and Oregon, chambers of commerce of Olympia, Seattle, Tacoma, Hoquiam, Aberdeen, and Spokane, Wash., and Salem, Oreg., Spokane Merchants' Association, Portland Traffic Association, Columbia Empire Industries, Department of Public Service of the State of Washington, and many others, operation of the schedules was suspended until July 15, 1938. Rates and charges will be stated in amounts per 100 pounds.

The rates now in effect on malt liquors in cans, bottles, or other containers, to Pacific coast points are:

The carriers do not propose to change these rates in any way. What is proposed is an additional rate of 80 cents from the four points named, on "Liquors, malt, including Ale, Beer, Beer Tonic, Porter or Stout, in tin or glass, boxed," minimum weight 60,000 pounds. The proposed schedules also provide that, subject to a minimum weight of 60,000 pounds for the entire shipment, beer in kegs and barrels and in "tin or glass, boxed" may move at the proposed rate of 80 cents on the weight of the beer in cans or glass, and rates of 89 cents from St. Louis and 93 cents from Peoria, Chicago, and Milwaukee on the weight of the beer in kegs or barrels. The proposed rate is published to apply as maximum from points of origin intermediate to those named and also to intermediate destinations. Under both the present and proposed rates shipments may be stopped for partial unloading at a charge of $6.30 for each stop. The proposed lower rate was published to enable the midwestern brewers to meet the competition of local brewers and to meet water competition from St. Louis and Peoria.

Beers produced at St. Louis, Peoria, and Milwaukee have a nationwide distribution and in the destination territory here considered they compete with beers produced in that territory. In 1937 there were 38 breweries operating in California, 6 in Oregon, 17 in Washington, 5 in Idaho, 10 in Montana, 2 in Nevada, and one in Arizona. Beer from the local breweries generally moves by truck, except for long hauls, notwithstanding numerous reductions in the rail rates in an attempt to hold the traffic to the rails. For example, the rail movement between Los Angeles and San Francisco, Calif., 468 miles, under

76405-39-vol. 227-34

a rate of 25 cents, comprises less than 10 percent of the total movement. Only one of the local breweries, located at Olympia, Wash., ships more by rail than by truck. Because of this truck competition and also water competition, the rail rates are very low between important points on the Pacific coast. An example is the rate from Los Angeles to Seattle, Wash., 1,287 miles, of 52.5 cents, minimum 30,000 pounds, yielding minimum car-mile earnings of 12.23 cents.

Beer in packages moves from St. Louis to the Pacific coast by water, mainly to Los Angeles and related southern California points. The barge-steamer rate from St. Louis to Los Angeles is 70.5 cents, minimum 50,000 pounds. There are additional charges for marine insurance, wharfage, and loading at, and transportation from, Los Angeles Harbor to the city, which, with the 70.5-cent rate, aggregate substantially the same as the proposed 80-cent rate. The bargesteamer rate from Peoria and Chicago is 4 cents higher than from St. Louis, but barge service from Peoria and Chicago is not available during the winter months. Milwaukee is not on the barge line, and the rail rate to Chicago, the nearest barge-line point, is 12.5 cents. Chicago and Milwaukee have made no shipments and Peoria but one experimental shipment over the barge-steamer route, and Chicago has made but very few shipments all rail to this territory.

The total all-rail movement of bottled and canned beer from the breweries of Anheuser-Busch, Incorporated, at St. Louis, PremierPabst Corporation at Peoria and Milwaukee, and Jos. Schlitz Brewing Company and Miller Brewing Company at Milwaukee, to California, Oregon, and Washington during 1937 was 48,045,169 pounds. In addition, they shipped 16,779,409 pounds to intermediate territory that would be affected by the proposed rate. The total water movement from the Anheuser-Busch brewery during the five months of 1937 that this route was used was 11,490,000 pounds. Of the 48,015,169 pounds shipped all rail, 13,754,940 pounds were shipped by the Premier-Pabst Corporation to the San Francisco, Los Angeles, and San Diego districts, which business, the record indicates, will hereafter probably move by water at a saving of about 9 cents per 100 pounds if the suspended rate does not become effective. Both the rail and water shipments to California, Oregon, and Washington totaled 59,535,169 pounds, which, on the basis of a weight of 25 pounds per case of 24 twelve-ounce cans and 2.25 gallons of beer per case, represents 172,844 barrels of 31 gallons each, as contrasted with 1,640,727 barrels of bottled beer sold in California by California brewers, 24,487 barrels of bottled beer sold in Oregon by Oregon brewers, and 318,677 barrels of bottled beer sold in Washington by

1 When shipped in bottles, the weight per case is greater.

Washington brewers during the year ended June 30, 1937, as shown by statistics of the Bureau of Internal Revenue, United States Treasury Department.

While the beers from St. Louis, Peoria, and Milwaukee compete with local beers in this territory, they sell at a considerably higher price than the local beers, and the margin of profit to the distributor is considerably less than in the case of the local beers.

Respondents show that over numerous representative routes from Chicago, Milwaukee, and St. Louis to Los Angeles, San Francisco, Portland, Oreg., and Seattle, for distances ranging from 2,023 to 2,814 miles, the suspended rate will yield minimum car-mile earnings ranging from 23.7 to 17.1 cents. The suspended rate yields higher earnings than the present rates, than the rate from Los Angeles to Seattle, heretofore referred to, than the present rates on canned goods from the Pacific coast ports to Detroit, Mich., and Pittsburgh, Pa., minimum weight 60,000 pounds, and than many of the rates approved in Pacific Coast Fourth Section Application, 165 I. C. C. 373 and 190 I. C. C. 273.

We find that the suspended rate has been justified. An order will be entered vacating the order of suspension and discontinuing the proceeding.

227 I. C. C.

AIR MAIL DOCKET No. 19

POSTAL REVENUE LIMITATION ON AIR MAIL RATES

Submitted April 29, 1938. Decided June 2, 1938

Method of, and periods for, ascertainment of “anticipated postal revenue" from air mail, and relation of such revenue to aggregate cost of transportation of air mail by airplane for fiscal year ending June 30, 1939, determined. Karl A. Crowley, Paul D. Page, Jr., and William C. O'Brien for Postmaster General.

Paul M. Godehn, Luther M. Walter, Gerald B. Brophy, William I. Denning, Hamilton O. Hale, A. Culbert, Francis D. Butler, H. Thomas Austern, J. Harvey Covington, and Howard C. Westwood for various air-mail carriers.

Edward G. Hamilton for pilots' association.

REPORT OF THE COMMISSION

DIVISION 3, COMMISSIONERS MCMANAMY, MAHAFFIE, AND MILLER BY DIVISION 3:

Exceptions were filed by the Postmaster General to the report proposed by the examiner and a reply was filed by the carriers.

By order of October 23, 1936, division 3 instituted on its own motion an investigation relating to that portion of section 6 (e) of the Air Mail Act, as amended, which directs that the Commission, in fixing fair and reasonable rates of compensation under section 6 (a) of the act

shall fix and establish rates for each route which, in connection with the rates fixed by it for all other routes, shall be designed to keep the aggregate cost of the transportation of air mail on and after July 1, 1938, within the limits of the anticipated postal revenue therefrom.

The proceeding was instituted with a view to the entry of an order or orders fixing and determining the method or methods to be used for ascertaining the anticipated postal revenue from domestic air mail, the period or periods for which such ascertainment should be made, and the postal revenue from domestic air mail which may be anticipated by the application of such method or methods for such period or periods beginning July 1, 1938.

All air carriers engaged in the transportation of domestic air mail were made respondents to the proceeding and the Postmaster General

was notified thereof. A hearing was held in December 1936. A study of the record then made disclosed that there had not been sufficient experience in operation under the present air-mail contracts to permit of the best compliance with this direction of section 6 (e), and the proceeding was accordingly reopened for further hearing in February 1938.

Method for ascertainment of revenue.-The evidence concerning a method or methods for ascertaining the anticipated postal revenue centers largely upon the cost-ascertainment system used by the Postmaster General for determining the revenues and costs of the various classes of postal service. Much of the carriers' evidence is directed to a criticism of the application of this system for the purpose of section 6 (e).

The cost-ascertainment system was established, after exhaustive investigation and study, under the authority of the act of February 28, 1925, and cost-ascertainment reports have been issued for each fiscal year beginning with the fiscal year 1926.1 Under this system the portion of total revenues and total expenses of the postal service assignable to individual classes of service are ascertained through an elaborate system of field tests and computations. As stated on page 2 of the report for the fiscal year 1937:

No separate accounting was made, or could be made, that would assign directly the amount of revenue from these general sources produced by each class of mail, and the segregation to classes has therefore been accomplished by processes of ratio and proportion based upon tests and counts conducted at representative post offices for periods selected to cover a monthly cycle of postal business and to reflect seasonal variations.

Allocations between the several classes of mail of the amounts assignable to all mail matter are based upon ratios developed through certain physical counts. Out of a total of 45,233 domestic post offices in the fiscal year 1937, for example, 296, representing 45.64 percent of the total postal revenues, were selected for the counts. Such counts were made during four selected "normal" periods, each of one week's duration. During that year the periods selected were September 21 to 27, 1936, November 30 to December 6, 1936, March 8 to 14, 1937, and June 14 to 20, 1937, both dates inclusive in each instance. In each of these periods the number of pieces of mail of each class originating at each of the 296 offices, and the amount of postage revenue thereon, were counted, and during the September period the total weight of the pieces in each class also was taken.

All post offices are divided into nine groups for the purpose of the cost-ascertainment reports. The first group consists of the 15 largest post offices in the United States. The next five groups embrace

1 All fiscal years mentioned in this report end on June 30 of the year named.