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The rates from Norfolk are lower in proportion to the distance than the rates in issue, as shown by the following table:

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The rates from Norfolk are the same as those from Baltimore to these destinations. The principal lines from Norfolk are those of the Chesapeake & Ohio Railway Company and the Norfolk & Western Railway Company. The former has its own line from Norfolk to Chicago via Cincinnati, extending through Indiana east of the Monon line, serving such points as Muncie, Marion, Peru, and Richmond, Ind. The Norfolk & Western extends from Norfolk to Cincinnati, with a branch from Portsmouth, Ohio, to Columbus, Ohio. These carriers maintain single-line rates from Norfolk to these points and participate with connecting carriers in joint rates from Norfolk to other points in Indiana east of the Monon line and to Ohio and Michigan points on a basis of rates lower than those from Port Wentworth and New Orleans.

The rates from Boston, New York, Philadelphia, Baltimore, and Norfolk to the northern destination territory east of the Monon line apply to transportation wholly within official territory. With certain exceptions not here important, none of the lines serving the southern refining points, except the Illinois Central,12 extend farther north than the Ohio River. Its main line extends from New Orleans to Chicago, with branches to Louisville, and to Indianapolis

12 The lines of the Louisville & Nashville Railroad Company and the Southern Railway Company extend across southern Indiana and Illinois to St. Louis. The line of the Mobile and Ohio Railroad Company extends northward from Mobile and Montgomery, Ala., crossing the Ohio River at Cairo, and extending northward through Illinois to St. Louis.

which is on the Monon line. The southern carriers cannot make joint rates to the destination territory east of the Monon line without the concurrence of the northern carriers, and the latter refuse to concur in joint rates from the South lower than the present rates, although they maintain both single-line and joint-line rates from the eastern refining and shipping points to the same territory on a much lower basis.

Neither the northern nor the southern carriers, nor any other party, introduced evidence showing the specific cost of transporting sugar.13 The northern carriers made no contention that the present sugar rates in either official or southern territory, with which the rates in issue are compared, are not fully compensatory.

As further bearing on the reasonableness of the assailed rates, those from New Orleans are now higher than they have been at any time since 1910. On August 15, 1910, the sugar rate from New Orleans to Fort Wayne was 24 cents. This rate remained in effect until June 29, 1917, when it was increased to 25.6 cents. On June 25, 1918, it was nearly doubled, being raised to 46 cents. Two years later, it reached its war-time peak at 61.5 cents, the 46-cent rate having been increased 333 percent, as authorized in Increased Rates, 1920, 58 I. C. C. 220. This rate, along with practically all other rates in the country, was reduced 10 percent July 1, 1922, to 55.5 cents. Reduced Rates, 1922, 68 I. C. C. 676. The latter rate remained in force for over 15 years, and was in effect at the time of the prior report herein. As previously explained, it was increased to 58.5 cents December 15, 1937, and to 64 cents, the present rate, April 18, 1938. Thus this rate is now higher than at any time since 1910 and is 2.5 cents above the 1920 peak.

This is not true of the rates from the eastern refining points. Taking the New York-Fort Wayne rate again as an example, that rate was 23 cents August 15, 1910. On June 25, 1918, it became 40.5 cents. On August 26, 1920, it was increased 40 percent to 56.5 cents, as authorized in Increased Rates, 1920, supra. It was reduced 10 percent in 1922 to 51 cents and on December 3, 1931, as part of the readjustment resulting from Eastern Class Rate Investigation, 164 I. C. C. 314, 171 I. C. C. 481, and 177 I. C. C. 156, it was reduced to 48 cents. On July 29, 1933, it was reduced to 38 cents, pursuant to Sugar Cases of 1933, supra. Thereafter, it was increased 3 cents to 41 cents December 15, 1937, and to 45 cents April 18, 1938, as previously explained, which is the present rate. It is 11.5 cents below the 1920 high.

13 At the original hearing data were introduced as to the cost of transporting all freight by certain northern and southern carriers. This was referred to in the original report at page 630.

Complainants refer to the relation between their rates and those from the eastern refining points which existed for the 20-year period from 1910 to 1931. As stated in our prior report, at page 628: Between 1910 and 1931 the rates to this territory from southern and eastern refining points reflected a relation agreed upon by carriers in August 1910. This relation was disrupted by substantial reductions in the rates from eastern refining points during 1931 and 1933. The changes since 1910 may be illustrated by the rates to Fort Wayne, Ind., a representative destination. On August 15, 1910, these were 24 cents from New Orleans and 23 cents from New York. On June 25, 1918, substantial increases were made in the rates from both southern and eastern refining points, those from the latter being placed upon the fifth-class basis. Under this adjustment the rates to Fort Wayne were 46 cents from New Orleans and 40.5 cents from New York. These rates, subjected to the general increases and reductions of 1920 and 1922, became 55.5 cents from New Orleans and 51 cents from New York. On December 3, 1931, the effective date of the eastern class-rate revision, the rate from New York became 48 cents, and on July 29, 1933, pursuant to our findings in Sugar Cases of 1933, supra, it became 38 cents. As no corresponding reductions were made in the rates from southern refining points, the Fort Wayne differential in New York's favor is now [March 8, 1937] 17.5 cents. Since the present rates to all points in the destination territory reflect substantially the same relative situation as that incident to Fort Wayne, it is evident that to all points in this territory the eastern refiners now have * differentials in their favor much greater than those in effect during the 20-year period prior to 1931.

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Since the prior report, the differentials in favor of the eastern refiners have not been reduced; instead they have been increased. Since the New York-Fort Wayne rate is now 45 cents and the New Orleans-Fort Wayne rate is 64 cents, New York's differential is now 19 cents as against 17.5 cents at the time of the prior report.

The eastern refiners obtained a reduction in their rates December 3, 1931, because of the fortuitous circumstance that these rates were class rates. Until recently the rates applicable to sugar within official territory have been the class rates and, at the time of our report (May 1930) in Eastern Class Rate Investigation, supra, sugar was rated fifth class.14 As a result of our findings in that proceeding the fifth-class rate was reduced, e. g., from New York to Fort Wayne, 744 miles, from 51 cents to 48 cents. The relation between the sugar rates from eastern and southern refining points was not in issue and was not considered in that class-rate investigation. It resulted from the readjustment of the class rates in official territory that the eastern refiners gained an increased advantage in rates over their southern competitors.

14 For a statement of the differences between class rates in official territory and those in southern and western territories, see Eastern Class Rate Investigation, 164 I. C. C. 314, at page 391, also Southeastern Sugar Investigation, 132 I. C. C. 477, 499, and 142 I. C. C. 459, 461.

In 1933, when the differentials in favor of the eastern refiners were further increased, at Fort Wayne, for example, by 10 cents, the result was brought about by the refusal of the eastern lines and certain lines in official territory to concur in reduced rates from the South. The southern lines, including the principal carriers of sugar from New Orleans and Port Wentworth, and certain of the northern carriers, including the Monon and other lines west thereof, reduced their rates on sugar from the South to official territory on and west of the Monon line, but the eastern lines and other lines east of the Monon refused to concur in like reductions from the South. At the same time, however, the eastern lines reduced their rates to the territory both east and west of the Monon line and thereby greatly increased the differential of the sugar shippers on their lines over the competing southern shippers.

The basis sought by the southern refiners, 22 percent of the interterritorial first-class scale, is, in fact, slightly higher, mile for mile, than the basis now in effect from the eastern origins, averaging 21.1 percent of the increased K-2 scale. For example, the latter basis for the New Orleans-Dayton distance, 890 miles, would produce rate of 50 cents, while the rate sought by the southern refiners from New Orleans to Dayton is 53 cents. Under the rates sought, the differentials, New York under New Orleans, to a few representative points, would be as follows: Fort Wayne, 8 cents; Grand Rapids, Mich., 11 cents; Detroit, Mich., 17 cents; Akron, Ohio, 20 cents; and Columbus, Ohio, 14 cents. It is apparent that the basis proposed by the southern refiners would result in greater differentials in favor of the eastern refiners than those in effect prior to 1931. With respect to all points in the affected northern territory, sugar is sold on basis of either the ocean-rail or the all-rail rates from Baltimore.15 This means that refiners located at New York, Philadelphia, Port Wentworth, and New Orleans cannot distribute sugar to this territory unless they absorb the differences between the rates from their respective shipping points and the rates from Baltimore.

The ocean-rail rates referred to are in all instances joint rates established by the water and rail carriers and are subject to the applicable provisions of the act.

From Baltimore to the affected northern territory the ocean-rail rates in a great many instances are the same as the all-rail rates between the same points. In many other instances the ocean-rail rates are 2 cents lower than the all-rail rates, and in a relatively

The ocean-rail route from Baltimore, Philadelphia, and New York is by vessel to Norfolk, thence the rail lines of the Chesapeake & Ohio Railway Company or the Norfolk & Western Railway Company, and connections.

few instances they are 3 or 5 cents lower. There are practically the same differences between the all-rail and the ocean-rail rates from New York and Philadelphia to points in the same destination territory.

From New Orleans the barge-rail rates to the same points are either 3 or 3.5 cents lower than the all-rail rates. These barge-rail rates are also joint rates, subject to the applicable provisions of the act,10 and are now under investigation in Docket No. 26712, Rail and Barge Joint Rates. Port-to-port barge rates are not subject to our jurisdiction and are not filed with us. There was testimony at the original hearing to the effect that at that time the barge rate on sugar from New Orleans to Louisville and Cincinnati was 30 cents, and to Evansville, Ind., 24 cents, and that the average trucking rate for a distance of about 75 to 100 miles would be about 10 or 12.5 cents.

With respect to the all-rail rates, the disadvantages of New Orleans under the present rates to the northern destination territory, together with the disadvantages which would result from the rates sought, are illustrated by the following table:

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The situation as to Port Wentworth is similar to that of New Orleans, except that the present rates from Port Wentworth in many instances are relatively higher than those from New Orleans. Profitable distribution of sugar in this territory ordinarily limits. freight absorptions to 10 or 11 cents, with a maximum of 15 to 20

10 Compare Denison Act, 45 Stat. 978, U. S. C., title 49, sections 151-156.

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