"This conclusion is reached with full knowledge of the conditions prevailing in the drought areas. As a matter of fact, the railroads have been substantially affected through the loss of traffic from this cause. The decision, therefore, reflects no lack of interest on the part of the Colorado railroads in the agricultural situation in that state, but is compelled by circumstances which menace the future of the carriers themselves.

"No doubt you are aware of the present financial crisis which confronts the railroads of this country. It cannot be too strongly emphasized. Fifty per cent of the railroad mileage in the Mississippi Valley is in the hands of the courts. Indeed, three of the lines serving your State occupy that status. If revenue relief is not forthcoming in the near future, other railroads in this territory will be compelled to join them. The Interstate Commerce Commission has been petitioned for a general increase of all rates and the proceedings in that case are being expedited in every possible way. President Roosevelt has directed attention to the situation and asked for speedy action. The serious consequences of a transportation break-down are generally recognized.

"In the face of such an emergency, I believe you will agree it would not only be inconsistent but highly improvident for the railroads to make the reductions asked for in Colorado. I might add that similar requests have been declined by the railroads serving Nebraska and Kansas.

"With full confidence that you will understand the necessities which prompt this decision."

5. Advertising in the President's Birthday Ball Magazine.-In my letter for the month of March 1937 I advised of the adoption of recommendation that Western roads shall not hereafter subscribe for space in publications purporting to be in the interest of charitable causes, as it was felt that a considerable amount of the sum spent for advertising in such publications did not reach the beneficiaries.

The presidents of various Western lines received again this year request from the National Foundation for Infantile Paralysis, soliciting advertisements in the President's Birthday Ball magazine at $1,000 per page, vigorous argument being advanced that such advertisements should not be in any way classed as a donation. It was agreed, however, at the January meeting of the Western Association of Railway Executives that the position previously taken should be maintained, and I replied to the publisher for account of all lines, under date of January 19th, as follows:

"Referring to your recent communication addressed to the presidents of member roads of this association soliciting railroad advertisements in the President's Birthday Magazine.

"As you probably know, the railroads have been struggling with constantly rising cost brought about through increases in the price of materials, increased wages, and increased tax assessments account employes' pension, and unemployment compensation laws, all of which make it imperative that we conserve our revenues to the greatest extent possible.

"In these circumstances, on behalf of all lines in Western territory, I have to advise that we cannot subscribe to advertising space in the publication you represent."

6. Financial Support for the Agricultural Engineering Foundation.-In my letter for the month of March 1937, I advised of request upon Western railroads by Mr. Oswald Wilson, Treasurer and Managing Director, of an organization known as the Agricultural-Engineering Foundation, of San Francisco, for financial assistance in carrying out the work of the foundation, stating that Mr. Wilson had been informed the railroads' financial condition did not warrant contribution to his organization.

The Agricultural-Engineering Foundation again solicited financial assistance from the railroads, but under date of January 5th I made reply for account of member lines to the effect that the railroad situation is very materially worse than when the subject was up a year ago and that it would be improvident to the extreme for us to make donations now, however meritorious the cause.

7. Railroad Contributions Toward State Exhibits at the New York and San Francisco World's Fairs in 1939.-The states of Kansas and Wyoming have created committees to report on the feasibility of exhibits for each of those states at the 1939 World's Fairs in San Francisco and in New York. One of the sources of financial support occurring to each of those committees apparently was the railroads of their respective states.

Following consideration of this subject at the January meeting of the Western Association of Railway Executives, I was directed to advise these people that the

railroads were not in financial condition to make contributions toward the expense of state exhibits at either of these fairs.

8. Advertising Campaign Proposed by the Wall Street Journal.-Under date of December 30, 1937, the Wall Street Journal proposed that Western railroads sponsor an advertising campaign to consist of an advertisement twice a month for twelve months in their publication at an estimated expense of $11,000 as a means of interesting manufacturers, their directors, executives, employes, shareholders, and customers in the welfare of the railroads, in which they have such an important self-interest.

After consideration of this question at the January meeting of the Western Association of Railway Executives, I was directed to advise them that our member roads had decided some time ago to postpone or discontinue entirely joint newspaper advertising as a regional proposition in Western territory, in view of the joint national advertising by the Association of American Railroads, as well as increased budget appropriations of many of our member roads for their individual accounts and that, therefore, the program suggested by the Wall Street Journal would not be undertaken.

9. Restrictions Covering the Furnishing of Closed Top Hopper Bottom Cars.-In my letter for the month of March 1937, I reported conclusion to reaffirm rule in Western territory prohibiting furnishing or equipping of hopper bottom cars with covered tops, as it was felt that a great deal of money had been saved by the carriers in this territory through the operation thereof since the adoption of this rule. It may be of interest to you to know that the Southeastern Presidents Conference, at its January, 1938, meeting, adopted a rule very similar to the one now in effect in Western territory.

10. Proposal of the C. R. I. & P. Ry. Co. To Substitute Tourist Cars for Standard Sleeping Cars Between Memphis and Los Angeles.-On January 28, 1938, the Rock Island served notice, under the provisions of the Commissioner Agreement, of intention to make certain changes in their passenger-train schedules, in connection with which it developed that they proposed to substitute tourist cars for standard sleeping cars between Memphis and Los Angeles. The Missouri Pacific made formal protest against this particular service, stating that it would result in establishment of tourist-car operation via the St. Louis gateway with consequent reductions in passenger revenues. Upon my assuming jurisdiction in the dispute, the Rock Island agreed to not inaugurate the tourist-car service, and the case was thus disposed of without the necessity of formal hearing and report.

11. Freight Schedules—(a) Non-Guarantee of Connections with Eastern Lines Trains Departing 2:00 A. M. from St. Louis and 7:00 A. M. from Chicago.-At a meeting of Chief Operating Officers on December 15, 1937, called particularly to dispose of controversies arising from conflicting interpretations of our October 2, 1936, agreement to not guarantee connections at St. Louis and Chicago with 2:00 a. m. and 7:00 a. m, trains, respectively, for Eastern destinations, it was unanimously decided that we should not only reaffirm this position, but that traffic solicitors should be uniformly and positively instructed to refrain from any promises which might be construed as a guarantee of such connections.

(b) Uniform Schedules from the Salt River and Imperial Valleys.--Another subject discussed at the December 15th meeting was the demand from shippers located on Southern Pacific rails in the Salt River Valley for an equality in service accorded them with that available to shippers located on Santa Fe rails in the same territory.

For a good many years, the perishable schedule from Imperial and Salt River Valleys provided a one-day earlier delivery at Eastern destinations via the St. Louis gateway than was available via Chicago for shippers originating on Southern Pacific rails. This distinction was brought about by reason of the fact that the Santa Fe equalized via Chicago any schedule available via St. Louis on traffic originating on their own rails, so as not to be short-hauled on their own line east of Kansas City.

The Salt River Valley shippers located on the Southern Pacific rails served notice on the Southern Pacific early in December that this disparity resulted in shippers located on Santa Fe rails securing some advantage in sales on the Chicago market. It was therefore agreed at the December 15th meeting to establish a uniform schedule to Chicago providing fifth morning delivery from the Salt River Valley and sixth morning delivery from the Imperial Valley.

It was further agreed that in adopting this change, the St. Louis lines should have the privilege of expediting their Imperial and Salt River Valley blocks so 84949-44-pt. 12-6

as to arrive St. Louis not earlier than 10:30 a. m. of the fourth and fifth days, respectively, as compared with previous arrival time of 9:00 to 9:30 p. m. This expedited schedule permits St. Louis lines to make connection for Chicago so as to arrive in time for early morning deliveries, fifth and sixth days, respectively, as compared with previous arrivals of noon, fifth and sixth days.

(c) Protest of the Southern Pacific and Cotton Belt Against Action of the Missouri Pacific and Frisco in Handling California Concentration Point Traffic to St. Louis on the Expedited Salt River-Imperial Valley Block.-With the establishment of the expedited schedule on the Salt River Valley and Imperial Valley blocks in order to equalize deliveries at Chicago, referred to in Item (b), the Missouri Pacific commenced to handle thereon California concentration point traffic destined Chicago, or beyond, thereby enabling them to participate in the Chicago market on California perishables for the first time on a parity with the schedules obtaining via the Kansas City and Omaha gateways. In addition thereto, the Missouri Pacific found it desirable from a tonnage standpoint to also handle on the expedited block some California concentration point traffic destined St. Louis. In order to meet this competition, the Frisco likewise established an expedited schedule, and in addition to handling Salt River Valley and Imperial Valley traffic thereon, started the practice of bringing into St. Louis such California concentration point traffic as could be used for fillers.

Formal protest, under the Commissioner Agreement, was filed against the handling of Colton block traffic on the expedited schedule, the protestants claiming that under the December 15th agreement, whereby the St. Louis lines were permitted to expedite their Salt River Valley-Imperial Valley blocks so as to provide fifth and sixth morning deliveries at Chicago, it was expressly agreed that this change would not in any way affect existing California concentration point schedule agreements. A hearing on this protest has been called and my report and conclusions will be rendered thereon in the usual manner.

(d) Time of Team Track Placements at Kansas City and St. Louis on Salt River Valley-Imperial Valley and Mexican Perishable Traffic; Also Traffic From California Concentration Points.-At a meeting of Chief Operating Officers on January 20th, an agreement was reached that inspections and/or deliveries on Salt River Valley-Imperial Valley and Mexican perishable traffic would not be permitted at Kansas City prior to 3:00 a. m., fourth and fifth days, respectively, and not before 12: 01 a. m., fifth and sixth days, respectively, at St. Louis; inspections and/or deliveries on California concentration point perishable traffic not to be made prior to 12: 01 a. m., sixth day, at Kansas City, and at St. Louis prior to 12:01 a. m., seventh day. It subsequently developed, however, that for a period of about six years, the Kansas City lines have been permitting inspections on California concentration point traffic at 4:00 p. m., fifth day, in order to effect diversions to points in the territory northeast of Kansas City, such as Des Moines, Waterloo, and the Twin Cities, for departure from Kansas City on evening trains for those destinations. Furthermore, attention was called to the fact that a protest had been filed with the Bureau of Service, Interstate Commerce Commission, by one of the shippers at Kansas City against restricting inspections to 4:00 p. m. of the fifth day from California concentration points.

At a meeting held in my office on January 28, 1938, to further consider this particular feature, conclusion was reached that the Kansas City lines could not, in the circumstances, move the inspection time back to 12:01 a. m., and that therefore an exception to the January 20th agreement was necessary in so far as it applied to Kansas City, but inasmuch as one of the St. Louis lines insisted upon an identical inspection hour at St. Louis, it was decided that the St. Louis situation would be left for a later conference. Two of the St. Louis lines thereupon served notice of intention to permit inspection at St. Louis at 4:00 p. m. of the sixth day on California concentration point traffic; but agreed that deliveries would not be made prior to 12:01 a. m., seventh day. I pointed out that there is an essential difference between the problem at Kansas City and that at St. Louis at the present time. At Kansas City, the present schedule has been in existence for many years. At St. Louis, the handling of Colton Block traffic on the expedited schedule, arriving St. Louis 12:30 p. m., sixth day, was inaugurated following our December 15th conference and is the subject of a formal protest as hereinbefore set out. Furthermore, whatever may be the outcome of such protest with respect to the handling of California concentration point traffic on the expedited schedule into St. Louis, when destined Chicago or beyond, St. Louis ceases to be an intermediate point on traffic destined St. Louis, and inasmuch as the basic schedule agreement contemplates a parity between Chicago and St. Louis on California concentration point traffic, such traffic is not due

at that point until 9:00 p. m. of the sixth day, and the granting of inspection privileges thereon at 4:00 p. m. is clearly prohibited under the basic agreement.

The Missouri Pacific and Frisco agreed, in order to compose the situation, to discontinue the handling of California concentration point traffic, destined St. Louis proper, on the expedited schedule. A conference of the St. Louis inbound lines will probably be necessary to reach unanimous agreement on inspection hour. Very truly yours,

H. G. TAYLOR, Commissioner.

EXHIBIT No. 303

COMMISSIONER OF WESTERN RAILROADS,
Chicago, Illinois, December 3, 1935.

TO THE COMMITTEE OF DIRECTORS:

For your information, I am outlining below activities upon which I have been engaged during the month of November 1935:

1. Western Trunk Line Tariff No. 330, Providing for Installation of Grain Doors at the Expense of Shippers.-Pursuant to action taken by Western carriers on November 1st, bills were presented to all shippers in whose behalf grain doors had been installed since the effective date of the tariff on July 1, 1935. In a few instances these bills have been paid. However, in the large majority of cases payment has been refused. Kansas City, Mo., was selected as the point at which a test of the provisions of the tariff should be made, and the subject is now being given careful consideration by the Committee of Counsel, looking toward determination as to future procedure to enforce collection. The outcome of proceedings at Kansas City will serve as a guide to be followed by the carriers at other points in Western territory.

2. Slowing Down the Movement of Perishables Between California Points and Chicago. The Federal Coordinator of Transportation instituted inquiry into the practice being followed by Transcontinental carriers of slowing down the movement of perishables between California points and Chicago at the request of shippers. This subject was given further consideration at meeting of the Western Association of Railway Executives, held on November 8th, at which time resolution was unanimously adopted to the effect that on December 1st the practice of slowing down the movement of perishables would be discontinued and all such commodities would be handled on regular schedule unless delayed on account of operating conditions, etc.

3. Proposal of Kansas City Southern Railway Company to Reduce Import and Export Rates to Kansas City, Mo., to the Cedar Rapids Basis.-As outlined in my letter of November 1, 1935, further information is being secured relative to the proposal of the Kansas City Southern Railway Company to reduce import and export rates to Kansas City to the Cedar Rapids basis. As yet it has been impossible to hold a conference in connection with this subject. However, it is anticipated that during December such conference will be held and report thereon will be rendered as promptly as possible.

4. Reduction on Instrastate as Well as Interstate Grain Rates in Illinois.— This subject has been currently presented since 1933 and as outlined in my letter of November 20, 1935, following further conference with the parties at interest, recommendation was submitted that the rates proposed by the C. R. I. & P. Ry. Co., as well as the Alton Railroad, be permitted to expire on December 31, 1935. Subsequently, under date of November 29, 1935, formal advice was submitted by the C. R. I. & P. Ry. Co. to the effect that while that company was agreeable to withdrawing reduced rates during the period of closed navigation, in order to protect its interests, it would be necessary to reestablish such reduced rates effective April 15, 1936. Inasmuch as steps taken under the Commissioner Agreement have thus far failed to compose the controversy, in accordance with Section 8 of the Commissioner Agreement, the subject will now be referred to the Committee of Directors for such further attention as may be deemed desirable.

5. Protest of Missouri-Kansas-Texas Lines Against Expedited Freight Schedule of Burlington Lines From Denver, Colo., to Houston, Texas.-During October advice was furnished by the Burlington Lines of intention to shorten freight schedules between Denver, Colo., and Galveston, Texas. However, this notice was subsequently withdrawn and the service not established. During November protest was filed under the Commissioner Agreement against the alleged change in service on the part of the Burlington, such protest being based on the understanding that the schedules had been shortened contrary to advice furnished.

Upon receipt of the protest, inquiry was promptly made concerning the existing status of schedules between those points and upon ascertaining that there had been no change in freight schedules between Denver and Houston on the part of the Burlington during a period of three years, the protest of the Missouri-KansasTexas Lines was withdrawn.

6. Proposal of the Chicago Great Western Railroad Company to Publish Rates for Trucks or Trailers Mounted on Flat Cars Between Chicago and the Twin Cities.—In order to meet highway competition, the Chicago Great Western Railroad Company proposed to publish rates for the transportation of trucks or trailers mounted on flat cars between Chicago and the Twin Cities, the charge to be $42.50 for each loaded truck or trailer one way and $21.25 for each empty truck or trailer one way, subject to certain minimum weights. This proposal was disapproved by executive officers of Western Trunk Line Committee and upon appeal to the Western Traffic Executive Committee, resolution was adopted by that body condemning the establishment of rates of that character as being a menace to the entire rate structure. Subsequently, the Chicago Great Western filed notice of intention to proceed with the establishment of the rates and on November 16, 1935, the Chief Traffic Officers of the Chicago & North Western Ry., Chicago, Burlington & Quincy R. R., and C. M. St. P. & P. R. R. Co. filed protest under the Commissioner Agreement to that action. This protest was later joined in by the C. St. P. M. & O. and Wabash Railways. Conference with representatives of all interested carriers was held in Chicago on November 26 and at the adjournment of such meeting, advice given that the roads involved would file briefs outlining in detail their respective positions. As soon as this information is received, the subject will receive prompt attention and report and conclusion rendered.

7. Proposal of A. T. & S. F. Ry. Co. to Establish One-Way Coach Fares Intrastate in California on Basis of 12 Cents per Mile.-Proposal was submitted before the Transcontinental Passenger Association by the A. T. & S. F. Ry. Co. to establish station to station rates of 12 cents per mile for coach travel intrastate in California, effective January 15, 1936. The basis of passenger fares approved for application in Western territory is now 2 cents per mile one way for coach travel and 1.8 cents per mile round trip. This proposal was objected to in the Transcontinental Passenger Association and individual notice making the proposition effective filed by the Santa Fe. On November 26th formal protest under the Commissioner Agreement against the establishment of the fares proposed was registered by the Southern Pacific Company. In accordance with the usual procedure, instructions were issued to all concerned, requesting that further steps in the matter be held in abeyance pending conference and conclusions under the Commissioner Agreement. Meeting between representatives of interested carriers will be held in Chicago on December 13th, following which the subject will be given prompt consideration and report and conclusions rendered at the earliest possible date.

There are a number of other subjects concerning the activities of Western carriers upon which report will be made at meeting of he Committee of Directors to be held in New York on Wednesday, December 11, 1935.

Very truly yours,

EXHIBIT NO. 304

H. G. TAYLOR, Commissioner.

REGULAR MEETING OF THE COMMITTEE OF DIRECTORS

Regular meeting of the Committee of Directors was held at 3:00 p. m., (E. D. S. T.) Wednesday, September 11, 1940, in the Board Room of the Bank of the Manhattan Company, 40 Wall Street, New York City.

The following were in attendance: Stephen Birch, E. N. Brown, Philip J. Roosevelt, F. W. Doolittle, Gen. James G. Harbord, John H. W. Ingersoll, Wm. DeForest Manice, Francis F. Randolph; C. E. Johnston, Commissioner; O. E. Sobota, Secretary to Commissioner.

In the absence of the Chairman, Gen. James G. Harbord presided at the meeting, and in the absence of Mr. F. M. Wilson, Mr. O. E. Sobota acted as Secretary.