fact that the practical application of heater charges would not have been made until this winter. However, investigation of this matter has now been completed, and my conclusions are outlined in my circular letter C-6–1 of August 23rd, copy of which is hereto attached for your information. 6. Proposed Increase in Railroad Employment Through Greater Distribution of Work. The Federal Coordinator of Transportation addressed a letter to Mr. R. V. Fletcher, Vice-Chairman, Association of Railway Executives, under date of August 16, 1933, relating to this matter. Thinking this may be of interest, I am attaching, hereto, a copy of Mr. Eastman's letter referred to. On August 22nd a meeting of as many executives as were available was held in my office to consider what action should be taken by Western Lines. After discussion I was directed to communicate with Judge Fletcher in accordance with my letter attached, dated August 22nd, and at the same time refer the matter to individual roads for attention, in accordance with my circular letter T-63-1, of the same date, addressed to Member Roads. President, Missouri Pacific Lines, St. Louis, Missouri. President, C. B. & Q. Railroad, Chicago, Illinois. President, Northern Pacific Railway, St. Paul, Minnesota. President, Great Northern Railway, St. Paul, Minnesota. President, D. & R. G. W. Railroad, Denver, Colorado. President, Chicago & Northwestern Railway, Chicago, Ill. GENTLEMEN: Enclosed herewith is copy of my report and conclusion, with respect to the proposal of Chicago and Northwestern Railway to eliminate heater charges on shipments of potatoes from Wisconsin and Upper Peninsula of Michigan points, to Chicago. 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 the Signatory Roads to Agreement for Commissioner Plan, Western District. PROPOSAL OF C. & N. W. RAILWAY COMPANY TO ELIMINATE HEATER CHARGES ON SHIPMENTS OF POTATOES FROM WISCONSIN AND UPPER PENINSULA OF MICHIGAN POINTS TO CHICAGO GENERAL STATEMENT AUGUST 23, 1933. December 24, 1932, the Chicago and North Western Railway Company docketed with the National Perishable Freight Committee a proposition to cancel heater charges on potatoes originating at points on their lines in Wisconsin and the Upper Peninsula of Michigan to deliveries on the North Western in the Chicago district, and to deliveries on open facilities on the district covered by Agent Galligan's Tariff No. 20-T, I. C. C. No. 242. The proposition was considered at a special meeting of the National Perishable Freight Committee December 30th, submitted to interested member lines and failed of adoption. The Western Traffic Executive Committee reviewed the subject at a meeting February 7, 1933, where it again failed of adoption. The Chicago and North Western Railway Company thereupon (February 9th), served notice of their intention to take individual action-advised Chairman Boyd to instruct Chairman Dearborn to immediately amend his publication and to file sixth section application to make the basis effective at the earliest possible date. February 15th, the Northern Pacific Railway Company, Chicago, Burlington and Quincy Railroad, Great Northern Railway, Missouri Pacific Lines, and the Denver and Rio Grande Railroad filed protest against the contemplated action, invoking the provisions of agreement for Commissioner Plan, Western District. POSITION OF THE C. & N. W. RAILWAY The reasons in support of the proposed cancellation by the North Western, in the order of their importance, may be briefly summarized as follows: 1. Truck competition between points of origin and the Chicago market, which involves not only loss of tonnage to the carriers, but imperils the orderly marketing methods now in vogue and which it is to the interest of the carrier and the industry, as a whole, to maintain. 2. That the charge for the service from the Upper Peninsula of Michigan and Wisconsin to Chicago is "unjust, unreasonable, and discriminatory." 3. Competition between producing points on the North Western and potatoes originating in the Lower Peninsula of Michigan where heater service is not provided and, consequently, no charge other than the transportation charge is made. 4. Disinclination on the part of the North Western to disturb established differentials on potatoes as between various points of production in Western Territory and the difficulties in delays incident to reduction in the line-haul rates. 5. Certain questionable practices indulged in by other carriers in the heater territory for the purpose of defeating the published charge for such heater service. BASIS OF PROTEST The protestants reply to the above arguments in considerable detail, but their case rests primarily on the statement that "heater service cannot be charged for generally in heater territory if it is furnished free in some parts of this territory, and the establishment of free heater service is, therefore, not an appropriate method of meeting truck competition." CONCLUSION From a practical standpoint the heater season was virtually over at the time this controversy was submitted. During the interim several meetings of the National Perishable Freight Committee have considered the matter in all its aspects, with the result that the majority of the reasons advanced by the North Western for the cancellation of the charge no longer exist. The closed season during which heater service is compulsory has been materially shortened and the charges for heater service from Wisconsin and the Upper Peninsula of Michigan to the Chicago territory have been reduced approximately 50%. The questionable practices on the part of certain carriers in different sections of heater territory designed to defeat tariff provision governing heater charges have been abandoned. The matter, therefore, appears to resolve itself into a question of whether cancellation of heater charges is an appropriate and effective method of combating truck competition. During periods of low temperature and obstructed highways, it is conceivable such free service might increase disadvantages of the trucks and serve to some extent to hold business to the rail carriers. During the open season (up to November 16th and after February 28th), where the service is optional with the shipper and is ordinarily unnecessary, free heater service could have no possible influence directly or indirectly on truck competition. Heater territory embraces some seventeen states. Statistics showing revenue are far from complete and in many instances only estimates. It is apparent, however, that the total sum involved amounts to several hundred thousand dollars per annum. Whether the proposed action on the part of the North Western justifies an extension of the free service is beside the point. It is a fact, and not a theory, that other lines interested in the traffic immediately notified Chairman Dearborn to publish for their account free service from Wisconsin, Minnesota. and North Dakota, and pressure was immediately brought to bear for similar action from producing points in Nebraska, Colorado, and Idaho. There can be no doubt but that the cancellation of these charges will result in a substantial loss in revenue to the carriers in Western Territory, and it is extremely doubtful whether such action will accomplish the purpose sought by the North Western. For these reasons, it is my recommendation that the charges provided in Perishable Protective Tariff No. 6, I. C. C. No. 5, as amended, effective August 10, 1933, be observed without further change. EXHIBIT No. 316 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 13, 1939, in the Board Room of the Bank of the Manhattan Company, 40 Wall Street, New York City. The following were in attendance: Malcolm P. Aldrich, Stephen Birch, E. N. Brown, Fairman R. Dick, F. W. Doolittle, R. E. Harding, W. A. Harriman, F. T. Heffelfinger, John H. W. Ingersoll, Carroll B. Merriam, J. S. Pyeatt, Francis F. Randolph, Tom K. Smith, C. E. Johnston, Commissioner, O. E. Sobota, Secretary to Commissioner. Mr. W. A. Harriman acted as Chairman, and Mr. O. E. Sobota, in the absence of Mr. F. M. Wilson, acted as Secretary. Upon motion duly made and seconded, minutes of the previous meeting were approved as written. Commissioner Johnston reported that the subject of an addendum to the Commissioner Agreement, together with proposed Articles of Association of the Western Association of Railway Executives, was in the hands of a Committee of Counsel of Western Lines, and, in accordance with their recommendation, it was the sense of the meeting that matter should, for the present, be allowed to remain in status quo. REDUCED RATES ON NEWSPRINT PAPER FROM INTERNATIONAL FALLS, MINNESOTA, AND OTHER NORTHERN MILLS, TO COLORADO COMMON POINTS Commissioner Johnston outlined the case briefly as follows: "The proponents in this case contend that the rates on newsprint paper from the Northern Group to Colorado common points must be on a parity with those from Millwood, Wash., in order that the shippers in the Northern Group may secure their share of the business in the Colorado territory. "It is the contention of the protestants that reductions in rates on newsprint paper from International Falls, Minn., Kenora, Ont., and other points in the Midwest to Colorado are not justified under existing conditions, would have little, if any, effect in changing the direction of the movement of the traffic, and would result in demands for corresponding reductions in rates from the Pacific Northwest territory, which would mean a substantial loss in carriers' revenue. "This controversy arises out of an effort on the part of one group of shippers to gain an advantage over another group through the medium of reductions in freight rates on the allegation that such rates are required to establish parity, when, as a matter of fact, 98% of the tonnage moving from the two producing groups is handled under comparable rates, that is, 70¢ per 100 lbs.; only 2% moving on the 65¢ rate from Millwood. Further, should the reduced rates from the Northern mills be made effective and a similar reduction to meet this rate be made from the Pacific Northwest mills, there would be created a cycle of rate reductions resulting in no benefit to the shippers and a loss in carrier revenues. "I, therefore, recommended that the proposed reductions from the Northern group to Denver and Colorado common points to meet the Millwood rate not be made effective." It was the sense of the meeting that the Commissioner's recommendation was a proper one. PROTEST AGAINST ADJUSTMENTS IN RATES ON POTATOES, ONIONS, AND OTHER ROOT VEGETABLES FROM COLORADO AND RELATED GROUPS Commissioner Johnston reported as follows in connection with this case: "This proposal consists of two parts, namely, (1) volume of the rates necessary to meet or at least retard the ever-increasing truck movement from Colorado, and (2) the propriety of publishing rates from Utah and Idaho predicated on the truck compelled rates from Colorado plus the established differentials. "The proponent lines, namely, the D. & R. G. W., Missouri Pacific, MissouriKansas-Texas, and Union Pacific, contend that the rates proposed from Colorado and related groups in Nebraska and Wyoming are necessary to meet severe truck competitive conditions. It has been the policy of the Union Pacific Railroad, over a long period of years, to carry relatively low differentials from producing areas in Utah and Idaho to be added to the Greeley, Colorado, Group rates on potatoes and onions, as well as on other products, and it is their view that this is necessary to enable the producers in those states to market their commodities successfully in competition with similar articles produced near the consuming centers of the Middle West and the East. "The protestants took the position that the territory covered by the proposed reductions from Colorado is far greater than necessary to meet truck competition and that there is no justification for maintaining differentials from Utah and Idaho on this traffic; that reduced rates on potatoes and onions from Utah and Idaho will compel like reductions from other producing areas such as Washington, Oregon, California, the Dakotas, and Minnesota, thus materially affecting the revenues of all railroads in Western territory. "After a careful study of all the facts submitted in this controversy, I recommended that further consideration be given to the practical possibility of amending the proposal under consideration in such manner as to permit reductions thought to be desirable and necessary between Colorado points and those within such a limited area as to avoid the necessity of reductions in rates from other producing areas; that the area to which such rates should be applicable should be confined to Western and Central Kansas and Nebraska, Oklahoma and Texas destinations and possibly to Southern Missouri, Arkansas and Louisiana without affecting the present rates to Missouri River and Mississippi River points; St. Louis and South or beyond; that this experimental reduction be made for a trial period with a definite expiration date; that adequate steps be taken to verify the result of such experiment; and that its continuation beyond such expiration date be contingent upon proven success during the trial period." Considerable discussion was had regarding the seriousness of spreading over the entire Western territory a rate reduction which has been put into effect merely to meet a localized situation. The Commissioner's report and conclusions were accepted, and he was directed to confer with President Jeffers of the Union Pacific Railroad regarding this case. BRIEFS OF REPORTS ON COMMISSIONER CASES TO BE FURNISHED COMMITTEE OF DIRECTORS The Commissioner was asked to furnish in the future, in addition to the detailed reports now going to the Committee of Directors covering Commissioner cases, a brief summary of the report and conclusions in order that the facts may be readily available to those whose lines are not directly involved in the particular case at hand. REDUCED RATES ON PEACHES FROM WESTERN COLORADO, UTAH, AND SOUTHERN IDAHO Commissioner Johnston made the following report covering this case: "At the hearing on this matter, it developed that there is an unusually heavy production of peaches in the territory involved and that considerable confusion and uncertainty exists among the growers concerning the marketing of the peach crop. While an attempt has been made to stabilize conditions through a marketing agreement, having as its object rigid price control and abolition of the disturbing practices existing in former years, such as sales to trucks in bulk, selling to truckers, and giving 20 to 50 bushels of peaches without charge, due to the excess production of peaches this year, it is felt that many growers will not abide by the marketing agreements and will sell their peaches to the best advantage. "The proponents state that the marketing commissioner and others in the Colorado territory have called upon the railroads to assist in stabilizing the marketing situation by rate action and that the demand for this action has been so insistent and violent that if not granted, the railroads will carry the blame. While fully recognizing that the rates proposed on peaches from Western Colorado, Utah, and Southern Idaho are unusual and represent drastic reductions, the proponent railroads believe such action would be justified as the most direct and beneficial contribution they could make toward saving the peach industry in that territory. "The protestants objected to this proposal on the basis that proposed rates are much lower than what is necessary to meet truck competition, and it is their contention that once the rail carriers publish and make effective reduced or socalled emergency rates to meet overproduction, experience has shown that such rates generally become permanent and are indefinitely continued for the future. Further, that if the proposed reduced rates were granted by the carriers to cover the movement of peaches, it would be difficult to see how the same action can consistently be denied for the movement of other fruit, such as apples, pears, oranges, and grapefruit, where the carriers are confronted with the statement that overproduction exists. "In my report I called attention to the fact that on June 20th of this year, the interested lines published reduced rates on peaches originating in the territory covered by this proposal, but destined to a much more limited area, these rates being made to meet truck competition. It is obvious from the facts shown in this case that the real motive of the proposal is an economic rather than a competitive situation. While it may be true that truck competition may play a large part in the movement of this year's crop of peaches from the territory involved, it is clear that such movement, if it develops, will result from marketing and economic factors rather than from comparative transportation charges. "I pointed out that railroad rates cannot be adjusted to keep pace with the various fluctuations in crop, industrial, and economic conditions and the principle that overproduction on a given commodity is not a justifiable reason for requiring rail carriages to reduce reasonable rates. I therefore recommended that the proposal be not placed in effect on the ground that there is no justification for the proposed reductions and their inauguration would result in the dissipation of railroad revenues and consequent prejudice to the public interest." The Commissioner's conclusions and recommendations were approved, 1. Lease of Sites on Railroad Rights-of-Way for the Location of Steel Bins for Storage of Shelled Corn. 2. Protest Against Proposal of the Union Pacific Railroad to Publish Return Limit of Six Months from Date of Sale on First Class, Intermediate Class, and Coach Class Transcontinental Round-Trip Excursion Fares Daily the Year Around. (This proposal was subsequently withdrawn by the Union Pacific Railroad, thereby obviating necessity for Commissioner Hearing.) 3. Committee appointed by Railroad Executives to meet with Committee appointed by Railway Labor Executives Association to discuss functioning of the Railroad Adjustment Board. 4. Payment of Claims on Perishable Traffic for Failure to Accomplish Seventh Morning Auction Delivery at Chicago. 5. Publicity in Connection with Barge Lines. There being no further business, the meeting adjourned at 4: 15 P. M. EXHIBIT No. 317 F. M. WILSON, Secretary. REGULAR MEETING OF THE COMMITTEE OF DIRECTORS Regular meeting of the Committee of Directors was held at 3:00 P. M., (E. S. T.) Tuesday, April 9, 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, F. W. Doolittle, Gen. James G. Harbord, Will H. Hays, C. Jared Ingersoll, B. F. Kauffman, Wm. DeForest Manice, Finley J. Shepard. E. W. Stetson, C. E. Johnston, Commissioner, O. E. Sobota, Secretary to Commissioner. In the absence of the Chairman, Mr. E. N. Brown presided at the meeting, and in the absence of Mr. F. M. Wilson, Mr. O. E. Sobota acted as Secretary. Upon motion duly made and seconded, minutes of the previous meeting were approved as written. Commissioner Johnston reported on the following subjects, which had come before him since the last meeting of the Committee of Directors 1. Freight Schedules Between Chicago, St. Louis, Kansas City and Texas Points-Protest of Action of the Santa Fe Railway in Establishing Faster Freight Schedules Between Chicago and Kansas City, Oklahoma City and Texas Points.Previous report was made to you on this subject; but, for ready reference, a brief résumé follows: On September 13, 1939, after numerous requests from |