Historic Decision

The geographic shape of the U.S. was drastically altered last week just as effectively as it could have been done by a convulsion of nature. It was done by a 9-to-2 decision of the Interstate Commerce Commission. The South and West were brought nearer to the center of the nation and the Northeast was moved farther away. The ICC thus rearranged the U.S. by its decision to equalize freight rates, on a mileage basis, between all sections of the country except mouritain-Pacific territory.

The abolition of the higher rates to the South and West was a clear-cut victory for Georgia's energetic Governor Ellis Gibbs Arnall, who last June carried the South's case to the Supreme Court (TIME, April 9). It was also a victory for Attorney General Francis Biddle, who last September filed suit against a roster of the railroads operating west of the Mississippi.

The ICC, with its usual thoroughness, presented the railroads with a massive document that traced the history of the rate battle back to 1887. In effect, the ICC ruled that wherever manufacturers are situated -- in the South, West, or East -- at the same distance from a given point, they would each pay the same rate. This cracked at one blow the freight rate structure, which has influenced the economic distribution of industries, and set up a new structure which may make some of the existing distribution uneconomic.

Having dropped this blockbuster, the ICC gave carriers 90 days to appeal and submit proposals for the new rates. The weary Commissioners were prepared for a barrage of protests from northern railroads, chambers of commerce, trade associations and shippers.

But to let the country and the courts know that it meant business, ICC ordered an interim adjustment in rates. Well aware that the rate hearings could drag on indefinitely, the ICC ruled that, effective Aug. 30, rates in the South and West will be reduced 10%, while rates in the Northeast will be increased 10%.

This last device showed a serious weakness in the change. There is no sound economic reason why the rates in the East should be raised, since the railroads serving that area are doing very nicely at present.

The reason for this rate-raising is that the railroads of the South and West, having much less traffic, presumably could not bear equalization if it were achieved entirely by cutting their rates. Thus equal economic opportunity for the South and West is to be secured, not by their taking two steps forward, but by their taking one step forward and the East taking one step back.

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