewhere, that handling this additional business will normally tend to the benefit of regular customers, since the additional business, if rightly managed in their interest, will relieve the regular business of a share of the fixed charges.1

It is perhaps necessary to point out here that a public service may to a certain extent limit its profession and accordingly refuse to enter upon lines of business which it does not wish to undertake, and that in such a case it cannot be compelled to perform upon any terms for any one. And it might therefore make special bargains in individual cases in reference to the performance of such outside business, without committing itself to serve all that apply; but it does not follow that, if it has once professed a line of business, it can limit its profession of that business to certain persons engaged in it. There is an English case, In re Oxlade,2 which seems to say that if a certain railroad undertook to carry coal only for colliery owners, it could not be obliged to take it for any other class of persons; but this can hardly be, for it seems altogether inconsistent with the simplest rules of public duty. And in an American case, Haugen v. The Albina Water Co., where a water company with mains laid in a street attempted to limit its duty to persons living upon certain portions of that street, it was held that the company owed service to all applicants located within its territory without discrimination.

1 These views formerly had such currency that several courts were willing enough that common carriers should make a lower rate for freight shipped from B to C, which originally came from A, than for freight, of local origin, which was shipped from B to C. See Johnson v. P. & P. R. R., 16 Fla. 623; Ragan & B. v. Arken, 9 Lea (Tenn.) 609. But by the present view such concessions are held plainly unjustifiable, since they involve personal discrimination. Wight v. United States, 167 U. S. 512; B. & W. R. Co. v. Mobile, etc., Ry. Co., 60 Fed. Rep. 545; Fitzgerald v. Grand Trunk Ry, 63 Vt. 169; Brandt Milling Co. Case, 4 Can. Ry. Cas. 259. Upon similar principles it is not allowable to make lower rates for transportation from A to B for goods eventually destined for C. Alabama, etc., Ry. v. Railroad Commission, 86 Miss. 667; Hope Cotton Oil Co. v. T. & P. Ry., 10 I. C. C. Rep. 696.

2 15 C. B. (N. s.) 680.

8

21 Ore. 411.

If public companies may not refuse to deal with persons who want services for one purpose while they profess to serve others who want the same services for another purpose, it would seem to follow that, in their dealings with their patrons who ask the same service, a public company ought to charge all alike, without regard to the need they have of the service. It is true that the results are not so deplorable when the discrimination is between patrons who put the service to different usage as they are when the discrimination is between applicants who are competitors; but it is submitted that from a logical point of view there is substantially the same illegality, and from a practical point of view there is much the same injustice. Nevertheless it is strongly urged by the railroad companies, for example, that they should be allowed to make different rates for commodities which are destined for different purposes. It is, again, pointed out that this policy may be necessary in order to get more traffic, and that this by the law of increasing returns may be for the benefit of all concerned. Moreover, the railroad managers sometimes make here an argument, which they elaborate in other situations, that upon grounds of public policy they should be permitted to make such lower rates as they did in Hoover v. Pennsylvania R. R., where they exacted one rate for coal to be sold at retail for domestic consumption and a lower rate for coal to be used for manufacturing purposes. And, indeed, in that case the court was persuaded that there was a public policy to support such concessions for special purposes in view of the encouragement given to productive industries by such preferential rates. But despite the economic argument, the legal principle remains that to charge different customers who wish the same service different prices, when there is no difference in the conditions under which the service is rendered, is plain inequality, and therefore outright discrimination. Singularly enough, this was the basis of the decision in another Pennsylvania case, Bailey v. Fayette Gas-Fuel Co.,2 which was decided only a few years later. In that case a higher price per cubic foot was charged to customers who used gas simply for illuminating than was charged to such customers as used gas also for fuel. This was properly held to constitute unjustifiable discrimination, and so sweeping was the language of the court as to cover the less obvious case of making different prices for illuminating gas and fuel gas.3

2

193

Pa. St. 175.

1 156 Pa. St. 220. 3 Special concessions for special business are by the weight of authority illegal dis