No joint commodity rate on cotton seed in carload lots was in existence at the time of the filing of the complaint. The rates complained of as above set out are Class A rates under Western Classification, and shipments of cotton seed from points on the Fort Smith & Western Railroad to Memphis were governed thereby. These through class rates were higher than the combinations of the locals from the same points on the Fort Smith & Western Railroad, through Fort Smith, to Memphis over the lines of the other defendants.

The local rates on cotton seed, in car loads, from stations on the line of the Fort Smith & Western Railroad to Fort Smith, minimum weight 30,000 pounds, were, at the time of hearing, as follows (I. C. C., 201):

Other points on the line in the same groups with the stations above named took the same rates. The former local rates were uniformly 4 cents less per 100 pounds from these points and the other stations in the same groups, taking the same rates.

On July 2, 1907, after the testimony herein was taken, defendant Fort Smith & Western Railroad Company, by leave of the Commis

sion, amended its answer and stated that since the filing of its original answer it had withdrawn the Class A rates on cotton seed by Supplement 37 to I. & O. T. Tariff No. 1-H, I. C. C. No. 49, reading as follows:

Western Classification rating will not apply on shipments of cotton-seed car lots from stations on Fort Smith & Western Railroad to points covered by this tariff. Rates will be made on combinations of locals, but shipments will be accepted only when cars provided by the connecting carrier are available. If shipments are made in this company's cars, shippers will be required at their own risk and expense, subject to the usual demurrage charges, to unload or transfer same at junction points.

As a part of said amendment to answer, it further alleged that it had published and filed tariff, effective June 11, 1907, as follows:

On shipments of cotton seed originating at stations on the Fort Smith & Western Railroad on which freight charges have been paid at current tariff rates, a refund will be made to consignees of 4 cents per hundredweight for every 65 pounds of the product manufactured from cotton seed given the Fort Smith & Western Railroad for shipment outbound.

Original expense bills covering inbound shipments of cotton seed, together with statement of billing covering the outbound product to be forwarded to this office, at the close of each month, for which voucher will be made in favor of consignee direct. (See tariff I. C. C., 242.)

A carrier may properly offer lawful inducements to industries to locate upon its lines. It may not offer unlawful or discriminatory payments or privileges as such inducement, as is done in this rule. The rule and the practice which it provides are, in our opinion, un lawful.

Said amendment to answer further stated that, on May 20, 1907, the said defendant filed, effective June 22, 1907, I. C. C., 243, tariff on cotton seed in carloads from points of origin on its line to Memphis, Tenn., as follows:

Routing Instructions, via Fort Smith and St. L., I. M. & S. Ry., or via Fort Smith and St. L. & S. F. and C., R. I. & P. Rys.

Rates will apply only when loaded in cars furnished by the St. L., I. M. & S. Ry., C., R. I. & P. Ry., or St. L. & S. F. Rys.

If loaded in Ft. S. & W. R. R. cars, shippers will be required at their own risk and expense and subject to the usual demurrage charges, to unload or transfer same at Fort Smith, Arkansas.

This purports to be a joint tariff with the Chicago, Rock Island and Pacific Railway Company, the St. Louis, Iron Mountain and Southern Railway Company, and the St. Louis and San Francisco Railroad Company, and the rates therein named are combinations of the local rates of the Fort Smith and Western Railroad Company, then in force, from points on its line to Fort Smith, and the local rates on the lines of the other carriers named from Fort Smith to Memphis, the local rates between the last two points being 17 cents per 100 pounds. The Chicago, Rock Island and Pacific Railway Company concurred in this tariff, but later canceled its concurrence, effective September 7, 1907. The other two carriers named as participants never concurred therein, so that no lawful through route via the defendants' lines with joint rates applicable thereto ever existed under said tariff.

On November 6, 1907, the Fort Smith and Western Railroad filed, effective December 7, 1907, its tariff I. C. C. No. 257, canceling its I. C. C. No. 243. This tariff, I. C. C. No. 257, purports to be a joint tariff with the other three carriers mentioned in said tariff I. C. C. No. 243. The Rock Island's concurrence in Fort Smith and Western's tariffs was, as stated, canceled on September 7, 1907. Concurrence in said tariff, I. C. C. No. 257, covering rates to Memphis, has been given by the St. Louis and San Francisco Railroad. Concurrence of St. Louis, Iron Mountain and Southern Railway applies only to rates to Little Rock. This tariff contains the same conditions as to furnishing cars and unloading at Fort Smith that have been herein quoted from I. C. C. No. 243. The rates, however, are from 1 to 3 cents higher per 100 pounds to Memphis than in tariff I. C. C. No. 243, due to the fact that the defendant, Fort Smith and Western Railroad, raised its local rates, effective on October 19, 1907, tariff I. C. C. 250, and reissue of same rates in tariff I. C. C. 258, effective December 23, 1907. Complainant further contends that the through rates on cotton seed from the points on the Fort Smith & Western Railroad should be no higher than the rates on cotton seed to Memphis from points on the Chicago, Rock Island & Pacific Railway, which are similarly distanced from Memphis. Nothing appears in the testimony to indicate that conditions are the same at the towns on the Rock Island as at the corresponding towns on the Fort Smith & Western. There is much in the record to show that conditions are not at all similar, but differ widely as to the age and population of the towns, tonnage of the railroads, competitive conditions, development of the country, and conditions as to local markets.

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The rates on cotton-seed products from Fort Smith to Kansas City and St. Louis and from Fort Smith to Memphis, in carloads of 30,000 pounds, in cents per 100 pounds, are as follows:

The through rate on cotton-seed meal, in carloads, from Fort Smith to Boston is 35 cents per 100 pounds, and from Memphis to Boston is 28 cents per 100 pounds.

The Fort Smith & Western Railroad began operations in the fall of 1903. Its line is from Fort Smith, Ark., west to Guthrie, Okla., 217 miles. The first 20 miles from Fort Smith it uses the Kansas City Southern line under trackage contract, the terms of which forbid the defendant road from handling local traffic. From that point to the Oklahoma border the road passes through the Choctaw and Cherokee Indian lands, held by Indian allottees. There are no highways or bridges crossing the Indian lands and about 10 per cent of the land is under profitable cultivation. About 15 per cent of the Creek Nation land is under cultivation. Small towns at various points on the road have grown up and business in a small way has been created as a result of the building of the road. Two daily passenger trains are operated each way and one daily freight train each way.

The total freight tonnage handled from July, 1906, to February, 1907, approximates 240,000 tons, the greater part of which was coal and coke. For the year ending June 30, 1906, the total tonnage carried was 260,000 tons, of which 152,000 tons were coal and coke. All other commodities amounted to 107,000 tons. The total revenue from said 260,000 tons was $327,449.03. Cotton seed and cotton-seed products produced $76,000 of that amount.

With the exception of Fort Smith, Ark., and Guthrie, Okla., the towns on defendant line are but small country villages. Cotton is the principal agricultural product, although corn is grown in small quantities.

Defendant Fort Smith & Western Railroad Company's road cost approximately $6,000,000 to build, exclusive of equipment costing about $1,000,000. The outstanding bonds December 31, 1906, amounted to $6,500,000, of which $579,833.33 were unsold and in the treasury. These bonds in the treasury were used as collateral to bills payable of $221,500, and equipment trust notes of $366,435.44. The authorized bond issue of the company is $7,500,000.

The said railroad, for the calendar years 1904, 1905, and 1906, was operated at a loss, not earning enough to pay operating expenses,

interest on bonds, bills payable, and car-trust certificates, said deficits being as follows:

1904. 1905. 1906..

$140, 390.42

70, 839.66
37, 226. 20

The deficit each year has been made up by the stockholders, who are also the holders of the bonds.

There are five oil mills on the line of the said defendant railroadtwo at Fort Smith, two at Guthrie, and one at Weleetka. Another is in process of construction at Prague and will be in operation this fall. The capacity of these mills is much greater than the volume of cotton seed produced in the country tributary thereto. There are nine mills at Memphis.

The St. Louis, Iron Mountain & Southern Railway and the St. Louis & San Francisco Railroad enter Fort Smith. The Santa Fe, Rock Island, and M., K. & T. roads enter Guthrie, and by reason thereof all carload inbound business to these terminal points of the Fort Smith & Western is handled by these other roads, and defendant has no opportunity to get foreign cars for outbound business beyond its own line, except that at Crowder City, the M., K. & T. Railway delivers to it some inbound Fort Smith business. Last season it was obliged in numerous cases to transfer the contents of cars at Fort Smith at its own expense to connecting carriers' cars in order to keep its equipment on its own line, the connecting carrier often taking from ten to fifteen days to furnish cars. Last year the defendant had but 300 box cars and could not have handled the cotton seed offered from and to points on its own line if the oil mills thereon had not agreed to accept the seed in open coal cars. Its equipment last year in box cars and coal cars was inadequate for the needs of its own line. This year it will have 510 box cars, but it is estimated that the cotton production on its own line will exceed last year's production by from 19,000 to 15,000 bales, and the total number of box cars this year will not be more than adequate to handle its local traffic.

The defendant, Fort Smith & Western Railroad Company, declares that it has at all times been ready to put in effect through rates on cotton seed to Memphis, if it could get its local rates from points on its line to Fort Smith, as its share of the through rates, and be protected in equipment on its own line by getting foreign cars for such outbound through shipments. Mr. J. S. Davant, secretary of the complainant, testified that in the division of joint rates from points on the line of the Fort Smith & Western Railroad to Memphis said defendant ought to have the equivalent of its local rates from same points to Fort Smith.

13 I. C. C. Rep.