that the "authority of the Commission to grant on request the right sought is made by the statute to depend upon the facts established and the judgment of that body in the exercise of a sound legal discretion as to whether the request should be granted compatibly with a due consideration of the private and public interests concerned and in view of the preference and discrimination clauses of the second and third sections." I confess that this still leaves me at least in the twilight as to the extent of our authority, but I shall proceed on the assumption that in its exercise we have a considerable amount of discretion, albeit it must be of a sound and legal variety, and that we may properly give consideration to any broad public interests involved. One of the specific limitations which the statute imposes upon relief is that it shall not be "granted on account of merely potential water competition not actually in existence." The majority reach the conclusion that "in determining whether competition by water is actual or merely potential, the fact that there has been no movement by water is not always controlling." While this construction strains the statutory language almost to the breaking point, it has much practical sense to commend it, and I am not disposed to quarrel with it.

Another specific limitation is that the charge for the longer haul must be "reasonably compensatory for the service performed." The words "reasonably compensatory" are capable of many interpretations, but I think the Commission did rather well in the interpretation which it placed upon them in Transcontinental Cases of 1922, 74 I. C. C. 48, 71. Among other things, it said that "a rate properly so described must (2) be no lower than necessary to meet existing competition; (3) not be so low as to threaten the extinction of legitimate competition by water carriers." The reduced rates here in question will, if they do what they are expected to do, extinguish competition by water. However, I see no way to avoid that. The use of the water route would require a considerable investment of money by the oil companies. They will not make these expenditures, if they can obtain equivalent benefits through reductions in the rail rates; and, on the other hand, if they cannot obtain such benefits and find it necessary to make the expenditures, they will not use the railroads to any considerable extent. As I see it, it is not a situation where traffic can be divided between the rail and the water routes.

Looking at the matter from the standpoint of broad public interest, it can be argued with force that in any event the taxpayers must go on paying for interest and maintenance on account of the waterways; that the railroads will be better off with than without the reduced rates; and that, therefore, the net effect, so far as the

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public interest is concerned, will likewise be better if the relief is granted. If the reduced rates were so low as to yield only a margin over out-of-pocket expense, I should question the second premise of this argument, for such rates are of very slight advantage to the railroads at best and are very likely, in view of the constant shifts of out-of-pocket expense, to become a positive detriment. However, it appears that the reduced rates here are probably not in that category. Those which the majority approve will yield car-mile earnings which seem to be fairly remunerative.

This brings up, however, another question. The rail rates on petroleum products have in general been relatively high. In the past the railroads regarded this traffic as a source from which they could reasonably derive large profits with little or no adverse effect upon the consumer, and the Commission was inclined to acquiesce in this view. This was true in southern territory. In fact in Petroleum and Its Products, 171 I. C. C. 286, 347-351, I dissented from the rates which were there fixed, both for that territory and for official territory, on the ground that they would be too high even on the theory above mentioned. The consequence is that the present rates on gasoline and kerosene, which are 42 cents to Florence, 40.5 cents to Sheffield, 37.5 cents to Decatur, 38.5 cents to Guntersville, and 47 cents to Chattanooga, can be reduced, as proposed, to 25 cents to the first four of these points and to 27.5 cents to Chattanooga and still leave the railroads with earnings which they would regard as quite satisfactory on many other kinds of traffic.

So far as the rates to the intermediate points are concerned, those which may still be on the scale prescribed in the case cited I have always deemed to be too high, as above indicated. But there is, I believe, comparatively little of that rate structure left in the South. There have been widespread reductions on account of both water and truck competition or a combination of the two. It seems to me that the time has come for the Commission to reconsider its views as to what constitutes a maximum reasonable level of rates on petroleum products. It is one thing to give much weight to so-called value of the service when the conditions are such that the traffic can bear a relatively high level of rates, and quite another thing to do this when the territory is permeated with competition. There no doubt are points in southern territory which competition has not yet reached where a high level of rates can for a time be maintained, but in my judgment the railroads in the long run have more to lose than to gain from singling out such points for discriminatory treatment. Summing up my views, I believe that the Government built the waterways with the thought that they would be used as such rather than as a means of forcing reductions in rail rates, and, so far as the

taxpayers who are bearing the burden had any knowledge whatever of the matter, I presume that they had a similar thought. From this point of view it would be altogether fitting and appropriate for the oil companies to use the water route with all its circuity, delays, inconvenience, and possible hazards rather than to receive the benefit, as a result of the expenditure of government funds, of low rates via the more expeditious rail routes. However, from the standpoint of the broad public interest the conclusion is justified that the net effect will be better if the railroads are able to retain this traffic even at the reduced rates proposed. Nevertheless it does not follow that the railroads should be granted fourth-section relief to assist them in making such reductions, for the whole situation with respect to rates on petroleum products within the South is such that I can see no sufficient justification for an attempt to maintain rates to the intermediate points at a pinnacle level. If rates no higher than are proposed at the river points are maintained to the intermediate points, they will yield the railroads excellent earnings. I therefore reach the conclusion that the fourth-section relief should be denied.

COMMISSIONERS PORTER and LEE dissent.

COMMISSIONERS ALLDREDGE and PATTERSON did not participate in the disposition of this proceeding.

235 I. C. C.

INVESTIGATION AND SUSPENSION DOCKET No. 4607
SWITCHING ALLOWANCE AT FISHER, LA.

Submitted May 12, 1939. Decided November 6, 1939

Suspended schedules proposing restoration of switching allowance at Fisher, La., found not justified. Schedules ordered canceled, and proceeding discontinued.

W. E. Davis for respondent.

BY THE COMMISSION:

REPORT OF THE COMMISSION

By schedules filed to become effective March 22, 1939, respondent, The Kansas City Southern Railway Company, proposed to restore a switching allowance formerly paid to the Louisiana Long Leaf Lumber Company, of Fisher, La. On its own motion the Commission suspended operation of the proposed schedules until October 22, 1939. The schedules were subsequently voluntarily postponed by respondent pending disposition of this proceeding.

For more than a decade prior to 1918 the afore-mentioned lumber company owned and operated the Victoria, Fisher and Western Railroad Company, a small tap line extending from its connections with The Texas and Pacific Railway Company at Victoria, La., to Fisher, about 31 miles. At Fisher it connected with respondent's tracks and also served the yards of its proprietary industry. In November 1917 its charter was surrendered, and it was used only for logging purposes, the tracks within the plant at Fisher being used for switching by the lumber company.

Following the Tap Line Case, 23 I. C. C. 277, respondent for several years absorbed the switching charges of the Victoria, Fisher & Western, amounting to $2 per car on all shipments from the lumber company's yellow-pine mill No. 1, and $3 per car from that company's hardwood mill No. 2. After the Victoria, Fisher & Western ceased to function as a common carrier, respondent made to the lumber company the same allowances, which in the meantime by a supplemental order entered in the Tap Line Case, supra, had been increased to $2.50 per car from mill No. 1 and $3.50 per car from mill No. 2 on all out-bound forest products switched by the lumber company to respondent's interchange track at Fisher. As a result of additional supplemental orders later entered in that proceeding, the allowances

per car became $3 and $4.05 from mills Nos. 1 and 2, respectively. In recent years mill No. 2 has been closed. These allowances were maintained until January 1, 1939, when they were canceled by respondent, following Propriety of Operating Practices-Terminal Services, 209 I. C. C. 11. There the Commission said, page 29:

When a carrier is prevented from performing the service by the election of the industry to perform it, and when the service of the carrier would not meet the needs and convenience of or be satisfactory to the industry, the carrier's duty to perform the service under the line-haul rate is discharged, and there is no obligation resting upon it to make an allowance to the industry for performing the service. Allowances to Texas Gulf Sulphur Co., 96 I. C. C. 371.

When a shipper, seeking an allowance for performing a carrier service within its plant, makes no demand of the trunk lines for performance and the carriers could not perform such service with available equipment because of excessive track curvature, any inequality which occurs because the shippers' competitors receive for the line-haul rate a service similar to that for which it requests an allowance is due to the position which it has assumed rather than to undue prejudice which the carriers could be required to remove. U. S. Cast Iron Pipe & Foundry Co., Inc. v. Director General, 62 I. C. C. 339.

If the shipper, for its convenience, prevents the carriers from performing the final placement of cars by a single movement, the carriers need not absorb the costs of switching from points of interchange to points of placement within the plant, when performed by the shipper. Marting Iron & Steel Co. Case, 48 I. C. C. 620.

In justification of the attempt to restore the allowances, witnesses for respondent testified that other mills in this territory receive similar allowances under like circumstances; that the cost to respondent to do this work with its own power would exceed $3 per car and would delay its trains; that the cost to the lumber company is in excess of the amount of the allowances; and that good management makes it preferable that cars to and from the interchange track be handled by the lumber company instead of by respondent. The question here to be determined, however, is whether the allowance proposed is for a transportation service which respondent is legally obligated to perform under its line-haul rates.

Practically the entire working population of Fisher is employed by the lumber company. Respondent's interchange track is sufficient for ordinary use. The lumber company's tracks have been reconditioned recently and are now considered safe for respondent's power to, but not beyond, a bridge shown as "F" on a map filed of record. However, the lumber company's loading platforms are about 1,000 feet beyond that bridge, and movement by respondent's power of cars to and from those platforms is impossible because the platforms do not permit proper clearance for the types of locomotives now used by respondent. The allowance proposed is for service performed by the lumber company in moving loaded cars from the loading platform to the interchange track with respondent.