gins and destinations here involved, and prescribed differentials for such routes 10 or 20 percent less than the lowest rates contemporaneously applied on corresponding traffic over rail routes from and to the same points. It is proposed to make these rates subject to an intermediate rule and apply them as maxima from all intermediate origins to Houston, and to apply rates on the classification basis to intermediate points, except that where lower rates can be constructed by use of the proposed rates to Houston plus the classification basis to intermediate destinations such lower combinations will apply.

Under the proposed adjustment, departures would occur on direct and indirect routes at intermediate destinations, on traffic from both the more distant points and intermediate points. The following examples are representative. From Louisville to Houston the distance over the direct route through Memphis is 930 miles and the proposed rate is 80 cents. To Memphis and to Gish, Tex., higher-rated intermediate points, 377 and 921 miles respectively from Louisville, rates of 81 and 97 cents would apply. The same rate from Louisville would also apply over the indirect route of the Baltimore and Ohio Railroad Company to East St. Louis, Ill., and the Missouri-Kansas-Texas Railroad Company, 1,407 miles, or 50 percent circuitous. Over this route the proposed rate would yield earnings of 11.4 mills per ton-mile and, based on a minimum of 36,000 pounds, 20.5 cents per car-mile and $288 per car. Evidence of record indicates that the proposed rates are reasonably compensatory.

Generally the same class of tobacco manufactured at Louisville, St. Louis, and Middletown is also manufactured at the North Carolina-Virginia origins, but apparently not all classes are manufactured at each of the respective points. For example, cigarettes are not manufactured at intervener's plant at Middletown. The products are shipped in carloads and distributed to final destinations in lessthan-carload lots. Approximately 2,275,000 pounds of smoking tobacco move annually from Middletown to Houston. Usually it has moved by truck-barge-ocean route by way of Cincinnati and New Orleans, except that in 1936, during the period of floods and strikes on the barge route, it moved rail-ocean by way of Norfolk until strikes on that route forced the traffic to the rail lines. When normal conditions were restored, shipments by truck-barge-ocean were resumed, except that an occasional shipment is made by rail-ocean as a matter of courtesy to the steamship lines. As indicating that the traffic would move all rail if the 85-cent rate be established, the Middletown intervener stated that when that rate was approved by applicants six carloads were shipped by all rail, but, due to delay in filing applications for relief from section 4 of the act, the traffic was again returned to the truck-barge-ocean route.

From Middletown the transportation is either by the C. & D. Motor Delivery Company or the Cincinnati & Lake Erie Railroad Company (electric line) to Cincinnati, Mississippi Valley Barge Line to New Orleans, and the Mooremack Gulf Lines, Incorporated, to Houston. The barge equipment consists of three towboats and approximately 80 barges operating a weekly tow for merchandise service. The ocean service is generally performed with a steamship of 1,658 tons capacity, and other ships are supplied when necessary. The time in transit over the water route is approximately 10.5 days. The Mississippi Valley Barge Line also serves both Louisville and St. Louis, it publishes rates from these points and holds itself out to transport the traffic to Houston. From Louisville the traffic is now moving all rail, the volume shipped by rail last year being 36 carloads. As hereinbefore explained, the rate of 80 cents from the North Carolina-Virginia origins to Houston is applied over certain routes from Louisville under an intermediate rule. It is stated for the manufacturer at this point that the traffic will continue to move by rail as long as the rate from Louisville is no higher than from the North Carolina-Virginia origins. Otherwise this manufacturer will be forced by competition to ship by the barge-ocean route. There is no evidence with respect to the volume of these commodities shipped from St. Louis, the record indicating that shipments are moving by all-rail routes, but it is not shown whether they also move by barge-ocean routes. Applicants state that the manufacturer at this point seeks the establishment of the same rate to Houston that applies from the North Carolina-Virginia origins.

While market competition is alleged to justify the relief sought from these inland points, the facts as to such competition and its effect upon applicants' rates have not been shown. The disadvantage of these points with respect to the rail rates from the North Carolina-Virginia origins results from ocean and rail-ocean competition through Norfolk, which also exists, although in a substantially lesser degree from Middletown but does not exist from either Louisville or St. Louis. The fact that the rail rates are below normal from the North Carolina-Virginia origins does not warrant the granting of relief to depart from the long-and-short-haul provision of section 4 with respect to traffic from points not subject to the same competition.

No justification has been shown for maintaining the proposed rates from the more distant points as maxima from intermediate points and higher rates from such intermediate points to intermediate destinations.

As will be noted from the foregoing table, the proposed rates on smoking tobacco from Middletown are 4 cents higher than the truck

barge-ocean rates to Houston, while from St. Louis and Louisville the proposed rates are 2 cents on smoking and plug tobacco and 11. cents on cigarettes lower than the competitive rates. No justification has been shown for maintaining, over all-rail routes, rates lower than by the competitive barge-ocean routes. As stated on page 287 of the prior report on further hearing, while we have customarily authorized relief only in rates which made proper allowance for disadvantages of water services, if any, the amount of the differential depends entirely upon the circumstances of each case and it is not mandatory that any differential be imposed, provided the rate authorized for the rail carriers be not lower than necessary to meet the competition. The relief there authorized in applications Nos. 15521 and 16416, with respect to these commodities from the North Carolina-Virginia origins to Houston, was limited to rail rates 9.5 and 19.5 cents higher than the water or rail-water rates from and to the same points and, as hereinbefore stated, differentials from 10 to 20 percent less than the lowest rail rates were prescribed in Mississippi Valley Barge Line Co. Application, supra, for application over rail-barge-rail routes from and to points in the territory here considered. Applicants point out that, under the formula prescribed in the latter proceeding, it will be necessary to establish, over railbarge-rail routes, rates 80 percent of whatever rates are established as the result of the decisions in these applications. This fact does not justify the relief sought, but rather emphasizes the futility of reducing the rail rates.

It also appears that certain of applicants' routes from Louisville, St. Louis, and Middletown are through points on the Mississippi River, such as Memphis and New Orleans, which also have the benefit of barge transportation. In certain instances the proposed rates to Houston are lower than to such intermediate points. For example, it is proposed to continue the present rate of 96 cents from Middletown to New Orleans, a carload-distributing point, and to apply the 85-cent rate to Houston over certain routes through New Orleans. In justification of such departures, applicants explain that the truck-barge line also maintains a higher rate from Middletown to New Orleans than to Houston, although the measure of the rate is not disclosed. From Middletown to New Orleans the rail-barge rate is 77 cents, constructed 80 percent of the present rail rate of 96 cents from and to the same points. The present rates to New Orleans from Louisville and St. Louis respectively are by barge 64 and 67 cents and by rail 80 and 84 cents, whereas, with the proposed rates from these points to Houston the rate is 80 cents. Applicants state that the rail rates to New Orleans are made with relation to the rates from Chi

cago, and that, unless relief be granted as to New Orleans, a like reduction in the rates from Chicago will be necessary, which would destroy the existing adjustment as between these points. The record in this proceeding does not justify maintenance, from or to intermediate points also served by the competing barge or truck-barge routes, of rates differently related to the barge or truck-barge rates than those at the more distant points.

Subject to the conditions hereinafter imposed, applicants in Nos. 16775 and 16776 will be authorized to establish and maintain, over existing routes to Houston, from Louisville and St. Louis, for the transportation of cigarettes, smoking tobacco (tobacco with paper wrappers), and plug tobacco, in straight or mixed carloads, minimum 36,000 pounds, with or without cigarette papers, pipes, or twist tobacco, as described in application No. 16775, and from Middletown, for the transportation of manufactured tobacco, cut or granulated, smoking, with or without cigarette papers, as described in application No. 16776, in carloads, minimum 40,000 pounds, rates constructed on the basis of 125 percent of rates contemporaneously in effect over the competing barge-ocean carriers and their connections, but not less than the rates proposed in the respective applications, and to maintain higher rates from, to, and between intermediate points; provided (1) that the rates from, to, and between higher-rated intermediate points also served by competing barge or truck-barge routes shall not exceed rates constructed in relation to the barge or truckbarge rates contemporaneously in effect from and to such points in the same manner as the rates authorized herein to Houston, and from, to, and between other higher-rated intermediate points, the rates shall not be increased, except as may hereafter be authorized by the Commission; (2) that the rates at such higher-rated intermediate points shall not exceed the lowest combination of rates subject to the act; and (3) that the relief shall not apply to circuitous lines or routes where the distance over the short line or route (a) is 1,000 miles or less and the longer line or route is more than 50 percent circuitous, and (b) exceeds 1,000 miles and the longer line or route is more than 333 percent circuitous, except that where the distance over the short line or route exceeds 1,000 miles and the distance over the longer line or route does not exceed 1,500 miles, relief will apply to such longer line or route even though it is more than 33% percent circuitous. Since relief is not based on circuity the equidistant provision of section 4 will not be imposed. All other and further relief will be denied.

An appropriate order will be entered.

INVESTIGATION AND SUSPENSION DOCKET No. 4380

RECEIPT AND DELIVERY SERVICE AT EASTERN PORTS

Decided May 2, 1938

On reconsideration, finding in prior report, 225 I. C. C. 789, that certain schedules proposing to restrict ocean-rail class rates now in effect between north Atlantic ports and points in the Southwest over routes through south Atlantic and Gulf of Mexico ports, so that they will apply only from and to docks or piers at those north Atlantic ports, were justified, reversed. Schedules ordered canceled and proceeding discontinued.

B. F. Batts, A. L. Burford, C. S. Burg, W. E. Davis, Wallace T. Hughes, H. H. Larimore, R. S. Outlaw, and J. E. Johanson for respondents.

A. P. Donadio and Alfred S. Knowlton for rail carriers supporting respondents.

Henry Thurtell, Horace L. Walker, J. R. Bell, and G. H. Muckley for protestants.

Walter H. Brusche, W. W. McCoubrey, W. H. Chandler, H. J. Wagner, and Chas. R. Seal for various steamship companies and civic bodies supporting protestants.

REPORT OF THE COMMISSION ON RECONSIDERATION

BY THE COMMISSION:

In the prior report, 225 I. C. C. 789, decided January 27, 1938, division 3 found that certain schedules proposing to restrict the ocean-rail class rates now in effect between north Atlantic ports and points in the Southwest over routes through south Atlantic and Gulf of Mexico ports, so that they will apply only from and to docks or piers at the north Atlantic ports of steamship lines participating in those routes and not include any service or expense embraced in the delivery of traffic to or from those docks or piers, were justified. The suspension order was vacated and the proceeding was discontinued. On petition of protestants, in which the interests supporting them join, we reopened the proceeding for reconsideration, vacating and setting aside our previous vacation order. In a later petition we are asked to permit the Ocean Steamship Company of Savannah (a protestant in the original proceeding) to become a party petitioner. The prayer is granted. Although the suspension period expired February 22, 1938, respondents have voluntarily postponed the effective date of these schedules until June 20, 1938.