Kansas City interests oppose the proposed adjustment because of the advantage given Enid interests by normal rates over routes including back hauls which it is contended constitute wasteful transportation. They also point out that the proposed adjustment would be violative of the long-and-short-haul provision of section 4 of the Interstate Commerce Act because the resulting rates on grain via Enid would be lower than the rate from Enid. Respondents have not expressly requested relief from the operation of the fourth section. The additional hauls, however, such as those over the Rock Island via Enid, are not unusual, and the circuity via Enid is not of sufficient degree to constitute transportation for which the rates necessarily should be higher than for transportation over the direct route. An adjustment of rates over the Rock Island corresponding with that maintained by the St. Louis-San Francisco is warranted, and it is shown that such rates would be reasonably compensatory. Under the proposed adjustment the rates would be no lower on traffic moving via Enid than on like traffic over the direct route to and through Kansas City.

We find that as to the departures which would result from the proposed elimination of the three-way rule by the Rock Island the necessary fourth-section relief should be granted, and that these proposed schedules are justified.

The facts above stated apply only to the proposal of the Rock Island. No evidence was submitted in justification of the proposed schedules of the Atchison, Topeka & Santa Fe. Examination of the suspended schedules of the latter carrier shows that in some instances there would be undue circuity. There is no justification upon this record for relief from the fourth section. Therefore we are not warranted in authorizing fourth-section relief as to those schedules, and we find that they are not justified.

Appropriate orders will be entered.

235 I. C. C.

No. 275711

NAVAL STORES FROM MISSISSIPPI TO GULF PORTS

Submitted May 10, 1939. Decided January 8, 1940

Upon investigation of rates and practices of carriers by rail and by truck affecting the interstate transportation of naval stores from certain points in Mississippi to Gulfport, Miss., New Orleans, La., and Mobile, Ala., for export or coastwise movement beyond:

1. Schedules in Investigation and Suspension Docket No. 4265 found justified. Order of suspension vacated, and proceeding discontinued.

2. Rates, rules, regulations and practices under investigation in No. 27571 found not to have been or to be unlawful. Proceeding discontinued.

Lawrence Chaffee, Elmer A. Smith, Robert Mitten, Erle J. Zoll, Jr., Y. D. Lott, Jr., J. N. Flowers, Leroy Morris, and P. H. Enochs for respondent rail carriers.

Barney E. Eaton, James S. Eaton, Barney E. Eaton, Jr., and Houston H. Evans for protestant motor carrier in I. and S. No. 4265, and a respondent motor carrier in No. 27571.

W. W. Wolford, L. A. Schwartz, E. H. Thornton, C. A. Mitchell, J. J. Martin, M. P. Smith, R. G. Cobb, H. K. Shaw, J. A. Kelly, William A. Roberts, Chas. B. McInnes, J. Morgan Stevens, J M. Stevens, Jr., Bob Ray, and W. C. Flanders for shippers.

BY THE COMMISSION:

REPORT OF THE COMMISSION

Exceptions to the examiner's proposed report were filed by Evans Motor Freight Lines, protestant in the investigation and suspension proceeding and a respondent in No. 27571, by the Gulf Mobile and Northern Railroad Company, a respondent in both proceedings, and by various shipper and port interests. Respondent Gulf and Ship Island Railroad Company replied to certain of the exceptions. The issues were orally argued. Our conclusions differ slightly from those last proposed by the examiner.

By schedules filed to become effective October 24, 1936, respondents 2 in Investigation and Suspension Docket No. 4265 proposed to

1 This report also embraces Investigation and Suspension Docket No. 4265, Naval Stores from Mississippi to Gulf Ports.

2 The Gulf, Mobile and Northern Railroad Company and the Gulf and Ship Island Railroad Company are the principal respondents. Hereinafter these carriers will be referred to as the Gulf, Mobile & Northern and the Gulf & Ship Island, respectively, except as otherwise indicated.

3

establish reduced rates on naval stores from Hattiesburg, Columbia, and Laurel, Miss., to Gulfport, Miss., from Columbia to New Orleans, La., and from Laurel to Mobile, Ala., for export or coastwise movement. Upon protest filed by the Evans Motor Freight Lines 3 operation of the schedules was suspended until May 24, 1937, and subsequently was deferred voluntarily by respondents pending the disposition of this proceeding.

On October 27, 1936, we entered upon an investigation on our own motion into the rates, rules, regulations, and practices of common carriers by railroad and by motor vehicle, and the minimum charges, rules, regulations, and practices of contract carriers by motor vehicle, affecting the transportation in interstate commerce of naval stores by such carriers, in carloads and in truckloads, from and to the same points included in the investigation and suspension proceeding, except from Laurel to Gulfport, with a view to determining whether such rates, rules, regulations, and practices "are inconsistent with economical and efficient management and service, or are unjust, unreasonable, or in any respect in violation of law." The two proceedings were heard together and will be disposed of in one report. Except as otherwise noted, rates and costs will be stated in amounts per 100 pounds.

Following the first hearing the proceedings were, upon petition of the Gulf, Mobile & Northern, reopened for further hearing "only with respect to the interstate transportation of naval stores, in carloads and truckloads, from Columbia, Miss., to Gulfport, Miss., and New Orleans, La."

Naval stores may be divided into two classes, solid products, such as rosin and pitch, and liquid products, principally pine oil and turpentine. In this report rates stated as applying on rosin and pine oil will be understood to include other solid and liquid naval stores, respectively. About 85 percent of the export and coastwise movement of naval stores consists of rosin, the other 15 percent being turpentine and pine oil. Naval stores are usually shipped in barrels or drums having a gross weight of about 500 pounds.

Hattiesburg is on the main line of the Gulf & Ship Island, extending from Jackson, Miss., to Gulfport. Columbia and Laurel are on branch lines of the Gulf & Ship Island, and are also served by the Gulf, Mobile & Northern, which is the short line from Columbia to New Orleans and from Laurel to Mobile.

3 This is the trade name for a carrier by motor vehicle owned by an individual, Dorothy Evans. It will be referred to in this report as the Evans Line.

235 I. C. C.

The application of the proposed rail rates is limited to certain routes, which are not in all cases the shortest possible routes. The following statement shows the distances by the shortest rail routes, by the routes over which the proposed rates apply, and by highway:

Gulf & Ship Island, Silver Creek, Mississippi Central Railroad Company, Hattiesburg, Gulf & Ship Island.

3 New Orleans and Northeastern Railroad Company, Hattiesburg, Gulf & Ship Island. Gulf, Mobile & Northern direct.

Fernwood, Columbia & Gulf Railroad Company, Fernwood, Illinois Central Railroad Company.

From 1904 to the beginning of the World War there was a heavy movement of naval stores from Mississippi producing points through Gulfport, amounting in 1911, for example, to 78,491 tons. During that period the Gulf & Ship Island handled virtually all of this traffic. From the beginning of the World War until 1933, with the exception of 1924, the movement was very small. Recently, owing to a new process for extracting rosin, turpentine, and pine oil from waste pine stumpage, the naval-stores industry in southern Mississippi has been stimulated to a considerable extent. In 1932 the total export and coastwise movement of rosin through Gulfport was 899 tons; in 1933 it was 6,171 tons; in 1934, 10,438 tons; in 1935, 12,128 tons; and in 1936, 26,935 tons. Because of growing truck competition this increased production did not bring a corresponding increase in rail movement. In 1932 the Gulf & Ship Island handled a total of 1,057 tons of rosin; in 1936, 4,435 tons. Thus, while the volume of rosin moving through Gulfport in 1936 was about 30 times that moving in 1932 the amount handled by the Gulf & Ship Island was only about 4 times as great in the former as in the latter year. The following table shows for the years 1936 and 1937 the total movement of rosin from and to the points covered by these proceedings, divided as between rail and motor carriers, and the percentage moving by each:

235 I. C. C.

1 Gulf & Ship Island Railroad.

Gulf, Mobile & Northern.

83

35

135

33

Traffic switched by Gulf & Ship Island to Fernwood, Columbia & Gulf, for movement over that line to Fernwood, thence via Illinois Central to New Orleans.

Not reported.

A traffic witness for the Gulf, Mobile & Northern stated that his line was handling about 35 percent of the traffic from Laurel.

The volume of pine oil moving between the above points has been comparatively small. In 1936 the movement to Gulfport was 29 tons from Columbia, 2,128 tons from Hattiesburg, and 101 tons from Laurel. The corresponding tonnages in 1937 were 642, 2,026, and 306. None of this pine oil went by rail, the entire movement being by the Evans Line. In 1937 there was a movement of 40 tons from Columbia to New Orleans by rail. The only movement of liquid naval stores to Mobile shown of record is a movement of 21 tons from Laurel in 1936, over the Gulf, Mobile & Northern.

In Naval Stores from Southern Points, 167 I. C. C. 666, decided August 6, 1930, we prescribed as a basis of rates on naval stores from certain southern States, including Mississippi, to trunk-line and New England territories, 19 percent, on rosin, and on pine oil, 29 percent of the corresponding first-class rates. Later, in the course of a general rate revision made necessary by certain fourth-section orders, the southern carriers established the same percentages of first class for general application on naval stores in southern territory. On this basis the rates from Hattiesburg to Gulfport, for example, were 13 cents on rosin, minimum 36,000 pounds, and 20 cents, on pine oil, minimum 30,000 pounds.

For the purpose of meeting the competition of the trucks the railroads made successive reductions in their rosin rates. By September 1936 the rate on rosin from and to all the points here considered