(The appendixes to Mr. Beardsley's statement follow :)

APPENDIX A

Additional Cases in Which the ICC Considered the Effect of Rates Upon the Earnings of the Carrier or Carriers to Which They were Applicable

In Sugar cases of 1951, 284 I.C.C. 333 (1952), the Commission, division 2, found not shown to be just and reasonable proposed reduced rail rates on sugar. At page 352 of its opinion, the division stated:

"From the record before us, reductions in the rail rates do not appear to be necessary in order to meet fairly the barge competition. The bargelines contemplate like reductions if the proposed rates were to take effect, and the result would be a widespread downward revision of freight rates for which there is no justification, and would threaten the existence of certain inland waterway systems."

In Tobacco From Lancaster, Pa., to Selma, Ala., 292 I.C.C. 230 (1954), the Commission, division 2, found a proposed reduced rail rate not shown to be just and reasonable. Pointing out that the proposed rate would result in the elimination of the competition of the water carrier protestant "until such time as it reduced the present joint water-truck rate applicable" between the points, the division said (p. 232):

"The record wararnts the conclusion that the proposed rate is lower than necessary to meet the competition over the rail-water-truck route; that it would result in a needless sacrifice of carrier revenue, and would fail to bear its just proportion of the total transportation burden in maintaining a transportation system in conformity with the national transportation policy."

In Magazines from Darby and Philadelphia, Pa., to Texas, 292 I.C.C. 493 (1954), the Commission, division 3, said (p. 496) :

"The record is convincing that the proposed rail rates are lower than necessary to meet the presently ineffective competition over the water, water-rail, or watertruck routes, and that the proposed rates would result in a needless sacrifice of carrier revenue and in unfair or destructive competitive practices, in contravention of the national transportation policy."

In Cotton Bagging From Alabama and Georgia to New Orleans, 53 M.C.C. 217, 219 (1951), the Commission, division 2, said:

"Based on the minimum of 30,000 pounds, the proposed rates would return truck-mile revenues which range from 45.2 cents, from Anniston, Ala., to New Orleans, 430 miles, to 60 cents, from Geneva, Ala., to New Orleans, 295 miles, and average 46.9 cents a truck-mile, from the 39 origins to New Orleans, for an average distance of 394 miles. The average expense for Cooper Transfer Co., the proponent of the suspended rates, was 26.5 cents a truck-mile in 1949, and 32.4 cents a truck-mile for the 9-month period ended September 30, 1950. In 1949, its less-than-truckload traffic accounted for 20 percent of its total revenue, and its average load and haul were 6.78 tons and 223 miles, respectively. The considered traffic moves in substantially heavier truckloads, and over longer distances, than the average. Moreover, cotton bagging is normally a low-rated commodity, is generally originated in line-haul vehilces at shipper's dock, and moves directly to consignee without intermediate terminal handling. It fairly appears, and protestants do not dispute, that the proposed rates would be compensatory."

In Dean v. Herrin Transp. Co., 53 M.C.C. 55 (1951), the Commission, division 3, dismissed complaints that the rates of two motor common carriers on flavoring syrup were unduly low, but only after pointing out that the traffic yielded revenue of 46 cents per truck-mile as against total operating costs of 35.2 cents per mile.

In Various Commodities From Los Angeles to Phoenix and Tucson, 53 M.C.C. 796, 799 (1952), the Commission, division 3, stated:

"We have frequently found that cost data are helpful in the determination of the reasonableness of a particular rate or rate structure. They are not the only criteria, however, and where they are lacking, the reasonableness of rates may be determined by other evidence, such as a comparison of the rates and the revenues thereunder with other rates between the same and other points,

73155-61-pt. 1-2

and the revenues thereunder. Here, the revenues yielded by the proposed rates indicate that they would be reasonably compensatory and the proposed rates compare favorably with the rates on the same commodities, maintained by the respondents between other points in the general territory here under consideration, and the revenues under the proposed and compared rates are comparable."

Additional Cases in Which the ICC Considered the Competitive Necessity for the Rates Involved

In Pulpboard From Port Wentworth And Savannah, Ga., to Richmond, Va., 288 I.C.C. 583 (1953), the railroads proposed a reduced rate on the subject commodity "to meet alleged water-carrier competition." In allowing a reductior in the existing rate, though not as low as the rails proposed, the Commission, division 2, said (p. 587):

"It has long been recognized that rail carriers have the right to establish rates that will enable them to meet competition with other forms of transportation, provided that the rates do not contravene any provision of the statutes; but we will not authorize departures from section 4 to permit the establishment of any rate lower than necessary to meet competition. We are not convinced that it is necessary to maintain a rate as low as that here proposed. We find that actual water competition exists, that the necessity for relief has been shown, that the rates which we shall authorize are reasonably compensatory and not lower than necessary to meet the competition, and that the relief is justified, subject to the conditions hereinafter prescribed."

In Export Rates, Associated Shippers Carloading Corp. 273 I.C.C. 600, 603, 604 (1954), the Commission, division 3, said:

"Transportation companies subject to the act have the right to initiate rates to meet competitive forms of transportation, provided they do not reach the point where they result in the unfair or destructive competition referred to in the declared national transportation policy. Before we can regard any rates as falling below a minimum reasonable level, it must appear, with reasonable clarity, that they attract to themselves more than a fair volume of traffic or are so low as to cast an undue proportion of the transportation burden upon other traffic. [Citations omitted.] No such a showing has here been made." In Armstrong Cork Co. v. L. & N. Railroad Co., 274 I.C.C. 5 (1952), the shipper sought reparation on the ground that the railroad had charged a higher rate for shipments of caustic soda to its plant in Pensacola than for shipments of the same commodity to North Pensacola, a point about 15 miles inland, since both points were accessible to water-carrier service. In denying reparation, the Commission, division 3, said (p. 8):

"The defendants submit that their failure to extend the competitive rate to Pensacola at the time it was published to North Pensacola is justified by the fact that receivers at North Pensacola consumed liquid caustic soda in such quantities that they could use water service with its 500-ton minimum, whereas on the basis of the complainant's 36 carload shipments over a period of nearly 2 years, one bargeload would have supplied it for 7.81 months. Carriers may, if they so desire, in publishing water-compelled rates, limit their application to points where receivers are in a position to utilize the competitive water service." In approving reduced rail rates on drugs, medicines, chemicals, and toilet preparations, the Commission, in Drugs, Medicines, Etc., From Chicago, Ill., to The East, 286 I.C.C. 609, 616 (1952), said:

"The record is convincing that the reduced rates under investigation are no lower than necesary to meet the motortruck competition and are not unjust, unreasonable, or otherwise unlawful.”

In All-Commodity Rates Between California and Oregon, Washington, 293 I.C.C. 327 (1954), the Commission, division 3, found reduced rail rates to be just and reasonable. Among other things, it stated (pp. 339–340):

"The fact that the reduced rates from the San Francisco area reflect a less favorable percentage relation to those from Los Angeles than the prior allfreight rates, and a less favorable relation to first-class rates than that of the reduced rates from Los Angeles, does not constitute proof of undue prejudice and preference. There is an indicated necessity, because of competition, for the reduced rates by rail from Los Angeles. The record affords no basis for a conclusion that there are similar circumstances and conditions that affect traffic from the San Francisco area which require, for the removal of undue

prejudice and preference, rates that bear the same relation to first class as the rates maintained from Los Angeles."

In Tinplate From Eastern Trunkline and New England to West, 289 I.C.C. 384, 386 (1953), the Commission, division 2, found that the proposed reduced rail rate "is no lower than is now necessary to meet the [water carrier] competition, and is just and reasonable." The same division, in Adhesive Paste From Twin Cities to Wisconsin and Michigan, 289 I.C.C. 719 (1953), in finding reduced rail rates on the subject commodity to be just and reasonable, noted (p. 720) that "*** the rates proposed are no lower than necessary to move the traffic, and are reasonably compensatory." In Fiber Brushes From Aurora,

Ill., to Harrison, N.J., 292 I.C.C. 384 (1954), the Commission, division 2, found a reduced rail rate on the subject articles to be just and reasonable, stating (p. 386): “There is no contention or indication that the proposed rate would not be reasonably compensatory, and the record is convincing that it is not lower than necessary to meet the competition by motor carrier."

Additional Cases in Which the ICC Considered the Effect of Rates Upon a Lawful Rate Structure or Adjustment

In Petroleum Between Washington, Oregon, Idaho and Montana, 234 I.C.C. 609 (1939), the Commission considered proposed rate reductions by both railroads and motor carriers. It found the truck rates, and most of the rail rates, unreasonably low and hence unlawful. In its decision (pp. 636–637), the Commission said:

"We have here a situation where carriers by rail, by highway, and by water are engaged in a competitive struggle over an important form of traffic. * * To the most important destination point, Spokane, the evidence justifies conclusions that the proposed rail rate of 25 cents from the north coast ports would yield some margin over full costs; that the motor carriers could, with a heavy volume of traffic, make both ends meet on a rate of 17 cents from Umatilla and Attalia to Spokane; and that it is possible that the water carriers, likewise with a heavy volume of traffic, might be able to operate without loss on a 7.5-cent rate from Portland to Umatila and Attalia, allowing nothing for terminal expense at those river ports or for marine insurance.

"We were given power to fix minimum rates, however, primarily for the purpose of preventing destructive competition in rates and promoting the financial stability of the transportation agencies. Our duty in the exercise of that power is not done, therefore, if we allow competitive rates to gravitate to the lowest possible level. Minimum rates should be fixed, if it can be done, at levels which are consistent with some degree of carrier prosperity; and in so fixing them we ought to be able to count on the cooperation of the shippers, because reasonable prosperity for the carriers is in the final analysis to the advantage of those whom they serve."

In Tobacco From North Carolina Points to Southern Points, 280 I.C.C. 767 (1951), the Commission, division 2, found reduced carload and truckload rates on manufactured tobacco unreasonably low, stating (p. 774):

"While both the rail and truck rates as proposed may be reasonably compensatory, it is doubtful that they would contribute their fair share to the transportation burden considering the obviously high value of this traffic. To permit a further reduction by either form of transportation, or both, would only tend to increase still further the transportation burden on other traffic without giving due consideration to the value of the service on this traffic. Our duty in the exercise of the power to fix minimum rates is not done if we allow competitive rates to gravitate to an unduly low level." [Citations omitted.]

In Unfinished Cotton Piece Goods in the South, 61 M.C.C. 367 (1952), the Commission, division 2, found that reduced commodity rates proposed by motor carriers on unfinished cotton piece goods had not been shown to be just and reasonable. The division said (pp. 371-372):

"There is merit to the position of the protestants. Although the truck-mile earnings at the proposed rates appear high, respondents presented no supporting cost data for us to appraise the correctness of their conclusions that the proposed rates are compensatory. Both the present and compared rates are substantially lower than the normal exceptions basis of rates. There is no evidence concerning the circumstances for the establishment of the compared rates, and the considered traffic now moves freely under the present rates. It is admitted the motor-carrier costs are increasing, and there is indication that the proposed adjustment would spread to other points in the territory. The proposal would

deplete the carriers' revenues without adequate justification and would cast an additional burden upon other traffic."

In Bakery Goods and Chemicals, Eastern Points, 54 M.C.C. 551 (1952), the Commission, division 2, approved a reduced rail rate on barium hydrate, stating (p. 562): “✶ ✶✶ the rail respondents in the proceeding before us clearly labor under a substantial disadvantage in meeting motor-carrier competition. Some adjustment in the rate on barium hydrate between these points is essential if the respondents are to participate in the movement. A rate not less than 77 cents, minimum 40,000 pounds, as recommended by the examiner, in lieu of the proposed rate of approximately 72 cents, would be reasonably compensatory, is not lower than necessary to meet the competition, and would not cast a burden on other traffic; and we are of the view that it would not be unreasonably low." In Tobacco From Lancaster, Pa., to Selma, Ala., 292 I.C.C. 230 (1954), the Commission, division 2, found a proposed reduced carload rate on unmanufactured tobacco not shown to be just and reasonable, stating (p. 232): “* * the proposed rate is lower than necessary to meet the competition over the railwater-truck route; that it would result in a needless sacrifice of carrier revenue, and would fail to bear its just proportion of the total transportation burden in maintaining a transportation system in conformity with the national transportation policy."

In Sodium Products, Ready Truck Lines, 53 M.C.C. 63 (1951), the Commission, division 3, found that reduced rates proposed by a motor carrier on the subject commodities were not shown to be just and reasonable. In its opinion (pp. 65-66), the division said: "The proposed rate is apparently intended to attract the traffic of the large Cincinnati shippers which have increased the use of rail service. It is reasonably certain that the railroads will not forgo such traffic and will reduce their rate to the level of that here proposed, which might precipitate reductions in rail and motor rates from Trenton, a point more favorably situated from a distance standpoint to Cincinnati than Joliet."

In approving reduced motor carrier rates in Aluminum From Badin, N.C., to Eastern Points, 54 M.C.C. 498 (1952), the Commission, division 3, stated (p. 502): "The present motor-carrier rates on aluminum were established initially on a competitive level with railroad rates. However, since the railroad rates bear no apparent relationship to first class, the present motor-carrier rates from Badin to the four destinations here involved are on a substantially higher level than those to other eastern points. No convincing reasons are advanced, if any could be, for the continuation of this apparent maladjustment in rates. The proposed rates are designed to correct this situation as far as the four destinations are concerned."

In Candy, Drugs, Motors, Iron Bars, Valves, Westbound, 54 M.C.C. 723 (1952), the Commission, division 2, among other things, approved a commodity rate proposed by motor carriers on electric generators and motors. The division stated (pp. 727-728):

"Electric generators and electric motors are rated the same in the rail consolidated and the motor national classifications. The record indicates that these commodities are shipped together from and to the considered points. *** This relationship will be maintained by the proposed rate of $3.72, minimum 20,000 pounds, which appears to be reasonably related to respondents' present rates of $4.42, less than truckload, and $3.12, minimum 30,000 pounds."

In Petroleum Between Portland and Spokane, Portland & Seattle Railway Points, 286 I.C.C. 516 (1952), the entire Commission approved a reduced rail commodity rate on petroleum products moving westbound, but on eastbound movements, held the rate had not been shown to be just and reasonable. As to the westbound movement, the Commission held the proposed rate to be no "lower than necessary to meet the competition encountered." With respect to the movement in the opposite direction, however, the Commission said (pp. 523-524): "As to the eastbound movements, however, total costs to the shipper for the movement of gasoline by barge, considering the line-haul barge rate, insurance, evaporation and handling losses, terminal and storage costs, and motortruck movement beyond the terminal storage, would be not less than 22 cents. There is no convincing evidence that the rail rate required to meet the indicated competition as to eastbound traffic need be lower than the total expense incurred in the competitive transportation."

"There is likewise no evidence that a substantial amount of traffic moves eastbound to the points to which the rate of 20 cents is proposed. The additional

traffic in substantial amount which the respondent could hope to obtain by means of the proposed rate is that from the Portland group to points in the Inland Empire beyond Pasco and East Pasco. The eastbound rates are part of an adjustment affecting a substantial territory, as is indicated in the report Inland Navigation Co. v. Big Creek & T.R. Co., supra, in which the rates were characterized as being on a minimum level. Bearing in mind the substantial territory which might ultimately be affected, and the sensitive nature of the rail-rate adjustment affecting the various origin points and carriers generally, we are of the opinion that the publication of reduced rates on eastbound traffic as proposed would tend to disrupt the general adjustment and should not be approved without clear and convincing evidence that the result would not constitute destructive competition and would be consistent with the national transporation policy."

In Commodities From Los Angeles to Chicago, 293 I.C.C. 578 (1954), the Commission, division 2, disapproved a reduced rate proposed by a freight forwarder on mixed shipments between the named points of $3.60, minimum 20,000 pounds. The forwarder, in turn, had arranged to use the services and instrumentalities of a regulated motor carrier to perform the physical transportation on the basis of $3 per hundred pounds. Said the division (p. 584): "If Navajo's [the motor carrier] acceptance of the $3 rate on this forwarder traffic was motivated by the fact, if it be a fact, that the traffic would move in the direction of its light movement, it has been found that rates so made present a serious threat to the motor carriers' rate structure, especilly when different carriers are in competition for the same traffic. Freight Forwarders, Motor Common Carriers, Agreements, supra. Rates of that character which yield little more than out-of-pocket cost have been disapproved in several proceedings. Moreover, the evidence fails to show any competitive necessity for establishing such a depressed rate.'

Additional Cases in Which the ICC Considered the Tendency of Rates To Cast an Unjust Burden Upon Other Traffic

In Phosphate Rock From Southern Ports to Quincy, Ill., 287 I.C.C. 123 (1952), the Commission, division 2, held proposed reduced rail rates on crude phosphate rock not shown to be just and reasonable. At page 128 of its opinion the division said:

"In numerous proceedings the Commission has found unlawful subnormal rail rates which approximated the overall cost of water transportation, either because the proposed rates were found to be so low as to cast a burden upon other traffic or constituted unfair or destructive competition. Scrap Iron, New Orleans, Mobile to St. Louis, Chicago, 272 I.C.C. 781; Scrap Rails From Southern Ports to Chicago, 283 I.C.C. 357; Sulphur, Port Sulphur, La., and Texas to Hamilton, 284 I.C.C. 275; Sugar Cases of 1951, 284 I.C.C. 333. The same finding is warranted here on both of the above-mentioned grounds."

In Sugar Cases of 1951, 284 I.C.C. 333 (1952), the Commission, division 2, found not shown to be just and reasonable proposed reduced rail rates on sugar. In its opinion, the division said (p. 352):

"Bargeload carriage has the inherent advantage of lower costs compared with railroad service, and is less valuable to the shipper. While the trend in recent years has been toward increased bargeload tonnages as compared with those by rail, the great bulk of this traffic is still transported over all-rail routes. From the record before us, reductions in the rail rates do not appear to be necessary in order to meet fairly the barge competition. The barge lines contemplate like reductions if the proposed rates were to take effect, and the result would be a widespread downward revision of freight rates for which there is no justification, and would threaten the existence of certain inland waterway systems." In Tobacco From Lancaster, Pa. to Selma, Ala., 292 I.C.C. 230 (1954), the Commission, division 2, found proposed reduced rail rates on unmanufactured tobacco not shown to be just and reasonable. At page 232 of its opinion, the division said:

"The stated position of the consignee is that, *** the rail lines will not receive any of the traffic unless their rate is the same as that over the railwater-truck route. *** Not only would such a rate be equivalent to the total costs of the competitive service, but the consignee has good cause to prefer the all-rail service for the reasons stated [faster, no transfer of lading, less record keeping, longer free unloading time]. Competition by the protestant would