and Lynchburg on traffic moving over respondent's lines to Norfolk, resulting in higher rates from Roanoke and Lynchburg than from the farther distant points south thereof, in violation of section 4. To remove these departures, respondent published the rates which were suspended in this proceeding.

In the prior report division 4 found also that respondent had justified its proposal to restrict the routing in connection with the present rates applying from its stations in North Carolina on the Durham and Winston-Salem divisions, when such traffic is destined to Norfolk for export, so that the rates apply only by way of Durham and Winston-Salem, N. C., respectively, and connections beyond, and do not apply over its lines through Lynchburg or Roanoke.

Respondent's justification for the proposed increased rates, as well as the routing restriction, rested primarily upon the necessity of eliminating the above-described fourth-section departures. Its proposal to increase the rates from points on the Durham and WinstonSalem divisions, instead of reducing the higher rates in effect from Roanoke and Lynchburg, in order to remove these departures, was defended on the ground that the latter points, which are on its main line between Norfolk and Bristol, Va.-Tenn., and Norfolk are within official territory where the rates on scrap iron, as well as on numerous other commodities, are on a higher basis than those in effect from points south of that line.

The rates found justified in the prior report are in each instance, except from Prilliman and Henry, Va., equivalent to 15 percent of the K-2 scale of first-class rates prescribed in the southern class-rate revision for the actual distances over the line of respondent. From the two excepted points referred to, the rates found justified are on the basis of 70 percent of the scale of rates on manufactured iron and steel articles between points in official territory, which basis we have approved. See Midvale Co. v. Wheeling & L. E. Ry. Co., 231 I. C. C. 734. For the distances from these two points to Norfolk the official-territory basis produces rates slightly higher than would result under the basis of 15 percent of the first-class rates.

In the following table the short-line distances, the distances over respondent's line, the rates found justified, rates based on 15 percent of first-class rates for the short-line distances from the Virginia origins, and rates based on 70 percent of the iron-and-steel scale are shown.

235 I. C. C.

Protestant contends that division 4 erred in finding the proposed rates justified in view of the fact that they are based on the actual distances over respondent's line and for that reason are higher in most instances than rates which would result from applying the basis of 15 percent of first-class rates to the short-line distances, which latter method was followed in prior decisions cited by protestant. In Brenner v. Atlantic & Y. Ry. Co., 185 I. C. C. 561, and American Scrap Material Co. v. Atlantic & Y. Ry. Co., 191 I. C. C. 45, rates on scrap iron, in carloads, from certain points in North Carolina. to Ashland, Ky., Portsmouth, Ohio, and East Radford, Lynchburg, and Portsmouth, Va., were found unreasonable to the extent that they exceeded 15 percent of the first-class rates under the K-2 scale for the distances from and to these points, minimum 40,000 pounds, distances being computed, as provided in the report in the southern

class-rate revision, over the shortest routes over which carload traffic could be moved without transfer of lading.

The establishment from the Virginia stations here considered to Norfolk of rates made 15 percent of first class for the short-line distances would result in numerous fourth-section departures. This is illustrated by the foregoing table. On the Durham division south of Lynchburg the short-line distances would produce rates of $3.30 from stations between Falwell and Naruna, Va., inclusive, whereas the group of stations immediately beyond, Jennings to Clarkton, Va., inclusive, would be accorded rates of $3.08. From the next four stations the rates would be $3.30, from South Boston, Va., $3.08, from Cluster Springs, Va., $3.30, and from Denniston, Va., $3.08. In other words, the most distant point would have a rate of $3.08, while the nearest point would have a rate of $3.30. Similar departures would be created on the Winston-Salem division.

Respondent points out that the only station here considered from which there has been or is likely to be a movement of scrap iron to Norfolk for export is South Boston, from which eight carloads moved during the first 6 months of 1938, and that the lower rate will continue to be available from that point over the direct line of the Southern Railway Company. It emphasizes the fact that, should a movement develop at any of the other points on the Durham and Winston-Salem branches, rates on the prescribed basis are in effect over other and shorter routes.

Protestant also contends that from a number of the origin points the rates found justified exceed the lowest combination of rates, in violation of the aggregate-of-intermediates provision of section 4 of the act. For instance, the rate proposed by respondent from Clarkton to Norfolk is $3.74, minimum 50,000 pounds. There is in effect a combination rate of $3.63 in connection with a minimum of 80,000 pounds, made up of a rate of $1.32 to Roxboro, N. C., and $2.31, Roxboro to Norfolk. However, the combination rates instanced by protestant are made up of separately established factors which, under the routing restrictions proposed by respondent from North Carolina origins and approved in the prior report by division 4, will not apply over routes by which the proposed rates from points in Virginia are applicable.

In Traffic Bureau, Lynchburg C. of C. v. Baltimore & O. R. Co., 235 I. C. C. 139, decided concurrently herewith, we prescribed on scrap iron, in carloads, from Roanoke and Lynchburg to Norfolk, for export, rates of $4.07 and $3.70, respectively, per ton of 2,240 pounds. Converted to amounts per ton of 2,000 pounds the rates would be $3.62 from Roanoke and $3.30 from Lynchburg. Protestant in the

present proceeding is also complainant in the cited proceeding. The report in that proceeding shows that complainant shipped 237 carloads of scrap iron from Roanoke, Lynchburg, and Petersburg, Va., to Norfolk and Newport News, Va., for export, between March 1, 1937, and April 20, 1938, of which 79 shipments moved over respondent's line from Roanoke and Lynchburg. In view of the higher basis of rates prescribed on this heavy movement and of the fourthsection departures which would be created thereby, we would not be warranted in prescribing the lower 15 percent of first-class basis from the origins here considered, particularly in view of the lack of any movement from the latter points, except South Boston.

Upon reconsideration, we approve the prior findings of division 4. The proceeding will be discontinued.

CASKIE, Commissioner, dissenting:

As shown in the report, we prescribed rates from points in North Carolina to Ashland, Ky., Portsmouth, Ohio, and East Radford, Lynchburg, and Portsmouth, Va., 15 percent of the K-2 scale, minimum 40,000 pounds, with distances to be computed as provided in the report in the southern class-rate revision. Rates on that or lower bases are now in effect from points in North Carolina on respondent's Durham and Winston-Salem lines and throughout practically the entire South. We have frequently awarded reparation to that basis where higher charges have been assessed. It is inconsistent to find here that materially higher rates from the Virginia origins, which are in southern territory, to Norfolk are reasonable. I would prescribe the same basis here and grant relief to maintain the higher rates at intermediate points in accordance with our usual practice.

The lack of movement minimizes the importance of the rates but does not justify the maintenance of unreasonable ones. Fourth-section departures always exist over direct and circuitous routes when rates are based on a scale and distances are calculated over the shortest route over which traffic can be transported without transfer of lading, and carriers in southern territory now have fourth-section relief in such situations in connection with the rates on scrap iron.

235 I. C. C.

No. 27329

LAWRENCEVILLE COOPERAGE COMPANY ET AL. v. AKRON, CANTON & YOUNGSTOWN RAILWAY COMPANY ET AL.

Submitted October 4, 1939. Decided November 14, 1939

1. Upon further hearing, findings in prior report, 226 I. C. C. 773, reversed or rescinded in part, as indicated below.

2. Defendants' arrangements and rates now in effect on shipments of rough staves and heads, in carloads, from points in Arkansas, Missouri, Kentucky, and Tennessee to Memphis, Tenn., and Louisville, Ky., in connection with shipments of tight cooperage to destinations in official territory, found not unjustly discriminatory, but found unduly preferential to the extent the applicable tariffs fail definitely to provide for monthly collection of differences between charges at cut-back rates and charges at local rates on tonnage not shipped out within the published time limit. 3. Carriers participating as initial carriers on shipments of tight cooperage from St. Louis, Mo., to destinations in official territory found necessary parties in any arrangement at St. Louis similar to those maintained at Memphis and Louisville embracing the transportation of rough staves and heads, in carloads, from points in Arkansas and Missouri. Finding in prior report, that St. Louis is subjected to undue prejudice in the transportation of rough staves and heads from points in Arkansas and Missouri, reversed.

4. Defendants participating as initial carriers on shipments of tight cooperage from Memphis, Louisville, and St. Louis to destinations in official territory when preceded by shipments of rough staves and heads in carloads, from points in Kentucky and Tennessee, having expressed willingness to establish arrangements at St. Louis the same as now established by these defendants at Memphis and Louisville, no order with respect thereto required. Findings in prior report, as to the manner of removal of undue prejudice to St. Louis, rescinded.

5. Order entered vacating prior order and requiring establishment of a rule for collection of charges, as prescribed.

T. M. Biederman and W. E. Rosenbaum for complainants.

Leo P. Day, W. W. Woolford, C. P. Reynolds, A. G. Thaman, Edw. D. Mohr, Lawrence Chaffee, B. F. Batts, W. E. Davis, A. B. Enoch, M. G. Roberts, H. H. Larimore, Geo. W. Holmes, P. H. Goodwin, H. L. Hanes, C. N. Richards, R. I. Miles, I. M. Savary, H. B. Muller, G. F. Thomas, H. P. Norden, Robert Mitten, H. R. Wilson, and Toll R. Ware for defendants.

J. V. Norman, J. C. Murray, F. C. Broadway, A. H. Haack, M. K. Eckert, O. N. Cloud, Richard M. Jones, C. W. Craig, E. Kaudman,