Mr. MAPES. Or east of the Mississippi Valley?

Mr. DONNELLY. No. It applied only to the western transcontinental territory.

Mr. MAPES. It did not apply to the Mississippi Valley territory? Mr. DONNELLY. No; at no place except the Pacific coast territory. Mr. MAPES. I wonder if you will be good enough to put that order in the record?

Mr. DONNELLY. Yes.

(The order above referred to is as follows:)

REOPENING OF FOURTH SECTION APPLICATIONS Nos. 205, ETC.1

(Submitted April 5, 1917. Decided June 30, 1917.)

1. Existing water competition found to be a negligible factor in affecting the rates by rail between Atlantic and Pacific coast terminals.

2. Rates on commodities from eastern defined territories to Pacific coast terminals lower than the rates on like traffic to intermediate points found not justified under existing circumstances.

3. Present effective rates on certain specified commodities from all eastern defined territories to Pacific coast terminals found not unreasonably low and not to have been induced by water competition.

4. Present effective rates on other commodities in schedules B and C found, as a whole, unreasonably low from territories east of the Missouri River to Pacific coast terminals.

5. Rates on barley, beans, canned goods, asphaltum, dried fruits, and wine from Pacific coast ports via rail-and-water routes through Galveston to the Atlantic seaboard should be revised to accord with the requirements of the long-and-shorthaul clause of the fourth section.

H. A. Scandrett, Charles Donnelly, F. V. Brown, T. J. Norton, F. D. Burroughs, John F. Finerty, and F. H. Wood for petitioners and respondents. F. A. Jones for Arizona Corporation Commission and Interior Counties Freight Bureau of Southern California.

Frank Lyon for American-Hawaiian and Luckenbach steamship companies. Clifford Thorne for Iowa State Board of Railway Commissioners.

Oscar L. Owen for New Mexico State Corporation Commission.

F. W. Dougherty and J. J. Murphy for State of South Dakota and South Dakota Railroad Commission.

Joseph N. Teal and William C. McCulloch for Portland Traffic & Transportation Association.

H. C. Barlow for Chicago Association of Commerce.

Seth Mann for San Francisco Chamber of Commerce.

J. B. Campbell for Spokane Merchants' Association and Spokane Chamber of Commerce.

N. L. Moon for Alan-Wood Iron & Steel Co.

Wilmer M. Wood for United States Cast Iron Pipe & Foundry Co. and American Cast Iron Pipe Co.

C. H. Reigart for American Iron & Steel Manufacturing Co.

Raymond Marsh for American Washing Machine Manufacturers' Association. R. P. Smith for Automatic Sprinkler Co. of America.

Herbert Sheridan for Canned Goods Exchange of Baltimore and National Canners' Association.

John B. Rucker for Baton Rouge Chamber of Commerce.

J. H. McCummey for Boston Woven Hose & Rubber Co.

George A. Page and Walter Engels for Borden's Condensed Milk Co.

H. C. Crawford for Cambria Steel Co.

W. D. Emil for T. A. Snyder Preserve Co.

Martin Van Persyn for Wholesale Grocers' Exchange of Chicago and Sprague, Warner & Co.

This report embraces also the reopening of Fourth Section Applications Nos. 342, 343, 344, 349, 350, 352, and 10336, respecting commodity rates from eastern defined territories to Pacific coast terminals and intermediate points; the reopening of Fourth Section Applications Nos. 9813, 10110, 10126, 10155, 10186, and 10189, respecting rates on barley, beans, canned goods, asphaltum, dried fruits, and wine from California ports and intermediate points by rail-and-water routes through Galveston to the Atlantic seaboard; Docket No. 9258, Commercial Club of Kansas City, Mo., v. Atchison, Topeka & Santa Fe Railway Co. et al.; and Docket No. 9278, Arizona Corporation Commission v. Atchison, Topeka & Santa Fe Railway Co. et al.

30420-251-37

C. L. Lingo for Inland Steel Co.

Ward Wise for Mark Manufacturing Co.

Luther M. Walter for Morris & Co. and Wilson & Co. Inc.

I. I. Bloom for Coast Products Co.

E. E. Bockstedt for Columbian Rope Co.

R. L. Hearon for Colorado Fuel & Iron Co.

F. W. Maxwell for Denver Transportation Bureau.

G. Roy Hall for Commercial Club of Duluth, Rust-Parker Co., and GowanLenning-Brown Co.

C. F. Rowe for Marshall-Wells Hardware Co.

James E. Needham for Electric Hose & Rubber Co.

C. C. Crouse for F. W. Fitch Co. and various members of the Iowa State Manufacturers' Association.

E. K. Prickett for Macy Co. and Office Equipment Traffic Association. Edward C. Rentz for Glove-Wernicke Co. and Office Equipment Traffic Association.

W. F. Price for J. B. Williams Co.

W. P. Tingley for Chamber of Commerce of Huntington, W. Va., HagueRatcliff Co., Sehon-Stevenson Co., and other companies.

C. A. Rosemond for Illinois Wholesale Grocers' Association.

F. A. Ogden for Jones & Laughlin Steel Co.

S. J. Bolton for Chamber of Commerce Traffic Bureau of La Crosse, Wis. W. E. Howes for Lackawanna Steel Co.

H. L. Burch for Board of Commerce of Lexington, Ky.

W. A. Ensten for Ludlow Valve Manufacturing Co.

H. M. Zook for Lukens Iron & Steel Co.

Bates Lowry for Lunkenheimer Co.

C. C. Ward for Michigan Wholesale Grocers' Association and Indiana Wholesale Grocers' Association.

Frank Barry for Merchants & Manufacturers' Association of Milwaukee. T. M. Henderson for Traffic Bureau of Nashville, Tenn.

J. F. Townsend for National Tube Co.

R. A. Van Kirk for National Varnish Manufacturers' Association.

William H. Day for New England Shoe & Leather Association, Essex County Associated Boards of Trade, and Lynn Chamber of Commerce.

J. H. Moyle for McClintic & Marshall Co.

J. M. Bomgardner for John A. Roebling's Sons Co.

J. P. Olney for National Canners' Association, New York Canners' Association, and Rome Chamber of Commerce.

Clarence Watkins for Paint Manufacturers' Association of the United States. Charles Dushkind for Tobacco Merchants' Association of the United States. W. S. McCarthy, S. H. Love, and H. W. Prickett for Traffic Bureau of Utah. L. F. Berry for Reid, Murdoch & Co.

F. R. Levins for Rust-Parker Co.

S. J. Wettrick for Transportation Bureau of Seattle Chamber of Commerce. J. E. Henry for Standard Sanitary Manufacturing Co.

A. F. Versen for Business Men's League of St. Louis.

George F. Hichborn for United States Rubber Co.

Francis J. Rickert for Wisconsin Wholesale Grocers' Association.

J. E. Bryan for Wisconsin Traffic Association.

A. T. Cobb for Yawman & Erbe Manufacturing Co. and Office Equipment Traffic Association.

R. D. Sangster for Commercial Club of Kansas City.

E. H. Hogueland for Topeka Traffic Association.

Charles S. Belsterling for National Tube Co., American Bridge Co., American Sheet & Tin Plate Co., and Illinois Steel Co.

W. H. Titus for Cluett, Peabody & Co.

F. T. Bentley for Illinois Steel Co. and Minnesota Steel Co.

A. B. Caswell for Milwaukee Tanners' Freight Bureau.

H. F. Bartine, J. F. Shaughnessy, Geo. B. Thatcher, and W. H. Simmons for Railroad Commission of Nevada.

A. P. Ramstedt, Leonard Way, and A. L. Freehaver for Public Utilities Commission of the State of Idaho.

George B. Graff for Boise Commercial Club.

C. T. Helpling for Chambers of Commerce of Long Beach, San Diego, San Pedro, and Wilmington, Calif., Santa Ana Merchants & Manufacturers' Association, and Savage Tire Co.

W. H. Metson, Malcolm A. Coles, and Frank Van Sant for Independent Wine Shippers of California.

Charles Clifford and Malcolm A. Coles for Retail Dry Goods Association of California.

Charles Clifford for C. C. Morse & Co., Pacific Hardware & Steel Co., William Wrigley, jr., Co., and other companies.

L. R. Bishop and H. M. Wade for Buckingham & Hecht, Dolliver & Bros., and others.

W. D. Wall for San Jose Chamber of Commerce.

G. J. Bradley for Merchants & Manufacturers' Association of Sacramento. Stanley E. Semple for Stockton Traffic Bureau.

E. P. Grayson for Associated Jobbers of Los Angeles and Los Angeles Chamber of Commerce.

George N. Hoodenpyl for City of Long Beach.

Frank M. Hill for Fresno Traffic Association.

R. E. Allen for R. E. Allen.

Jay W. McCune for Traffic & Transportation Bureau of Tacoma Commercial Club and Chamber of Commerce.

Edward M. Cousin for Willamette Valley & Southern Oregon shippers.

E. S. De Pass for Carnation Milk Products Co.

C. W. Fulton for port of Astoria, Oreg.

J. H. Lothrop for Portland Traffic & Transportation Association.

By the commission:

REPORT OF THE COMMISSION

In Reopening Fourth Section Applications (40 I. C. C. 35) we found that the existing competition by water at the time the report was made, June 5, 1916, between the Atlantic and Pacific coasts of the United States, did not justify the relationship of rates then existing. We also found that the maintenance of these low rates on the Schedule C commodities named in Commodity Rates to Pacific Coast Terminals (32 I. C. C. 611), and the maintenance of the rates on barley, beans, canned goods, asphaltum, dried fruits, and wine from California ports, via rail and water, through Galveston to the Atlantic seaboard, while higher rates were maintained to or from intermediate points, had the effect of unduly preferring the coast points and unduly prejudicing intermediate points. Orders were entered requiring the carriers, on or before September 1, 1916, to readjust the rates on the Schedule C commodities in accordance with the terms of our order in Commodity Rates to Pacific Coast Terminals, supra, respecting Schedule B commodities. The relief orders which had been issued to the carriers respecting the rates on barley, beans, canned goods, asphaltum, dried fruits, and wine from California ports to Atlantic ports were rescinded, effective September 1, 1916. Pursuant to these orders, new tariffs were filed, effective September 1, 1916, containing rates purporting to be in accordance with the requirements of the orders. The new tariffs contained many increases in the rates to the Pacific coast on the Schedule C items, and in the rates on the California products from California ports to the Atlantic seaboard. Protests were filed with the commission on behalf of a large number of shippers and receivers of freight, representing many localities in that portion of the United States lying east of the Missouri River and on localities on or near the Pacific coast. It was strongly urged that the marked increases brought about in these rates would be destructive of certain industries and would result in material losses on account of unfilled contracts, and that some of the new rates were unjust and unreasonable in and of themselves. The commission thereupon suspended the new rates until December 30, 1916. On September 9, 1916, the Merchants' Association of Spokane, Wash., filed a petition, alleging that there was not at that time and had not been since April 5, 1916, any water competition whatever between the Atlantic and the Pacific coasts of the United States, and that there existed no justification for the maintenance of lower rates from eastern defined territories to the Pacific coast than to intermediate points. The petition requested us to reopen the fourth-section applications relating to rates from eastern defined territories to the Pacific coast and intermediate points, and after hearing and investigation to make such new or amended order relating to these rates as the conditions shown might justify.

On October 17, 1916, by appropriate order, we reopened all of the fourthsection applications relating to the rates on commodities from eastern defined territories to Pacific coast ports and intermediate points, and all of the applications respecting rates on barley, beans, canned goods, asphaltum, dried fruits, and wine from California ports to Atlantic ports.

We also assigned for hearing, in connection with the above-described fourthsection applications, Docket No. 9258, Commercial Club of Kansas City, Mo. v. Atchison, Topeka & Santa Fe Railway Company et al., and Docket No. 9278, Arizona Corporation Commission v. Atchison, Topeka & Santa Fe Railway Company et al. Hearings have been held at Chicago, Ill., Salt Lake City, Utah, San Francisco, Calif., Portland, Oreg., and Spokane, Wash.

The rates stated herein are in cents per 100 pounds.

Prior to the hearings the carriers sought and obtained authority to cancel the suspended tariffs and to publish in lieu thereof new tariffs containing more moderate increases to and from Pacific coast points. These new tariffs were filed to become effective December 30, 1916, on statutory notice, and had the effect of increasing the rates on all the Schedule C items from nearly all eastern defined territories to the Pacific coast ports by 10 cents in carloads and 25 cents in less than carloads. No increases were made in the rates to intermediate points in any instance in which the resulting rate would be higher than the rate to the Pacific coast ports. The new tariffs also had the effect of increasing by 10 cents the carload rates on barley, beans, canned goods, asphaltum, dried fruits, and wine from California ports via rail-and-water routes through Galveston to the Atlantic ports, and also of increasing the all-rail rate on canned goods from California points to eastern defined territories from 621⁄2 cents to 722 cents. The effective date of some of the eastbound rates was subsequently postponed by the carriers until March 1, 1917.

The complaint in No. 9258 puts in issue the relation between the rates on commodities to intermountain points from Kansas City as compared with the rates contemporaneously maintained on the same articles from points east of the Missouri River, complainants asserting that the present differences, particularly on items contained in Schedule B, are less than they reasonably should be, and subject Kansas City and its shippers to undue prejudice and disadvantage in attempting to supply the intermountain region with manufactured articles.

The complaint of the Arizona Corporation Commission, No. 9278, puts in issue the reasonableness of the rates on commodities from certain eastern territories to Arizona points, as compared with the rates to Pacific coast cities.

THE SITUATION AS TO WATER COMPETITION

The following figures respecting the ships and tonnage moving via the Panama Canal between the Atlantic and Pacific coasts are said to have been taken from the Canal Record:

The evidence showed that two Pacific Coast Steamship Co. steamers sailed from San Francisco for Atlantic ports during the latter part of August, 1916; that two American-Hawaiian steamers passed through the canal with eastbound cargoes in recent months, and that two steamers sailed from New York for the Pacific coast in July and one in October, 1916. One steamer reached Charleston, S. C., in September, 1916, carrying 17,000 barrels of flour from north Pacific coast points. There are statements in the record of other sailings and expected sailings, but the table of tonnage moved from June 30 to November 11, 1916, shows that this movement is slight and the evidence indicates that the movement has been irregular and uncertain. Much has been said in the record respecting prospective water competition between the two coasts. A most significant thing about the prospective water competition is the enormous increase in shipbuilding at the various ports of the United States.

A statement offered in evidence on behalf of Pacific coast cities, compiled from data gathered from marine engineering publications, purported to show that on October 2, 1916, there were building in the various shipbuilding plants of the United States a gross tonnage of vessels of all descriptions approximating 1,600,000 tons. Of this tonnage, 40 vessels of American ownership, with a gross tonnage of 165,046 tons, were being built at shipyards on the great lakes, and 7 vessels, with a gross tonnage of 19,000 tons, for which the ownership is not shown,

were also being built at these shipyards. Ninety-four vessels of American ownership, with a gross tonnage of 372,665 tons, were under construction on the two coasts of the United States, and 29 vessels, with a tonnage of 123,555 tons, were also under construction in the same shipyards, but the ownership of these vessels is not shown. An extract offered in evidence, taken from the consular and trade reports on November 18, 1916, showed steel merchant vessels, building or under contract in American shipyards on November 1, 1916, according to shipbuilders' returns to the Bureau of Navigation, Department of Commerce of the United States, numbering 417 vessels, of 1,479,946 gross tons. During October, 1916, American shipyards are said to have finished 17 steel merchant vessels of 52,941 gross tons and made new contracts for 17 steel merchant vessels of 77,877 gross tons. It is stated that there were under contract in American shipyards on November 1, 1916, 314 merchant vessels of 960,899 gross tons, which the builders expected to launch on or before June 30, 1917. How many of these are of American ownership or for what service each is designed it is not possible to determine from the facts before us.

It is clear, however, that the present service by water between the two coasts of the United States is infrequent, sporadic, and irregular. It is inferable that the great shipbuilding program now being carried forward in the shipbuilding plants of the United States will result in bringing into this coast to coast trade a number of ships in the not distant future. Testimony on behalf of the merchants on the Pacific coast showed their disposition and capacity to organize and equip steamship lines for this business in the event of radical increases in the rail rates between the two coasts. It was stated that in 1893 the North American Navigation Co. was organized under guaranties of the merchants of San Francisco. Ships were acquired and put in operation, with the result of bringing about marked reductions in the then existing rail rates between the two coasts. The present situation, however, as to the water competition is beyond dispute. There is no existing competitive necessity by reason of water service between the two coasts which warrants the rail carriers in maintaining under present circumstances lower rates to the Pacific coast than are normal and reasonable or lower than to intermediate points.

ATTITUDE OF THE RAIL CARRIERS

The rail carriers are before us in this proceeding seeking authority to continue lower rates on a large proportion of all commodities to the Pacific coast than to intermediate points and lower rates from the Pacific coast via rail-and-water routes through Galveston on a limited list of commodities than are applied from or to intermediate points. It is urged that the ability of the boat lines to establish and maintain rates on certain of these commodities between the two coasts that are far below the level of normal rail rates on the same traffic has been amply demonstrated by the rates maintained during the first year the Panama Canal was in operation, of which the following are representative examples.