sense of the word true that these defendants in naming a rate of 93 cents on cotton piece goods from New York to Kansas City simply meet a rate which they find in effect and which they have not been instrumental in producing. They must make that rate or they must entirely withdraw from the business.

The Supreme Court of the United States has held, in cases too well known to require citation, that where a carrier is forced to establish a particular rate at the more distant point by competitive conditions which it does not control there arises out of this fact such a difference of circumstance and condition as exempts the carrier from the prohibition of the fourth section. It would be difficult to imagine a case which would more justly require the application of this holding of the Supreme Court than the one before us. We can not, therefore, direct the defendants to make no higher rate to Wichita than they apply at Kansas City.

Nor would the complainants in all probability derive any benefit from such an order if one were made. The testimony shows that comparatively little traffic moves from the Atlantic seaboard through the Gulf either to Wichita or to Kansas City. If these defendants. operating through Wichita were required to make no higher rate to the Missouri River than to intermediate points, their only course would be to withdraw from the Missouri River business and thereby avoid breaking down their rates to points south of Wichita to which they do carry traffic. These rates can not be readjusted, therefore, upon the theory that they are in violation of the fourth or the third section.

It is equally manifest that the situation can not be remedied by any legitimate change in rates from the east to Kansas City and to Wichita. What the complainant desires is not a reduction of the rate to Wichita, but a reduction of the difference in rate between Kansas City and Wichita. If the rate from New York to St. Louis were to be reduced the complainants would be in no respect benefited, since that reduction would apply equally at Kansas City and at Wichita. This is also true of a reduction between St. Louis and Kansas City. Here, again, the price at which these two localities could own their cotton piece goods would be equally affected. A reduction from Kansas City to Wichita would not benefit the complainants, for while the complainants might obtain their goods cheaper, the Kansas City merchant would be able to distribute his goods upon a rate proportionately less than before. None of these reductions would change the relation between these two points.

This would be accomplished by making a through rate to Wichita less than the combination upon Kansas City. We have already seen that the all-rail rate from St. Louis to Wichita is 96 cents, as against

a combination of $1, and we have further seen that the through oceanand-rail rate from New York to Wichita is 14 cents less than the combined local rates. If we were prepared to disregard the Mississippi and Missouri rivers as basing lines, it is doubtful if we could properly establish a through rate lower than the sums of the locals by more than that already in effect.

All this is but another way of saying that the only relief for which the complainants can hope must come through a reduction of the rate via Galveston to Wichita. The only question which is fairly open in this case is upon the reasonableness of this rate. These complainants, if rates are to be established with reference to the east, are enjoying as favorable an adjustment as they can expect. Does their location, with respect to Galveston and the Gulf, entitle them to more favorable transportation charges from the northern Atlantic seaboard than those in effect upon the commodities in question?

The complainants contend that the rate via the Gulf to Wichita ought not to exceed that to Kansas City from the east, nor is this proposition so absurd as the defendants would make it appear.

It is true that the distance from New York to Wichita via Galveston is 3,000 miles, twice as great as that to Kansas City, but it must be remembered that of this 3,000 miles, 2,300 is water, and that transportation by water over long distances is not as expensive as by rail. It is 10,000 miles from New York City to San Francisco through the Straits of Magellan, but cotton piece goods have been habitually carried over this route for from 60 to 70 cents per 100 pounds. They are to-day being transported between the same points, via the Tehuantepec route, for the same figure, involving a water carriage of 2,275 miles, a transfer and rail haul of 186 miles, and a second transfer and water haul of 2,280 miles.

It is quite probable that the actual cost of transporting cotton piece goods from New York to Wichita via Galveston does not exceed that of carrying them from New York to Kansas City via the cheapest route. The all-rail haul is to the latter point 1,300 miles and over. The ocean-and-rail movement involves a rail carriage of from 1,100 to 1,300 miles, depending upon the route selected. If the goods move through some Gulf port there is a rail carriage of not less than 850 miles. If, therefore, the rate were to be measured by the expense of the service, it is probable that Wichita would to-day enjoy as low a rate as the Missouri River.

This rate of $1.36 applies not only from New York, but from seaboard territory, which, broadly speaking, is that territory lying east of the Buffalo-Pittsburg line and north of the Potomac River. The goods move from the mill to New York upon the local rate, whatever that may be, and this rate is first paid or absorbed out of the

$1.36. It was said that this local charge from the mill to the seaboard would average 15 cents per 100 pounds, and there is in addition a cartage charge from the depot to the dock which amounts to about 3 cents per 100 pounds more, making a total of 18 cents which must first be deducted from the through rate, and which leaves $1.18 as the actual amount received by the line from New York to Wichita. Out of this is taken 5 per cent, or 6 cents, to defray the coast of marine insurance, and the balance, $1.12, is divided between the steamship and the railroad-35 per cent to the water and 65 per cent to the land. The rail carriers from Galveston to Wichita receive therefore 73 cents per 100 pounds for the transportation of these goods 700 miles.

Cotton piece goods are first class under the Western Classification, which obtains in territory west of the Mississippi River. The first class rate from Galveston to Wichita is $1.37. The Texas commission first class rate from Galveston to Fort Worth, 350 miles, is 80 cents. The first class through rate from New York to Wichita is $1.97. It is apparent, therefore, that this rate of $1.36 could hardly be pronounced unreasonable by comparison with the general level of rates prevailing in the territory through which it applies.

Rates to Wichita and similar points are generally determined by combination upon the Mississippi and Missouri rivers; that is, they are established from the east and are simply met by lines leading through Galveston. The complainants insist that this ought not to be so; that these southern Kansas towns, by reason of their proximity to the Gulf, are entitled to lower rates than those constructed from the east. It has already been suggested in this report that the actual cost of transportation from New York via Galveston to Wichita is not materially greater than to Kansas City, and while we are not prepared to hold that, for this reason, rates to Wichita should be reduced to a level with those of Kansas City via other routes, the fact is entitled to be weighed in disposing of this question.

There is also in this case an element of competition which must be dealt with. Wichita competes in the selling of these products with Kansas City and that fact must be, to an extent, considered in the establishment of these rates. Competition is universally considered by railways themselves in the rates which they voluntarily make, and it must, within certain limits, be taken into account by us. In Johnston-Larimer Dry Goods Company v. Wabash Railroad Company et al., 12 I. C. C. Rep., 60, we declined to disturb a rate. of 66 cents upon cotton piece goods from Kansas City to Wichita, although that rate, in every sense, is extremely high, since no particular individual or locality was injured; while in Johnston-Larimer Dry Goods Company v. Atchison, Topeka & Santa Fe Railway Com

pany et al., 12 I. C. C. Rep., 55, we required the establishment of a rate of 50 cents from producing points in Texas to Wichita for a distance twice as great, upon the ground that Wichita and Kansas City were competitors in this business. So, in the present case, we feel that this competitive element is entitled to some consideration, and that especially in view of the less expensive route via the Gulf, the differential against Wichita should be less than the full local from Kansas City to Wichita.

Knit goods are first class in the Official, Southern, and Western Classifications. The ocean-and-rail rate from New York and seaboard territory to Kansas City is the regular first class rate of $1.38. The rate to Wichita is $1.641. The local rate from Kansas City to Wichita is 66 cents. It will be seen that under the present adjustment the difference between Kansas City and Wichita against Wichita is only 26 cents, almost 40 cents less than the full local. We feel that this is as favorable a rate upon this commodity as Wichita can expect in comparison with the rate to Kansas City.

In Johnston-Larimer Dry Goods Co. v. New York & Texas Steamship Co. et al., 12 I. C. C., Rep. 58, we approved a rate on knit goods, from seaboard territory, of $1.61 to Wichita, as compared with $1.31 to Topeka. This decision was based upon the existence of a lake-andrail rate from Syracuse and other producing points to East St. Louis of 42 cents. This latter rate was not in effect during the season of 1907 and is not now in effect, so that the rates of the Santa Fe should be canceled or modified.

The Official Classification classifies cotton piece goods under Rule 25, second class, less 15 per cent. Under Southern Classification this commodity moves practically at the third and fourth class rates, but under the Western Classification it is first class. It should be noted, however, that while the first class rate from St. Louis to Kansas City is 60 cents, the rate upon cotton piece goods is but 35 cents, although that territory is within the limits of the Western Classification. The rate from New York to Kansas City is but 93 cents upon cotton piece goods, as against $1.38 upon knit goods. From an operating standpoint cotton piece goods are in every sense much more desirable traffic than knit goods. We feel that the rate from Atlantic seaboard points should be distinctly lower than that upon knit goods, and that the differential against Wichita, as compared with Missouri River, ought not to be materially greater. In our opinion the present rate of $1.36 via the Gulf lines is excessive, and we find that a rate of $1.25 would be just and reasonable to apply for the future.

Our conclusion leaves the rates to Wichita upon knit goods as they are and makes but a slight reduction in the rate upon cotton piece goods. It is with some regret that we have felt obliged to deny the

prayer of the complainants for an equal rate with Kansas City, for it sanctions an apparent discrimination against Wichita; but the careful student of the situation must see that this springs not from the voluntary action of the carriers, but rather from the situation of Wichita itself. Whether these rates are constructed from the east or from the south, that city stands at about the apex. In course of time conditions may justify a reduction of these rates through the Gulf, but for the present we hold that upon the existing basis of rates and under normal conditions the differential upon these two commodities against Wichita may properly equal 27 and 32 cents per 100 pounds. We do not extend this holding to class rates nor to other commodities.

An order will be issued accordingly against those of the defendants which operate via Galveston.

13 I. C. C. Rep.