1 New York, Delaware, New Jersey, Pennsylvania, Maryland, and the New England States. Illinois, Indiana, Michigan, Ohio, and Wisconsin. 18,986,000 21,660,000 11, 842, 000 14,529,000 60, 555, 998 62,718, 347 70, 434, 863 41, 350, 465 45,759, 763 The relatively better position of manufacturing in the South, 1935 compared with predepression years shown above, was due to a considerable extent to the activitives of industries engaged in canning and preserving of fruits, vegetables, fish, etc., and manufacturing textiles, pulp and paper, heavy chemicals, boots and shoes, certain iron and steel articles, and cigars and cigarettes. Less severe declines in the South in the economic conditions of other industries also contributed to this result. The record does not contain data, comparable to that shown above, for years since 1935. It does show that a substantial part of the total investment of the country in new construction and plant expansion in the so-called process industries between January 1935 and June 1938 was made in the South. Plants producing pulp, paper products, refined petroleum products, and chemicals account for most of this investment. The development in the South and in important sections of the North of industries engaged in manufacturing or processing certain of the articles named in the complaint, during certain postwar years prior to the depression, and the conditions which existed during certain depression years, are indicated in the statistics set forth in the following tables: Development of industries producing articles named in complaint during selected years-Continued 1 Connecticut, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, and Rhode Island. Illinois, Indiana, Michigan, and Ohio. Alabama, Georgia, North Carolina. and Tennessee. Alabama figures not included for year 1933. Illinois, Indiana, Michigan, Ohio, and Wisconsin. Delaware, Maryland, New Jersey, New York, Pennsylvania, and the New England States. 7 Tennessee. Georgia, North Carolina, and Tennessee. North Carolina, Georgia, Florida, Tennessee, Mississippi, and Louisiana. Thou- Thou- Thou- Thou- Thou sands sands sands Thou 164 11, 512 5, 545 (R) 54 (R) 24.8 (R) 9,008 (R) 43.9 (R) 1, 654 (R) 23.0 12, 331 (I) 6, 382 (1) 107.3 1 Delaware, Maryland, New Jersey, New York, Pennsylvania, and the New England States. Difference between 1923 and 1935. R indicates reduction; I indicates increase. The statistics set forth in the foregoing tables show that on the whole the industries referred to, which incidentally are surprisingly small in the South compared with those in the North, experienced relatively more rapid growth in the South than in the North during the postwar prosperity era and suffered less during the depression years. The alleged reasons for the recent relatively faster growth of certain industries in the South compared with the North, and for the movement to the South of industries which formerly were of great economic importance to communities in the North, including comparisons of wages, taxes, and other costs of production, are dealt with extensively in the evidence. The seriousness of the adverse economic effects on communities and States in the North of the removal therefrom of established industries also is described in some detail. This evidence has been given careful examination, and the question of the weight which may properly be accorded it will hereinafter be discussed. THE RATE SITUATION The early histories of the rate structures in the South and in the North and between the two territories are given in some detail in the reports in the southern and eastern class-rate investigations,* in which we prescribed the present class-rate adjustments within and between these territories, and they need not be repeated here. A brief description of the outstanding features of these rate structures, the patterns followed in the development of which were distinctly different in each of the two territories, is, however, desirable to a clear understanding of the present rate situations and of the contentions of the parties to this proceeding. From the beginning of railroad construction in the South until comparatively recent times a somewhat narrow range of traffic within that territory was subject to the class rates, or to rates related to the class rates. Traffic moving in any important volume, both carload and less than carload, was provided with commodity rates, usually materially lower than the class rates which otherwise would apply. The class-rate structure did not, therefore, reflect the rate level on the great volume of traffic. In the North a somewhat different situation prevailed. The class rates applied on the major part of the railroad traffic moving within that territory, including practically all less-than-carload traffic. Commodity rates were of minor importance. Southern Class Rate Investigation, 100 I. C. C. 513, 109 I. C. C. 300, 113 I. C. C. 200, and 128 I. C. C. 567. Eastern Class Rate Investigation, supra. The southern class-rate investigation embraced all of the territory lying generally east of the Mississippi River and south of the Ohio River and the line of the Norfolk & Western Railway Company from Bristol, Tenn.-Va., to Norfolk. This territory is herein referred to as southern territory. The class-rate level did rather closely reflect the general rate level. The result was that the class rates in the South were considerably higher than those in the North. The commodity rates in the South on a substantial volume of traffic were on about the same level as, or on somewhat lower levels than, the rates applicable on like articles within the North. The rate structures in both territories have been subjected to many changes in recent years-revision of the class rates hereinafter described and increases and reductions, principally the former, in the levels of the commodity rates-but the outstanding features of the prior development of each are still prominent. A situation somewhat similar to that within the South existed in connection with the rates between the two territories. The class rates were high compared with those within the North; in fact, from and to a large part of the North they were combinations on the river crossings or other border points. The greater part of the traffic which moved at these class rates consisted of high-grade manufactured articles produced in the North and consumed in the South. Only a small part of the north-bound traffic was subject to the class rates, low commodity rates being applicable on the bulk of that traffic. In order to encourage the development of mining and manufacturing in the South the southern carriers early began the practice of establishing from southern producing points to the markets of the North, on articles which were competitive with those produced in the North, rates on or approximating the level of the rates applicable on like articles within the North. Prior to the end of the period of Federal control of the railroads they met little opposition to the establishment of such rates, but since that time the northern carriers generally have insisted with success, inasmuch as they controlled the rates to most points in the North, that north-bound rates on competitive commodities be maintained on higher levels than the rates on like commodities within the North. The interterritorial rate structure, for this and other reasons, including the class-rate investigation, also has been subjected to many changes in recent years. The class-rate investigations did not, except for less-than-carload rates, embrace the existing commodity-rate structures, class rates only being under investigation. The primary purpose of these investigations was to remove inconsistencies and incongruities in the existing class rates by adopting class-rate structures which would bring about some uniformity within the respective territories and which would be as simple as they could be made and free from undue prejudice. Prior to the hearings therein we announced that it would not be the primary purpose of the inquiries either to add to or sub |