Note 34 — Chapter VII · THE INTERSTATE COMMISSION.

In many cases the direct rate between two points, X and Y, was found to be greater than the combination of the rate from X past Y to a competitive point Z and the local rate back from Z to Y. For example, goods could be shipped from the Pacific coast to Kansas City and then back to points west of Kansas City more cheaply than they could be sent direct from the coast to these intermediate points. This enabled a shipper informed of the combination rates to get an advantage over one with less information who relied on the published tariffs stating the rates between his place of business and the points to or from which his shipments were to be sent. The Commission took up this matter in 1887 and the traffic managers of the roads agreed to revise their tariffs so that the direct local rate should in no case exceed the through rate plus the local rate back from the terminus or competitive point. This rule resulted in many material reductions of the rates to intermediate points; for example, the points between Denver and the Missouri River on the lines controlled by the Southern Pacific. See Martin v. Southern Pacific R.R. I. C. C. Decisions, vol. 2, 1888, pp. 1, 4.