rates from Chattanooga the proportion received by the southern lines was 62.2 per cent and by the northern lines 37.8 per cent. The average haul by the southern lines was 328 miles and by the northern lines 206 miles. The average division of the through rates to the southern lines was $2.35 and to the northern lines $1.44. Of the through rates from Birmingham the proportion received by the southern lines was 65.2 per cent and by the northern lines 34.8 per cent. The average haul by the southern lines was 420 miles and by the northern lines 219 miles. The average division of the through rate to the southern lines was $2.72 and to the northern lines $1.45.

There is but slight difference in the percentage results via the direct gateways as between the different exhibits, and it is substantially correct to say that the divisions of the through rates less the bridge charge for a number of years prior to October 1, 1914, were on an average basis of 65 per cent to the southern lines and 35 per cent to the northern lines. The same basis applied to the reduction of 35 cents in the through rates would mean that 23 cents of such reduction should be borne by the southern lines and 12 cents by the northern lines.

Exhibits were filed by both sides showing ton-mile earnings under the divisional basis in effect immediately prior to October 1, 1914, under the basis proposed by the southern lines, and under a basis which would recognize the northern lines as entitled to the claimed increase of 5 per cent. These exhibits are not particularly illuminating. The Commission has many times held that owing to different transportation conditions north and south of the Ohio River the southern carriers are entitled to higher ton-mile earnings than are the northern carriers. But the question before us is not what would be reasonable rates north and south of the river, respectively, but what are just and reasonable divisions of the through rates prescribed by the Commission.

We are not impressed by the contention of the northern lines that under The Five Per Cent case, supra, they are entitled to an increase in their divisions. That case was decided July 29, 1914, some time after the original decision in this case. We found that the carriers in central freight association territory were entitled to an increase of 5 per cent in their intraterritorial class rates and in many of their commodity rates, subject to certain limitations, one of which was that "rates throughout central freight association territory that still are controlled by the force of unexpired orders of this Commission, entered after specific investigation in formal cases," should not be modified.

The rates on pig iron from the southern furnaces to central freight association territory are joint rates published by the southern lines

and concurred in by the northern lines. In our original report these joint rates were found to be unreasonable. Our order ran only against the carriers named as defendants, and therefore did not specifically embrace points not reached by those carriers, and reduced rates were established only to a few points north of the Ohio River. It can not be reasonably questioned, however, that the principle of our conclusion and of the order based thereon extended to all points to which joint through rates were then published. As already pointed out, it was stated at the rehearing that reductions would have been made to all such points in accordance with the spirit of the order if it had not been for the failure to agree upon divisions of such rates north and south of the river. We do not think the decision in The Five Per Cent case furnishes any warrant for this contention by the northern lines.

Upon all the facts of record we find that of the amount of the original reduction in the joint through rates, established and to be established, the southern carriers should bear 23 cents and the northern carriers 12 cents. We further find that of the joint through rate of $4 from Birmingham to Chicago, the lines south of the Ohio River are entitled to and should receive $2.52, and that the lines north of the Ohio River are entitled to and should receive $1.48. All other joint through rates on pig iron from the southern furnaces to points reached by defendants' lines in central freight association territory, as well those already reduced under the order effective October 1, 1914, as those herein required to be reduced, should be apportioned between the carriers north and south of the Ohio River on the same basis as named for the Birmingham-Chicago rate.

Orders will be entered in accordance with the conclusions herein announced. In the matter of the divisions of the joint through rates the order will be made effective as of October 1, 1914, the date when the original order took effect.

Matters which relate to the rates on pig iron from the south to trunk line and New England territories, involved in the rehearing, will be disposed of in a later report.

35 I. C. C.

INVESTIGATION AND SUSPENSION DOCKET No. 518.

WITHDRAWAL OF REGULATIONS COVERING CONCENTRATION AND STORAGE OF DAIRY PRODUCTS.

Submitted June 19, 1915. Decided July 24, 1915.

1. Proposed cancellation of rules providing for readjustment of aggregate charges on shipments of dairy products concentrated in transit in western territory justified, and orders of suspension vacated.

2. Proposed cancellation of rules as to storage in transit not justified.

W. F. Dickinson, Charles Donnelly, R. B. Scott, A. P. Humburg, C. S. Berg, T. J. Norton, and C. C. Wright for respondents.

Cassoday, Butler, Lamb & Foster for Live Poultry & Dairy Shippers Traffic Bureau.

H. D. Driscoll for Kansas Carlot Egg Shippers Association and Topeka Traffic Association.

T. F. Chaplin for Missouri Association of Wholesale Dealers in Butter, Eggs, and Poultry, and St. Louis Refrigerating & Cold Storage Company.

W. S. Priebe for National Poultry and Egg Association.

M. S. Hartman, Grant Thornberg, and S. C. Bates for various interested shippers.

REPORT OF THE COMMISSION.

DANIELS, Commissioner:

For many years certain western lines have published special rules and regulations with regard to shipments of dairy products, which includes butter, eggs, and poultry. These may be divided into two general groups: (1) Rules providing for the readjustment of aggregate charges on these products shipped in less-than-carload quantities from points of origin in Nebraska, Kansas, Oklahoma, Missouri, and the northwestern corner of Arkansas, to concentration points, and thence in carload lots to the Mississippi River crossings and points east thereof, and to Pacific coast terminals; (2) rules providing that the through carload rate from point of origin to point of ultimate destination, plus a charge, usually $5 per car, will be protected on carload shipments of these commodities stored in transit at intermediate points.

The respondent carriers filed tariffs designed to cancel these rules and regulations and to discontinue the practices thereunder, effective

on various dates between September 23, 1914, and May 10, 1915, but upon protests by the Live Poultry & Dairy Shippers Traffic Bureau and numerous other organizations and shippers interested in the purchase and sale of butter, eggs, and poultry the Commission suspended these tariffs to various dates between July 21, 1915, and September 30, 1915.

At the hearing it was announced that no justification of the schedules affecting the present rules and regulations regarding the storage in transit of these commodities would be attempted. For a second time in the course of a few months certain of the respondent carriers have filed tariffs proposing to cancel this practice and upon the suspension thereof have failed to justify the action. The respondents having offered no testimony in support of the tariffs, we find that they have failed to meet the burden of proof required by the statute.

Butter, eggs, and poultry move from country stations to concentration points in small lots, averaging about 200 pounds, and the lessthan-carload rate is paid. At these concentration points, which are usually the larger towns, the shippers or concentrators maintain extensive plants for storing and subjecting these commodities to processes, such as the reworking, grading, and repacking of butter; the drying, desiccating, freezing, grading, candling, and repacking of eggs; and the feeding, dressing, grading, freezing, and packing of poultry.

The products are shipped forward in carloads, and the carload rate from the concentration point to destination is applied, with a minimum weight of 20,000 pounds. The shipper at concentration point thereupon files a claim with the carrier for a refund, and there is a readjustment by which the carload rate from the point of origin of each less-than-carload shipment to destination is applied on each less-than-carload shipment in the car sent forward, with the addition of 5 cents per 100 pounds. Only when the outbound carload moves within one year from the date of the inbound shipment will refund be made. Then, too, there is a minimum rate of 10 cents per 100 pounds prescribed on each inbound less-than-carload shipment, and a minimum charge of 25 cents on each shipment. The actual weights of the inbound shipments as shown on paid expense bills are to be reduced by varying percentages stated in the tariff because of the reductions suffered in the treatment of the products at the concentration point. The shipper is required to keep a record of the transit and nontransit tonnage received at concentration points, and what is forwarded, and to make sworn yearly statements of the total tonnage on hand as compared with that represented by unexpired expense bills.

The carriers propose to discontinue this readjustment of the aggregate charge, and this action will compel the application of the

less-than-carload rate to points of concentration and the carload rate thence to destination, and while it advances no particular rate, it will result in an increase in the total transportation charges. The resulting charges are estimated by the respondents to be generally about 14 per cent in advance of the present charges, and by the protestants from 30 to 35 per cent; and the burden of justifying these increased charges is as much upon the carriers as though it were proposed to advance a particular rate. That burden may be sustained, however, by showing that the rates applicable upon cancellation or readjustment are proper charges for the service performed.

A special arrangement for the encouragement of the concentration of dairy products was first instituted about 1890 by the St. Louis & San Francisco Railroad along its lines in Kansas and Missouri. It was later established by the Missouri Pacific and Chicago, Rock Island & Pacific along their lines in these states and in Nebraska. As time went on it became effective on all lines in the states and on the traffic hereinbefore described. At first the arrangements took the form of special less-than-carload commodity rates from the country points to the concentration points. Under this arrangement the shipments to and from the concentration points were handled and treated as separate and distinct transactions, and settlements with the carriers made accordingly. Later, that the line bringing in the small shipments to the concentration point might control the outbound carload movement, the present practice of readjusting the aggregate through charges was adopted.

Witnesses for the respondents testified that the practice in its original as well as subsequent form was established for the purpose of building up the industry. The method adopted, however, has not been without opposition. It appears that some of the carriers, believing that the practice was wrong in principle, established it on their lines only because they were forced to do so under stress of competition. For example, the Chicago & North Western Railway did not make it operative over any of its lines until 1906, and then only in Nebraska, as a result of the competition of other Nebraska lines. The same is true of the northern transcontinental lines, like the Great Northern and Northern Pacific railways. Having discovered about 1906 that a substantial percentage of the butter and eggs consumed in Pacific coast markets was coming from Kansas and Nebraska, these carriers decided to do something to encourage the movement of such products from points on their lines, and accordingly adopted the practice they now desire to abolish.

The respondents contend that the industry in question no longer needs the stimulus of an abnormal adjustment of rates, and in support of this they submitted exhibits showing the relative production of dairy products in Nebraska, Kansas, Missouri, Oklahoma, and Texas,