BEFORE THE Interstate Commerce Commission Docket No. 13494 INVESTIGATION OF CLASS RATES, TO, FROM AND WITHIN SOUTHERN TERRITORY BRIEF FOR NORTH CAROLINA CORPORATION COMMISSION Edgar E. Clark, W. T. Lee, Chairman, Counsel. George P. Pell, (Washington, I). C.) A. J. Maxwell, C ommission ers. Raleigh, N. C., July 25, 1923 ®be Htbrarp of tfje ®nibersittpofJ2ortf)CaroIina feoofe toasi presented b P Class' FOR USE ONLY IN THE NORTH CAROLINA COLLECTION UNIVERSITY OF N.C. AT CHAPEL HILL 00 49317265 re INDEX PAGE Asheville route. 26 Buffalo-Pittsburg. 57 Cannot justify higher rates to Eastern End, Zone 1. 18 Charlotte, N. C. 69 Central Freight Association territory. 43 Conclusion. 74 Confirmed by Mr. Plant’s rebuttal testimony. 31 Comparison of specific rates and mileages. 52 Classification differences. 60 Differentials: Cincinnati to North Carolina points, history of. 11 Buffalo-Pittsburg to North Carolina points. 13 Eastern Trunk-Line territory to North Carolina points. 55 Thirty cents from C. F. A. on parity with 60 cents from Eastern points. 55 Johnson City, Tenn., case. 54 Lower differential from Pittsburg demanded.*.. 67 Earnings of carriers (comparison) : Chesapeake and Ohio, Norfolk and Western, Virginian, South¬ ern, Seaboard Air Line, Atlantic Coast Line. 39 Gross and net revenue on main line of Southern Railway in North Carolina greater than on any of the Virginia trunk lines. 36 Operating conditions of Southeastern lines within North Carolina.... 30 Preliminary. 3 Proposals made to meet necessities of unreasonably circuitous routes 21 Rates: Trunk lines through Virginia cities rate-making routes to North Carolina points. 7 Carriers ignore order of I. C. C. in rate proposals. 9 Increase by carriers in January, 1922. 14 Carriers’ rate proposals on basis to keep open circuitous routes 67 Higher than combination. 48 Rates to Virginia cities higher than Disque A scale. 62 Revenue, operating, of carriers : Atlantic Coast Line. 32 Southern Railway. 33 Seaboard Air Line. 34 Chesapeake and Ohio, Norfolk and Western, Virginian. 38 Zones Two and Three. 69 Digitized by the Internet Archive in 2019 with funding from University of North Carolina at Chapel Hill https://archive.org/details/beforeinterstateOOnort BEFORE THE Interstate Commerce Commission Docket No. 13494 INVESTIGATION OF CLASS RATES, TO, FROM AND WITHIN SOUTHERN TERRITORY BRIEF OF THE NORTH CAROLINA CORPORATION COMMISSION There will be discussed in this brief the adjustment of rates between Ohio River points, Central Freight Association terri¬ tory and Buffalo-Pittsburg groups, on the one hand, and points in the State of North Carolina, on the other. Rates between points east of Buffalo-Pittsburg groups and points in North Carolina are not involved in the investigation, having been recently revised under order of the Commission in Dockets 10500-10515. Rates between points in North Carolina and the Southeast and Mississippi Valley are included in the investigation. These rates have likewise been recently revised under order of the Commission in Dockets 10500-10515. It is not our purpose to discuss this adjustment further than to express the opinion that it will be more satisfactory to all interests to preserve the general system of grouping, rather than to adopt a complete system of mileage scale rates. Whether such revised rates, upon a general scheme of group¬ ing, are retained, or whether there should be substituted for them rates based upon a mileage scale, the interest represented in the original complaint in Docket 10500 will be served, to wit, rates will reflect a differential under the rates of the Virginia cities related to the shorter mileage between the points in North Carolina and the Southeast. 4 We, of course, have an important interest in the measure of rates, and believe that the rates proposed by the carriers are too high, but we seek no special advantage, and have not given the thought and research to this phase of the investigation that would permit us to offer suggestions of value, or in which we could have complete confidence. This question will be ex¬ haustively treated by other parties. The features of the investigation that are of paramount im- % portance to the commerce and industries of North Carolina are the adjustments proposed by the carriers between Ohio River cities, Central Freight Association and Buffalo-Pittsburg ter¬ ritories and points in North Carolina. The rates proposed by the carriers between all these groups and the zones in North Carolina are so far out of line with any reasonable basis for such rates that their proposal by the carriers can only be understood on the theory that the whole readjustment with which they were dealing was so large, and their attention so absorbed with the larger adjustments to the whole Southeast, that adequate consideration was not given the peculiar features of the North Carolina adjustment; to the different routes over which they have been and must continue to be made; to the different rate levels applying over these routes, and to the totally different transportation and com¬ mercial conditions. Indeed, this view of the matter is confirmed by carrier testi¬ mony. By reference to letter of carrier executives (Womble, Exhibit No. 1168), and also testimony of carrier witness, B. G. Brown (page_), it will be seen that the carriers took the rate of $1.75 from Macon, Ga., to Cincinnati, and made that the basis of their proposed rates for equal mileage from Cin¬ cinnati to Winston-Salem and the western half of zone one, in North Carolina, and the rate of $1.87, Augusta, Ga., to Cin¬ cinnati, and made that the basis for the proposed rate for equal mileage to Raleigh and the eastern end of zone one in North Carolina. This basis takes no account of the fact that Macon and Augusta are in the heart of the Southeast, and that everv mile of the haul from Cincinnati to these destinations is over South- eastern lines, while zone one in North Carolina borders for two hundred and fifty miles alongside of official classification trunk lines, with 86.6 per cent of the haul from Cincinnati to these destinations in North Carolina over these trunk lines, and that these North Carolina cities, having the benefit of trunk-line haulage, have to meet trunk-line competition of their Virginia competitors within their own territory. In other words, under the carriers’ proposals, these zone-one points in North Carolina, having trunk-line facilities within an average of eighty-five miles of their doors, receiving their freight over these trunk lines, and having to meet trunk-line competition, would have to pay the full Southeastern level of rate, not only for their eighty-five miles of haul over rail lines having the greatest density of traffic of any lines in the South¬ east, but also the full level of Southeastern rates for the 86.6 per cent of their haul over the lower-rated lines in trunk-line territory. Comparing specifically Macon and Winston-Salem, the short¬ line mileage, Cincinnati to Macon, is constructed over three lines of road, and all of it Southeastern mileage. Cincinnati to Winston-Salem is over the single line of the Norfolk and Western and' 428 miles of the total of 550 miles is over the trunk line of the Norfolk and Western. Comparing Macon, Georgia, with Greensboro, North Caro¬ lina, the next largest city in the western division of zone one, 480 miles would be over trunk line of the Norfolk and Western and 114 miles over the main line of the Southern. The poorest section of road over which freight would travel Cincinnati to Greensboro, through Lynchburg, would be the trunk line of the Norfolk and Western. The section of the Southern Railway, reaching from Greensboro to Lynchburg, has greater density of traffic than even the trunk line of the Norfolk and Western. (See Plant Exhibit No. 1917, showing traffic density on this section of the Southern Railway, $66,676 per mile, or greater than any section of road in the whole South.) The imperative necessities of commercial competition have at all times been persuasive with the Commission and influen¬ tial with the carriers, and until such time as rates for the whole 6 country can be made on a single blanket, the necessities of commercial competition must continue to have their influence. In what other way can there be adjustments in border terri¬ tories that will permit fair competition in commerce and in¬ dustry ? If commerce and industry in this border territory—blank- eted with trunk line rates for two hundred and fifty miles along its northern border—did not have to live or die in this fierce competition of next-door neighbors—if commercial com¬ petition could be entirely eliminated from the equation—there is no sound economic basis on which the same level of rates could be justified from Cincinnati to 'Winston-Salem and Greensboro as from Cincinnati to Macon, Georgia. When the same level of rates can be logically applied through trunk line territory to Winston-Salem and Greensboro as from Cincinnati, through southeastern territory to Macon, Georgia, there will be no justification left for differentiation in rates in territorial groups, and we will have one level of rates from the Atlantic to the Pacific and from the Lakes to the Gulf. The variation in conditions involved here is as great as will be found to exist between any two general classification and rate territories. The short line route from Cincinnati to every city and town in North Carolina zone one, without exception, is the trunk line route through Virginia gateways. (Womble Exhibit, No. 1205.) This is also admitted by B. G. Brown, chairman of the committee representing the Carolina lines, on cross-examina¬ tion (p. 4829): “Q. Well, it is true, Mr. Brown, isn’t it, that the short line route from Cincinnati to zone one stations in North Carolina— if there are any exceptions to this you can state it—is through the Virginia cities routes? “A. Yes, sir, that is largely true. If there are any excep¬ tions I do not recall them, as to Cincinnati.” The most direct route over southeastern lines is that of the Southern Railway through Asheville. That route is circuitous to every city and town in zone one, and the average circuity is RS 1 /) miles. (Womble Exhibit, No. 1205.) This exhibit shows Ciacinnat ill uj t m h h 9 1 Rcj q f ( o (i 5 ^ 0 Caro 1 1na "Zo tic M iles IZo Miles ttville io - --...fi-'l, ohtH// C awUNA °/M r lanta. -Z’y./ 3 /. 4/VA T/OH White: OFf/ciAL ir E Rft)TOI\Y Black: 5out HtHNi cou con In tori dus I etc* alo tier pet is ] coo Gr< san ter thr be grc to in bet r in lin 12( coi tio < roi if tin i tio So to is 7 the average distance via the trunk lines to be 633 miles, and via the Southern’s Asheville line 719% miles. That the trunk line routes through Virginia cities are, and always have been, the rate-making routes from Cincinnati to North Carolina zone one has not only been admitted by the carriers from time immemorial—they have asserted it, pro¬ claimed it, and emphasized it on every previous occasion when this rate adjustment has been in issue. This position has been so often presented and argued and stressed before the Com¬ mission bv the Carolina lines that we could fill a book with «/ quotations in point from the records which they have placed before the Commission in former rate proceedings. One gen¬ eral quotation, to which all the Carolina lines were parties, will serve here: “It should always be borne in mind, however, that the trunk¬ line adjustments applied by the Norfolk and Western and the Chesapeake and Ohio and their connections from Cincinnati and Louisville and the whole of Central Freight Association territory to Virginia cities absolutely controls the adjustment of through rates to all of the destinations here involved, whether in Virginia or in North Carolina, with the exception of that portion of the State of North Carolina lying west of Statesville and Gastonia. Even beyond the points last men¬ tioned the Virginia cities rates make the rates on some of the classes as far west as Asheville.” (P. 16.) “While the Carolina lines have absolutely no control over the adjustment of rates from the west to Virginia cities, this adjustment of rates, owing to the extremely low level of rates or proportions of rates accepted by the trunk lines from the Ohio River and points in Central Freight Association territory to the Virginia cities, exercise an absolutely controlling and dominating influence upon rates to the destination territory here under consideration. “Dating from the earliest stable adjustment, the rates from all territory north of the Potomac River and on and north of the Ohio River to points in Carolina territory have been made, and logically so, by the routes through Virginia cities, because the measure of these rates has been and is controlled by the abnormally low rates applying to the Virginia cities. This is true with respect to rates from the Ohio River crossings, points in Central Freight Association, Trunk Line and Buffalo-Pitts- burg territories, and was an established fact many years before 8 the Southern Railway was organized, and before there was any practical route via Asheville” (pp. 49-50—Womble Exhibit, No. 1172, quoting from brief of Carolina lines, filed February 1, 1916). Further indicating that the proposed adjustment Cincinnati to North Carolina received no consideration from the carriers other than a blind application of the southeastern yardstick over the route of the Virginia trunk lines as the direct short line, the carrier witness, Mr. B. G. Brown, chairman of the Carriers’ Carolina Committee, admitted his complete surprise when confronted with the fact that his proposed rates were substantially in excess of the full combinations of local rates on Virginia gateways (p. 4830) : “Q. In proposing this adjustment, Mr. Brown, did you give any consideration to the alternative mileage scale which was put into effect in January applicable between Virginia and North Carolina cities, and to the situation that the rates you propose to the territory I have been discussing are substanti¬ ally in excess of the full combinations on Virginia cities em¬ ploying the use of tfiat mileage scale? “A. No, sir; I am frank to say that we did not, and if there are any such cases, of course we must revise the figures.” Would the whole history of rate investigation before the Commission disclose a like precedent, where carriers had after months of investigation proposed a rate revision that exceeded the full combinations of local rates on a competing point, in some instances as much as thirty-one cents on fourth class? It can mean nothing else than that the carriers blindly applied a southeastern yardstick to the extremes of border territory, on rates properly making through trunk-line territory, and without giving any consideration to the differences in commer¬ cial and transportation conditions in the border territory, or without giving any consideration whatever to the level of rates that should apply on the mileage through trunk line, as against southeastern territory, and also, as frankly admitted by Mr. Brown, without giving any consideration to the stipulation by the Commission in its order for this general investigation that such rates should be revised, “having regard to the relation- 9 ship which rates between Ohio River crossings and points in North Carolina should bear to rates between Ohio River cross¬ ings and Richmond, Norfolk, Lynchburg, Roanoke, and other points in Virginia known as Virginia cities.” Hear Mr. Brown on cross-examination (pp. 4846-7) : “Q. Do I understand you to say, Mr. Brown, that you made these rates without any relation to the Virginia cities? “A. Yes, sir; from the Ohio River. “Q. You gave no consideration whatever to the order of the Commission for this investigation in specific terms that your rates from Cincinnati and Louisville to North Carolina points should be revised with relation to your rates from Cin¬ cinnati and Louisville to the Virginia cities? “A. Yes, sir; we gave consideration to that provision in the order setting down this investigation, and after giving it consideration concluded that the rates to the Carolinas should not be made with any relation to the Virginia cities, and there¬ fore have not proposed any such basis.” Again, on page 4872, Mr. Brown says: “I want to state once more that the proposed rates from Cincinnati and Louisville are not made with any relationship whatever to the rates to the Virginia cities.” That is indeed a startling admission from the carriers. If the Commission had not imposed that direction upon the car¬ riers the obligation would necessarily have rested upon them to make their rates to North Carolina with relation to the routes and the gateways over and through which the direct short lines run, and with relation to the rates made over those lines to the gateways. The inherent facts of the situation im¬ posed that obligation upon them, even without any order or direction from the Commission. No other method of construct¬ ing these rates can be defended. And vet we have the frank admission of the chairman of the Carriers’ Committee in charge of the revision of the rates to Carolina territory that they were advertent to this direction from the Commission, gave it con¬ sideration, and then concluded that “the rates to the Carolinas should not be made with any relation to the Virginia cities, and therefore have not proposed any such basis.” 10 Having proposed rates in complete disregard of rates to competing cities through which the rates make, and of the rate level on the lines over which the rates make, and by the appli¬ cation over these routes of the proposed southeastern measure of rates, and confronted by the fact that rates made in this manner substantiallv exceed the full combination of local rates, it is interesting to see how the carriers have proposed to remedy this little defect that had previously escaped their notice. As previously quoted, when Mr. Brown was asked if he had given consideration to the fact that his proposed rates exceeded full combinations of local rates, he replied: “A. No, sir; I am frank to say that we did not, and if there are any such cases, we must revise the figures.’’ In revising their figures the carriers have employed the philosophy of the parent who was interrupted in his admin¬ istration of corrective measures to his son, with the admoni¬ tion that the severity of the punishment was about to £4 split his Sunday pants.” “Very well,” says parent, “just take them off.” The carriers propose to remedy their blundering proposal by the simple process of again lifting the local rates, which are not involved in this investigation, and which had already been arbitrarily advanced bv them in Januarv, 1922, so as to adjust the combination to their proposed rates and so as more effectively to shut out the influence of the Virginia cities trunk-line route, and then, after rebuilding their wall to shut out from this border territory any influence whatever from the trunk-line routes, to employ an alternative rule in their tariffs, graciously conceding that the rebuilt combination of full local rates shall not be exceeded as a through rate. It will be interesting to set down here, in chronological order, the series of events which led to the present adjustment of Ohio River rates to North Carolina, and the series of changes which the carriers have made and are now proposing to make « to complete their process of making their rates to this border territory, over the trunk lines, on the southeastern basis. 11 When the trunk-line basis of rates was put in effect to Nor¬ folk, about 1886, the Cincinnati-Norfolk lines had to take Chicago traffic at Cincinnati on a 32 cents basis. The trunk¬ line rate from Chicago to Norfolk was 72 cents, the Chicago to Cincinnati rate 40 cents, leaving the Cincinnati-Norfolk lines 32 cents. Finding themselves handling traffic from Chicago to Virginia cities on the 32 cents basis, the Cincinnati- Virginia cities lines put into effect the 32 cents scale as pro¬ portional rates Cincinnati to Virginia cities on traffic for Caro¬ lina territory. For all the years up to the percentage advances of the war period this 32-cent scale remained in effect, at times as a pub¬ lished proportional rate, and at times as a basis of division. The Carolina lines during all this period, up to 1914, de¬ manded and received their full local rates from the Virginia gateways on western traffic, their local rates to the zone near¬ est the gateways being 61 cents. It was never satisfactory to the North Carolina shippers to pay the Carolina lines their full local rate of 61 cents to handle through traffic for an average distance from the nearest Vir¬ ginia city of 104 miles, while the trunk lines hauled it an average distance to the gateways of 548 miles for 32 cents. This unsatisfactory situation was responsible for many rate controversies with the carriers, and before the Commission. The first case was that of the Charlotte Shippers’ Associa¬ tion v. Southern Railway Company, 11 I. C. C., p. 108, in which the Commission made the following finding: “In the present case the remedy rests alone with a modi¬ fication of the system of charges to the territory in question, and the principal cause of complaint may be removed by an agreement of the connecting carriers to through rates to ter¬ minal points something less than the addition of the Lynchburg proper rates, and the Commission recommends such action to the consideration of the roads. We have no authority to enter an order commanding such agreement, but in consonance with the practice over so large a portion of the country, and con¬ trolling so great a percentage of the traffic, any other method must remain a constant source of irritation and complaint, be considered an injustice by the shippers, and their discontent an embarrassment to the roads.” 12 In Corporation Commission of the State of North Carolina v. Norfolk and Western Railway et al., 19 I. C. C., p. 303, the Commission found the 61 cents rate from Roanoke to Winston- Salem and from Lynchburg to Durham to be an unreasonable rate, and ordered it reduced to 52 cents as a local rate, and with the knowledge that this would also reduce to* the same extent the through rates from the west. In 1913 the carriers agreed with the Corporation Commis¬ sion of North Carolina to put into effect proportional rates, to apply from Virginia cities to all points in zone one, North Carolina, in connection with the 32 cents trunk-line propor¬ tional Cincinnati to Virginia cities, and the proportional south of the gateways to all points in zone one was made 50 cents in lieu of the 61 cents local rate. This proportional, under percentage changes, became 78 cents, now 70 cents. This adjustment was approved by the Commission upon application of the carriers in re “ Rates to North Carolina Points,” 29 I. C. C., p. 550. The following quotation is from opinion of the Commission in that case: “In Charlotte Shippers 7 Association v. S. Ry. Co., 11 I. C. C., 108, the Commission had occasion to examine the rates from western points to Charlotte and other points in North Carolina. We then found the low rates to the Virginia cities and the relatively high rates to points in North Carolina to be a source of irritation and complaint, and the view was ex¬ pressed that such rates would always be regarded by the ship¬ pers as an injustice, and that their discontent would prove an embarrassment to the roads. “The Commission recommended that the carriers consider the establishment of rates which should be produced by the addition to the proportional rates to the Virginia cities of something less than the full locals from the Virginia cities' to points of destination in North Carolina. That, as we see it, is what will be brought about by this adjustment, and we fail to see in the contention of the Virginia cities how undue discrimi¬ nation or any discrimination whatever against those cities will result from the proposed adjustment which, in principle, ac¬ cords with the adjustment prescribed by us for Durham and Winston-Salem in Corporation Commission of N. C. v. N. and W. Ry. Co., 19 I. C. C., 303. An order will be entered author- 13 izing the establishment of the rates proposed from the Ohio River cities and St. Louis and the establishment of the pro¬ posed proportional rates from Memphis.” Again in 10500-10515 (I. C. C., 64, p. 271) the Commission re¬ quired the carriers to make through rates from all territory east of and including Buffaio-Pittsburg to zone one in North Carolina on differential basis of 60 cents (now 54 cents) over Richmond and Norfolk. So that we have the situation that every time the question of through rates through Virginia gateways to zone one, North Carolina, has been before the Commission there has either been recommended, approved or prescribed a basis of rates less than the use of full local rates, and in one case a reduction of the local rates, applicable both to-local and through rates. With all this history of official condemnation, it should be of interest to note the whole series of changes which the car¬ riers now propose to employ in overthrowing all of the prog¬ ress that has been made in the years of contest over this western adjustment; in nullifying all of the decisions and orders of the Commission dealing with it, and in effectuating their purpose of making rates to this territory, through trunk¬ line territory and over the trunk lines, on the same basis and mileage level as their proposed rates to the southeast, where no part of the haul is in trunk-line territory, or over lines employing in any way trunk-line rates, and where no trunk¬ line competitive conditions have to be met: First. They propose to cancel the present basis of divisions (the old 32 cents scale, now 56 cents) which has been used by the trunk lines since 1886, at times as a published proportional rate, and at times as a basis for divisions, but always, since 1886, employed as the measure of their part of the revenue on Cincinnati traffic for Carolina territory, and so used at the present time with such uniform percentage changes as have applied to other rates. Second. They propose to cancel the proportional rates which the Carolina lines put into effect by agreement in 1914 for their part of the haul south of the Virginia gateways. 14 Third. They, as part of this program, have already increased the local rates (January, 1922) Roanoke to Winston-Salem and Lynchburg to Durham, which were reduced under order of the Commission in I. C. C. 19, p. 303, putting those rates back to the level-of other points in zone one. Fourth. They, as part of this program, increased the local rates to all of zone one (January, 1922), including a further advance in the Commission reduced rates to Winston-Salem and Durham 4% cents per 100 pounds, with lower classes raised even more by use of the so-called I. and S. 1261 per¬ centage relationships. The following figures show the impor¬ tance of this increase on the lower classes: 1 2 3 4 5 6 January, 1922 . 100 86 76 64 52 43 Prior rates . 95.5 80 65.5 50 44 33 Advances . 4.5 6 10.5 14 8 10 Fifth. They now propose to further advance this local scale to $1.11, June 30th basis ($1 net now), although this local adjustment of rates was excluded from the scope of this inves¬ tigation. Sixth. They propose to advance the alternative mileage scale put into effect by them in January, 1922, having alterna¬ tive application south of Virginia gateways. Seventh. They propose to cancel the full Virginia cities local rates, carried by the Virginian Railway as proportional rates through their junction points on Carolina traffic. And they are proposing an adjustment of through rates that, after all this catalogue of successive cancellation of propor¬ tional rates and divisions, and of increase after increase of local rates (some of which were established by the Commission it¬ self), they will still have to employ a special rule in their tariffs to prevent rates higher, and substantially higher, than the full combination of increased local rates. And after all this elaborate plan and change to get North Carolina rates on the full southeastern level, how can it be expected to stand? 15 After all the progress that lias been made in the sound and beneficent policies encouraged and established by the Inter¬ state Commerce Commission of eliminating the old “basing points,” with the dominating and unequal and unfair advan¬ tages which the construction of through rates on their full combinations gave to them; when the central theme and thought of this whole southeastern readjustment was, by con¬ sent of carriers and shippers, to get away from the only re¬ maining conspicuous example of full combination rate adjust¬ ments east of the Mississippi River, how can the carriers ex¬ pect to deny to North Carolina the right of reasonable through rates, made with relation to the level of rates applying over the trunk lines which form the short lines to our doors, rather than the application over these lines of the southeastern level of rates, and to subject North Carolina to the unfair and un¬ equal competition within its own front yard of trunk line rates to the Virginia cities and full combination of increased local rates to the North Carolina cities? There was back of this investigation the legitimate hope that there would come from it an adjustment harmonized to meet all conditions and end rate controversies within the South. Surely this result cannot be achieved by the blind application of one yardstick to all varying conditions, resulting in rate adjustments in this border territory more restrictive and more discriminating than any that have obtained in the past, and that have met condemnation by the Commission whenever brought under its review. We will not discuss at this time suggestion of carriers that there may be a further increase in the local rates from Vir¬ ginia cities to zone one, in the process of further building up of local factors against their proposed high level of through rates, as these local rates are not embraced within the scope of this investigation, but something more should be said of their proposals to cancel the basis of rates to and from the gateways that make up the present through rates Cincinnati to zone one. These factors are shown on AVomble Exhibit, No. 1202, reproduced on next page. . Corporation Commission Exhibit No. 1202 C. 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C. C. 297 and 347; Agent Speiden, I. C. C. 510. 17 Many times during this investigation carrier witnesses have called to their aid the support of the argument that a particu¬ lar rate had been of long standing. That is of course not a # 0 conclusive argument, nor yet wholly convincing in itself. The old 32 cents basis of rates from Cincinnati to Virginia gate¬ ways on Carolina traffic has stood since 1886, and precisely the same condition from which it had its origin and thirty-seven years of continuance exists today and is to be continued—the fact that the same lines over which this basis applies apply the same basis on rates from Chicago to Virginia cities. The 32 cents proportional basis was 30 cents less than the local rate, Cincinnati to Virginia cities. The Chicago rate to Vir¬ ginia cities was, in 1886, 30 cents less than the Cincinnati com¬ bination, and approximately this same factor, reflecting per¬ centage changes, sticks in the rates Chicago to Virginia cities today. The lines over which it applies have offered no justi¬ fication whatever in this record for its discontinuance as a proportional or divisional basis on Carolina traffic. They are prosperous lines and can live handsomely today on the per¬ centage advances of their old rate levels. If one of the old landmarks in the structure of rates is to be set aside, is it unreasonable to suggest that at least the lines over which it has had thirty-seven years of uninterrupted application should put their own witnesses on the stand to justify it with direct and substantial reasoning? It ought not to be left to their neighbors and competitors to make out the case for them. No witness of the Norfolk and Western or the Chesapeake and Ohio has appeared in these proceedings to ask that it be done or to offer justification for it. As to the proportional rates established south of the gate¬ ways in 1914, their proposed cancellation was drawn out of witness representing the Carolina lines, on cross-examination, but no serious effort has been made to justify the cancellation of those proportional rates except the suggestion that they were originally made to satisfy popular clamor. Whatever the moving cause of this tardy measure of justice to the ship¬ pers of North Carolina, the Carolina lines did agree to it in settlement of complaints pending before the Commission at 2 18 that time, and the rates became effective under approval of the Commission upon application of the Carolina lines. The proportional rate south of the gateways to zone one was then fixed at 50 cents. Under percentage advances and reduc¬ tions it is now 70 cents. It has been at all times a not unrea¬ sonably low basis for constructing long distance through rates for an average haul by the Carolina lines of 104 miles south of Virginia cities, and of 85 miles south of gateways on Vir¬ ginian Railway, and is more liberally reasonable now than when it was established by agreement at 50 cents. No reasons have been shown to justify its cancellation except as it be¬ comes a necessary part of the carriers’ program to put the through rates through trunk-line territory to zone one on the southeastern rate level, and we submit that no proper justifi¬ cation has been shown for the proposal, and they should not be permitted to cancel these proportional rates and divisions unless through rates substantially reflecting the same level are prescribed in their stead. Certainly there is nothing in this record to show the 70 cents proportional rate for the average of 104 miles south of Virginia cities proper and of 85 miles from Virginia gateways to be an unreasonably low proportion of a through rate, or to justify its cancellation. CANNOT JUSTIFY HIGHER RATES TO EASTERN END OF ZONE ONE * * We have discussed, so far, the proposed adjustment of $1.75 Cincinnati to Winston-Salem and the western end of zone one. As shown, the short line route to every point in zone one is the trunk-line route through Virginia gateways. Zone one was established about 1886, and has continued without material, if any, change in its boundaries since that time. The zone covers some 250 miles in length along the northern border of the State, and down to and including stations on the east and west line of the Southern Railway, Goldsboro to Winston-Salem. What was the reason for making a zone 250 miles in length running laterally with transportation lines from the west, and 19 ignoring distance in rates from the west as between cities in the eastern and western ends of this zone? The same reason that has continued to exist to this day, and that will continue to exist, and that must preserve the parity of rates as between cities in the eastern and western ends of the zone without regard to distance—the fact that just across the State line in Virginia there is a like rate blanket to which rates from the west are blanketed along the trunk lines for two hundred and fifty miles and more intermediate to Norfolk, the very lines over which the rates make to all points in zone one. Just across the State line the rates blanket to and through all the gateways. The rate-making routes disregard distance, and will continue to disregard distance to the contiguous Virginia cities group. Their rates from Cincinnati are the same to Nor¬ folk, Portsmouth, Petersburg, Richmond, Lynchburg and Roanoke, without regard to distance. Their formerly pub¬ lished proportional rates and present divisions of through rates on Carolina traffic are the same through all these gateways, without regard to distance. No direct representative of any of these Virginia lines has appeared in these proceedings to propose or justify any change in their equalized rates to all Virginia cities or equalized divis¬ ions through all gateways to zone one destinations. Upon what basis could they justify an abandonment of that policy, voluntarily established and voluntarily maintained for nearly forty years, and proposed to be continued as to the Virginia cities, as long as such policy of ignoring distance is continued as to Virginia cities? As long as this policy is continued, how can the Southern lines ask for higher rates or divisions for hauling traffic one hundred miles south of Norfolk than for hauling traffic 100 miles south of Lynchburg? Their service is precisely the same in either case. Measuring distance by transportation rates, as it is meas¬ ured by the Virginia trunk lines, Norfolk is just as close to Cincinnati as is Roanoke, and a point 100 miles south of Nor¬ folk, in zone one, is, by the same standard, as close to Cin- 20 cinnati as is a point in zone one 100 miles south of Roanoke or Lynchburg, or Richmond, or Petersburg. The necessities of commercial competition as between North Carolina and Virginia cities are the same in either case. The carriers’ proposal of higher rates to the eastern end of zone one is another case of blindly using a southeastern yard¬ stick to measure distance in a territory and over trunk lines where rates are not measured in terms of miles. It is admitted that the trunk lines form the short-line routes to all these points, and of course not challenged that the trunk lines blanket the rates from Roanoke to Norfolk. What has the southeastern yardstick to do with making rates to or through these respective towns? No suggestion of higher rates to the eastern end of zone one has ever been made in the forty years of history of this adjust¬ ment until this attempted use of the southeastern yardstick up to the very blanketed border of trunk-line territory, and until the carriers conceived the idea of making rates that would open up under fourth section observance all the cir¬ cuitous routes through southeastern territory to these zone one points. If higher rates should be made from Cincinnati to the east¬ ern end of zone one, making through Virginia gateways, why should not Chicago, the whole of Central Freight Association territory, and Buffalo-Pittsburg rates, making through the same Virginia gateways, be made higher? The carriers are even now proposing the same rates from Central Freight Association territory to the eastern end of zone one as to the western end of zone one. If, with forty years of age and precedent and reason behind it, it is now proposed to continue it from Central Freight As¬ sociation territory, through the same gateways, why should it be changed as to Cincinnati, which is in Central Freight Association territorv, and from which rates make through Vir- ginia cities? There can be no reason for this proposed change except that the proposed rates from Cincinnati are fallaciously based upon the circuitous southeastern routes. 21 PROPOSALS MADE TO MEET NECESSITIES OF UNREA¬ SONABLY CIRCUITOUS ROUTES It is conceded that one of the considerations for this unrea¬ sonable proposal was the making of a rate structure that would put southeastern routes to this territory from Cincinnati on a fourth section basis. Quoting from testimony of witness J. E. Tilford (1007-1008) : “Q. (By Commissioner Maxwell.) Are you through with your discussion about Exhibit 196? “A. Yes, sir. “Q. I understood you to say that you had worked out an adjustment to the Carolina territory with relation to the routes from the Ohio River to the southeastern points? “A. That is true; we have worked the adjustments so they would dovetail. “Q. In the figures as shown on your Exhibit 196, you have worked them out by proposing rates to points in eastern North Carolina, right on the Virginia-North Carolina border, from Cincinnati as high or higher than the rates to any intermediate point through any of the southeastern gateways. “A. WELL, THAT WAS NECESSARY TO AVOID FOURTH SECTION VIOLATIONS AT SOUTHEASTERN POINTS.” It will be interesting to note the unreasonable circuity of the various routes accommodated to fourth section observance by this proposed adjustment. For a graphic illustration of such unreasonable routes, we have sketched on the next page some of the most unreasonable of these proposed routes, which have been traced from witness J. E. Tilford’s map, Exhibit No. 196. We are not considering, at this time, whether these routes should be absolutely closed. We have no objection to their remaining open for the handling of traffic, and there may be times when it would be in the public interest for them to be open routes under permission from the Commission. But that it is unjustifiable to construct a rate structure to maintain routes as unreasonably circuitous as these as open routes is too plain for serious argument. This would be incontestible if the 22 competing routes were all within southeastern territory, and over routes properly employing the same general level of rates. It is difficult to treat with respectful consideration the pro¬ posal to make the rates to fit the necessities of fourth section observance over these unreasonably circuitous routes through southeastern territory as against the direct short-line routes through trunk line territory. In this connection we would call attention to the testimony of B. G. Brown, chairman of the Carolina Committee of the carriers, on cross-examination (pp. 4806-4814) : “Q. So that there is nothing in the order of the Commis¬ sion in I. and S. Docket 1261 or any other order of the Com¬ mission, other than the order for this investigation, requiring a revision of rates from the Ohio River, Cincinnati and Louis¬ ville particularly, to North Carolina points, other than the re¬ moval of fourth section violations? ‘‘A. That is correct, Mr. Maxwell. “Q. Now, as to fourth section violations, I want to ask you to name the several routes by which traffic is handled between Cincinnati and Louisville and points in North Carolina. ‘‘A. I will at least try to give the principal routes. There are quite a number. The Southern Railway has a route through Asheville. There are routes via the Southern Railway and other lines through Atlanta; still other routes operating through Augusta, Ga. To a portion of the Carolina territory there is also a route of the C. C. and 0. into Spartanburg. Via the Virginia gateways there are routes in connection with the C. and 0. and the N. and W. through quite a number of gate¬ ways. The principal ones are Roanoke, Lynchburg, Peters¬ burg, Richmond, Norfolk, and Suffolk, Va. I do not recall that at the present time the Virginian Railway, with its routes also through Virginia gateways, handles Cincinnati-Louisville traffic to the Carolinas. It is my impression that they do not do so at this time, although they largely form the short line to a part of the territory. “Q. The Virginian, you say? “A. Yes, sir. It is their purpose, however, to participate in the proposed adjustment. “Q. (By Mr. Rixey.) Has not the Louisville and Nash¬ ville a route through Jellico? “A. That is one of the several routes that I referred to briefly as being through Asheville. The L. and N. brings the 5o , ™ a w MAP INDICATING SHORT TRUNK-IANE ROUTES BETWEEN CINCIN¬ NATI AND NORTH CAROLINA ZONE 1 POINTS, COMPARED WITH CIRCUIT OUS ROUTES THROUGH SOUTHEASTERN TERRITORY R stands Tor Carriers’ Proposed Rate. 23 traffic to the Southern Railway at Jellico, Tenn., which the Southern handles through Asheville. The Cincinnati, New Orleans and Texas Pacific brings traffic to the Southern Rail¬ way at Harriman, and the Southern handles it through Ashe¬ ville. “Q. (By Mr. Maxwell.) Are there not through rates and divisions in effect via the Virginian Railway gateways'? “A. My recollection is, Mr. Maxwell, and I am basing it on a statement made to me by the general freight agent of the Virginian Railway some months ago, possibly a year ago, that his company did not at that time, and had not participated in that Carolina traffic from Cincinnati and Louisville, but had done so, of course, from Central Freight Association territory. “Q. Is it their purpose to do so again? “A. It is their purpose here to join in the Cincinnati-Louis- ville adjustment. “Q. Now, as to the routes through the Virginia gateways, speaking in general terms, are there fourth section violations in the rates from Cincinnati and Louisville through the Vir¬ ginia gateways to North Carolina destinations? “A. I think it is safe to say that, generally speaking, there are not. Of course we have some of the water points in the eastern part of the State that perhaps reflect violations, but generally we have got very few fourth section violations by the Virginia gateway routes. “Q. That is true, first, for the reason that the Virginia trunk lines have for many years observed fourth section prin¬ ciples? “A. Yes, sir; and that the Carolina lines have for many years observed fourth section principles from the Virginia cities. “Q. That was for the reason that the participation of the Carolina lines in traffic through the Virginia gateways is based on rates to the zone nearest the Virginia gateways from Cin¬ cinnati and Louisville, less than the rates to the next zone, with the rates to the second zone less than to the third zone, so that they are built up that way on a zone basis having some relation to distance, and generally at least with no fourth sec¬ tion violations? “A. That is correct, Mr. Maxwell; that is to say, the desti¬ nation relationships as to Cincinnati and Louisville traffic have largely if not absolutely reflected the relationships that ex¬ isted in the rates from the Virginia cities proper. 24 “Q. And the same thing would be true with respect to traffic from Central Freight Association territory and Buffalo- Pittsburg territory ? “A. Yes, sir. “Q. Now, as to the southeastern routes, take first, the Sea¬ board Air Line Railway. That has rates and divisions in effect on traffic from Cincinnati and Louisville through what points, what southern gateways? “A. Through Atlanta certainly. “Q. And probably through Birmingham? “A. I would not say so from Cincinnati and Louisville, but undoubtedly so from Cairo, Evansville and St. Louis. * “Q. And certainly through Atlanta from Cincinnati and Louisville ? “A. Yes, sir. “Q. Do you know if it has been the policy of the Seaboard not to solicit shipments from the West through the Atlanta gateway for destinations in North Carolina north of Monroe, N. C., a point on the North Carolina-South Carolina border? “A. Frankly I did not know that, Mr. Maxwell. “Q. Well, just taking the situation as you know it to be, wouldn’t it occur to you as a sound practical policy for the Seaboard to prefer to take these shipments from the nearer Virginia gateway and handle them over what is the best de¬ veloped section of the Seaboard Air Line Railway system, rather than to take them from the further removed south¬ eastern gateways? “A. Well, I don’t know that I could agree with you on that. I should say that a given railroad in determining its policy as to the preferred gateways on any traffic would neces¬ sarily take into consideration a number of conditions. The Seaboard Air Line might find it profitable to engage in that business through the Atlanta gateway, or might have found it so. - I do not know that they have done so. I am speaking of the territory now, as I understood you to say, north of the Carolina State line. “Q. I am asking you more particularly with respect to the economics of the situation. From your knowledge of the situ¬ ation, wouldn’t it be a more economical routing to handle the traffic if the Seaboard Air Line should take Cincinnati and Louisville business from the Virginia lines at Petersburg or Richmond to North Carolina destinations than from Atlanta and Birmingham? “A. Well, I do not hesitate to say that as to the Southern Railway- “Q. Mr. Brown, I was asking you about the Seaboard Air Line. “A. I don’t like- “Q. You know that general situation? ‘‘A. I just do not like to make a statement about the Sea¬ board Air Line policy that I naturally do not know. “Q. We are away from the question of policy now, and I am asking you as to the economics of it. “A. At least on the present level of rates, I expect it might be the best for them to turn the traffic loose as soon as they could. “Q. And that would be to take it at the Virginia.gateways? “A. Yes, sir. “Q. Do you know the same thing to be true with respect to the Atlantic Coast Line? “A. I should say so. “Q. That would be substantially the same situation? “A. I am pretty certain that the Atlantic Coast Line does not today solicit traffic into what we call Zone 1, like Golds¬ boro and Raleigh. I do not think the Atlantic Coast Line solicits Cincinnati-Louisville business via the Augusta route today. “Q. They have rates and divisions in effect, but in your opinion they do not solicit the business, and would prefer to handle it on the short haul? “A. Well, the rates might technically be in effect. Cer¬ tainly I do not know of any divisions being in effect. I had a rather extensive correspondence with them on that some time ago. The Southern Railway got hold of a shipment going to New Bern, somewhere in there, and tried to turn it loose to the Coast Line at Columbia. We knew there were no divis¬ ions, and it cost us some money before we got through with that deal. “Q. Just what is the make-up of that Coast Line route through Atlanta from Cincinnati and Louisville? “A. Well, as I say, I do not understand that that is a practical matter. There is a route through Atlanta and Augusta now into the upper part of the State. “Q. What lines would it move over? “A. If there were such a route, the Georgia Railroad likely, through Augusta, and then the Atlantic Coast Line. There may be a-1 suppose that is about the only way they could handle it. “Q. I take it as a matter of course. Does the Southern handle any business through Atlanta from Ohio River points to North Carolina destinations? 26 “A. To the zone we are speaking of? “Q. Yes. “A. Not if we can avoid it.” We have here the peculiar situation that it is admitted by carrier witnesses that the proposed rates to North Carolina points were made with relation to opening up these circuitous southeastern routes as fourth section routes, and the frank « * admission that it will be uneconomical for any of the Carolina lines to use the southeastern routes —uneconomical for the Seaboard and Coast Line, and that the Southern doesn’t use these routes now “if it can avoid it.” It is no defense of these proposals to say that they have not applied the proposed southeastern level of rates to the greater distances via these circuitous routes. They have applied the southeastern level of rates for the mileage over trunk lines through trunk-line territory to the pivotal points in the group and for the purpose of making rates high enough to meet the highest rates applied to any intermediate points over circuitous routes through southeastern territory. Neither the southeast¬ ern rate level nor the convenience of circuitous southeastern routes have anything to do with making rates over the direct lines through trunk-line territory to points in North Carolina. THE ASHEVILLE ROUTE So that, after having constructed their proposals, admittedly to meet fourth section observance by all these routes, Mr. Brown was then driven to the admission that only the route through Asheville has a practical interest in fourth section question to this territory (p. 4814) : “Q. That would reduce the fourth section question, then, from a practical standpoint, to the route of the Southern Rail¬ way through Asheville, would it not? “A. Absolutely. The routes through Atlanta and Augusta have had no concern with fourth section violations in this ad¬ justment to the Zone 1 territory.” This admission brings us, frankly, the elimination from con¬ sideration of all other routes over southeastern lines to Zone 1. 27 These other routes, admittedly, are entitled to no consider¬ ation in making these rates. Now let’s inquire what consideration the route of the South¬ ern Railway through Asheville is entitled to have in making these rates from Cincinnati to Zone 1. Zone 1 is entitled to have its rates made over the direct and most efficient routes, and on the level of rates employed by those routes. There should be no disagreement about that. To every point in Zone 1 the trunk lines make the short-line route. To two of the largest cities in the zone, considered by the carriers as pivotal—Winston-Salem and Durham—one of the trunk lines, the Norfolk and Western, has a single-line haul from origin to destination, and all of the distance except 122 miles from Roanoke to Winston-Salem and 117 miles from Lynchburg to Durham is over the main line of the Norfolk and Western’s trunk line. The total distance from Cincinnati to Winston-Salem over the single line of the Norfolk and Western is 136 miles less than its mileage from Cincinnati to Norfolk, and to Durham 87 miles less than to Norfolk. (See next page for graphic illustration.) The southeastern level of rates does not apply over these lines and cannot in good conscience be made to apply in con¬ structing rates over them to these points in North Carolina. The line of the Southern Railway through Asheville is not the short line to any point in zone one. Its average circuity to all points in the zone is 86Yo miles. Every mile of its line is in southeastern territory; it has heavy mountainous grades and curves and does not compare in density of traffic or operating efficiency with the Virginia trunk lines or with its own lines reaching many of these desti¬ nations in connection with the trunk lines. We invite attention to another quotation from the fourth section brief of the Southern and other Carolina lines (Womble Exhibit No. 1172) showing that those lines have not been “and cannot be” material factors in the adjustment of rates under consideration: 28 “The purpose of the evidence introduced along* this line is to clearly show how these low rates or proportions accepted or applied by the trunk lines on Carolina traffic absolutely over¬ come the matter of distance or mileage shown compared with rates which the Southern or Carolina lines can afford to accept, and place the Carolina lines operating via the Ashe¬ ville, or the Spartanburg-Columbia, or the Atlanta routes, at a distinct and striking disadvantage as compared with the routes via the Virginia cities. Not only is this true where the mileage via the Carolina routes is more circuitous or approxi¬ mates the mileage via the Virginia cities routes, but it is like¬ wise true where via any of the Carolina routes the distance is less to certain Carolina destinations from the Ohio River than via the Virginia cities routes. “Owing to the absolutely controlling influence of this trunk line adjustment, and the low level of rates or proportions applied by the trunk lines from the Ohio River and beyond to Virginia cities, and accepted by them on Carolina traffic, the distance via Asheville, even where the route is the short line, have not been and cannot be material factors in the adjust¬ ment of rates from the west to points in that portion of North Carolina east of Statesville or Gastonia, or to points in Vir¬ ginia in still closer proximity to the Virginia cities. Indeed, the controlling influence of the Virginia cities routes makes itself felt as far west as Ashevlle on the Southern Railway’s route via Asheville (pp. 51-52). “When it is shown that the factors applied by such lines as the Norfolk and Western and Chesapeake and Ohio from Central Freight Association territory to Virginia cities are far below any rates in the South, and necessarily measure and fix the rates to the low-rated territory here involved, it will be manifest that when these much stronger trunk lines, with their far greater density of traffic, easier operating conditions, and vastly superior earnings, can and will continue to dominate the situation irrespective of the question of distance" (pp. 52-3). “On account of the trunk line adjustment applied from the whole of Central Freight Association territory to the Virginia cities, another inevitable result is that the influence of this low adjustment, brought into Southern territory as far South as the Virginia cities, must and will be reflected beyond these gateways into and throughout Carolina territory” (p. 62). C/a/c/M/va r/ WOMBLE EXHIBIT No. 1181 /lLUSTKAT/VG R£L ATI Kif DISTAASCE FROM C/fiSC/ Ass/A Tf of 14*6*fif/A A*o A/oRth Carol /a/a C/r/ss Reach so er S/mcce L/mc of Roreock <5 Western /&\/lroa o. (SC4jL£-£/m = tow.) AC CoRporat/oa/ Coma-i/SS/or £»/bit //o. Stress: Wo able tCDocrrzr /3,49+ ■ Ml IV as »'«' • " . .f.*****-,.*,,**. -»<*, . . •. *rfw*o,..f V Vj- . ? . H . * J !•• • <»“ Mi. .Mi> ,*«, . • • • ■ • ■ ««.. • • • _ --~ 29 The foregoing* quotations from their own words represent the historical position and contentions of these carriers for all the years of the continuance of this adjustment. There has been no change in the basic elements of the situation. In “Rates to North Carolina Points/’ 29 I. C. C., p. 556, the Commission found that the Asheville route of the Southern Railway “Is clearly at a disadvantage in making rates to the territory east of Salisbury.” This disadvantage, in compari¬ son with the trunk-line route, is based upon these important factors: The mountainous country through which it operates, with heavy mountainous grades and curves. Its operation through southeastern territory, where higher rates are generally observed. Its circuitous route and greater mileage. These natural disadvantages of the Asheville route of the Southern Railway make it clear that if it insists upon the right to continue in this business, it must do so upon the terms it has always recognized—a frank recognition of its disadvan¬ tage, for which it must either obtain permission for non-observ¬ ance of the fourth section, or meet the fourth section by reduc¬ tion of its intermediate rates. It has had fourth section relief over this route all these years, and has maintained substantially higher rates to intermediate points as far west as Asheville, and, on some classes, beyond Asheville. It now proposes to put that route on a fourth section basis by raising the rates to every point on the line, not only to the full southeastern level, but in some cases substantially higher, mile for mile, than the full southeastern level. Its proposed rate to Morganton is fifteen cents higher, for the same dis¬ tance, than its proposed rate to Atlanta. On a line that has been operated at this proclaimed and recognized disadvantage, and upon rates protected by fourth section relief, it would in¬ crease the rates to every station on this line from Asheville to Salisbury. 30 OPERATING CONDITIONS OF SOUTHEASTERN LINES WITHIN NORTH CAROLINA Dealing with the adjustment from Cincinnati to North Caro¬ lina, zone one, we have endeavored so far to show that the carriers’ proposals are indefensible because they have.ignored the level of rates historically and at the present time employed over the trunk lines, which constitute the short-line route in every case between these points, and because the carriers now seek to apply over these trunk lines, in reaching North* Caro¬ lina destinations, the rate level which the carriers now seek to put in effect over southeastern lines, which have always had, and presumably for many years will of necessity have to employ, higher levels of rates than those in effect on the trunk lines. They would leave us at the mercy of unequal competition with the Virginia cities, which have the trunk-line rates, and while continuing to haul our freight over these same trunk lines would require us to pay the southeastern rates for the trunk-line service. There is another important element which the carriers have ignored, and which we will now ask to have considered. We have shown that one of these trunk lines, the Norfolk and Western, reaches with its own rails, by single-line haul from Cincinnati, two of the principal cities in zone one, and the two cities which the carriers themselves have designated as the pivotal points in the zone, Winston-Salem and Durham. (Womble Exhibit, No. 1168.) These advantages clearly distinguish the rate structure Cin¬ cinnati to zone one from any adjustment to the southeast. Every foot of the way from Ohio River crossings to all points in the southeast and the Mississippi Valley is over southeastern lines, where higher rates are consistently employed. The carriers, in their proposals, have also ignored the fact, which is clearly demonstrated in evidence, that for the aver¬ age haul of 85 miles south of the gateways, and an average of 104 miles south of Virginia cities proper, to .these points in zone one, the character of railway lines for this short part of the haul is superior to the transportation lines in any other part of the South; that these lines not only border on trunk¬ line territory geographically, but that in physical character¬ istics and density of traffic—in gross and net earnings—these parts of these southeastern lines partake of the characteris¬ tics of, and have all the transportation advantages of, the trunk lines. For convenient reference we are reproducing in the follow¬ ing pages Womble exhibits numbered 1187, 1188 and 1189. These exhibits cover ten years of operations of the Southern Railway, Atlantic Coast Line and Seaboard Air Line, giving separately the gross and net earnings for each system per mile of road and per mile of road within North Carolina. Taking the ten-year average, the superiority of net earnings within North Carolina, compared with system earnings, is, for the Southern 56 per cent, for the Coast Line 19.7 per cent, and for the Seaboard 153 per cent. The strikingly superior gross and net operating revenues per mile of road in North Carolina are produced under rates which the carriers repeatedly designate as depressed, compelled, and sub-normal. These statements, covering a ten-year period, show that North Carolina is related to trunk-line territory not only in geographical proximity—not only in having to meet the com¬ mercial competition of trunk-line rates to the Virginia cities— but that we have in fact trunk-line conditions on the south¬ eastern lines within North Carolina with respect to traffic density and net earnings. CONFIRMED BY MR. PLANT’S REBUTTAL TESTIMONY The showing made by these exhibits was strengthened, rather than weakened, by the rebuttal testimony of Mr. A. H. Plant, comptroller of the Southern Railway. None of the other lines made any effort to meet this testimony, and Mr. Plant’s theories, by which he sought to discredit the force of his own sworn reports to the North Carolina Corporation Com¬ mission, add strength to the original testimony of Mr. Womble. 32 i- x * E » E 5 © Q c 2. — -t- © s © ^ c S © > o JT • OQ O O * C 1 o r - C w ^ M ^ »*» w * Pv *h«*J g fc <*1 * NH g§ O ^ 5 H c e E n dfc Sci HH p E fc p w !U E ^ C h ^ x < E C C E O E N* NN C^ *■’*• r 1 ^ 6 g ps p r _r» N«< Mq H E E X g E E E H fcgS E- ^ T x ~ ro^ Fr 1 1-2 ^ ^ rtH - H ” ^ g E - E c 9 E E w E **■ *^* c; V ^ < E ^ E ** 6 EC cP ~ v £ ~ g E E ■ | = | e *5 H X > aj ’ to ; 2.~ o _ U ® e« ^ S & E E p, ^ n X >— fe wC” C *- 1 ©■= § = " o Sj k_i . o >, fe -50 1.2 CO 0 CO CO 0 . E 0 3 0 Q (NO^WOOOOCOOOO rf 00000005 00NCD HHHNH^HNHH os 0 |i "e ^ c5 o> e Ce 0 ^ Oh 02 O 2 p « P 2 £ P5 O 2 N^iOMONOW^iO iO»C -h 05 OO CD iO CO CO r^OO CO >> Xil E05 00rt oj Cu «E ES ■ CO w 0 ^ 0:2 10 00 1 iMrf ONCONN EOOCDOC OC5NIOCD ErHrt(M(M(ME(NrHE TtH OS Q) tl 2 eh ^ E E 05 c r. a M O 2 co c s» Of3 o 2 OC5CD»DCOErt<05(M’^ CCOOOOICOCD^^CO ■^COWOCOOecDiOOO OO 05 05 00 O ’ ^ CON»C 02 >> m OCONiDiONt^N05E 05C0(N(N05E(Mi0i0O COCC05NOOMOOCecO t^t^t^coir^csr-tco^oco go 05 o-: 0)^0 tJu +J b£) ^ o Cj 0> r, 05 NCOMOOOON^COCO (NNNINNhhhhh D1 ^CV) (M D1 (M W (M (M (N CS CM o z NIMIOCDONCDIO^CO i m lO >- CD 05 N e OCO OCO Ne^OO(NOONCD05 05 ioooor^t^oocx)(X)Oo 02 tdO c t E o> IMCOC ‘0CDN00C5O'H OC5C5C5C50505 05 05 0 Authority: Annual reports of Atlantic Coast Line Railroad Company to North Carolina Corporation Commission. Substitute for page 33, Brief of North Carolina Corporation Commission, in I. C. C. Docket No. 13404. (Corrections indicated in Black Figures.) 33 x x o * a vi ^ •-H 0; s ^ 3 M o O o £ 0; 3 •M 4> w © 35^ So 5 O >h Qq fc M 5C y 4-1 3 C3 *9* OH 0S>< H £ eg B ' da H Oh fagr . M Hh < OS So c H HH /V» fc OS H » H X H OS c fc os w E u c OS C H x C fc rv; w M X 2 H S gos Hg kg •'’l £ HH M rS HK < H OS X H ^ gx C m H OS °H S5 K H K H < h x ti Ci © K ■wju wi a,.S 3£.£ s oj > £ m -*i C30 K (J co F -*-> % 3 «fc?d& *&&*&*'” o CO LO £ c^oia>oocoooc^Lnco 1 1 > c^CNjojc^co^t^cicoco 1 C/5 6^ 1 1 1 1 1 CO -M o widj.S 53 Sr^-S 3 i> > £ eoooco05r^"—ii—ii —iooio u c*2£5 . • CO aiocMCvjo^coco^om CD ^o^z" Hr-T-1-MIN(NC1W T— w ^O'^fcoa^Lococvicocr) 1 1 1 1 1 K. CO >» OiNOOOOtXjlrHLOa^ cbaio^ooocNiooooT-Hco 1 1 1 C/5 rH rH pH rH w ^ 1 1 ^e- 1 1 1 gUM« 0) bo re (OOOOOOOl-1 Tj< Tj< Tp C5> v ododoi^NNNN 00 u rG CM CM CM CM r-H t-H r-H i—t r-H S d cDNtsinoooa^aajO) CDCDtDCDCOrHrHrHrHrH 1 1 1 1 1 • 13 ^r^t^t^tCOCMCMCMCMCM I 05 4-> 03 *—H r-H r-H r-H *-H r-H rH r-H r-H »-H 1 1 J-H CO >> OOOOOJ)GGG)G 1 C^C^O^C^C^CDCDCO^O^O 1 C/5 1 1 1 1 cMco^LnNooa5 0rH r-H r—H r—H »-H •—H r-H *——< i—H CM CM O^OOO'iO^O'iO^O'iOO'XT} a; U) re i-i < Authority: Annual reports of Southern Railway Company to North Carolina Corporation Commission. . Corporation Commission Exhibit No. 11K1) 34 A* 4i c a © © " 0 O I r - i E- A^ AX ££ £ fc < " I H rr» < & = [ii w' y & £ * V} tn © £ aa x S < s § r * i-* u. a- K x Cl £ ^ C5 * e ?; rp; p r^ h- . £ £ Ci SS" * t /V* ^ COXCOCl-COONMCC l l l ■ i i o d C5 X O ^ X N X Cl i »0 CM to CO »0 ^ i U, ^ i ■* NCOX^OC5CO-t*XCO i K—t u r-uOiOOiCTfiOO o i 71 AAAAAAAA » i >i C^CNJC^lC^CMCM^r-. l m l 6^ l i -u "S M jj .S aj gz.s S tX H U jS d oj . -<-> ? - > s r V as H £ « vi.O >> £•£} « • 1/2 "'' pH fg X w- o CO OJ 3 o 0) > d a (M co co L- o oo o •—t d 71 CO oo oo GTP CO I'- 05 >> co co co co to to CO to to to i—H Sh V a} CM tO i i ^^^ONOOCO-rfN i d XtOClXOCOOClO^ i br— (M OO^ 050500^(^-0^ i ■m i z OOHC5HCONXHC5 1 i—< r-H t-H t-H »-H Od , ~ l 1 mwm o3 t. i P-H (J) 1 r^ O § 1 i i 1| r* c 't OOCICONOXN-^ i i A tH X OXOtOXCOCltO^Cl i °cS 71 ^ 05ClXt0N05t0XO i 1 >> NNXONXO^XCl i in i i i *- i foS*, n -do o z .. Ph Cx H 0) bX)£ b£ O c3 O *p I O 05 X Cl ' '0ici0»0 O O 05 05 X X N N N t - co oc 03 d ft O £ COOCOOXXNNNN *-■ ^ ^ Ol Ol CM OJ CM CM CO CO CO cO CO CO CO co CO cO 71 O q a? +-> ai >> CO OCO^CO^-HrHCOCCfC ‘O N X O lO CO CO O CO CO OOO^TfrfiCiOiOiO cocococococococococo (NCO^IOCONXOC^- 050505 05 05 050505 05 .05 o b£ a u O £> Authority Annual reports of Seaboard Air Line Railway Company to North Carolina Corporation Commission. 35 Mr. Plant’s reports have for years shown gross and net operating revenues for his lines in North Carolina substanti¬ ally greater than for the Southern Railway system. He sought to discredit this by a theory that his system of accounting did not represent an exact allocation of expenses; that all terminal expenses are assigned to the State in which they are incurred ; that the larger terminals of the Southern Railway are located outside of North Carolina, and therefore our State is not charged with a sufficient proportion of such expense. When Mr. W. H. Gatchel, assistant vice-president of the Southern Railway, was on the stand, he frankly demonstrated that not only the largest assemblying and transfer terminals of the Southern Railway system are located in North Carolina, at Spencer, but he gave his opinion that it is “the largest ter¬ minal for handling less-carload freight south of Philadelphia, if not in the whole country. ’ ’ And the exhibit which he agreed to put in the record, the Southern Railway catalogue of au¬ thorized package car loadings, showed 24.7 per cent of all authorized package car loadings for the Southern Railway sys¬ tem were to break bulk at yards in North Carolina, while there is only 18.9 per cent of the mileage of the Southern Railway system within North Carolina. Relatively the same situation exists with the Atlantic Coast Line, with its mammoth terminals at South Rocky Mount, North Carolina, and with the Seaboard at Hamlet, North Caro¬ lina. Does not this indicate that North Carolina is charged with more than its ratable proportion of terminal expenses? It is obvious that this terminal expense of handling less-carload freight is much greater than for carload freight. Each of these lines also have their terminals in this State for breaking up and making up of through trains of carload freight, and all the expenses of these terminals are charged, according to Mr. Plant’s testimony, against their earnings within North Carolina, without any segregation of intrastate, interstate and trans-state service, and a large part of the service performed at these stations is for trans-state tiaffic, both carload and less-carload. 36 So that, to the extent that more than an average proportion of terminal service is performed and expense charged in this State, to that extent the net revenues shown in Mr. Plant’s reports creditable to North Carolina operations are less than they should actually be. GROSS AND NET REVENUE ON MAIN LINE OF SOUTH¬ ERN RAILWAY IN NORTH CAROLINA GREATER THAN ON ANY OF THE VIRGINIA TRUNK LINES The showing made of heavier traffic density, of larger gross and net operating revenues within North Carolina, is further strengthened by Mr. Plant’s Exhibit 1917, showing gross operating revenue per mile for the main line of the Southern Railway across and within the State of North Carolina of $66,676 per mile, and net revenue of $23,546 per mile. The figures presented in the Womble exhibits covered all of the mileage operated by each of these systems within North Carolina. For the Southern Railwav this covered 1,219 miles of road, or nearly one-fifth of the total mileage operated by the Southern Railway system, and includes a heavy propor¬ tion of branch line mileage. We were not prepared to give definite information as to traffic density on the main line of the Southern in North Carolina. This information was fur¬ nished by Mr. Plant, in his Exhibit No. 1917, which also gives like figures for other main-line stems handling heavy traffic in the South, and this shows that the Southern Railway main line in North Carolina has greater gross and net revenue than any piece of railroad in the South. The next highest is the line" from Cincinnati to Chattanooga, with gross revenue $56,076 per mile, and net revenue $10,240. The main line of the South¬ ern in North Carolina exceeds this by $10,600 per mile gross, and $13,306 per mile of net revenue. Traffic density and earn¬ ings on the Cincinnati, New Orleans and Texas Pacific have been before the Commission in many cases and received flat¬ tering comment. It has perhaps been considered the strongest section of railroad in the South. The separate earnings of the main line of the Southern Railway across North Carolina have 37 never before been developed before the Commission, and the showing made by Mr. Plant’s exhibit is indeed impressive. His exhibit shows the net operating revenue per mile on this line ($23,546) to be substantially greater than the average of gross revenue per mile ($19,710) for the Southern Railway system. It shows even heavier gross and net revenue than is shown for any of the trunk lines in Virginia. Womble’s Exhibit No. 1199 covers operations of the Chesa¬ peake and Ohio, Norfolk and Western and Virginian for a ten-year period. The Norfolk and Western shows heavier operating revenue than either of these Virginia trunk lines, and the greatest shown for any year for the Norfolk and West¬ ern is $40,216.50 for the year 1920. The total mileage of the Norfolk and Western is only 2,200 miles of road, so that a large proportion of its total mileage is main-line mileage. We have no means of showing separately the operating revenue for its main line, but it must be a safe assumption from these figures that it would be less than $66,676 per mile, and it must be a safe assumption again that there isn’t a section of road on either the Norfolk and Western, Chesapeake and Ohio, or the Virginian which earns as heavy operating revenue as Mr. Plant has shown for the main line of the Southern through the State of North Carolina. .(Exhibit shown on next page.) An even more surprising statement than is this comparison of Southern Railway main line with other sections of main line in the South, and with the Virginia trunk lines, is the com¬ parisons in Womble Exhibit No. 1200, reproduced on the next page, showing that, taking all of the mileage, main lines and branches, of the Southern, Atlantic Coast Line and Seaboard in North Carolina, the average net earnings on their lines in this State have averaged a higher percentage of their average investment per mile of road, for a ten-year period, than that of the Chesapeake and Ohio, Norfolk and Western, and Vir¬ ginian. Mr. Plant further confirms the Womble exhibits in his sup¬ plementary exhibit, prepared at the request of Commissioner Eastman, and filed under date of June 1, 1923. 38 N. C. Corporation Commission Exhibit No. 1199 I. C. C. Docket No. 13494 W itness: Worn ble STATEMENT OF OPERATING REVENUES AND EXPENSES, WITH AVERAGE INVESTMENT, FOR TEN-YEAR PERIOD (1912-1921), OF CHESAPEAKE & OHIO, NORFOLK & WEST¬ ERN, AND VIRGINIAN RAILWAYS, FROM ANNUAL REPORTS TO INTERSTATE COMMERCE COMMISSION CHESAPEAKE AND OHIO LINES Year (See Note) Miles Operated Operating Revenue Operating Expenses Net Operating Revenue Average Investment 1912_ 2,263.10 $ 15,151.73 $ 10,002.07 $ 5,149.66 1 96,310.89 1913_ 2,319.00 15,129.49 10,544.01 4,585.48 95,353.32 1914_ 2,345.80 15,640.73 10,936.11 4,704.62 102,037.47 1915_ 2,369.20 16,657.12 11,631.11 5,026.01 105,476.53 1916_ 2,378.67 20,950.49 13,746.62 7,203.87 108,241.67 1917_ 2,412.10 22,654.03 15,797.77 6,856.26 118,710.37 1918_ 2,479.70 29,729.72 21,809.71 7,920.01 120,567.92 1919_ 2,506.00 28,521.55 24,212.48 4,309.07 126,942.72 1920_ 2,519.20 35,933.70 31,700.18 4,233.52 127,680.23 1921_ 2,545.87 32,872.04 26,161.22 6,710.82 134,141.55 NORFOLK AND WESTERN RAILWAY CO. 1912_ 2,010.23 $ 19,766.51 $ 12,769.40 $ 6,997.11 $ 108,554.32 1913_ 2,022.85 21,622.92 14,121.57 7,501.35 112,317.84 1914_ 2,035.91 21,843.12 14,703.91 7,139.21 118,738.09 1915_ 2,041.95 21,051.96 13,630.02. 7,421.94 126,462.44 1916_ 2,079.91 28,582.96 16,110.66 12,472.30 129,081.50 1917_ 2,085.47 31,604.50 19,737.28 11,867.22 133,141.41 1918_ 2,083.94 39,350.48 29,549.46 9,801.02 139,600.03 1919_ 2,088.08 36,840.35 30,660.36 6,179.99 136,476.65 1920_ 2,200.33 40,216.40 38,624.53 1,591.87 143,145.00 1921_ 2,225.94 36,281.57 28,754.67 7,526.90 144,351.78 VIRGINIAN RAILWAY CO. 1912_ 474.60 $ 10,193.00 $ 6,261.68 $ 3,931.32 $ 176,126.51 1913_ 491.13 11,896.21 6,870.19 5,026.02 179,446.13 1914_ 503.03 12,603.78 7,023.88 5,579.90 180,336.21 1915_ 503.59 11,557.83 6,705.56 4,852.27 185,140.62 1916_ 507.57 16,658.71 8,454.80 8,203.91 185,144.90 1917_ 512.62 19,980.63 11,117.13 8,863.51 187,513.18 1918_ 518.56 22,960.59 17,891.69 5,068.90 189,510.47 1919_ 522.90 23,092.95 17,546.38 5,546.57 192,193.86 1920_ 523.57 34,682.76 24,655.69 10,027.07 208,179.71 1921_ 526.09 34,260.98 23,581.00 10,679.98 216,201.10 Note.—Data shown opposite years 1912 to 1915 inclusive is that for years ending June 30th of years shewn. 39 M X r J'l *4* s ^ 0 O a -fc.2 © - -2 ■w w *-i © ^ C ~ v 1 »> O O i"" C.X ft • • r j t-> x w O co od ~ ^ -S IZ NH »" £ S £ s. ^ >£ w n H sSs *■< fti O ^5g a* ^ £ S - Ph £ K ~ ^ X — ^ H 1) ^ ^ - w * rr> ^ A*, J P £ £ C* s; cs w ^ x -G^-G ;z A* a- rog •1^ ^ ^ s ^ c ^ S ^S ^£< x K■ X x r £^k > Khoz < X M s ~^£ X x c £ x r *s< c c 3 £ £^3^ £»* £ A* < M A .erg «MM ^ " e ««^ X X >Uv w ^ V' > ^- C M ^ ^ it X i- m x£££ C.ZKS X b£. 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J*8 P. t -fZ b Zio y/T\ Map snc /n P/savp Lines Principal Short A/ME Poutes pr opt Peprespnta 7/yp Points in Central Preicht Pssoc/a t/o/v to Carol /na Po//y ts Nc~HrK This Map is a Composite or Maps or Suspns Mop ns’ oppic/al /Hap op Jd/vctnn and Terphn al Points /n Central Mrs/dpt Assoc /at/on Tprrttork a up Adjacent tSoNcr/ON and TprNiip/Al Points. (/S2i.) Pand M £ //all r s Cop. Pap or Worth Carolina fcoAtsirT. Moors z Oases’C os. /Railroad Ndnct/on Points Pap or the Southeastern part oR the Un/peo States. iri icku>y r \umbuS jW 0/x J Xu*\ To / ShtK 0 ^ CK.\>coA e ■'inn / ^Sh'irv^h jv .4 vs ’ ft. . «c no : j o /\ / kQ V %n a ffs ,nCr / \ r- / \s / / Ik JlavistA K nc hcrrm MSbcr^A / M^nude Trait A lotjo ■SaffalK. l/\ \ w Li Si h y 1 / TH'^f -«nV ffn ? - - xdcri< n ^'° 1 ^ , ^[ihort / ■^7 hot*** pS’M'A jrfnfa T \ faboro Jw e ' qh I _ ^\m ycX^ ; \/{lb 1 2 21M 5 19 24K 2 23 1 • 22 Indianapolis __- - __ 2!) 24 23 26 Toledo_ _ ___ _ _ 11 13 H isn 12^ 17 49 To All Points in North Carolina Zone Two Bay City_______ _ 25 *4 8*4 12 2*4 6 23 25*4 17 *4 16 *4 12 17*4 10 *4 10*4 6 *4 13 23 *4 18 Chicago __ _- . ___ 11*4 13 Cleveland_ ___ _ _ 17*4 14 Dayton_. _ ____ _ 2 6*4 15 Detroit_ _ ... __ __ SSS INOOC »-H CS 11 10 20 Ft. Wayne__ . . 3 11*4 19 16 10 17 Grand Rapids...___ _ 12*4 2*4 7 23 15 22 Indianapolis.. _ _ _ 8 *4 12 *4 11 16*4 17 10 17*4 18 Toledo_ ____ _ . __ 13*4 11 To All Points in North Carolina Zone Three Bay City_ _ .. ___ .. .. __. 22 11 15 15*4 5*4 6 14*4 5 18 Chicago._ __ . _ __ ___ 1 1 11 Cleveland_ _ _ _ _ .. 8*4 5 7*4 3*4 10 12 Dayton_ _ ... _ 2 8*4 Detroit _ _ ... _ . _ 14 4*4 9*4 3*4 12*4 10*4 6 *4 12*4 11*4 7 14 Ft. Wayne.. . _ ___ ... _._ 5 6*4 n*4 Grand Rapids_ .. . ... - ... ... . - Indianapolis _ _ . ____ . _ 15*4 5 11*4 3 16*4 8*4 Toledo ___ _ . . . . . _ . 9 1 6 8 12 WHEN IT IS CONSIDERED THAT THE CARRIERS’ PROPOSED RATES WOULD INCREASE PRESENT RATES TO THE EXTENT SHOWN ABOVE, AND THAT THE PRES¬ ENT RATES FROM C. F. A. ARE ON A BASIS OF 70 CENTS OVER VIRGINIA GATEWAYS FOR AVERAGE HAUL SOUTH OF GATEWAYS OF 85 MILES, AND THAT THE COMMISSION HAS FIXED A DIFFERENTIAL OF 60 CENTS (NOW 54 CENTS) OVER VIRGINIA GATEWAYS FROM EASTERN TRUNK-LINE POINTS MAKING OVER RICHMOND AND NORFOLK FOR AN AVERAGE DIS¬ TANCE OF 158 MILES, THERE IS PRESENTED A PIC¬ TURE OF THE UNREASONABLENESS OF THE CAR¬ RIERS’ WHOLE SCHEME OF PROPOSED RATES TO NORTH CAROLINA. Womble Exhibits Nos. 1162-67 were inaccurate to the ex¬ tent, and only to the extent, that the words “combination of ‘local’ rates on Virginia gateways” was used in the heading. The combination used in making up that series of exhibits was the full local rates to Virginia cities proper, which rates apply as published proportional rates to gateway points on the Virginian Railway, plus the local mileage scale south of the gateways. These Virginia cities rates apply both as local and proportional rates to Alta Vista, Suffolk and Norfolk, on the Virginian Railway, but to other junction points on that 4 50 railway the local rates are 15 cents higher. This was fully . explained in testimony and Exhibit No. 1220% was presented, showing that if Virginian Railway junctions, to which Vir¬ ginia cities rates apply only as proportional rates, were elimi¬ nated from consideration, it would only increase the average mileage south of the gateways from 85 miles to 104 miles. We are still insisting that the mileage south of Virginian Railway junctions should be the governing mileage in con¬ sidering the level of rates to North Carolina points. The gen¬ eral character of the Virginian Railway is well known as one of the best in the United States. Since the record closed in this case the announcement has been made that this line is to be electrified at a cost of fifteen million dollars. When a line of the operating efficiency of the Virginian brings traffic to the Carolina lines an average of 19 miles nearer to these North Carolina cities, this difference in distance should be consid¬ ered, and the actual service performed by the Carolina lines for the North Carolina shipper is the transportation of his freight from his nearest gateway. While the Womble Exhibits Nos. 1162-67 are accurate in every respect except the detail explained, these exhibits failed to disclose the more comprehensive extent to which carriers’ proposed rates exceeded full combination of local rates, in that the computations shown on these exhibits dealt only with the alternative local mileage scale applying south of the gate¬ ways, whereas, in fact, the proposed rates in many cases ex¬ ceeded the full combination over Virginia cities proper, using the full local zone rates as the factors south of the gateways, and in this way carriers’ proposals exceeded full combination of local rates on Virginia cities proper to all cities and towns in zones one, two and three, to the extent herewith set out: To Zone One Points ' 1 2 3 4 5 6 Bay City..__ .. ____ 4 2^ 6^ 3 H 9H 3 Vi 3 5 2H IVi 3 3 Chicago__ ____ _ Cleveland__ _ . . .. _ Detroit-.-_ .. . • Ft. Wayne__ -----. . . Grand Rapids_ 1 , ‘ , .4 1 Indianapolis-. - - .. .. ..- _ Toledo_ __ _ __.1__ i__ ' ♦ ' • . f. - f * ' - ** WOMBLiE EXHIBIT No. 1178 STAUNTON (AYNCSBOAO LYNCHBU.fi Ml >v J-+ Al£H£NN/N v\l/\v£/tLr 'Alta vista Oi-K __l /j RGINj A North Ca! £>an\/n-lc A/C COAPO RATION CcfifjMAfS/OAL CXHIBIT No. W/rxess Wonblc f.C.C Docket No. /3.4S+. % GEO&XAPH/CA/.LV' AcCOp/AT£ MaP /L L US TEA T/NO pJfTENT TO VYh/CH .Co NS TX C/C T/ON OR \E/£o/N/AN 'Pa/ewat Cor Mileage Between \Vjrgjn/a Gatewat and Not^h ) Ca/Zouna Points. /VJif'roxr /V£ws 51 To Zone Two Points Bay City- - Chicago - ... . _ _ _ _ _ __ 5 1 3 934 134 134 634 1134 6 534 2 8 5 10 53 4 6 Cleveland.. . . ... . . .... ..._ Dayton ... __ ____ _ Detroit_ .. __ . . ___ 4 2 Ft. Wayne . ______________ Grand Rapids.. _ .. __ ___ .. . 7 34 1 4 Indianapolis. _ ._ T oledo To Zone Three Points Bay City_ . . ..._ 634 1 34 3 534 3 434 9 2 3 834 5 234 7 Chicago . . ._ _ .... Cleveland __ ... Dayton _ _ ___ _ ___ 2 334 Detroit ____ Ft. Wayne . . . __ Grand Rapids . . __________ 234 134 34 Indianapolis. ... ... _ ... Toledo . ___ . 3 We have shown on preceding pages the elaborate extent to which carriers are now proposing to change factors to and from the Virginia gateways in their efforts to get the total of these factors built up to the level of their proposed through rates. Conceding, for the argument, that they may be permitted to make all these proposed changes in these factors, and in¬ cluding another increase in the local rates south of Virginia gateways and Virginia cities, which rates are not included in this proceeding, their proposed through rates would still ex¬ ceed full combination of such increased rates to the extent shown herewith: To Zone One Points i 2 3 4 5 6 1 9 534 734 dViipfl.frn _ -- - - 2 134 134 334 l Clrn n rl Rani Hr _ _ ___- 634 3 634 134 34 134 52 To Zone Two Points Bay City_ _ __- 1 9 5 x 7 Chicago - - . _ _ _._ 1 1H 1 Cleveland . . ____ _ Detroit __ __ 3H 1 3 A A 5 A 1 Ft. Wayne__ Grand Rapids...,__.*_ 3 Indianapolis_ . _ . . Toledo. ___ _ A 1 X A To Zone Three Points Bay City___ VA 9'A 6 8 1 2 4 1 A 6 Chicago_ _ Cleveland.. . _ . _ _ _ A. 4 Ai 5 A 1 Detroit__ . ___ ____ lA Ft. Wayne___ _ ___ . Grand Rapids____ _ 3 Indianapolis__ . __ Toledo_ _ .. _ 2 COMPARISON OF SPECIFIC RATES AND MILEAGES Coming back to the stipulation that these rates should be revised, “having regard to the relationship” between rates from C. F. A. to the Virginia cities, we invite attention to a comparison of the rates and mileages to Virginia cities and of rates and mileages to North Carolina zone one cities. From the comparisons set out below it will be seen that the carriers are proposing rates which will average about as high for the average haul south of the Virginia gateways of 85 miles as the rates for the long distances to the Virginia cities. In the proposed rates set out below, the proposed rates on 4th, 5th and 6th classes are in nearly every case actually higher for the 85 miles of short haul than for the long haul to Virginia cities. Taking Grand Rapids as the extreme illustration, the average distance to Virginia cities, 803 miles, is nearly ten times as great as the average distance beyond the gateways to zone one, and yet we have a 6th class rate of 40% cents for the 803 miles and 46 cents additional for the 85 miles. From Detroit, 695 miles, average to Virginia cities, the 4th class rate is 48% against 58 additional for the 85 miles; 5th class 41 against 46%, and 6th class, 34 for the long haul against 43% cents additional for the additional 85 miles. 53 The 85 miles of haul is over the main stems of these Caro¬ lina lines, having traffic conditions as previously shown, which approximate traffic conditions on the lines in trunk line ter¬ ritory. We know of no polite way in which condemnation of these proposed rates could be more strongly stated than by this simple comparison of rates and mileages, which follows: From Bay City, Michigan 1 2 3 4 5 6 To Virginia Gateways, average haul 786 miles.. __ Additional to Zone 1, average haul 85 miles.. . _ Total through rate to Zone 1_ .122 94 co n- o c- 80 71 55 64 4634 50 34 39 47 34 216 18334 151 119 97 8634 From Cleveland To Virginia Gateways, average haul 602 miles. . Additional to Zone 1, average haul 85 miles .. Total through rate to Zone 1 .. .. .... 10634 8034 93 66 70 61 48 55 4034 43 34 3334 4134 187 159 131 103 84 75 From Detroit To Virginia Gateways, average haul 695 miles... ... Additional to Zone 1, average haul 85 miles ... Total through rate to Zone 1_... 108 86 94 71 70 34 6534 4834 58 41 4634 34 4334 194 165 136 10634 8734 7734 From Grand Rapids To Virginia Gateways, average haul 803 miles... Additional to Zone 1, average haul 85 miles.. . . . Total through rate to Zone 1- ... 12734 8834 11134 72 84 67 57 34 6134 49 48 4034 46 216 18334 151 119 97 8634 From Pittsburg To Virginia Gateways, average haul 469 miles... Additional to Zone 1, average haul 85 miles ...... Total through rate to Zone 1.. . . . . . . . 10634 6834 93 56 70 5234 48 4834 4034 3834 3334 3634 175 149 12234 96 34 79 70 It seems conclusive to us that the Commission should discard the entire scheme of rates proposed by the carriers from Cen¬ tral Freight Association territory to North Carolina, and that this whole scheme of rates should be dealt with on the same 54 general principles employed by the Commission in its adjust¬ ment of rates from eastern trunk-line territory to North Caro- lina in Dockets 10500-10515, by the employment of differential factors over the gateways through which the traffic moves and through which the rates logically make in constructing the through rates. The carriers have constructed their proposed rates upon premises fatally defective, and no amount of tinkering with their proposals can conform them to a just or satisfactory adjustment. The Commission has in recent, strongly-contested and well- considered cases set the precedent on both sides of this adjust¬ ment that should govern in this. In the case of Johnson City, Tennessee (64 I. C. C. 709), the Commission required the carriers to make through rates from Central Freight Association territory to Johnson City on a differential basis of 30 cents over St, Paul, Virginia, to which the same proportional rates apply as through Virginia cities. The distance, Johnson City over St. Paul, compares with the average distance to the 51 cities and towns in zone one over the Virginia cities—101 miles to Johnson City and 104 miles to these North Carolina cities, if the distance south of the gateways is to be measured from the Virginia cities proper. The average distance to the North Carolina zone one cities is 85 miles if measured from the nearest gateway in each case, and using the gateways on the Virginian Railway, to which Virginia city rates now apply as proportional rates. From the whole of Eastern Trunk Line territory to North Carolina zone one points rates are now in effect, under order of the Commission in Dockets 10500-10515, on a differential basis of 60 cents first class (less ten per cent, July 1, 1922— now 54 cents). To our sense of reasoning this basis fits in with the differen¬ tial from Central Freight Association territory to Johnson City, Tenn., of 30 cents, and with the differential basis pro¬ posed by Mr. Womble of 30 cents, and points the way to the adjustment that should be made from Central Freight Asso¬ ciation territory to zone one. «/ # 55 The differential of 60 cents from eastern trunk lines to zone one was made over the two eastern Virginia cities of Richmond and Norfolk. The other Virginia gateways were not consid¬ ered, and had no bearing on that adjustment for the reason that the local rates from Eastern Trunk-Line points to the western Virginia cities of Roanoke and Lynchburg are higher than to Richmond and Norfolk, and for this reason Richmond and Norfolk are the rate-making gateways from Eastern Trunk-Line territory. The rates from Central Freight Asso¬ ciation territory apply not only through all Virginia cities proper, but also through the nearer gateways on the Virginian Railway. The average distance from Richmond to the 51 cities and. towns in zone one is 158 miles, while the average distance to these 51 cities and towns from the nearest Virginia gateway through which western rates apply is 85 miles. We have en¬ deavored to illustrate this point on the next page in a way that makes it entirely clear. Returning, for a moment, to the unreasonableness of the carriers’ proposals, Womble’s Exhibit No. 1210 shows the sub¬ stantial extent by which carriers’ proposals exceed the 60 cents differential basis adopted by the Commission in Dockets 10500-10515, although the mileage south of the gateways from Central Freight Association territory is much less than from Eastern Trunk Line territory. Taking New York as representative of Eastern Trunk Line territory and Chicago as representative of Central Freight As¬ sociation territory, and relating the factors of distance and relations of rates in Official and Southern territories, would figure a differential of 30 cents from Central Freight Associ¬ ation territory on the same basis that would figure 60 cents from Eastern Trunk-Line territory. This formula is set out in Womble Exhibit No. 1211. Again, a differential of 30 cents is arrived at in the method employed by Mr. Womble (Exhibit No. 1209) in working the general basis of rates set out as his proposal of rates from Central Freight Association territory in black figures on this exhibit and numbered 8. The basis used by Mr. Womble em- 56 ployed the Disque Scale for the total average distance from points of origin to points of destination in zone one. There was added to this figure an increase of 73 per cent for the proportion of the haul south of the gateways, representing the difference in level of the Disque Scale and the carriers’ (Bar¬ ham) proposed standard scale for the southeast, taking this difference at the end of the Barham Scale at 460 miles. It is not pretended that there is anything peculiarly sacred in the exact figure of 30 cents proposed by Mr. Womble. The thing that we are asking the Commission to do is to follow its precedent in Dockets 10500-10515, and in the Johnson City case, and after consideration of all the important elements and differentiations in this adjustment to fix these through rates upon or with relation to such differential relationship through all the Virginia gateways as it finds to be proper. But every reasonable precedent which we find seems to sus¬ tain as reasonable the 30 cents differential basis proposed by Mr. Womble as a differential on first class, with other classes run out on the Southern Traffic League (Ryan) per cents, which have now been accepted by the carriers. The carriers are in this case proposing rates from St. Louis, Mo., to the southeast and Carolinas, made a differential of 30 cents, first class, higher than Cairo for a distance of 155 miles. The Commission fixed in 39 I. C. C. 224-244, a differential on first class of 20 cents for a distance not exceeding 300 miles south of Memphis. In 61 I. C. C. 336, the Commission fixed the first-class differ¬ ential of 15 cents for a distance of 88 miles, Macon over At¬ lanta, and in the same case the differential on first class of 28 cents for 171 miles, Augusta over Atlanta. Within the southeast and Mississippi Valley the carriers are at this time nowhere proposing a zone adjustment carrying an advance over an adjoining intermediate zone as great as 30 cents for an average of either 85 or 104 miles of greater dis¬ tance. Fifteen cents is the greatest amount of such increase shown at any point of their proposals for the whole southeast and in the Valley, and where this much of advance is made it U H nC hb^ r< j ’WAp ILLUSTRATING the shorter average haul on traffic FROM CENTRAL FREIGHT ASSOCIATION AND PITTSBURG TER¬ RITORIES (BLACK LINES), MAKING THROUGH ALL VIRGINIA GATEWAYS, TO ZONE 1 POINTS IN NORTH CAROLINA, COMPARE!* WITH AVERAGE HAUL SOUTH OF RICHMOND AND NORFOLK IO SAME POINTS ON TRAFFIC FROM EASTERN TRUNK LINE TERRI¬ TORY (RED LINES) f? l c.htnoneL / d kldoiv rr un c >£ Kboro r'(J cJ H ■ ' . • ' ■ 5 IAU iVf\ ; ? /■ . ■ • : W - < >; ■ HfiV/ T / J /' r V Ji .V- 5 ' C/,H 57 is usually for a greater average increase in distance than that under consideration here. It is also worthy of comment that the whole proposed ad¬ justment in the southeast and in the valley makes no discrimi¬ nation on account of two or more line hauls. Five of the 51 cities and towns in zone one, shown in Mr. Womble’s exhibits, are reached by the Norfolk and Western’s single line from Cincinnati and Columbus—Madison, Mayo- dan, Winston-Salem, Roxboro and Durham. All but one of the others (Leaksville) is reached by single line south of Vir¬ ginia gateways, a majority of remainder are reached by main line single haul south of Virginia gateways. BUFFALO-PITTSBURG The history of the Buffalo-Pittsburg rates to North Caro¬ lina has been so recently reviewed by the Commission that it seems barely necessary to restate it. It will be recalled that the original order in this case pre¬ scribed a uniform differential of 30 cents first class over Rich¬ mond and Norfolk to Zone 1 from the whole of Eastern Trunk- Line territory, including Buffalo-Pittsburg groups. Upon peti¬ tion of the carriers the case was reopened and reargued, and in the final decision of the Commission, now in effect, this whole'adjustment of rates was put on a basis of 60 cents as a maximum differential, instead of 30 cents as found to be rea¬ sonable in the original order. Inasmuch as the carriers are still resisting the reconsidered and liberalized order of the Commission with respect to these rates, the reasons which they assign for this persistence should receive the closest scrutiny. Let’s examine the reasons given by the carriers for con¬ tinuing over into this proceeding their long-continued contests over these rates. Mr. J. W. Perrin, presenting the testimony for the carriers, set out four general reasons: 1. Classification differences. 2. Low rates and abnormal relation of classes Pittsburg to Virginia cities. 58 3. Present adjustment from Pittsburg does not line up with rates carriers now propose from related territory in Central Freight Association territory. 4. Higher rates from Pittsburg necessary to keep open cir¬ cuitous routes if proposed increased rates from points on such circuitous routes are approved. We will quote at some length Mr. Perrin’s own frank state¬ ment of these reasons: “I have referred previously to the more satisfactory rates obtained from Baltimore, Philadelphia, and New York under a basis of differentials over the rates to Virginia cities because of the application of the Southern Classification to both fac¬ tors. But in the case of Pittsburgh, removed from the influ¬ ence of the fourth section, which applied at interior Eastern points, and having such an abnormal relationship between classes to Virginia cities, no consistent through rates can be obtained under the basis of differentials added to the rates to Virginia cities.” • •••••• “Q. And how were the rates from Boston to North Carolina constructed with respect to the through rates that you made from New York? “A. The rates from Boston to Virginia cities are governed by the Official Classification, but that was entirely discarded in making the rates, because we preserved the port relationship between New York and Boston; therefore, the question of.using Official Classification down to the Virginia cities as a factor in making the through rates did not have any effect. “Q. And when you swing around to Pittsburgh, the rates to the Virginia cities are governed by Official Classification, and where you have a class percentage relationship, Pittsburgh to the Virginia cities, very different from the relationship South, then you get into difficulties when you undertake to add differentials south of the Virginia cities governed by the Southern, to the trunk-line rates from Pittsburgh to the Vir¬ ginia cities governed by the Official Classification? “A. Yes, sir; and, as I have previously stated, the relation¬ ship between the classes from Pittsburgh to the Virginia cities was very abnormal in itself. It is the lowest that we have been able to find. “We are of the opinion that, inasmuch as lines leading west from Buffalo-Pittsburgh, as well as lines leading east from 59 these points, compete for traffic to Carolina territory, and in¬ asmuch as the- short-line distances are in some cases via the Western routes, and in some cases via the Eastern routes, some consideration should be given to the proposed joint through rates from Central Freight Association in fixing the rates from Buffalo and Pittsburgh. “Mv exhibit No. 431, filed when I was previously on the stand, I show in there the present and proposed rates from Pittsburgh and Buffalo, and the proposed rates from Youngls- town, Cleveland and Canton, Ohio, to representative North Carolina and South Carolina points, and from that exhibit an idea may be had of the proposed relationship in the rates from Pittsburgh and say Cleveland, Ohio, which is perhaps tlie most representative point in the group of Central Freight Associa¬ tion points adjacent to the Pittsburgh group. “The idea is that, distance considered, there should not be marked differences in the rates from Pittsburgh and Cleve¬ land. The distance from Cleveland to Greensboro, N. C., is 37 miles greater than from Pittsburgh, and the proposed revision of the rates from Pittsburgh would make the difference on first-class 12 cents in favor of Pittsburgh. The same difference in rates will apply to Fayetteville, N. C., where Pittsburgh is 99 miles nearer than Cleveland; and at Charlotte, N. C., where Pittsburgh is 40 miles nearer than Cleveland; and at Florence, S. C., where the difference is 63 miles in favor of Pittsburgh; and at Orangeburgh, S. C., where the distance is 31 miles in favor of Pittsburgh. To Columbia, S. C., the rates from Pitts¬ burgh and Cleveland would be the same, there being a differ¬ ence in distance of only four miles in favor of Cleveland; to Spartanburg the Cleveland distance is 26 miles less than the Pittsburgh difference, and there should be a difference of four cents in rates. At Denmark, S. C., the distance from Pitts¬ burgh is 13 miles less than from Cleveland, Ohio, while the difference in rate proposed is one cent. At Charleston, S. C., the difference in distance is 63 miles in favor of Pittsburgh, while the difference in rate as proposed is 12 cents first-class. “It seems manifest that the existing rates from Pittsburgh would be discriminatory against the proposed rates from Cleve¬ land, especially to points in the Carolinas, to which the short- line distances from Cleveland are less than or approximately the same as the distances from Pittsburgh. “Q. Taking Greensboro for example, the present rate from Pittsburgh to Greensboro, as shown by your exhibit No. 431, is $1.70. The proposed rate from Cleveland to Greensboro is $1.87. In other words, if you were compelled to hold the pres- 60 ent rate from Pittsburgh to Greensboro, and should be permit¬ ted to establish the proposed rate from Cleveland to Greens¬ boro, you would have a rate from Cleveland to Greensboro 17 cents higher than the rate from Pittsburgh? “A. ■ Yes, sir. Now, so far as the relationship between points of origin is concerned, the change of 5 cents per 100 pounds is merely for the purpose of more nearly relating the rates from Pittsburgh and Cleveland and adjacent points into the Carolina territory. “Q. You have dealt with Cleveland in the illustration which you give as typical? “A. Yes, sir. “What is said as to Cleveland indicates that the present rates from Pittsburgh would not be properly comparable with the proposed rates from Toledo, Columbus, Detroit, and the other points in that section of Central Freight Association ter¬ ritory from which the distances approximate the distance from Cleveland. The revision proposed from these Central Freight Association points and from Pittsburgh should establish a rea¬ sonable relationship between them and Pittsburgh.” Analyzing these reasons separately: 1st. Classification differences. After following pretty closely the building-up of this record of twenty thousand pages, the opinion is hazarded that no point in it has been more over¬ worked and overstressed than the point of differences in classi¬ fication in rates to Virginia cities and North Carolina cities with respect to all these adjustments — Ohio River, Central Freight Association territory, and Buffalo-Pittsburgh. We are dealing, and can only deal, with general levels of rates. Because classification differences theoretically make unequal rates as between Virginia and North Carolina cities on some particular article which may not move from Pitts¬ burgh, is no logical reason for making an unreasonable adjust¬ ment of rates on all classes, Pittsburgh to North Carolina, and which would not, after it was made, adjust an unreasonable classification difference. Wide differences in the classification of particular articles cannot be remedied by raising or lowering the general level of rate schedules on all classes. There are variations in each classification more favorable and less favorable to the shipper. To undertake to equalize 61 rates on articles more favorable to the shipper under one classification by increasing rates on all classes intensifies the disadvantage of the shipper on articles rated less favorably in his classification, and is no remedy for the trouble aimed at. Increasing or decreasing a rate schedule 10 cents per 100 pounds, first-class, does not equalize rates on an article rated first-class in one classification and three times first-class in another. Results that appear to be absurd can be pointed out under any rate schedules in a like situation where two classifications are involved; for illustration, the admission by Mr. Olliphant that under the rates as proposed by the carriers, the actual freight charge on some articles will be less from Detroit to Jacksonville, Fla., than from Detroit to Cincinnati. By the time you could get a schedule of rates to Jacksonville high enough to remedy the extremes of that situation, you might be shipping pig-iron by parcel post, with postage stamps on each “pig.” The persistent tendency is for classification ratings to come nearer together, as shown by testimony of J. T. Ryan and his exhibit No. 1225, and when differences in percentage relation of classes in rate schedules are considered, the differences in classification ratings, on articles that actually move in worth¬ while quantities, across classification boundaries, is much less significant than all the carrier witnesses who have attempted to justify proposed rates to North Carolina have undertaken to show. Take the point so much stressed by carrier witnesses, that there are 1,057 articles rated sixth-class in Southern Classifica¬ tion that are rated fifth-class in Official. Butfcthe sixth-class percentage of the first-class rate is higher even in the revised Southern Traffic League per cents, now accepted by the car¬ riers, than the fifth-class percentage of the first-class rates in trunk-line territory. So that, these differences in classification are, after all, in the nature of equalizing differences in rate structures. Notwithstanding the much more favorable percentage rela¬ tionships employed in Official territory than in Southern terri- 62 tory, there are a great many articles more favorably rated in Official than in Southern, and any effort to equalize classifica¬ tion ratings by general levels of class-rate schedules intensifies inequalities of this kind, without giving any remedy in many cases where more favorable ratings obtain in Official. The Southern carriers have a classification committee in continuous session revising classification ratings, and it may be depended upon that they are looking out for ratings in Southern Classifi¬ cation that give reasonable revenue on articles that move in substantial volume, and if any absurd situations develop from the establishment of reasonable and reasonably related rate schedules, they should be adjusted by fitting the classification rating to such reasonable rate schedules, and not by fixing rate schedules to take care of absurdities and oddities in classifica¬ tion ratings. 2d. Low rates Pittsburgh to Virginia cities, and “abnormal” relations between classes Pittsburgh to Virginia cities. It’s a peculiar argument that rates to North Carolina points, through Virginia cities, ought to be increased because the local rates to the Virginia cities are so low. If rates to the Virginia cities were higher, or if it were proposed to make them higher, it might logically be urged that rates to North Carolina points, making through Virginia cities, might be higher, but the force of logic becomes exhausted when it is employed in the reverse direction. It does, indeed, seem a pity to take even the crutch from so infirm an argument; but here, again, the facts do not support the premise on which it is so poorly based. There has been much discussion in this record of the level of rates to Virginia cities, so often stressed as “depressed.” The Womble exhibit, No. 1177, shows the average level of rates from the ten repre¬ sentative Central Freight Association points to Virginia cities to be higher than the Disque Scale A by between three and four per cent. The comparison set out on the next page shows the Pittsburgh-Virginia cities rates to exceed the Disque A scale by 7.28 per cent. So that, clearly, the Pittsburgh-Vir¬ ginia cities rates are now above the average level of rates in trunk-line • territory. ■ , • < «/ 63 COMPARISON OF PRESENT RATES WITH BISQUE “A” SCALE FROM PITTSBURG, PA. TO MILES Roanoke, Va- 456 { Disqu^ Lynchburg, Va-448 { Disq^ Alta Vista, Va-4 71 j Disque Brookneal, Va.482 { Meherrin, Va...483 { Alberta, Va-479 { Richmond, Va- 418 { Disqu^ Petersburg, Va.-441 { ^que* Jarratt, Va.....475 { nitque Suffolk, Va.«00{gS^ Norfolk, Va-503 { PER 100 POUNDS 118.5 107.0 118.5 107.0 118.5 108.5 118.5 111.5 118.5 111.5 118.5 108.5 118.5 102.0 118.5 107.0 118.5 108.5 118.5 111.5 118.5 112.5 103.5 91.0 103.5 91.0 103.5 92.0 103.5 95.0 103.5 95.0 103.5 92.0 103.5 86.5 103.5 91.0 103.5 92.0 103 5 95.0 103.5 95.5 78.0 71.5 78.0 71.5 78.0 72.5 78.0 74.5 78.0 74.5 78.0 72.5 78.0 68.5 78.0 71.5 78.0 72.5 78.0 74.5 78.0 75.5 33.5 53.5 33.5 53.5 33.5 54.5 33.5 56.0 33.5 56.0 33.5 54.5 33.5 51.0 33.5 53.5 33.5 54.5 33.5 56.0 33.5 56.5 45.5 37.5 45.5 37.5 45.5 38.0 45.5 39.0 45.5 39.0 45.5 38.0 45.5 35.5 45.5 37.5 45.5 38.0 45.5 39.0 45.5 39.5 37.5 30.0 37.5 30.0 37.5 30.5 37.5 31.0 37.5 31.0 37.5 30.5 37.5 28.5 37.5 30.0 37.5 30.5 37.5 31.0 37.5 31.5 Total Present Rates 416)4 416)4 416)4 416)4 416)4 416)4 416)4 416)4 416)4 416)4 416)4 Total Disque “A” Scale 390)4 390)4 396 407 407 396 372 390)4 396 407 411 4681)4 4363)4 7.28% higher than Disque Scale. 64 We have confidently presented the contention in this case that the rates from Pittsburgh to Virginia cities proper are relatively high rates. It will be helpful, in considering this phase of the question, to refer to Woinble exhibit No. 1214, which, for convenient reference, we are reproducing in dimin¬ ished size on next insert page. Having in mind that the rates from Pittsburgh to Virginia cities are 30 cents first-class (June 30th) higher than from New York, and precisely the same on every class as from Cleveland and Buffalo, it will be seen at a glance that, with relation to rates from important cities beyond Pittsburgh, the Pittsburgh-Virginia cities rates are high, and, upon the principle of relativity, a strong case could be pre¬ sented for a reduction in the rates from Pittsburgh to Virginia cities. But it seems to us the point of anchorage in this adjustment is that the Virginia-cities adjustment is a stable adjustment. It has endured and will no doubt continue to endure, and it ought to fix the basis for rates making through the Virginia cities, just as rates to Ohio River points fix the basis of through rates making through those gateways. If the rates from Buffalo and Cleveland to Virginia cities are the same as from Pittsburgh, the rates making on Virginia cities to near-by points beyond ought to be the same. But in no event is there foundation for the contention that Pittsburgh-Virginia cities rates are abnormally low for trunk-line territory and do not for that reason furnish a proper basis for construction of through rates. 3d. That present rates Pittsburgh to North Carolina do not line up with rates now proposed by the carriers from related Central Freight Association territory. Here is the real meat in the Pittsburgh cocoanut; and here, again, we insist that the argument has been reversed. Having proposed rates from Central Freight Association territory to North Carolina upon a basis that'is fallacious and illogical, they find that their proposed rates from Eastern Central Freight Association points could not stand up unless there can be a readjustment of rates from Pittsburgh and Buffalo. That WOMBJjE EXHIBIT No. 1214 mm - r^*s\ v*\*tv*mV, v^-'A ^ycix^Ps -v. • . .: ' •-, •- ■' ' ■ :-' . • "‘.N :' as ** 1 .* a^fei wmkiihh 1 ftm n »KWiiUi - V i; 1 fs $ J l - 1 o V ■rh r, „!.* ;*vs»TAr >-as ‘I .’/ T(ifino> .1 )A,(in'iAna 69 ZONES TWO AND THREE In every rate adjustment making through Virginia gate¬ ways the problem is the adjustment to zone one, which auto¬ matically fixes the adjustment to zones two and three on the same relationship over zone one which obtains in adjustment of local rates from Virginia cities to these zones. This is both the historical and logical relationship. For this reason we have confined our discussion to zone one rates. Only two proposals have been made to change this relation¬ ship : the proposal to split zone one, which has been discussed, and the proposal of the carriers to apply the Ohio River ad¬ justment all the way from Macon, Georgia, to the Virginia- North Carolina State line, and from Augusta, Georgia, to the Virginia-North Carolina State line. When this proposal falls down, and the rates to zone one are made via the trunk-line route, we assume that the carriers will be back in agreement that whatever rate is made to zone one through Virginia gateways will build up by each succeed¬ ing zone from the Virginia gateways, taking the increase in through rate over zone one which the zone rate from the gate¬ ways takes over zone one. CHARLOTTE, N. C. Something specifically ought to be said about Charlotte, which is in zone two, because of the conflict between that city and Spartanburg, South Carolina, which has arisen from the findings of the Commission in the Spartanburg case (34 I. C. C., p. 484, and 59 I. C. C., p. 346), and more particularly from the method used by the carriers in complying with that de¬ cision. The complaint in that case was filed in August, 1913, ten years ago, and the revision of rates under that order was not made until 1921. There was a three-cornered interest involved in that adjustment, but only two of these interests were parties—the complaining city of Spartanburg and the respon¬ dent carriers. The complaint alleged discrimination against Spartanburg as compared with Atlanta and Charlotte. Neither the city of Charlotte nor other related North Carolina inter¬ ests were parties to or represented at either hearing in that case. When the carriers sought to comply with the Commis¬ sion’s findings in that case by raising the rates to Charlotte, that city did file protest against the increased rates, but the case had been long pending and the Commission declined to suspend the rates. It was then the purpose of the city of Charlotte to file direct complaint against the new rates, but they were advised by the North Carolina Corporation Commission that inasmuch as a general investigation of all these southeastern rates was under way, such complaint, if filed, would be consolidated with and become a part of this general investigation in which these rates are in issue. Still another interest that was not heard in the original Spar¬ tanburg case is that of the other cities in the Spartanburg group—Abbeville, Anderson, Belton, Calhoun Falls, Easley, Greenville, Greenwood, Greer, Laurens, Pelzer, Seneca, Simp- sonville and Clinton. These cities are presenting their inter¬ ests in this case and insisting that the old group basis, includ¬ ing Spartanburg, should be maintained, and that the rates to this group should be based on the route through Atlanta, rather than the route through Asheville, N. C., or St. Paul, Ya. Whenever the question of rates to North Carolina points through Virginia gateways has been presented, the question has arisen as to how far the reflection of the Virginia cities rates should extend. Does not an analysis of this compre¬ hensive record, in which all interests are represented, support and strengthen the general zone basis that has obtained for thirty-six years, and indicate that the rates up to and includ¬ ing the Anderson-Spartanburg-Greenville group should be based on the Atlanta route, and that to points north of this group the rates should be based on the Virginia cities route? Bearing on this particular point, the testimony of Mr. G. AV. Clapp (pp. 11071-2), representing all of that Piedmont group except Spartanburg, is strong: 71 ‘‘Q. There are two gateways from tlie west through which freight moves to these Piedmont cities. Have you given any study to the relative amount of the movement through the Atlanta gateway, the Asheville gateway, and the St. Paul gate¬ way? I said two gateways, I should have said three. “A. I have figures from the railroads showing the per¬ centage of traffic moving from the Ohio River crossings and the Mississippi River crossings to points in the Piedmont group from February 5th to 10th, inclusive. “Q. You got that information from the carriers? “A. Yes, sir. “Q. Have you compiled that information, showing the per¬ centage moving through each of the gateways to each of the cities you represent? “A. Yes, sir. “Q. State that. “ A To Atlanta Asheville St. Paul Total P. C. Abbeville _ 98.7 1.3 _ 100 Anderson _ 89.6 .9 9.5 100 Clinton _ 96.6 1.5 1.9 100 Greenville _ 81.6 3.1 15.3 100 Greenwood_ 35.4 8.9 55.7 100 Laurens _ 89.5 2.3 8.2 100 Spartanburg _ 76.1 13.4 10.5 100 Piedmont group_ 81.07 4.49 14.44 100 It will be noted that the heaviest percentage moving to any city in the group through the Asheville route is 13.4 per cent to Spartanburg and that 76.1 of western freight to Spartan¬ burg moves through the Atlanta route. The record does not disclose the movement of western freight to Charlotte. It was in evidence in the Spartanburg case that the Southern Railway moved its western freight to Charlotte through Statesville rather than Spartanburg, owing to better traffic conditions over that route than over the Saluda route to Spartanburg, and in this case we have the admission of Mr. B. G. Brown, assistant traffic manager, Southern Railway (pp. 4806-14), that it would be uneconomical for the Carolina lines to handle traffic to points in North Carolina through the At¬ lanta route as against the A irginia cities route. 72 Does not this line of testimony establish with reasonable satisfaction the boundary where the influence of the Virginia cities route should end and that of the Atlanta route begin? At the time of filing its original complaint the city of Spar¬ tanburg had substantial grounds for complaint. Its rates from the north, east and west were higher than to Charlotte by more than the difference in progression of the local rates from Virginia cities to Spartanburg as against Charlotte, and its rates from the north were higher than to Atlanta. Its rates from New York were ten cents higher than the combination of local rates on Virginia cities, and it was clearly entitled to a substantial measure of relief. On the broader record presented in this case the Commis¬ sion may well review some of its former findings in the Spar¬ tanburg case, and the alternative basis upon which such find¬ ings were at that time permitted to be observed. The ques¬ tion of the relation and influence of the Virginia cities routes is presented in this record more thoroughly and in broader outline than it was presented in the Spartanburg case, where the sole issue was rates to Spartanburg. The issue is clearly drawn in this record as to the extent to which the trunk line level of rates should be reflected through the Virginia gateways. It is our contention that this lower rate level must be given recognition up to the point where reasonable through rates made over the trunk lines, and grad¬ ing up with the zones south of the gateways, meet the level of rates made over southeastern lines from Ohio River cross¬ ings. Clearly enough this meeting point should not be the equi-distant point via the trunk line and southeastern routes, for that would give no reflection whatever of the lower trunk line level of rates. The equi-distant point has been shown to be just north of Lexington and 70 miles north of Charlotte. (Womble, p. 6481.) This record discloses more completely than has ever been developed in any former proceeding before the Commission the character of transportation lines over the two routes. By the trunk lines we have Norfolk and Western and Chesa¬ peake and Ohio from Cincinnati to Roanoke and Lynchburg— 73 two of the strongest trunk lines. South of Lynchburg we have what has been shown by the carriers themselves to be the best piece of railroad in the whole South—better than either of the Virginia trunk lines. This same line extends to Spartanburg, but 76 miles beyond Charlotte, and with somewhat diminish¬ ing traffic in South Carolina. On the line of the Southern through Asheville we have on the Spartanburg division, south of Asheville, what Mr. B. G. Brown, assistant freight traffic manager of the Southern Rail¬ way, described as the heaviest grade on any standard railroad in the country that he knew of. The trend of the decisions of the Commission in other cases, since the Spartanburg decision, has been strongly in the direc¬ tion of giving greater effect to the Virginia cities routes by requiring through rates over these gateways “substantially less than combination,” where formerly the influence of that route was limited by full combination rates—notably in Dockets 10500-10515, “Rates to North Carolina,” and in the Johnson City, Tenn., case, where rates from Central Freight Association territory and Pittsburg were prescribed on a 30 cents differential basis over St. Paul, Virginia, and Bristol, Virginia-Tenn. Since the original decision in the Spartanburg case, the whole “basing point” system in the South has been torn up, root and branch, and the Commission and carriers become even more strongly committed in this case to the general policy of breaking through the gateways with reasonable through rates. The whole trend is in the direction of giving greater rather than less effect to the potentiality of the routes through Vir¬ ginia gateways, and this is especially and necessarily true of rates from points in Central Freight Association territory which we have shown in this record make to and through Vir¬ ginia gateways via other routes than through Cincinnati. In the Spartanburg case the Commission was dealing with one complaining city, and one having much merit in its gen¬ eral complaint; and, as before stated, the Commission did not have in its record even the benefit of representation of other interested sections. In this case the Commission has the re- 6 74 sponsibility of prescribing* a harmonious adjustment for the whole territory, with every interest represented and a com¬ plete and comprehensive record. CONCLUSION We have undertaken in brief outline to cover the high points in the voluminous record of testimony and exhibits relating* to the proposed Carolina adjustment. We have endeavored to treat the considerations that really have important bearing on these adjustments. They have been discussed under restraint. We have endeavored to treat the carriers’ proposals with the respectful consideration which the importance of the matter demands. This has been extremely difficult to do when, as must now be apparent, every rate the carriers have proposed from that whole sweep of country—Ohio River, around through Central Freight Association to and including Buffalo-Pitts- burg—has been made upon the southeastern rate level and pro¬ posed and designed to meet the convenience of southeastern lines, operating unreasonably circuitous routes through south¬ eastern territory, and represents a denial of the level of through rates that should and must apply over the direct lines, operating in trunk line territory, to within an average distance of 85 miles of the 51 cities and towns in North Carolina zone one. Every rate they have proposed, without exception, in all of these North Carolina adjustments, should be discarded. They are all of them built upon a false foundation, and when the foundation is uneven or out of square, the whole superstruc¬ ture is out of line. Even from Pittsburg* and Cleveland they are “looking at North Carolina through Ohio River crossings.” We say again, as we began, we seek no special advantage. We do insist that upon any standard of equity we are entitled to through rates made over the direct trunk lines— on the level of rates employed by these trunk lines— upon reasonable dif¬ ferentials over the Virginia gateways, and related to the traf¬ fic conditions on the lines south of the gateways; and that, when rates from the Virginia gateways make through our ter¬ ritory, we are entitled to rates reasonable differentials under the rates from these gateways. 75 The North Carolina rate structure cannot be “ looked upon as the balance of the southeast, through Ohio River crossings.” It differs in every material aspect and relation from that to “the balance of the southeast.” “The balance of the southeast” has its own direct routes over different lines, and on different rate levels. “The balance of the southeast” does not live alongside of the numerous Virginia gateways having trunk-line rates, and therefore having to meet, within their own territory, the com¬ petition of trunk-line competitors. “The balance of the southeast,” generously and justly, is not contending that our rates should be constructed over their routes and upon their levels. Every southeastern witness representing shipping interests, who has discussed the Carolina situation in this proceeding, has conceded the distinguishing factors in our rate situation. A fundamental principle is involved in making the rates to North Carolina from Central Freight Association territory, Ohio River crossings and Buffalo-Pittsburg groups. We have endeavored to emphasize that principle. The con¬ siderations that must be given controlling weight in fixing the North Carolina rates differ materially from those that apply to the Southeast generally. This, as we have pointed out, is conceded by the representatives of the Southeast. We refrain from discussion of matters that are not of direct and major importance to the North Carolina interests, because they will be discussed by others, and we do not wish to be¬ cloud the vital principle for which we contend and which must be recognized and adopted if North Carolina interests are to be permitted to compete on fair grounds with their competitors across the North Carolina-Virginia State line. NORTH CAROLINA CORPORATION COMMISSION. W. T. LEE, Chairman, GEORGE P. PELL, A. J. MAXWELL, EDGAR E. CLARK, Commissioners. Counsel. « Photomount Pamphlet Binder Gaylord Bros. Inc. Makers Syracuse, N. V. PAT. JAN 21, 1908