Railroads in the Union Station. The reduction in rental secured was about what had been estimated, and the establishment of various centralized forces is now being undertaken. It is hoped to have the combined organizations located in their new quarters within the next sixty days.

4. Investigation of Freight Rates, I. C. C. Docket 26,000.-In a Memorial Petition filed with the Interstate Commerce Commission by the American Farm Bureau Federation and other organizations of a similar nature, Ex Parte No. 110, request was made that the Commission proceed with an investigation of all freight rates, looking toward a reduction upon all basic commodities. The railroads of the country protested the making of such an investigation by the Commission, as being an unnecessary expense in view of the fact that a great number of voluntary reductions were being considered by the railroads as well as other specific reductions being under consideration by the Commission. However, the Commission determined to conduct the investigation requested, and set the date for hearing on April 24, 1933. The railroads in the three territories immediately arranged for the formation of committees to handle each phase of the investigation as presented by the Commission and are now occupied in preparing a vigorous defense of the present bases of freight rates. It is anticipated that railroad witnesses will not be heard until some time during the middle of May.

The executives of each region have appointed five of their number to join in the direction of the defense in this case and preliminary meetings are bing held in Washington to perfect the railroads presentation. It is felt by all of the executives that this is a most important case, inasmuch as it appears to be a direct challenge to the present scheme of operation of the railroads.

5. Basic Passenger Fares.-At the request of a Member Road of the Western Association of Railway Executives, the matter of basic passenger fares was docketed for consideration and a special meeting of the Association called to consider same on April 18th. All but two Western Roads were in favor of making some reduction in the basic passenger fare at least for an experimental periodin an endeavor to, if possible, find some level of passenger rates that would attract people back to the railroads who are now using their own automobiles. There was quite a diversity of opinion as to the extent to which such reductions should be made. After considerable discussion it was determined that in view of the investigation which the Interstate Commerce Commission is making into freight rates (I. C. C. Docket 26,000), hearings on which began April 24th, it might not be desirable to take any action voluntarily reducing the basic passenger fare for reason of its possible influence upon the freight-rate case. It was also thought desirable that any movement to reduce passenger fares should be made on a National basis and a Committee of Executives was appointed to consult with similar committees from the Eeastern and Southeastern Territories to ascertain their views, after which the subject will again be referred to the Western Association of Railway Executives for consideration. H. G. TAYLOR, Commissioner.

President, D. & R. G. W. Railroad Co., Denver, Colo.
C. R. Gray,

President, Union Pacific System, Omaha, Nebraska.
J. E. Gorman,

President, C. R. I. & P. Railway Co., Chicago, Ill.
W. B. Storey,

President, A. T. & S. F. Railway Co., Chicago, Ill.
Ralph Budd,

President, C. B. & Q. Railroad Co., Chicago, Ill.

GENTLEMEN: Enclosed herewith is copy of my report and conclusion, with respect to the proposed inauguration of an "all-commodity" rate by the Missouri Pacific Lines and the Denver & Rio Grande Western Railroad between St. Louis and Denver.

In the event you are not in accord with the conclusions reached in this report, will you submit notice in writing to that effect, to the undersigned, within five days from the date hereof, pursuant to the provisions of Section 7, Agreement for Commissioner Plan, Western District?

Very truly yours,

H. G. TAYLOR, Commissioner.

cc-To Signatory Roads to Agreement for Commissioner Plan, Western District.

SUBJECT

APRIL 17, 1933.

Proposal of the Missouri Pacific Lines, in connection with the Denver & Rio Grande Western Railroad, to establish carload all commodity rates, as described in Item 418-I, W. T. L. Tariff No. 231, I. C. C. No. 2203, from St. Louis and Kansas City, Missouri, to Denver, Colorado, on basis of third class minimum weight 30,000 pounds per car.

ORIGIN OF CONTROVERSY

January 10, 1933, the Executive Committee of the Western Trunk Line Committee considered the proposal to establish all commodity rates as outlined in the preceding paragraph and disapproved the proposal.

January 21, 1933, Chairman Boyd's rate advice 16519, relating to Emergency Proposal 25-32, announcing that the Missouri Pacific-Denver & Rio Grande Western purposed taking individual action and establish the proposed bases of rates effective as promptly as possible.

January 26, 1933, the Interstate Commerce Commission, under sixth section application, granted permission to publish the rates on 10 days' notice.

January 31, 1933, protest was filed against the establishment of the proposed rates by the Union Pacific System, Chicago, Rock Island & Pacific Railway, Chicago, Burlington & Quincy Railroad, and the Atchison, Topeka & Santa Fe Railway System, and the controversy was submitted to the undersigned pursuant to provisions of the agreement between Western Lines effective December 1, 1932.

Same date notice of protest sent the Missouri Pacific-Denver & Rio Grande Western and the Western Trunk Line Committee.

February 6, 1933, the Missouri Pacific-Denver & Rio Grande Western submitted statement in support of their proposal.

March 6, 1933, protesting roads submitted statement in opposition to the proposal.

March 12, 1933, Missouri Pacific Lines submitted arguments in rebuttal, which was concurred in by the Denver & Rio Grande Western Railroad.

TERRITORIAL APPLICATION OF ALL-COMMODITY RATES IN EFFECT AT PRESENT

With considerable variation in the bases, “all commodity" rates are at present applicable in Western Territory as follows:

Between all points in Western Trunk Line territory on and east of a line running from Mobridge through Pierre, Chamberlain, to Sioux City, thence via Fremont, Lincoln, Crete and Fairbury, Nebraska, to Kansas State line, thence via Concordia, Hoisington, Great Bend, Larned, Dodge City, and Elkhart to the Kansas-Oklahoma border.

Between all points in Southwestern Freight Bureau territory.

Between points in Western Trunk Line territory and points in Southwestern Freight Bureau territory.

Between California points and Utah points.

RATE BASES

As illustrative of the rate bases at present effective which influence consideration of the question, the following are cited:

In Western Trunk Line Territory and Southwestern Freight Bureau Territory:

1

37% of 1st Class, Minimum Weight----.

Between San Francisco-Los Angeles and Salt Lake-Ogden:

46% of 1st Class, Minimum Weight--58% 1st Class, Any Quantity.

1 Approximate.

MO. PAC.-D. & R. G. W. STATEMENT

At the time the all commodity rates were established in Western Trunk Line territory, consideration was given to including Colorado points but after a conference with the Forwarding Companies and an agreement upon their part to continue the use of rail lines, it was concluded not to extend these rates to any points in Colorado. Some time after the establishment of these rates, (March 15, 1932) the Forwarding Companies notified the carriers that truck competition had increased, a material reduction had been made in truck rates and the For warding Companies could no longer compete for Denver business.

The subject was informally discussed at a meeting of the Freight Traffic Executive Committee. Suggestion was offered by the Union Pacific that action be deferred and that a protest be lodged with the New York Central Lines and the Pennsylvania Railroad, who through their holding companies control the Forwarding Companies. (Universal and National.)

As a result of the efforts by the executives of the Union Pacific and Missouri Pacific with the executive officers of the New York Central and Pennsylvania, the Universal Carloading & Distributing Company and the National Freight Forwarding Company were persuaded to resume use of the rails. The rail lines were used exclusively through the months of October and November and until December 12, 1932, when the business was again restored to the trucking companies.

It was stated that the rate for trucking from St. Louis to Denver was $1.25 per 100 pounds, from Kansas City to Denver, 85¢ per 100 pounds; that the use of the rails during the months of October and November had disclosed that the rail cost was approximately $12,000 to $13,000 for the two months in excess of the cost had the business been handled by truck, and that the Forwarding Companies were confronted with the alternative of

(a) Returning to the use of trucks, or

(b) Retiring from the Denver business.

An attempt was made to restrict the truck tonnage to higher rated merchandise which could not be consolidated into third or fourth class Rule 10 cars. This, however, was found to be impracticable and the entire tonnage was returned to the trucks. This situation has prevailed from December 12, 1932, to date.

As a result of the experience obtained during the period of October 1st to December 12, 1932, when the rail lines were used exclusively, it was concluded by the Forwarding Companies that they would be willing to return to the exclusive use of the rails provided the carriers would make a rating of third class St. Louis to Denver ($1.61) on a minimum weight of 30,000 pounds. This notwithstanding the fact it is claimed that the truck rate between the same points is but $1.25 per 100 pounds. This contemplates a rating which will permit the loading of all commodities rated fourth class or higher and on the face of the figures would result in a definite contribution on the part of the Forwarding Companies of $108.00 per minmum car. The proponents emphasize the fact that the bases proposed return a minimum revenue, St. Louis to Denver, of $483.00 per car, or approximately 47¢ per car mile.

UNION PACIFIC, C. R. I. & P., C. B. & Q., AND A. T. & S. F. STATEMENT

In answer to statement of the Missouri Pacific-Denver & Rio Grande Western Railroad, the roads opposed to the establishment of the all commodity rates to Denver submitted a detailed history of the establishment of these rates in Western Territory, which is summed up in the statement (pages 9 and 10), that the Executive Committee of the Western Trunk Line Committee has disapproved the extension of these rates to Colorado points on five different occasions and that the proposition has twice been withdrawn by the proponents.

It does not appear, however, that the circumstances were exactly similar in all the instances cited. Action was deferred in two instances, at least, pending the outcome of an attempt to hold the business under the existing L. C. L. rates, and it is only in the latest consideration of the subject that definite evidence was submitted that this result could not be accomplished.

Detailed statement is also submitted showing the combinations possible via various junctions in event the proposed and other similar bases are established, and the effect of these combinations on the present L. C. L. rates. The probable reductions shown are substantial, particularly so on the longer hauls. This situation, however, already exists in a greater or less degree throughout the entire territory, including the Pacific Coast. It is, however, impossible to make an accurate appraisal of the effect of these rates in the absence of tonnage figures. Protestants summarize their statement by stating that the establishment of these rate bases is to the interest and for the benefit alone of the Forwarding Companies, and possibly to a limited extent of the mail order houses.

Nowhere in the answer does the statement appear, however, that the "all commodity" rates are not effective in meeting truck competition and from the fact that the expiration date of the present bases in Western Trunk Line territory has been twice extended, the presumption is that they do, in part at least, accomplish this purpose.

There is also included an estimate of the annual losses which would result if the present tonnage of L. C. L. freight to Denver via the Union Pacific and Burlington, to Denver and Colorado Springs as to the Rock Island, and to Pueblo, Colorado Springs, and Denver as to the Santa Fe. The aggregate of this loss is estimated at $133,000 per annum.

This estimate ignores two important features, namely: (a) Loss which may be sustained through diversion of the business to the truck lines, and (b) tonnage which may be regained through the establishment of the rates proposed.

This figure of $133,000 per annum is not substantially different from the actual loss of revenue now being sustained by the Missouri Pacific-Denver & Rio Grande Western in the loss of but one shipper's business from St. Louis and Kansas City to Denver alone.

CONCLUSION AND RECOMMENDATION

The above resume of the statements submitted by the parties to this controversy demonstrates that the rate proposed is higher than any similar bases now effective in the territory. The establishment of the rate is based upon definite commitments from the Forwarding Companies to the effect that the proposed rates will enable them to regain a portion of the Denver tonnage now being lost to the trucks, and that the Forwarding Companies agree to use the rail lines exclusively on their Denver business.

This commitment is somewhat weakened by the statement contained in the argument submitted by the proponents, under date of March 12th, to the effect that one Forwarding Company had already protested the proposed basis as being too high. As a matter of fact, the bargaining attitude of the Forwarding Companies, notwithstanding their railroad affiliations, has been a significant feature of the negotiations.

Considered on the record alone, I should be disposed to hold the Missouri Pacific-Denver & Rio Grande Western as probably justified in the action proposed; however, under the agreement effective December 1, 1932, it devolves on the Commissioner in the settlement of the controversy to have "in mind the greatest possible conservation of net revenue to parties involved in or affected by the controversy as a whole." In view of the issue now pending before the Interstate Commerce Commission under Docket 17,000, Part 2, wherein the carriers members of the Western Trunk Line Committee are, on their own initiative, seeking to secure an upward revision of the class rates covering the longer hauls, a voluntary reduction of the character and scope proposed would, in my opinion, not only prove embarrassing, but might jeopardize a favorable decision.

It is, therefore, my opinion that the extension of the “all-commodity” rates from St. Louis and Kansas City, Missouri, to Denver, Colorado, as proposed by the Missouri Pacific and Denver and Rio Grande Western should not, in the interest of the railroads of the Western District as a whole, be made at this time. H. G. TAYLOR, Commissioner,

To the Committee of Directors:

EXHIBIT NO. 310

COMMISSIONER OF WESTERN RAILROADS,
Chicago, Illinois, October 2, 1933.

For your information I am furnishing below a summary of the activities upon which I have been engaged during the month of September 1933, some of which I reported verbally to the Committee at the meeting held in New York City on September 13th, 1933.

1. Basic Passenger Fares in Western Territory.—Meetings of the Executives of all Western Roads was held in Chicago on September 1st to consider this subject. Discussion developed that there had been some change in attitude as to the extent to which basic fares should be reduced, and the matter was accordingly referred back to the Committee of Five Executives (Messrs. Baldwin, Budd, Gray, Sargent, and Shoup) for further consideration and recommendation. Meeting was promptly arranged between the Committee of Executives and Passenger Traffic officers of Western Lines, resulting in a recommended change in basic passenger fares in accordance with the memorandum attached hereto. This recommendation was forwarded to all Western railroads and replies received indicate an overwhelming majority in favor of its adoption. Meanwhile, Eastern and Southern Roads again requested that action be held in abeyance in the West, pending an effort to reach agreement as to a National basis of rates, as well as the date upon which such rates might be made effective. They were advised, however, that the Western roads had definitely committed themselves to the rates proposed in the recommendation and therefore it was not felt that anything would be gained by a conference to discuss rates; further, that the Western roads would be glad to join with Eastern and Southern roads in establishing a date for any change in basic rates. This matter is now in course of being determined by meetings of passenger traffic officials, and the basis adopted will doubtless be placed in effect as of November 15th or December 1st, 1933.

2. Regional Coordinating Committee, Western Railway Group.-As outlined in my letter of September 1, 1933, The Regional Coordinating Committee, Western Railway Group has assumed jurisdiction over the coordination work formerly being undertaken by the Committee on Elimination of Preventable Waste, and in order that the work might progress without interruption, in the same manner as proposed by the Committee on Waste, I was requested to assume the position of Executive Secretary of the Regional Coordinating Committee. This places three separate and distinct functions in my office, none of which, it is felt, will infringe upon any other. In view of the change in direction to be given coordination activities, as well as the limitations imposed by the law, it was again necessary for me to visit the Divisional Committees to insure uniform understanding of the scope of their investigations.

3. Proposed Reduction in Rates on Miscellaneous Packinghouse Supplies, Westbound, and Inedible Packinghouse Products, East-bound, Between Chicago and Missouri River Points.-The Chicago Great Western Railroad Company, through the Western Trunk Line Committee, submitted a proposal to reduce rates, as above stated, between Chicago and Missouri River points to 30 per hundred pounds, with a minimum of 30,000 pounds. This proposal was rejected by the Western Trunk Line Committee and appealed by the C. G. W. to the Western Traffic Executive Committee, where it again failed of approval, subsequent to which notice of individual action was filed by the C. G. W., whereupon my services as Commissioner of Western Railroads were immediately invoked by the other lines, members of the Western Traffic Executive Committee. Notice was promptly served upon the Chicago Great Western Railroad Company, and the proposed reduction in rates is being held in abeyance pending my conclusions, which will be furnished shortly.

4. Air Conditioning of Passenger Equipment.—At the meeting of Member Roads, held on September 1st, I was directed to make inquiry of all Western lines as to what their program in regard to air conditioning would be for year 1934. As soon as replies are received, this subject will again be presented to a meeting of the Association in an endeavor to reach agreement concerning what will be done for 1934, and, if possible, avoid heavy competitive expenditures for this facility.

5. Investigation of the so-called Prince Plan by the Federal Coordinator of Transportation.-At the meeting held in New York on September 13th, considerable discussion was had relative to an investigation into the three-group consolidation plan for Western Railroads, which is being undertaken by Mr. Poland, a member of the Research Staff of the Federal Coordinator of Transportation.