The evidence as to whether complainants have competitors at the alleged preferred points which use their storage-in-transit arrangements in shipping into the territory complainants desire to reach, is meager and indefinite, being made up largely of general statements and conclusions, and is mostly hearsay. A witness for the Beaumont complainant stated that a Lake Charles interest handles considerable flour on a storage basis. The president and manager of the Lake Charles interest admitted competition with the Beaumont complainant's branch house at Lake Charles. A witness for the El Campo complainant stated that quotations had been made by a competitor at Marshall on shipments of flour and mixed feeds. A witness for the Beaumont complainant stated that they had to shrink profits if they desired to meet competition. The witness for the Orange complainant said "our condition at Orange is the same as the present condition at Beaumont and Sugar Land," and that "on account of the storage-in-transit privilege at the points named in the complaint we are unable to reach the same territory as our competitors."

The Beaumont complainant's branch at Lake Charles is primarily a wholesale grocery house. Some transited flour is shipped out by this branch in competition with other Lake Charles interests, but its manufacturing facilities are very limited, and most of the mixed feed shipped from that point must be first brought from the Beaumont plant.

Wheat may be milled at Beaumont, El Campo, Orange, and Sugar Land and the product shipped out at the remainder of the through rate. If complainants had flour mills they could utilize this milling-in-transit arrangement and ship out flour in mixed carloads with grain and grain products at a saving in the freight charges. They would thus accomplish the same results as if the storage-intransit arrangement on flour here sought were in effect. Millers at points in the Southwest other than those here considered use their milling-in-transit arrangements and ship out flour from the transit points in mixed carloads with grain and grain products to the same destination territory to which complainants ship or desire to ship. They compete with complainants in the sale of flour, and this may be the cause of some of the difficulty complainants experience in marketing their goods.

Defendants and intervening Texas milling interests oppose the relief sought. They fear that the practice of permitting storage in transit on flour will become more general throughout the Southwest and that such a situation would operate to their detriment. They now have arrangements for inspection, storage, milling, and mixing of grain or certain of its products other than flour, which

they regard as in the public interest, but see no commercial or economic necessity for storage in transit on a finished product like flour. There are practically no flour mills in Louisiana and those opposing the complaint believe there may be justification for the existence of storage in transit there, as there is no way to serve the trade other than by distributing flour through the broker or jobber and then to the retailer. On the other hand, the present system of distributing flour in Texas has been built up during the past 50 to 75 years. The 35 or more flour mills in that State distribute most of their output direct to the large consumers and retailers, the remainder being handled through flour jobbers. A more general adoption of the practice of permitting storage in transit on flour would increase the amount sold through middlemen, such as complainants, and would necessitate increased handling. Defendants assert that there are few storage-in-transit arrangements now in effect on manufactured articles, and where they are permitted, in Texas at least, they have resulted from competition, in many cases a charge being made for the storage service in addition to a switching charge. These milling interests believe that if these additional services are required of the carriers they will create an additional transportation burden which will ultimately result in increased freight rates. The increased use of storage-in-transit arrangements on flour would tend to reduce the carriers' less-than-carload traffic on this commodity. Complainants admit that elimination of such arrangements on flour at the alleged preferred points would not be satisfactory. They desire extension and not elimination of the service, but there is no evidence that flour is not now moving freely in the territory here considered.

We find that the failure of defendants to provide storage in transit on flour at Beaumont, El Campo, Orange, and Sugar Land is not unreasonable or unduly prejudicial. The complaint will be dismissed.

157 I. C. C.

No. 204621

COLONIAL SALT COMPANY ET AL. v. CHICAGO & ERIE RAILROAD COMPANY ET AL.

Submitted June 20, 1929. Decided August 15, 1929

1. Rates on salt, in carloads, from Akron, Wadsworth, and Cleveland, Ohio, and Detroit and St. Clair, Mich., to destinations in Missouri and the Southwest found unreasonable. Reasonable rates prescribed. Reparation denied.

2. Intrastate stoppage-in-transit arrangement in Missouri not shown to be violative of section 13 of the interstate commerce act.

3. Proposed rates on salt, in carloads, from points in Michigan, Ohio, Indiana, and New York to destinations in Texas found not justified. Suspended schedules ordered canceled and proceeding discontinued.

W. J. Tomkins for complainants and protestants.

John R. Baker for Armour & Company and subsidiaries; R. D. Rynder for Swift & Company; W. T. Hickerson for American Salt Corporation; Barton Salt Company; Carey Salt Company; and Western Salt Company; and H. G. Legan for Morton Salt Company. M. B. Pierce and L. H. Strasser for central-territory carriers; H. H. Larimore, A. B. Enoch, G. H. Muckley, M. G. Roberts, R. S. Outlaw, E. A. Boyd, G. E. Duffy, and H. C. Barron for southwestern carriers; E. Rigg for Chicago, Rock Island & Pacific Railway Company and Chicago, Rock Island & Gulf Railway Company; S. C. Inkley for St. Louis-San Francisco Railway Company; and F. B. Clark and J. E. Dimond for Missouri Pacific Railroad Company. REPORT OF THE COMMISSION

DIVISION 3, COMMISSIONERS AITCHISON, TAYLOR, AND PORTER BY DIVISION 3:

Exceptions were filed by complainants and defendants to the report proposed by the examiner.

In No. 20462, by complaint filed December 31, 1927, several salt producers allege that the rates on salt, in carloads, from Akron, Wadsworth, and Cleveland, Ohio, and St. Clair, Mich., to destinations in Missouri, Arkansas, Louisiana, Oklahoma, and Texas were and are unreasonable and unduly prejudicial compared with interstate rates from producing points in Kansas, Louisiana, and Texas;

This report also embraces Investigation and Suspension Docket No. 2976, Salt from St. Louis, Mo., and Related Points to Texas.

and that the intrastate rates on the same commodity in Louisiana and Texas, and a stop-over privilege maintained within Missouri, permitting partial unloading, were and are unjustly discriminatory and unduly prejudicial to interstate commerce. Reparation and lawful rates for the future, including reasonable minimum rates, from Kansas, Louisiana, and Texas points to the destinations under consideration are sought. At the hearing Detroit, Mich., was added as a point of origin, except as to reparation. Rates will be stated herein in amounts per 100 pounds.

In I. and S. No. 2976, by schedules filed to become effective September 10, 1927, respondents propose increased and reduced rates on salt, in carloads, from points in Michigan, Ohio, Indiana, and New York to destinations in Texas. Upon protest of several producers, we suspended operation of the schedules until April 10, 1928. They are now under voluntary suspension pending our decision here. The principal change proposed is an increase of 1.5 cents to Texas common points, the present basing rate from East St. Louis being 41.5 cents and the proposed rate 43 cents. There would be some substantial reductions to points in western Texas.

Salt is a low-grade heavy-loading commodity, rated class C in western classification, but usually accorded commodity rates much lower than class C rates. All the rates from the points in official classification territory are commodity rates less than the combinations of locals. They are generally made on differentials over the basing rates from East St. Louis, Ill., or other gateways. The differentials to East St. Louis, the principal gateway, on traffic to the Southwest range from 11.5 cents to 16 cents. They represent the divisions accruing to the lines to East St. Louis on that traffic. The local rate from eastern Michigan points to East St. Louis is 22 cents. Closely related locals apply from the other producing points in official classification territory.

The present and proposed rates greatly exceed those for similar distances in the scale prescribed for application after May 22, 1925, on salt from Kansas producing points to destinations in the Southwest in Salt Between Western and Southwestern Points, 120 I. C. C. 91, 128 I. C. C. 431, and 144 I. C. C. 428, and Perryton Equity Exch. v. Atchison, T. & S. F. Ry. Co., 152 I. C. C. 251. From East St. Louis they are on the average about 33 per cent higher. The prescribed scale is now applied not only from Kansas but also, for competitive reasons, from Louisiana and Texas producing points to southwestern destinations. Complainants and protestants seek rates. on about the same level as those in that scale. They would be satisfied with them notwithstanding the fact that transportation conditions affecting the hauls as far as East St. Louis are much more favorable

than those in the Southwest. The carriers urge that the prescribed scale is near the point of confiscation and too low for application even from official classification territory to the Southwest. They filed five petitions for reopening the case in which it was prescribed. All of them were denied, however. The scale must be accepted as a fair standard by which we may judge the rates from and to the points under consideration. Moreover, as southwestern producers ship on this scale their competitors in official classification territory are entitled to rates made with proper relation thereto. We are of the view, however, that the rates from official classification territory should conform to the general adjustment prescribed in the Consolidated Southwestern Cases. In this connection we observe that the salt scale above mentioned, which extends to 1,000 miles, approximates for similar distances the column 16 basis of rates prescribed in those cases for the Southwest.

We find that the rates assailed are and for the future will be unreasonable to the extent that they exceed or may exceed the column 16 rates approved in the southwestern revision mentioned from and to the same points. The establishment of these rates will remove the unjust discrimination and undue prejudice alleged to result from the present rate structure. No reason appears for prescribing minimum rates from the southwestern producing points. There is no competent testimony by qualified witnesses as to the payment of freight charges, and reparation is accordingly denied.

A stoppage-in-transit arrangement applicable within the State of Missouri, required by the legislature, permits partial unloading of carload shipments of salt and a few other commodities. It may be used by St. Louis interests in distributing into the State in competition with complainants. There is some testimony in the form of general statements and conclusions to the effect that this arrangement is injurious to interstate shippers, but there is not that proof which the law requires as a basis for setting aside the action of State authorities. Upon an adequate record in Southwestern Milling Co. v. A., T. & S. F. Ry. Co., 146 I. C. C. 395, the arrangement, in so far as it applied on grain and grain products, was required to be canceled.

An order will be entered requiring the establishment of rates for the future on the basis indicated; and also requiring the cancellation of the suspended schedules and discontinuing the proceeding.

157 I. C. C.