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sources of production of pyrites in Canada and the increased use of sulphur in the manufacture of sulphuric acid.
It is conceded by complainant that the rate of $1.40 per ton on imported pyrites from Baltimore to Buffalo is made to meet canal competition on shipments from New York. So far as the evidence shows, there is no movement of the traffic between Baltimore and Buffalo.
The amount of pyrites shipped by complainant from Baltimore to Detroit on which $2.72 per ton was paid is 2,691 tons. On this amount the Baltimore & Ohio Railroad Company received 70 per cent of the rate and the Detroit, Toledo & Ironton Railway Company 30 per cent.
When considered by itself, the rate of $2.72 per gross ton for transportation of pyrites from Baltimore to Detroit is rather low. It yields a revenue of but 3.84 mills per ton per mile. The rate per ton per mile, however, is not the only test to be applied to a rate on any particular commodity to determine whether it is reasonable or unreasonable; it is only one element among numerous others which must be taken into consideration. It was held by the Commission in Business Men's Association of the State of Minnesota v. Chicago, St. Paul, Minneapolis & Omaha Railway Company, 2 I. C. C. Rep. 52, syllabus, thatThe method of testing the freight rates of a railroad by the rate per ton per mile is
a one by which these rates may be brought down to the narrowest point of scrutiny, and in this sense is valuable, but it is like looking at them with a microscope, for it ignores all other tests except that which it alone furnishes, and does not take into consideration any of the surrounding circumstances and conditions that enter into the making of the rate, no matter how compulsory or imperious these may be, and for this reason it can not be considered a controlling rule in determining the reasonableness of rates.
To determine the reasonableness and justness of any freight rate made by a railroad company, all the surrounding circumstances and conditions must be considered as well as the rights of the shipper, and if these circumstances and conditions are so compulsory and imperious that they fairly and justly exercise any controlling influence in the making of the rate, they can not be disregarded in a proceeding in which the reasonableness and justness of the rate is presented for determination.
The average receipts per ton per mile on all traffic transported by the Baltimore & Ohio Railroad Company for the year ending June 30, 1907, were 5.70 mills and like receipts of the Detroit, Toledo & Ironton Railway Company for the same period were 4.36 mills. In reaching these totals all classes of commodities transported are of course included. It is to be borne in mind that iron pyrites is a low grade commodity and is transported in a manner to yield a profit to carriers under a very low rate. It is transported in large quantities, is loaded to carrying capacity of cars, and is moved at the convenience of carriers. It is in every way a most desirable species of traffic. When compared with commodities of its general class the rate of $2.72 is above the average.
The fact that a long-established rate yields but small receipts per ton per mile can not justify its increase to such an extent or in such a manner as to be unjust to any shipper. Circumstances and conditions may be such that an increase in a particular rate may be unreasonable, although after the increase the rate will yield low receipts per ton per mile. The complaining company purchased its year's supply of pyrites in the fall of 1906, and contracted for the sale of its products for the ensuing year at the same time. The increase of 98 cents per ton in the freight rate on pyrites, effective January 1, 1907, represents about the usual profit per ton on sulphuric acid.
Where a railroad company has made and maintained for a long time a rate for the transportation of a certain commodity, such rate is presumed to be remunerative. If the rate is increased, the presumption is that the increase is unreasonable. To this general effect there are a number of decisions of the Commission. Central Yellow Pine Association v. Minois Central Railroad Company et al., 10 I. C. C. Rep., 505; Tift v. Southern Railway Company et al., 10 I. C. C. Rep., 548. Where an industry has been required to pay for a long period of time rates of freight on raw material which bear certain relations to rates charged to competitors at other points, a marked change in such relations of rates in favor of competing industries can not be made without an attendant presumption of undue discrimination.
The higher rate to Detroit, effective January 1, 1907, has been voluntarily reduced by the carriers 51 cents per ton, effective January 1, 1908. Relations between rates to Chicago and Cincinnati have been made more favorable to Detroit than the average during a period of over eight years. The presumption is that the rate of $2.21 per ton of 2,240 pounds now effective for transportation of pyrites from Baltimore to Detroit is remunerative to the carriers.
Under all the circumstances shown in this case, the Commission is of opinion that the rate of $2.72 per ton of 2,240 pounds on imported pyrites from Baltimore to Detroit is now and was during the time it was in effect unreasonable and unjust, and that the rate for such traffic should not exceed $2.21 per gross ton.
Considering the discrimination against Detroit prior to the present adjustment of rates and the circumstances under which the business of manufacturing sulphuric acid was entered into by the complaining company, we are also of opinion that reparation to the extent of 51 cents per ton should be awarded on the amount of pyrites shipped by it from Baltimore to Detroit on which was paid the rate found herein to be unreasonable. An order will be entered accordingly.
DETROIT CHEMICAL WORKS
ERIE RAILROAD COMPANY; LEHIGH VALLEY RAILROAD
COMPANY; WABASH RAILROAD COMPANY; PENNSYLVANIA RAILROAD COMPANY; PITTSBURG, CINCINNATI, CHICAGO & ST. LOUIS RAILWAY COMPANY; PITTSBURG, FORT WAYNE & CHICAGO RAILWAY COMPANY, AND DETROIT, TOLEDO & IRONTON RAILWAY COMPANY.
Submitted January 7, 1908. Decided April 6, 1908.
The rate of $3.32 per ton of 2,240 pounds on imported iron pyrites in carloads from
New York to Detroit is now and was during the time it was in effect unreason. able and unjust, and should not exceed $2.81 per ton. Reparation awarded. Edward S. Davis for complainant.
George S. Patterson for Pennsylvania Railroad Company; Pittsburg, Cincinnati, Chicago & St. Louis Railway Company, and Michigan Central Railroad Company.
H. W. Clark for Lehigh Valley Railroad Company.
REPORT OF THE COMMISSION.
It is alleged in this complaint that the rate of $3.32 per ton of 2,240 pounds charged by defendants for the transportation of iron pyrites in carloads from New York City, N. Y., to Detroit, Mich., is unjust and unreasonable and subjects complainant to undue prejudice and disadvantage when compared with chemical works owned and operated by others in various cities similar to the one operated by it in Detroit. Reparation is asked.
The case presents the same issues that were presented in the case of this complainant against Northern Central Railway Company et al. decided by the Commission March 16, 1908, 13 I. C. C. Rep. 357. Facts respecting the nature and conduct of complainant's business, the character of pyrites, the manner of making shipments thereof, and the situation of complainant with respect to competitors in other cities are fully stated in that decision and need not be restated in detail here. It is sufficient for the purposes of this case to make the following findings of fact:
Complainant late in 1902 and early in 1903 erected a sulphuricacid plant in the city of Detroit. In the manufacture of the acid iron pyrites imported from Spain is used. A portion of this product consumed by complainant during the year 1907 was shipped to Detroit from New York City over defendants' lines of railroad. The complainant contracted for its supply of pyrites with an importer in the fall of 1906 for the ensuing year. . At the time complainant's factory was completed and during the year 1903 the rate on pyrites from New York to Detroit was $2.16 per gross ton.
At no time from 1902 to January 2, 1907, was the rate in excess of $2.34 except for a short time in 1906, when on protest of complainant and on his negotiations looking toward shipments by ocean, river, and lakes from Spain, an increased rate was reduced. Pyrites is a lowgrade commodity, is loaded in bulk in box cars to the carrying capacity thereof, is shipped at convenience of carriers, and yields profit to them on a comparatively low rate.
The import rate on pyrites in carloads from New York to Detroit was at the time the complaint was filed $3.32 per ton of 2,240 pounds, and that rate was maintained until January 9, 1908. The varying rates per ton from April 26, 1902, to April 15, 1907, on such shipments from New York to Detroit, Cincinnati and Cleveland, Ohio; St. Louis, Mich., and Chicago, Ill., at which points sulphuric-acid plants are located, are shown by the following table:
When the rates of January 2, 1907, were put into effect the relation of complainant to its competitors with respect to rates which had been maintained for years was not materially disturbed, but the reduction made to Chicago, Ill., St. Louis, Mich., and Cincinnati, Ohio, by the tariff of April 15, 1907, left complainant at a comparatively great disadvantage.
January 9, 1908, the defendants voluntarily reduced the rate to Detroit 51 cents per ton, and established the following rates from New York toDetroit, Mich. Cincinnati, Ohio. Cleveland, Ohio. St. Louis, Mich. Chicago, In. $2.81 $3.31 $2.56
$3.60. Under the circumstances of this case and for reasons given in the case cited supra, we are of opinion that the rate of $3.32 per ton of 2,240 pounds on imported pyrites from New York to Detroit is now and was during the time it was in effect unreasonable and unjust, and that the rate for such traffic should not exceed $2.81 per gross ton.
The amount of pyrites shipped by complainant from New York to Detroit on which $3.32 per ton was paid is 2,402 tons. On 1,429 tons the Erie Railroad Company received 72.3 per cent and the Wabash Railroad Company 27.7 per cent of this rate; on 494 tons the Lehigh Valley Railroad Company received 66 per cent and the Wabash Railroad Company 34 per cent; and on 479 tons the Lehigh Valley Railroad Company received 60.4 per cent and the Michigan Central Railroad Company 39.6 per cent.
Under all the circumstances shown we are also of opinion that reparation to the extent of 51 cents per ton should be awarded complainant on the amount of pyrites shipped by it from New York to Detroit on which was paid the rate found herein to be unreasonable. An order will be entered accordingly.
13 I. C. C. Rep.