Both complainants and defendants submit comparisons with rates in eastern territory, many of which have been prescribed by us, on numerous commodities, including brick and tile, cement, pitch, plaster, china clay, gypsum, wood pulp, wood flour, pulpwood, sulphur, lime, iron and steel, scrap iron, sand and gravel, blackstrap molasses, lumber, coke, ground coal, ground iron borings, granite paving and curbing, and others. The compared commodities embrace a range of values which extends well below and above that of fertilizer. Complainants stress the fact that, generally speaking, the rates on these commodities are upon lower bases and produce lower ton-mile revenues than does fertilizer, but defendants point out a number of them which, by reason of heavy loadings, produce more per car and per car-mile than fertilizer. On the whole these comparisons indicate the propriety of relatively low rates on fertilizer. A more complete analysis thereof is unnecessary.

The record also contains voluminous statistical and revenue data designed to show the general similarity or dissimilarity, as the case may be, of conditions in central and eastern territories. Evidence of a generally similar character was before us in the Eastern Class Rate case and was discussed at length in the report in that proceeding. No useful purpose would be served by a repetition of that discussion here. See International Paper Co. v. Alabama G. S. R. Co., supra.

Defendants submit detailed evidence with respect to the adverse financial condition with which they have recently been confronted and show that it is growing progressively worse. They also refer to the heavy inroads which other transportation agencies, such as motor trucks, have made upon their business, and suggest that the necessity for reducing rates for short hauls to meet such competition makes it important that they be permitted to recoup by charging relatively high rates for long hauls not so seriously affected by the competition. These matters have been fully considered.

We are apprised of the financial situation of the rail carriers and of their difficulties in competing with the trucks in Fifteen Per Cent Case, 1931, 178 I.C.C. 539, 179 I.C.C. 215, and have kept closely in touch with these matters since. In this connection the record also shows that the fertilizer industry is in desperate straits. It has been vitally affected by the agricultural depression, there is a large excess of potential production over the existing demand, and financial losses, bankruptcies, and reorganizations have been the rule in the industry in the past few years.

None of the matters of general import previously mentioned warrant a substantial difference between the basic levels of fertilizer rates in central and eastern territories, but it does not follow that we

may require the lines serving the eastern territory to maintain rates upon less than a maximum reasonable basis in order to bring them into line with the low level prescribed in the Northern case as the result of an erroneous conception of the Hoch-Smith resolution.

Defendants point out that fertilizer traffic has moved freely under existing rates. Further, that most of the large fertilizer plants in eastern territory are located on the coast, where they can and do receive a substantial quantity of their materials by water and to some extent ship the finished product in the same way, whereas, generally speaking, in central territory the railroads get the inbound haul of the materials as well as the outbound haul of the finished product. There is, however, a considerable movement by rail of materials to certain manufacturers and mixing plants located in the interior East, and it should also be remembered that the fertilizer tonnage in eastern territory is almost double that in central territory.

Various estimates of record indicate a prospective loss of revenue to the carriers in eastern territory of upward of a million dollars per annum if the northern scale were here prescribed. These estimates are open to various criticisms, in that they contemplate the use of the same scale throughout eastern territory, whereas we have repeatedly recognized the propriety of a higher level of rates in portions of New England than in trunk-line territory; that they include reductions from the level of rates in effect prior to the Eastern Class Rate case, whereas many fertilizer rates which were sixth class were reduced by that decision regardless of any action. which may be taken in the instant proceeding; and that defendants' estimates do not take into account complainants' suggested use of a 40,000-pound minimum, the same as prescribed in the Northern case, instead of the 30,000-pound minimum generally prevailing in eastern territory. Allowance for these various factors would necessitate a downward revision of the estimated revenue loss, but it is not disputed that it would still be substantial in amount.

The New England carriers submitted evidence with respect to conditions peculiar to the territory in which they operate which warrants a somewhat higher level of rates than is intended for trunk-line territory. This fact is generally conceded by the other parties and has been recognized by us in previous cases. Evidence of a generally similar character was considered in the Eastern Class Rate case, and discussion thereof is unnecessary here. In addition to the less favorable operating and transportation conditions which they encounter and their higher costs, the New England lines also introduced evidence indicating that fertilizer moving in that territory is of somewhat higher value and lighter loading than the average, that a considerable portion of the cars used in the fertilizer

traffic have to be sent to the plants empty, and that much of the traffic moves to numerous stations on branch or secondary lines which take only from one to five cars each during a season.

In the Eastern Class Rate case we prescribed a basic scale of class rates for application in official territory. This scale applies throughout central and trunk-line territories and between those territories and zone A of New England as described in the report. The basic scale, increased by 5 percent, was prescribed for application within zone A in New England, and was increased 15 percent for application within zone B in New England as described in the report. It was further provided that, for interterritorial hauls between zone B and other territories, certain distance arbitraries set out in appendix F to the report in that case, page 467, should be added for the portion of the haul in zone B, and also that distance arbitraries might be added for hauls over short and weak lines, in which category the Bangor & Aroostook Railroad Company was included, and for hauls over certain branch lines.

Certain of the interests here complaining do not subscribe to the application of the exact northern scale in eastern territory. That scale is progressed at the rate of 3.5 cents from 100 to 200 miles, 3 cents for each 100 miles from 200 to 500, and 2 cents for each 100 miles from 500 to 800. One complainant contends that the rate of progression is improper and produces a hump between distances of 340 and 580 miles. The scale suggested in lieu thereof is the same as the northern scale for the first 200 miles, but for greater distances it progresses at a uniform rate of 2 cents per 100 miles. This would produce a rate of 26.5 cents for 800 miles, whereas the rate is 29.5 cents for that distance under the northern scale.

Another complainant finds fault with the rate of progression in the northern scale and urges that a proper scale for application in eastern territory should be somewhat lower than the northern scale for the shorter distances in order to enable the carriers more effectively to meet truck competition, and somewhat higher for the longer distances in order that the carriers may find it possible to recoup on long-haul traffic the losses in revenue resulting from competition with the trucks for the shorter hauls. A scale is suggested, with these factors in mind, which starts at 4.5 cents, instead of 5 cents as in the northern scale, and remains lower for distances less than 140 miles, equals the northern scale for distances between 140 and 170 miles, and is higher than that scale for greater distances. The suggested scale progresses at the rate of 5 cents from 100 to 200 miles, 4.5 cents from 200 to 300 miles, and 2.5 cents for each additional 100 miles thereafter. It reaches 32.5 cents at 800 miles.

Upon due consideration of the record, and giving appropriate weight to the policy of according as lenient treatment to the fertilizer traffic as may be, while at the same time making allowance for the fact that the rate level typified by the northern scale is lower than it would have been but for the erroneous application of the Hoch-Smith resolution, we believe that neither the sixth-class rates advocated by the carriers nor a level equal to or approximating the northern scale is appropriate for mixed fertilizer in eastern territory, but that a maximum reasonable basis would be 22.5 percent of the corresponding first-class rates.

FERTILIZER MATERIALS

The next question to be considered is with respect to the relation between the rates on fertilizers and materials. A specific request is made for rates lower than those on fertilizer for application to superphosphate, sulphate of ammonia, nitrate of soda, tankage, bone meal, castor pomace, fish scrap, and potash, in bulk and in bags from Portland, Maine, Boston, Mass., New York, N.Y., Jersey City, N.J., Philadelphia, Pa., and Baltimore to numerous points in eastern territory. This request is sponsored primarily by the Davison Chemical Company and affiliated companies in no. 23376, operating principally in trunk-line territory, and Olds & Whipple, Incorporated, the Consolidated Rendering Company, and affiliated complainants in no. 23621 and sub-no. 1, operating principally in New England. The opposition is by certain large fertilizer manufacturers, including the American Agricultural Chemical Company, the International Chemical Corporation, and Armour Fertilizer Works. Various other complainants take no position on this question but state that if it be concluded to prescribe lower rates on materials than on fertilizer they desire the benefit of that action for their traffic. The findings here made with respect to the rates on materials will relate to all rates which are brought in issue by the respective complaints, but cannot cover transportation from and to points where the rates are not in issue.

With respect to this phase of the present cases there is a considerable body of precedent to be found in previous decisions. In the Southern case and Northern case no distinction was made between fertilizer and materials and the same rates were prescribed for application to both. In the Southwestern case fertilizer and certain materials were accorded the same rates, but on certain other materials slightly higher rates were prescribed. In none of those cases does it appear that the matter of the relation between the rates on fertilizer and the materials was particularly stressed. However, in Imported Fertilizer Materials, 161 I.C.C. 649, certain shippers sought, among other things, to have a basis of rates applied to imported

fertilizer materials, from south Atlantic and Gulf ports to southern territory and the Ohio River and points north thereof, lower than the domestic basis which applied both to fertilizer and to materials. Two of the complainants who here oppose any difference in the rates on fertilizer and materials urged in that case that the rates on imported materials should be made 80 percent of the southern scale, with a minimum either of 70,000 pounds or of car capacity. Various reasons, including the heavy loading of imported materials, were presented in support of this proposition and discussed at length in the report, but the request for lower rates on the imported materials was denied.

In Hope Fertilizer Co. v. Baltimore & O. R. Co., 165 I.C.C. 538, pile-run superphosphate, in bulk, with an average loading of 80,000 pounds, was accorded a rate of 87.5 percent of the fertilizer rate from Nashville and West Nashville, Tenn., to Hope, Ark. This commodity is superphosphate as it comes from the bins in which it is piled to cure after it is produced by treating phosphate rock with sulphuric acid. It becomes commercial superphosphate when further treated so as to put it in proper mechanical condition for agricultural use and insure that it contains available phosphoric acid in quantity as represented when sold.

It is unnecessary to discuss that case further, because it is based in large measure upon the distinction between pile-run and commercial superphosphate. In the instant proceedings only one set of interests made any contention for rates based upon that distinction, and they stated later that they were willing to waive in this case the contention that there is any difference from a rate-making standpoint between run-of-pile superphosphate and 16-percent superphosphate. The latter term means commercial superphosphate with a guaranteed available phosphoric-acid content of 16 percent.

One other matter of precedent requires notice and this has to do with the establishment of alternative rates on the same commodity based on different carload minima. Those complainants seeking a difference in the rates on fertilizer and materials contend that the establishment of a lower rate, with a higher minimum on superphosphate than on fertilizer, is not in fact an alternative, because they are different commodities, superphosphate being one of the ingredients or raw materials from which fertilizer is made. However this may be, the superphosphate and the other materials upon which lower rates are sought are the same commodities whether loaded to 40,000 or 80,000 pounds per car, and those complainants concede the propriety of applying the fertilizer rates to those articles when loaded to 40,000 pounds, while seeking lower rates in connection. with an 80,000-pound loading.