Stores, officials of the traffic and operating departments realized that a large loss would be thereby entailed. The estimates of officials of the two departments, while somewhat at variance, indicate that practically the entire revenue from the line haul would be dissipated in terminal operations, due principally to storage and labor incident thereto.

During 1931 the B. & O. used an average of approximately 200,000 square feet at American Dock Stores for storage in transit of westbound freight, which at 55 cents per square foot amounted to $110,000. The total income received by the B. & O. for the year 1931 from its storage-in-transit operations at this warehouse was $54,480. The total operating costs were $146,554 for the year and resulted in a net loss to the carrier of $92,073, equivalent to an average loss of $2.48 per ton stored. Items of expense, such as work performed by clerks who also do other railroad work, and any advertising expense, or losses paid as warehouseman, were not included as expense items. Also the net loss shown is subject to slight adjustments, as no deductions were made for the cost of handling into and out of storage, in the case of through shipments, and the fact that cost of extra switching from the warehouse, which is an off-line point, to St. George, was not included. Exact figures to make such adjustments were not available and those presented reflect the approximate results of operations at this point.

Similar data for Pouch Stores for the year 1931, show that B. & O. revenue from freight stored in transit at this facility was $30,280, operating expenses were $84,137, and that the total loss was $53,857, or an average of $2.26 per ton stored.

Piers 5 and 6, St. George, Staten Island.-Piers 5 and 6, at St. George, are the regular lighterage piers of the B. & O., and are used for both eastbound and westbound freight, a portion, however, being devoted to the storage of in-transit freight. Due to the intermingling of lighterage and storage operations no data were available showing the investment, operating expenses, or profit or loss to the B. & O. from storage-in-transit operations on these piers for the year 1931. In-transit freight stored at these piers during 1931 amounted to slightly over 8,000 tons, while during the same period about 37,000 and 24,000 tons were stored respectively at American Dock and Pouch Stores.

Pier 12, Stapleton, Staten Island.-The B. & O. occupies a portion of this pier through an arrangement with the city of New York and pays as rent there for the same amount it collects from shippers for storage under the tariffs, consequently there is no loss from the storage service. The freight stored here during 1931 amounted to

approximately 1,500 tons, the greater part of which was burlap. Total income derived from storage of in-transit freight at this pier for 1931 amounted to $3,213, and expenses, including rent, labor, and insurance, were $3,825. The loss of $611.45 is the difference between the income from insurance and labor, and expenditures on account of these items.

Insurance operations of B. & 0.-Prior to September 6, 1930, the B. & O. maintained an insurance rate of $1.73 per year per $100 of value to cover westbound in-transit freight stored on Piers 5 and 6, St. George, Staten Island. Some warehouses of competing lines enjoyed more favorable terms, at least one being rated as low as 8 cents per year per $100 of value. In line with the action of competitive carriers heretofore referred to, the B. & O. adopted the so-called 8-cent rate effective September 6, 1930.

The B. & O. carries insurance with regular insurance companies to protect its liability on the in-transit freight stored at its warehouses on Staten Island. Six policies totaling $500,000 coverage apply to all commodities stored at any of the Staten Island facilities of the carrier. A uniform rate of 50 cents per year per $100 of value is charged by the insurance companies and paid by the B. & O. Additional coverage of $100,000 obtained at rates from 8 cents to about 15 cents per $100 of value applies to crude rubber to be placed in specified buildings at American Dock and Pouch Terminal.

The total value of freight stored during 1931, upon which the B. & O. assumed the insurance liability published in its tariffs, is not disclosed, nor is it shown that the insurance policies totaling $600,000, mentioned above, were sufficient to cover such liability. It does appear, however, that during 1931, the B. & O., on the basis of the 8-cent tariff rate, collected $793.52 from shippers for insurance on in-transit freight stored in its warehouses, and to cover this liability, paid out to insurance companies during the same year $2,861.07, causing a loss to the carrier of $2,067.55.

Storage of eastbound freight by B. & O. during 1931.-During 1931, eastbound freight stored by the B. & O. consisted principally of flour, the greatest amount of which was stored at the Continental Milling and Warehouse Company, New Brighton, Staten Island, for the account of W. P. Tanner-Gross Company, flour broker, which also owns the Continental Milling and Warehouse Company. The agreement for storing and handling flour at this warehouse was entered into in 1923, under which the B. & O. was to pay to the warehouse company, for each handling of flour from car to storage and from storage to boat or car, 25 cents per ton, or 50 cents per ton for handling in and out of storage. The B. & O. was also to pay

the same rental for storage space that it collected for storage at tariff rates, leaving the charge of 50 cents per ton for handling in and out of the warehouse as the cost to the carrier. This agreement was canceled effective October 31, 1931, and the amount of loss which the carrier may have suffered thereby does not appear. During the first 10 months of 1931, however, over 14,000,000 pounds of flour were stored by the B. & O. at the Continental Milling and Warehouse Company, for account of the Tanner-Gross Company.

The president of the Continental Company is also president of Tanner-Gross & Company, Incorporated, which is engaged in the merchandising and exporting of flour. He testified that at the present time the Continental warehouse stores no flour for the TannerGross Company, that it is cheaper to allow the various flour-trucking concerns later mentioned to store the flour than to store it in their own affiliated warehouse, and that he knew of no case where storage was now being paid on flour by any flour merchants in New York. He assumed that such trucking companies pay only a nominal rent to the carriers for such space as they occupy for the storage of flour, and that their profits were made on the trucking of the goods. This latter testimony had reference to the general practices and did not relate particularly to the B. & O. or any other single respondent. This report later shows that the carriers compete for traffic, including flour, and offer low rental rates for storage as an inducement for obtaining such traffic.

Storage in cars.-No record was found of cars being used by the carrier for storage of westbound in-transit freight. However, a considerable amount of eastbound flour was held in cars at St. George and neighboring yards. Statements prepared by the B. & O. show a record of 908 shipments of flour stored in cars during the first 5 months of 1931, at its New York terminals. These shipments were held in foreign cars an average of 8 days per car, then transferred to B. & O. cars, and were held an average of 21 days per car before being delivered and unloaded by the carrier at destination. The total cost of transferring the flour from foreign to system cars, together with expense of final unloading of the 908 cars upon delivery, an obligation of the carrier under its tariffs, amounted to $52,029.01. No storage charges were collected by the B. & O. for the detention of these cars. The amount of such charges which would have been collected under the eastbound intermediate storage tariff, if flour had been included with other commodities, would have amounted to $30,401.12. Per diem expense, handling costs, and uncollected storage charges, shown in the statements compiled by the carrier, amounted to $109,083.13. The total freight charges on these ship

ments, from points of origin to New York, were $178,731.20, of which the B. & O. proportion was but $85,349.77.*

CENTRAL RAILROAD COMPANY OF NEW JERSEY

The Central Railroad Company of New Jersey, hereinafter referred to as the Jersey Central, has three piers at Jersey City, namely, Piers 5, 11, and 14, and a warehouse operated by the Newark Warehouse Company, at Newark, N.J., hereinafter referred to as the warehouse company, which are devoted to the storage and warehousing of property. It also owns a number of buildings in the Bronx which it rents to various concerns for different business purposes. We shall deal first with the warehouse at Newark.

Newark Warehouse Company.-The Newark Warehouse Company was incorporated under the laws of the State of New Jersey on July 6, 1905, with an authorized capital stock of $500,000, of which $10,000 has been issued to the Jersey Central. The principal officers of the warehouse company are also officials of the Jersey Central. The vice president in charge of the traffic department of the Jersey Central is vice president of the warehouse company.

During the years 1906 and 1907 the warehouse company erected a 6-story steel and concrete building with basement, located at Lawrence and Mechanic Streets in Newark, with funds advanced by the Jersey Central, to secure which the warehouse company in 1910 issued a bond for $1,394,710.95 in favor of the Jersey Central. This bond has been reduced from time to time by the warehouse company, and at the time of the hearing amounted to $1,100,000. The building is 360 feet long and 175 feet wide, with a total commercial warehouse space of about 250,000 square feet. The south side of the building on the first floor is served by sidetracks of the Jersey Central. The building in addition to providing warehouse facilities contains a local freight station of the Jersey Central, occupying about 35,000 square feet on the first floor and 30,000 square feet on the second floor. Portions of the first and second floors are also used by the warehouse company for delivery and distribution of freight and for offices. The four top floors are used exclusively by the warehouse company, except approximately 400 square feet on the third floor.

For the past few years the Jersey Central had paid an annual rental of $87,324.36, equivalent to 6.57 percent of the entire investment in the property, to the warehouse company for the space occupied by it. The rental has varied from time to time but has been

Subsequent to the hearings, or effective September 20, 1932, the tariffs were amended to provide for a storage charge on flour held in cars the same as on general freight held in that manner.

gradually increased over a period of years to the present basis. It appears to have been based in part on the difference between total receipts and total expenditures, and thus includes any deficit incurred by the warehouse company. Although the Jersey Central uses only 20.63 percent of the warehouse space, the rent paid for the year 1931 amounted to 74.43 percent of the gross revenue of the warehouse company of $117,309.51. During the same period the warehouse company suffered a deficit of $52,325.76. The deficit incurred would have been still greater if the rental paid for space used as a freight station had been more nearly commensurate with the space occupied. It is thus clear that by the rental arrangement the carrier assumes the burden resulting from any unprofitable operation of the warehouse. This is clearly shown in a statement by the real-estate and tax agent of the Jersey Central to the comptroller, reading as follows:

It would seem to me that a fair adjustment as between the Warehouse Company and the Railroad Company would be for the Railroad Company to pay as rental whatever sum there may be as between the earnings of the Warehouse Company and the expenses on account of interest, taxes and maintenance of the property. Thus as time goes on and the Warehouse becomes more profitable and earns more revenue, the rental to the Railroad Company will be correspondingly annually reduced.

The warehouse company engages in a general commercial storage and warehouse business. No in-transit freight is stored in this warehouse for the account of the Jersey Central, although its published tariffs provide that in-transit freight will be stored there. A small amount of space is rented by the warehouse company to various concerns on a square-foot basis, and a number of other accounts are handled on a basis of rates per 100 pounds for storage and handling. The rates for space on the square-foot basis range from 5.5 to 6.5 cents per square foot per month or from 66 to 78 cents per square foot per year.

The Newark warehouse was constructed and financed by the Jersey Central as a medium through which traffic would be attracted to its line. Traffic solicitation and advertising for the warehouse company emanate from the freight-traffic department of the Jersey Central in connection with the railroad's traffic information. In June 1931 it was estimated that this building was filled to only 10 percent of its capacity.

Piers 5, 11, and 14.-Jersey Central Piers 11 and 14, located in Jersey City, are adjoining single-deck covered piers of steel and concrete construction with railroad tracks running through their center and are used for lighterage freight. Pier 5 is an old pier and is used for storage of waste paper and soap. The ledger value of these