within the North are controlled by the northern carriers; that producers of the articles on which such rates apply are in competition with producers of like articles in the North; and that, in reaching or attempting to reach the markets of the North, producers in the South are compelled to absorb or otherwise overcome the differences in rate levels. They contend that the establishment of these facts placed on defendants the burden of showing differences in transportation conditions sufficient to justify the differences in rate levels. They further contend not only that defendants have not met this burden but that in fact no such differences in transportation conditions exist.

The New Orleans Joint Traffic Bureau adopts as its own the position of complainants outlined above. Its interest is, however, as previously described, limited principally to rates on canned oysters and shrimp and on cordage and binder twine to destinations in Indiana east of the Monon line, Ohio, and Michigan east of Lake Michigan.

The Southern States Industrial Council, an organization of shippers in 15 southern States, urges that, unless it can be shown that higher rates from the South to the North than are maintained within the North are responsive to conditions in the South, will move the traffic, and are demanded and required by the southern carriers to enable them to earn a fair return, such higher rates are prima facie unreasonable and discriminatory; that where, as is the situation with respect to some of the articles named in the complaint, the southern carriers not only disclaim any demand for such higher rates but on the contrary advocate the maintenance from the South to the North of the lower northern levels of rates the northern carriers, in demanding and exacting for their services in transporting such traffic more than they do for transporting like traffic originating in the North, are subjecting the southern shippers to unreasonable, unjustly discriminatory, and unduly prejudicial rates; and that we not only do not lack power to require the removal of such unlawfulness but are in duty bound to do so. It argues that the northern carriers are entitled only to maximum reasonable compensation for their services, and that such compensation will result from the rate levels in effect in the North.

The southern carriers are generally in sympathy with the aims and objectives of complainants. They state that it has been and is their position that southern manufacturers of articles competitive with like commodities produced in the North are entitled to rates from the South to the North approximating the level within the North, or on such other basis as will permit a free movement of traffic; that they have been and are now not only willing but anxious

to join in the establishment and maintenance of such rates; and that where such rates are not in effect today it is due to the failure or refusal of the northern carriers to join in their publication.

Among other things, they assign as reasons for their position, which they emphasize is not new but has been their fixed policy for more than 50 years, the fact that the greater part of the manufactured articles and some of the raw materials of the South must find a market in the consuming centers of the North in competition with similar commodities manufactured or produced therein; that if such articles are to move by rail the rates must be fairly related to those within the North; that rates so related are not only in the interest of southern railroads and southern shippers but are likewise in the interest of consumers in the North and of northern carriers, for in the absence of such rates the traffic either will not move freely or will be diverted to other forms of transportation; that the maintenance of such rates would place southern producers, shipping into the North, in no better relative position than are northern producers shipping into the South; and that the consumer, who in the end bears the transportation charges, is entitled to the benefit of competition between articles manufactured in the South and the North, which competition will result from the free movement of such articles from, as well as to, the South.

In stating their position, the southern carriers make it clear that they do not advocate any fixed rule or formula for uniform application in the determination of north-bound interterritorial rates but, on the contrary, believe the circumstances and conditions surrounding the transportation of each commodity, including particularly the nature and extent of the commercial competition which it encounters in the North, should be considered, the principal guide, however, being the destination territory level. With respect to the commodities named in the complaint concerning which southern producers have testified that they encounter keen competition in their sale in the North, and that in order to market their products in the North they must have rates approximating the destination level, the southern carriers express the view that the rates sought should be established.

The southern carriers, while generally in sympathy with the aims and objectives of complainants, vigorously urge that cost of operation and other traffic and transportation conditions in the South are less favorable than in the North, and are such as to warrant a higher level of rates therein than in the North. They say that they must have such higher level of rates within the South in order to live. As previously indicated, aside from the evidence introduced by them in criticism of the cost analysis presented by complainants, they

offered no evidence bearing on the propriety of the present interterritorial or intraterritorial rates. They rely, however, upon previous decisions in which we expressed the view that conditions in southern territory warrant a higher level of rates therein than that which prevails within official territory. These are the same decisions to which complainants have directed the argument previously stated. On brief and in exceptions to the proposed report they present in detail their reasons for believing that the cost analysis presented by complainants is in many respects defective.

The proposed report herein recommended findings that the rates assailed on stoves, stone, cast-iron pipe fittings and service boxes, iron-body valves, fire hydrants, brass pipe fittings, brass cocks and valves, soapstone and talc, plumbers' goods, excelsior, papeteries, and chinaware are unlawful to the extent that they are upon levels higher than at present in effect on like articles within the North. The southern carriers filed no exceptions to these findings but, on the contrary, have expressed a desire to join in the establishment of such rates.

In their exceptions they state:

With these ultimate proposed findings, the Southern railroads are in accord. It should be understood, however, that while the Southern railroads take no exception to the finding that certain of the rates involved are unreasonable under Section 1 of the Interstate Commerce Act, they insist that such rates are not intrinsically or per se unreasonable but are relatively unreasonable. (See pages 12 to 23, inclusive, brief of Southern railroads this case.)

The Southern railroads regret that they must take any execptions whatsoever to the proposed report inasmuch as they are in accord with the ultimate proposed findings. However, there are certain statements in the proposed report with respect to relative transportation costs and rate levels in the South as compared with the North which are not only not supported by the facts of record but are contrary to the facts, and we are compelled to except to such statements and ask that they not be incorporated in the decision of the Commission.

An examination of the pages of their brief referred to in the above quotation indicates that one of the cases cited therein, Wyoming Coal Co. v. Virginian Ry. Co., 96 I. C. C. 359, as authority for the position which they take also illustrates their views on the subject. In that case, we said:

The comprehensive rate adjustment from the Inner and Outer Crescent groups to central territory is the outcome of competitive strain and stress through a long period of development. Whether commercial or carrier competition was the predominating factor can hardly be determined. In any event the rates applicable under this adjustment have been so uniformly related, and that relation has endured so long, that they now afford a standard of reasonableness for rates from the same producing fields. Under the circumstances of this case relative reasonableness, rather than intrinsic reasonableness, becomes the important thing to be considered, and other criteria, such

as ton-mile earnings, fall into the background. In Corporation Commission of Virginia v. C. & O. Ry. Co., 40 I. C. C. 24, 28, we said:

“It is true that in determining the reasonableness of rates, due consideration of their relation to other rates of the various carriers serving the same or competing localities should be given. In other words, section 1 of the act contemplates that rates to be just and reasonable must be relatively fair as between localities similarly situated, as well as reasonable per se.”

In Nagase & Co. v. Director General, 62 I. C. C. 422, we said:

"A shipper is entitled to a reasonable rate * * * and one of the tests of a reasonable rate is its relationship to other rates on the same or analogous commodities between points in the same general territory for similar distances." [Emphasis supplied.]

The northern carriers and the northern States, commissions, commercial organizations, and shippers who intervened are a unit in opposing the complaint in all respects. They lay much stress on the decisions in the southern class-rate investigation and later cases in which interterritorial rates on or related to the prescribed class rates were approved or prescribed.

The northern carriers argue that, while it is true that the class-rate investigation covered class rates only, the rates prescribed were based fundamentally on distance and thus readily recommended themselves as a standard for a properly related and balanced commodity-rate structure which would avoid fourth-section difficulties, and that in readjusting interterritorial commodity rates so as to reflect the classrate relation in the South and the North the carriers merely pursued a plan which was suggested by them to us in the class-rate investigation and which was referred to and approved in the decision in that proceeding and subsequently approved in principle in numerous later cases dealing with individual commodity rates, including certain of the rates here assailed. With respect to the articles named in the complaint which move principally or altogether in less than carloads, they point out that the class rates as such which are now applicable are not attacked nor is the propriety of the classification ratings on these articles attacked. They contend that in the absence of a special showing that transportation or other considerations set these articles apart from the mass of other commodities which moves at class rates in less than carloads, which special showing, they urge, has not been made here, there is no justification for prescribing commodity rates thereon. In this connection, they refer to our oft-repeated disinclination to require the establishment of commodity rates on less-than-carload traffic.

They say that in pursuing the plan of relating interterritorial carload commodity rates to the class rates, the carriers did not arbitrarily adopt the class-rate relation but on the contrary considered that each commodity presented an individual problem in the solution of which the circumstances and conditions affecting its transportation, includ

ing its ability to stand a given level of rates, were considered along with the desirability because of their revenue needs of adoption of rates which would preserve the carriers' aggregate revenues; that in consequence the interterritorial carload commodity rates reflect varying relationships with the rates within the North; and that complainants' proposal would improperly subordinate every recognized test for determining interterritorial rates to the single consideration of the wholly different intraterritorial rate structure within the North. They urge that of the commodities specifically named in the complaint only stoves, stone, canned goods, soapstone and talc, and possibly excelsior, furniture, and plumbers' goods, can from the standpoint of values, loading, and probable volume make a valid claim to carload commodity rates, and that, since the rates assailed on these commodities are, aside from the recent general increases, the same as or lower than those specifically approved or prescribed by us, in the absence of a showing of new facts or of materially changed conditions, or a showing that we proceeded on a misapprehension, none of which, they urge, has been shown on the instant record, the decisions in the cases dealing with those commodities, without more, require the dismissal of the complaint as to them.

The northern carriers expressly disclaim any contention that the South is a higher-rated territory than the North or that the cost of operation is higher in the South than in the North. At the hearing their traffic representatives testified that in determining what they consider to be proper interterritorial rates no consideration was or is accorded to cost of operation. They and some of the northern interveners argue, however, that, aside from what they consider its inconclusive character, the cost analysis presented by complainants cannot be accepted as an index of the relative costs of transporting particular commodities within or between the South and the North, and that even if the costs of transporting individual commodities were shown with reasonable accuracy, such showing would be of minor importance because costs constitute only one of a great number of factors which properly enter into the determination of reasonable rates.

The northern carriers also urge that the effect of the establishment of the rates sought would be to blanket rates over large areas north or south of the border depending on whether the existing rates within the South are observed as minima, or the rates sought are observed as maxima. Another claim presented by them as ground for denying the relief sought is that if granted it would result in changes in relation of the considered rates with rates on the same commodities from the Southwest and the West to the North. They urge that such changes in established relationships are justified only on clear and convincing evidence of unlawfulness in the present situation.