the English Railway Clauses Consolidation Act of 1845, from which section 2 of the ICA was derived, makes unlawful any difference in rates charged to shippers for identical cargoes shipped over the same line for the same distance and under the same circumstances of carriage. If, as argued by petitioners, sections 14, 15, and 17 of the Act were indeed derived from comparable sections of the ICA in the same manner as section 16 was patterned after section 3 (1) of the ICA and section 2 of the English Railway and Canal Traffic Act of 1854, we would be influenced by that argument. The Supreme Court in U. S. Nav. Co. v. Cunard, supra, indicated, at page 481, that— the settled construction of the * * (ICA) must be applied to the * * (Shipping Act. 1916) unless, in particular instances, there be something peculiar in the question under consideration, or dissimilarity in the terms of the act relating thereto, requiring a different conclusion. [Emphasis supplied.] Section 2 of the ICA, however, has no counterpart in the Act. Section 4 of H. R. 14337 contained language 30 strikingly similar to section 2 of the ICA, but that language was deleted from the later and ultimately enacted bill, H. R. 15455. In the hearing on H. R. 14337, in which this deletion was considered, a witness recommended: 31 We feel the first part of section 4 would be very difficult to act under and to advise upon, and that section 5 embodies some matters that it is unnecessary, and therefore undesirable, at this stage of the development of the American merchant marine, to incorporate in the act. Instead of those sections we propose to redraft section 5 so as to include in it the substance of the matter of sections 4 and 5 to the extent necessary to prevent injustice, if you conclude that you must have regulation. As the revised paragraph is short, perhaps I had better read it: "SEC. 5. That whenever, after full hearing upon a sworn complaint, the board shall be of opinion that any rates or charges demanded, charged, or collected in the transportation of a like kind of traffic under substantially similar circumstances and conditions, such common carrier shall be deemed guilty of unjust discrimination, which is hereby prohibited and declared to be unlawful.” *Section 4, First, of H. R. 14337 : "SEC. 4. That it shall be unlawful for any common carrier by water, or other person subject to this act, either directly or indirectly "First. To charge, demand, collect, or receive from any person or persons by any special rate, rebate, drawback, or other device a greater or less compensation for any service rendered or to be rendered in the transportation of passengers or property subject to the provisions of this act than it charges, demands, collects, or receives from any other person or persons for doing for him or them a like service in the transportation of a like kind of traffic under substantially similar circumstances and conditions: Provided, That nothing in this act shall prevent the carriage, storage, or handling of property free or at reduced rates for the United States, State, or municipal governments, or for charitable purposes, or to or from fairs and expositions for exhibition thereat, or the giving of reduced rates to ministers of religion, or to municipal governments for the transportation of indigent persons, or to inmates of the National homes or State homes for disabled volunteer soldiers, and of soldiers' and sailors' homes, including those about to enter and those returning home after discharge, under arrangements with the board of managers of said homes." Hearings on H. R. 14337, 64th Cong., 1st sess., at page 136. by any common carrier by water in foreign commerce are unjustly discriminatory between shippers or ports, or unjustly prejudicial to exporters of the United States as compared with their foreign competitors, the board is hereby empowered to alter the rates or charges demanded to the extent necessary to correct such unjust discrimination or prejudice, and to make an order that such carrier shall cease and desist from such unjust discrimination or prejudice." [Emphasis supplied.] The words "to the extent necessary to eliminate injustice" clearly reveal the intent of the redrafters of section 5 to eliminate an absolute prohibition against discriminations in favor of a prohibition against only those discriminations which are unjust. The witness' recommendations were, in part, adopted in H. R. 15455. While a revised section 5 was in substance followed in the first paragraph of section 18 of the bill (section 17 of the Act), section 4 of H. R. 14337 was not eliminated. That section was substantially adopted, with the notable exception of the first paragraph, objected to by the witness, in section 17 of H. R. 15455 (section 16 of the Act." Section 18 of H. R. 15455, based on the revised section 5 hereinabove set out, was conspicuously silent on the subject of special rates, into which category dual rates necessarily fall, and bore little resemblance to section 2 of the ICA. We therefore consider decisions under section 2 of the ICA to be of no persuasion here. As stated herein and in our Report on Motion in Anglo Canadian, supra, section 16 of the Act was patterned after section 3 (1) " of the ICA and section 2 of the [English] Railway and Canal Traffic Act of 1854, both of which earlier provisions forbade granting to shippers any undue or unreasonable preference or advantage. In decisions under section 3 (1) and 4 of the ICA, carrier competition has been considered a factor to be weighed in justification of a prima facie discrimination or preference. Eastern-Central Motor Assn. v. U. S., 321 U. S. 194 (1944); Texas & Pacific Ry. Co. v. U. S., 289 U. S. 627 (1933); Int. Com. Com. v. Alabama Midland R'y., 168 U. S. 144 (1897). In the Eastern-Central case the Supreme Court reviewed a determination by the Interstate Commerce Commission ("ICC"), upheld by & 33 Dr. Emory R. Johnson, who had assisted in drafting the bill, described section 4, First, of H. R. 14337, at p. 27 of the House of Representatives hearings on that bill, as containing an "absolute prohibition" against "a rebate or a drawback on a rate." 33 Section 3 (1) provides: "It shall be unlawful for any common carrier subject to the provisions of this part to make, give, or cause any undue or unreasonable preference or advantage to any par ticular person, company, firm, corporation, association, locality, port, port district, gateway, transit point, region, district, territory, or any particular description of traffic, in any respect whatsoever; or to subject any particular person, company, firm, corporation, association, locality, port, port district, gateway, transit point, region, district, territory, or any particular description of traffic to any undue or unreasonable prejudice or disadvantage in any respect whatsoever * District Court, that a minimum weight requirement for volume discount, not based on truckload capacity, was both unreasonable and unjustly discriminatory although the requirement was adopted by a motor carrier in order to make its rates competitive with railroad rates. In reversing the lower court's decision, the Supreme Court took the view that both competition and cost of operation are factors which must be taken into consideration in determining whether a discrimination or preference is unlawful. The case is particularly significant because of its recognition of two considerations. First, it recognized that principles evolved in the regulation of railroads in competition only with other railroads have a limited applicability to circumstances where different modes of transportation are in competition with each other. Second, it recognized the inseparability of the ICC's dual function of regulator and coordinator. The problems presented to the Supreme Court in the Eastern-Central case are highly analogous to the instant problem. While rate making has been closely tied to cost factors generally, those cost factors are substantially alike to all domestic carriers within an industry. Where cost factors differed between rail carriers and motor carriers, and a motor carrier based its rates on competitive considerations, the Supreme Court refused to base its decision as to the reasonableness of those rates on cost factors alone. In water transportation in foreign commerce, cost factors likewise vary between carriers of different national registry. Obviously the differences in costs of operation require carriers to take competition, as well as costs of operation, into consideration in fixing rates. We consider dual-rate contracts to be, in nature, highly analogous to volume discounts; although a shipper does not promise to ship a specific amount of cargo, the expression of his obligation in terms of percentages gives the conference lines as great an assurance of a basic core of cargo on which to rely in planning future vessel requirements as that which would result from a promise to ship a specific amount of cargo within a given period. The parties contract with awareness of the past and probable future needs of the shippers, and those needs are identical, whether or not specified. Further, the volume-discount nature of the dual-rate contract is free from the discrimination in volume contracts contemplated in section 14, Fourth, of the Act since the identical discount is available to all shippers, large or small. It was this type of contract which our predecessor, in Eden Mining, supra, took pains to distinguish in condemning a particular dual-rate system. But even if we should assume that dual-rate contracts are not as sured-volume discounts, and if we should assume that such contracts would be violative of the principles of the ICA, we nevertheless must consider decisions under section 2 of the ICA inapplicable here. Problems relating to foreign commerce, as hereinbefore discussed in connection with Gulf Intercoastal Rates and Swayne & Hoyt, create a peculiar difference in 'the questions to be considered, within the meaning of U. S. Nav. Co. v. Cunard, supra, for regulation of rates in domestic commerce, or the ability to regulate such rates, dispels the need for offsetting competitive rate-making measures. By the Transportation Act of 1920, the ICC was granted the power "so to fix minimum rates as to keep in competitive balance the various types of carriers and to prevent ruinous rate wars between them.” New York v. United States, 331 U. S. 284, 346 (1947). No power to fix rates in foreign commerce was granted to this Board. Further, unlike domestic transportation, where a certificate of convenience and necessity must be obtained by a new carrier prior to entry into a service, ocean carriers are entirely free to enter any field of competition. These peculiar differences between domestic and foreign transportation render inapplicable certain principles enunciated under the ICA in connection with domestic transportation, particularly where concerned with problems relating to one mode of transportation alone. Section 14 (3) Petitioners further argue that the Board has no authority to approve a dual-rate system under section 15 of the Act, since such systems are necessarily unlawful under section 14 (3). They argue, first, that the dual-rate system is necessarily retaliatory against nonsigning shippers, and, second, that the absence of the modifying word "unjustly" preceding the word "discriminatory" makes unlawful any retaliation by discriminatory methods and not merely those methods which are "unjustly discriminatory." As to the first argument, we cannot improve on an answer previously made to this contention in Isbrandtsen Co. v. N. Atlantic Continental Frt. Conf. et al., supra, where it was said at page 242: To retaliate is defined in Webster's New International Dictionary, 1945 Unabridged Edition, as "to return like for like" or "evil for evil." Retaliation perhaps connotes the idea of vengeance. *** We cannot view the adoption of the dual rate system or the charging of a higher rate to a shipper who voluntarily declines to give his exclusive patronage as a "retaliation." The higher rate cannot be said to be charged as a retaliation for "patronizing any other carrier." It is charged because the shipper does not sign the contract, regardless of whether or not he patronizes any other carrier. A nonsigning shipper who does not patronize a nonconference carrier is treated as harshly as a nonsigning shipper who ships partially or exclusively with such a carrier. The second argument is equally untenable." As stated in United States v. Wells-Fargo Express Co., 161 Fed. 606, 610 (1908), "It is difficult to conceive of the terms 'discrimination,' 'prejudice,' or 'disadvantage' as not associated with what is unjust, unreasonable, and undue." From the administrative precedents and judicial decisions hereinbefore discussed, and from the legislative history of the Act, we necessarily conclude that the dual-rate system is not in itself unlawful. The lawfulness or unlawfulness of a particular dual-rate system depends directly on the facts adduced in a hearing on the merits of the use of that system in the particular trade, and is judged by the standards announced by the Supreme Court in Swayne & Hoyt v. United States, supra, repeated here for emphasis: In determining whether the present discrimination was undue or unreasonable the Secretary was called upon to ascertain whether its effect was to exclude other carriers from the traffic, and if so, whether *** it operated to secure stability of rates with consequent stability of service, and so far as either effect was found to ensue, to weigh the disadvantages of the former against the advantages of the latter. 35 We construe this language, as have our predecessors, as requiring us to consider the reasonableness of the prima facie discrimination * against shippers inherent in dual-rate systems in the light of the necessity for that discrimination in order to effectuate the congressional plan for shipping in the foreign commerce of the United States. As previously indicated herein, Congress chose the controlled monopoly of the conference system over the alternative of the uncontrolled monopoly naturally resulting from unregulated cutthroat competition among ocean carriers." In Swayne & Hoyt v. United States, supra, the Supreme Court recognized necessity for the use of a "dual rate system" in order to assure the continued benefits of a regulated conference system as a standard for determining the reasonableness or justice of the prima facie discrimination resulting there from, in stating at page 305: We think there was evidence from which the Secretary could reasonably conclude that there was little need for a contract rate system to assure stability of service. [Emphasis supplied.] It is inconceivable that Congress, in selecting a regulated conference system in preference to unregulated cutthroat competition, would have outlawed a system which in many cases is the sole method by Assuming, as argued by Isbrandtsen, that the phrase "unjust discrimination" appearing in sections 15 and 17 of the Act renders dual-rate systems illegal per se, this argument is totally unnecessary. 85 Swayne & Hoyt v. United States, supra, at page 303. See discussion in 4 Alexander Report 417-421. |