principal competition encountered by the Indiana mines in the sale of coal at the named destinations is with mines located on the lines of the Louisville and Nashville Railroad Company in the so-called western Kentucky district. Accordingly, applicants propose to establish from the southern Indiana mines, as named in the tariffs previously mentioned, over their route composed of the lines of the Southern through Lawrenceburg and Versailles, Ky., thence the Cincinnati, New Orleans & Texas Pacific to Georgetown, Ky., and the Frankfort & Cincinnati beyond, rates of $1.90 to Frankfort and $2 to Elsinore and Stamping Ground, which rates are the same as those in effect from mines on the Louisville & Nashville to the same destinations. The rates from the latter mines apply over the Louisville & Nashville to Frankfort and the Frankfort & Cincinnati beyond to Elsinore and Stamping Ground, and are in conformity with the provisions of section 4. Applicants also propose to make reductions in the rates to certain intermediate points on their route, as hereinafter shown.

Relief is based on market competition, the proposed rates being intended, as above indicated, to enable applicants to move coal from southern Indiana in competition with carriers handling coal from western Kentucky, and also to enable consumers at the named destinations to obtain that commodity from southern Indiana at rates the same as from western Kentucky.

The following table, compiled from exhibits of record, is illustrative of the present and proposed adjustments from the southern Indiana mines, and the present adjustment from the western Kentucky mines:

Under the proposed adjustment, departures will occur at all points named in the above table on applicants' route, except Frankfort. To Frankfort from the western Kentucky mines, movement is in an easterly direction and the rates conform to section 4, whereas from the Indiana mines, movement over applicants' route is in an easterly direction through Versailles and Pisgah to Lexington, thence in a northerly direction to Georgetown and in a westerly direction from the latter point through Stamping Ground and Elsinore, thus resulting

in departures at the named points. The proposed reduced rates to Georgetown and Lexington are the same as the rates from the western Kentucky mines to the same destinations, and the proposed rate to Pisgah and Versailles, local points on the Southern and intermediate to Lexington, is the same as proposed to the latter point. It was testified that originally applicants had considered publishing a rate of $1.90 to Frankfort, Elsinore, and Stamping Ground without fourth-section relief, but that this plan was discarded because it would have compelled reductions in the rates from mines in the western Kentucky district to Elsinore and Stamping Ground, as well as to other competitive points, and resulted in an unwarranted loss of revenue by competing carriers.

The present rates to Georgetown and Lexington reflect the rates established in 1911 and 1916 to those points, respectively, as subjected to the subsequent general rate changes up to and including November 15, 1937. The proposed reduced rates to those points, as well as to Pisgah and Versailles, are lower, distance considered, than rates under the so-called Carolina scale prescribed by division 5 in North Carolina Corp. Comm. v. Aberdeen & R. R. Co., 200 I. C. C. 571, for application on bituminous coal from the Pocahontas, Coal Creek, and southwest Virginia groups to points in North and South Carolina; and, except to Georgetown, are lower than rates under the so-called Anderson scale prescribed by the Commission in Anderson Bros. & Foster v. Alabama Central R. Co., 206 I. C. C. 175, for application on bituminous coal from points in Kentucky and other southern origins to points in Tennessee.

The proposed rate of $1.90 to Frankfort, the most distant point on applicants' route, will yield 8.5 mills per ton-mile and, based on a loading of 50 tons, 42.6 cents per car-mile, for the average distance shown in the preceding table. Somewhat higher earnings will accrue under the proposed rate of $2 to Elsinore and Stamping Ground. These earnings will be substantially increased when the recently authorized general increases are added.

We find that the proposed rates will be reasonably compensatory and that a special case has been presented which warrants the granting of relief as prayed, subject to the conditions hereinafter prescribed.

Applicants will be authorized to establish and maintain, over their route as described in the application, for the transportation of bituminous coal, in carloads, from mines on the Southern Railway in southern Indiana, as named in that carrier's tariffs hereinbefore mentioned, rates not lower that $1.90 to Frankfort, and $2 to Elsinore and Stamping Ground, to which may be added authorized general in

creases, and to maintain higher rates to intermediate points; provided, that rates to such higher-rated intermediate points shall not exceed rates proposed in the application, plus authorized general increases, nor exceed the lowest combination of rates subject to the act. All other and further relief will be denied.

272 I. C. C.

No. 297621

ALLOWANCES FOR PICK UP AND DELIVERY AT
KANSAS CITY

Submitted June 29, 1948. Decided September 24, 1948

1. Railroad respondents perform pick-up and delivery service by use of warehousemen, pool-car distributors or other cartage operators, or draymen, as their independent contractors under written contracts at rates in excess of published shipper allowances.

2. It has not been shown that the railroad respondents have violated, or now violate, the Interstate Commerce Act in paying such rates to their drayage contractors.

3. Respondent motor carriers and freight forwarders are making payments, in excess of published shipper allowances, to warehousemen, pool-car distributors, or other cartage operators, or draymen, in pick-up and delivery service without entering into contractual arrangements under which such draymen perform the service for the motor carriers or freight forwarders. 4. Respondent motor carriers and freight forwarders, in making such payments, have violated, and are violating the Interstate Commerce Act.

5. Respondent line-haul motor carriers and freight forwarders by their existing practices, under which they pay drayage charges for pick-up and delivery service without contractual arrangements, pay such charges for services not performed by them or on their behalf and give an undue and unreasonable preference and advantage to the traffic and shippers thereof in violation of the Interstate Commerce Act. Such payments also found unlawful as constituting rebating of a part of published line-haul rates. 6. Payments of drayage charges by carriers and freight forwarders without any contractual arrangements therefor or solely under an oral understanding or agreement found to be an unreasonable practice in violation of the said act. Reasonable practice prescribed for the future by order requiring written contracts for such services and payments.

A. Henry Walter, Glenwood W. Rouse, and Wellington McNichols, for the Interstate Commerce Commission.

A. J. Baumann, R. C. Berkshire, James G. Blaine, E. E. Boyner, H. J. Carr, Martin L. Cassell, Jr., Henry Christianson, C. A. Conway, William E. Davis, E. J. Damon, Dean H. Eastman, J. E. Flansburg, P. F. Gault, J. E. Goggin, G. Zan Golden, Bryce L. Hamilton, John H. Lathrop, Y. D. Lott, H. O. Malm, Thomas H. Maguire, Frank C.

1 This report also includes docket No. 29763, Allowances for Pick Up and Delivery at the Twin Cities, No. 29764, Allowances for Pick Up and Delivery at Seattle, and No. 29765, Allowances for Pick Up and Delivery at Portland.

814901-49-vol. 272-23

McCulloch, Thomas I. Megan, F. J. Melia, Richard Musenbrock, Conrad Olson, W. O. Reed, M. G. Roberts, M. B. Strayer, R. Paul Tjossem, L. E. Torinus, Jr., Ray T. Sample, R. C. Volkert, Toll R. Ware, R. E. Wedekind, R. I. Wells, and O. P. Wieland for respondent common carriers by railroad.

Lee Reeder, C. E. Bellew, Morris D. Acree, Hoyt Crooks, W. L. Bridges, J. Maurice Andren, Henry T. Ivers, Earle V. White, Jr., and E. V. White for respondent common carriers by motor vehicle.

Homer S. Carpenter, John K. Cunningham, F. N. Melius, Jr., and Donald A. Schafer for respondent freight forwarders.

Robert N. Burchmore for various warehouse companies. Frank H. Floyd and Austin S. Knetzger for interested parties. George G. Fox for Public Service Commission, State of Missouri. Albert B. Rosenbaum, George R. Stuntz, J. F. Walsh, T. J. Slattery, and J. H. Tedrow for various other associations and interests.

REPORT OF THE COMMISSION

MITCHELL, Commissioner:

Exceptions to the report proposed by the examiner were filed by several of the parties. Our conclusions differ, in part, from those recommended by the examiner. Exceptions and requested findings not specifically discussed in this report have been given consideration and, where not reflected in our findings or conclusions, they are found not justified.

This proceeding and those listed in footnote 1, instituted upon the Commission's own motion, are investigations of the payment of compensation and allowances to certain described classes of persons in the terminal areas of the designated cities by common carriers by railroad, common carriers by motor vehicle, and by freight forwarders, subject to the Interstate Commerce Act, for the transportation of less-thancarload and less-than-truckload shipments of freight in interstate and foreign commerce. The compensation and allowances are those paid

2 The Interstate Commerce Act provides for the regulation by the Commission of transportation which railroads, motor carriers, or freight forwarders hold themselves out to perform in terminal areas incidental to transportation service subject to the act. Where such transportation is by motor vehicle it is made subject to the provisions of the Interstate Commerce Act in section 202 (c) which provides (with certain exceptions not material here) that transportation by motor vehicle by a carrier by railroad subject to part I of that act, or by any person for such carrier, whether as agent or under a contractual arrangement, in the performance within terminal areas of transfer, collection or delivery services shall be considered to be and shall be regulated as transportation subject to part I when performed by such carrier by railroad, and when performed by any person as agent for the railroad or under a contractual arrangement with the railroad such transportation shall be considered to be performed by such carrier by railroad as part of and shall be regulated in the same manner as the transportation by railroad. Corresponding provisions apply to carriers by express, motor vehicle, or water, and to freight forwarders, in connection with transfer, collection, or delivery services by motor vehicle performed by or for them within terminal areas.