Rail-and-Water: See WATER under this heading.

Water: 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. The essential elements are present when the facilities for transpor-
tation by water are available and may be utilized by shipper at a cost which makes
it more economical to use that form of transportation in preference to shipment
by rail at the prevailing rail rates. Petroleum Products to Tennessee River
Points, 115 (117).

Notwithstanding severity of unregulated water competition via Canadian
ports on St. Lawrence River and via New York State Barge Canal on ex-lake
export grain, and the facts that such traffic represented added traffic for rail lines
and that ton-mile cost of hauling added traffic is generally less than the average
for all traffic, protested competitive reductions from Buffalo and Oswego, N. Y.,
to north Atlantic ports were found to be below reasonable minimum. Minimum
reasonable basis yielding not greatly in excess of out-of-pocket costs, determined.
Ex-Lake Grain to North Atlantic Ports, 415.

Both rail carriers transporting ex-lake grain from Buffalo and Oswego, N. Y.,
to north Atlantic ports and water carriers on New York State Barge Canal com-
peted with all-water route from the head of the lakes to St. Lawrence River ports,
as well as with each other. Rates over the water routes were not regulated by
Commission and bore no fixed relation to the rail rates, and the canal carriers
were free to meet the demands of shippers or the competition of the St. Lawrence
route without restraint. As there was no reason why they should not compete
with the Canadian water route within reasonable bounds, even under regulation,
there was likewise no reason why the rail carriers should not be permitted to
reduce their rates to compete directly with the Canadian route, and secondarily
with the lake-canal route, for the export-grain traffic. Id. (422-423, 428).

While the competitive value of proposed reduced export rates on grain from
central territory to north Atlantic ports, in attracting added traffic from all-water
and part-water routes to fill available unused train tonnage, might be considered
a matter of managerial discretion, it did not outweigh considerations of their ade-
quacy, threat of disruption of the grain-rate structure, and provocation to a
widespread rate war, especially when resulting through rates from country origins
would still be generally higher than rates over part-water routes, and carriers
did not expect much additional tonnage except that requiring expedited service
to complete a cargo or provide ocean-liner ballast. Export Grain, C. F. A.
Territory to North Atlantic Ports, 655 (672-673).

The policy of Congress, as declared in sec. 500 of Transportation Act, 1920,
to promote, encourage, and develop water transportation and foster both rail
and water transportation in full vigor, does not mean that rail carriers should be
required to maintain prohibitive rates so as not to cut into profits of water car-
riers. Nor, even if it be construed to include promotion and encouragement of
private transportation on the waterways, does it exclude the right of a regulated
common carrier to meet such competition in a proper manner and to a reasonable
extent: Ex-Lake Grain to North Atlantic Ports, 415 (427-428); Molasses from
New Orleans, La., to Peoria and Pekin, Ill., 485 (501).

In the following cases, fourth-section relief was granted to establish rates on
named commodities to and from specified points to meet water competition,
subject to circuity limitations and other conditions: Canned Pineapples to Chicago
and Milwaukee, 557; Coke to Keokuk, Iowa, 59; Petroleum Products to Tennessee
River Points, 115; Phosphate Rock from Gulf Ports to Quincy, Ill., 204; Wood
Pulp from Brunswick, Ga., 565.

In the following cases, fourth-section relief sought on named commodities from
and to specific points, to meet water competition, was denied: Cigarettes and
Tobacco to Boston, Mass., 375; Soda Ash from Lake Charles, La., to Mobile,
Ala., 201.

Water-and-Truck: Construction of the proposed waterway would not affect
adversely half of the coal moving to the Youngstown area by truck and would
result in some contraction of the remaining half. Motor carriers, however,
have no right-of-way facilities of their own and the trucks used in such operation
generally can be turned to other uses. Proposed Lake Erie-Ohio River Canal,
753 (794).

COMPLAINTS.

Dismissal: Motion to dismiss complaint assailing divisions accruing to initial
carrier out of joint rates from Florida to eastern trunk-line and New England
territories, because of failure to bring in issue the through rates in their entirety
or to name the northern lines as defendants, denied, as such failure did not affect
either Commission's jurisdiction or its power to prescribe divisions as between
the carriers before it. 265 U. S. 274. Florida East Coast Ry. v. Atlantic Coast
Line R. Co., 211 (212).

Motion to dismiss complaint assailing rates on transited articles, on ground that
claims were barred because deliveries were made at the transit point more than
2 years prior to filing of informal complaint, denied. The original shipments
were lost in the fiction of transit and the only claims in issue covered shipments
delivered at final destination within the statutory period. Mount Vernon Bridge
Co. v. Baltimore & O. R. Co., 365 (366).

Issue: See ISSUE.

Limitation of Actions: See LIMITATION OF ACTIONS.

Parties: See PARTIES (SUBSTITUTION).

Reopening: See REHEARING.

CONFLICTING RATES. See SCHEDULES (APPLICABILITY AND INTERPRETA-
TION).

CONNECTING LINES. See SCHEDULES (PARTICIPATING CARRIERS).
CONSOLIDATION AND CONTROL OF RAILROADS.

As unification of Mobile & O. R., Gulf, M. & N. R., and New Orleans G. N. Ry.,
found to be in the public interest in 236 I. C. C. 61, could not be lawfully accom-
plished without modification of consolidation plan approved in 159 I. C. C. 522,
that plan was modified to assign the Gulf, Mobile & Northern and the New Or-
leans Great Northern to system No. 11 (Chicago & North Western) instead of
to system No. 8 (Atlantic Coast Line). Consolidation of Railroads, 1.
CONSTRUCTION AND INTERPRETATION.

Antitrust Acts: See ANTITRUST ACTS.

Clayton Act: See ANTITRUST ACTS.

In Pari Materia: The provisions of sec. 15a of the Interstate Commerce Act
and of sec. 202 (a) of the Motor Carrier Act, 1935, are not inconsistent. The
paramount duty laid upon Commission is to regulate both transportation agen-
cies, not in the interest of one or the other of such agencies, but in the public inter-
est. Naval Stores from Mississippi to Gulf Ports, 723 (733).

Interstate Commerce Act: See under the various subjects.
Legislative Intent: See also TRANSPORTATION ACT, 1920.

The power accorded Commission in sec. 15 (6) to fix divisions when in its opinion
those in effect "are or will be" unjust, unreasonable, or unduly prejudicial, clearly
looks as much to the future as to the present. Florida East Coast Ry. v. Atlantic
Coast Line R. Co. 211 (213).

When Congress expressly enumerated special classes exempt from general
provisions of law, the Commission could not enlarge them by mere construction
and include in them persons or things not expressly named in the act. Excursion
Fares for C. C. C. Camp Enrollees in the West, 479 (481).

Motor Carrier Act, 1935: See MOTOR CARRIER ACT, 1935.

Orders of Commission: See ORDERS.

Remedial Statutes: Sec. 1 (7) is a penal statute embodying a remedial policy
and exceptions to general prohibition against granting of free transportation
must be strictly construed. Excursion Fares for C. C. C. Camp Enrollees in the
West, 479 (481).

Routing Instructions: See MISROUTING.

Schedules: See SCHEDULES.

Statutes: See STATES.

Transportation Act, 1920: See TRANSPORTATION Act, 1920.
CONTINUITY OF MOVEMENT.

Recognition of carriers' right to maintain cut-back arrangements on tight
cooperage implies recognition of both the in-bound and out-bound movements as
essential parts of the arrangement and the necessity of concurrence of the carrier
or carriers operating out of as well as the carrier operating into the point of manu-
facture. Lawrenceville Cooperage Co. v. Akron, C. & Y. Ry. Co., 155 (167).
CONTINUOUS CARRIAGE. See CONTINUITY OF MOVEMENT.

CONTROL. See CONSOLIDATION AND CONTROL OF RAILROADS.
COST OF SERVICE.

In General: The average cost of transporting all traffic by all carriers in any
given region is not controlling in fixation of rates on particular articles. The cost
of transporting particular articles cannot be precisely determined, and factors
which throw light on that cost must be accorded such weight as, under all of the
facts and circumstances, appears warranted. Such factors may include evidence
with respect to revenues, expenses, and operating results of the considered car-
riers, traffic densities, comparisons of rates and revenues, character of the particu-
lar commodities, present and prospective volume of movement, routes of move-
ment, and character of equipment and service required. State of Alabama v.
New York Central R. Co. 255 (326).

Accessorial Services: See also SPECIAL SERVICE REQUIRED under this heading.
While proposed rates on cranberries were lower than motortruck rates from cer-
tain Massachusetts points to Harlem River, N. Y., carrier could not absorb high
costs of float services incidental to downtown deliveries, unloading services at
piers, or trucking from Harlem River to effect store-door deliveries. Cranberries
from Massachusetts to Harlem River, N. Y., 553 (554).

Apportionment as Between Freight and Passenger Service: Assignment of
a portion of passenger-revenue deficiency to freight service resulted in percents of
increase required in freight revenue to earn a fair return that exaggerated the
practical requirements in the freight-revenue situation. Florida East Coast Ry.
v. Atlantic Coast Line R. Co., 211 (238).

Ascertainment: "Weighted mode" of determining representative average
costs, revenues, and other operating data, which involved weighting each item in
a series, but not according to frequency as in a simple weighted average, was
unsatisfactory for cost-finding purposes, because it tended to eliminate statistical
items or values which, while occurring infrequently, should be considered in cost
finding to obtain typical results; unit costs so developed, multiplied by total actual
units of service, might yield total costs substantially different from known ex-
penditures; and its sensitivity to the manner of accumulating field data tended to

give extreme weight to values having a high frequency, and little weight to a
multitude of items occurring but once, with resulting errors. Florida East Coast
Ry. v. Atlantic Coast Line R. Co., 211 (242–244).

Estimated cost of transporting molasses from New Orleans, La., to Illinois in
38-car lots, based on assumption that the entire block would be handled as part
of a hypothetical train of 83 cars, obtained by adding 38 to the average of 45 loaded
cars per train moved north-bound during the test period, was questionable when it
was unlikely that trains handling such blocks would be made up in that manner.
Operating witnesses testified that all other north-bound traffic would be redis-
tributed over available trains when a 38-car shipment was handled, and as there
was an average of 3.84 trains per day and the average train consisted of 61 loaded
and empty cars, it was proper to assume for cost-finding purposes that the average
number of cars per train would be increased to 71. Molasses from New Orleans,
La., to Peoria and Pekin, Ill., 485 (492).

Bridges: See BRIDGES.

Comparison of Costs: Cost of transporting freight in the South and in the
North discussed. State of Alabama v. New York Central R. Co., 255 (306–308).
Since route via Missouri Pac. R. from New Orleans, La., to Peoria, Ill., involved
interchanges between three carriers and was approximately 17 percent longer than
direct route of Illinois Central R., cost of transporting molasses in 38-car lots
would not be less than for the Illinois Central, and the latter's costs were therefore
accepted as minimum rail costs in determining lawfulness of proposed rate.
Molasses from New Orleans, La., to Peoria and Pekin, Ill., 485 (493).

Cost Studies: Cost data and disability-ratio statistics submitted by Florida
East Coast Ry. to justify increased divisions sought from joint rates on citrus
fruits and vegetables from points on its line to eastern trunk-line and New England
territories, discussed. Florida East Coast Ry. v. Atlantic Coast Line R. Co.,
211 (222-227).

Even if proposed increased switching charges of belt line at New Orleans, La.,
were justifiable on basis of its revenue needs, they could not be approved in absence
of an adequate cost study showing what reasonable basic rates should be for all
types of switching performed, as well as any reasonable difference in charges for
the various services. New Orleans Public Belt R. Switching and Absorptions,
613 (643-644).

Factor in Reasonableness: The average cost of transporting all traffic by all
carriers in any given region is not controlling in fixation of rates on particular
articles. The cost of transporting particular articles cannot be precisely deter-
mined, and factors which throw light on that cost must be accorded such weight
as, under all of the facts and circumstances, appears warranted. State of Alabama
v. New York Central R. Co. 255 (326).

Considering cost of service and factors specified in 15a (2) of the act, rates on
certain manufactured articles and on soapstone and talc from southern-territory
points to official territory found unreasonable to the extent that they exceeded
prescribed percentage rates which were upon levels higher than would result
from the application of approximately the same levels of rates as apply on similar
traffic within official territory. Id. (328).

Notwithstanding that ex-lake grain moving at water-competitive rates from
Buffalo and Oswego, N. Y., to north Atlantic ports, for export, represented added
traffic and that ton-mile cost of hauling such traffic is generally less than the av-
erage for all traffic, as well as that cost per ton is less for a heavy than for a lighter
load, and cost per mile less for a longer than for a shorter haul, the reduced rates
were found to be below a reasonable minimum. Ex-Lake Grain to North Atlantic
Ports, 415 (427, 429).

Proposed quantity rate of 14 cents on blackstrap molasses, minimum 1,800
tons, did not bear a just and reasonable relation to existing carload rate of 17.5
cents between the same points when cost of handling single carloads was only 10
percent greater than cost of moving 38 cars as a single unit and returning empty
cars separately. Molasses from New Orleans, La., to Peoria and Pekin, Ill.,
485 (501, 502).

Where competition with a private transportation agency is the sole reason for
departing from a normal rate adjustment, cost of service should be regarded as
the absolute minimum. Id. (502).

Proposed increased charges of belt line at New Orleans, La., on interline switch-
ing, substantially greater than those proposed for interterminal or intraterminal
switching, appeared unreasonable when intraterminal switching was normally
the more expensive service. While the situation at New Orleans might be unusual,
no such assumption could be made without an adequate cost study, and it was
significant that no other carrier serving that locality charged more for interline
than for intraterminal switching. New Orleans Public Belt R. Switching and
Absorptions, 613 (628).

While the Commission is convinced that the principal means of coping with the
competitive situation is to give more weight to the cost-of-service factor, it must
be realized that the process cannot be approached with the hope of making abrupt
changes, or that rate making can become a mere process of applying cost formula.
It may prove that the economic life of the nation requires continued play of the
principle that, for the good of the whole, the burden of maintaining carrier services
must be distributed in part in disregard of relative costs and in proportion to
ability to pay. Proposed Lake Erie-Ohio River Canal, 753 (761).

Factor in Relation of Rates: The cost of transporting certain processed or
manufactured articles from producing points in the South into the North, com-
pared with that of transporting like articles within the North, found not to justify
the maintenance thereon of higher levels of rates than are applicable on like
articles within the North. The carriers' cost in performing transportation service
is only one of the factors to be considered, but when the relation of rates is of
such importance it, too, is of great importance, even though not entitled to
controlling weight. State of Alabama v. New York Central R. Co., 255 (327).
Intraterminal Switching: See SWITCHING (Intraterminal).

Loading: Railway costs in handling naval stores from Mississippi points to
Gulf ports were low because of favorable operating conditions, the lack of empty-
car haul, and the average naval-stores load of 27 tons, while truck costs were
unfavorably affected by the empty haul in one direction and the average load of
only 8 tons. Naval Stores from Mississippi to Gulf Ports, 723 (733).

Out-of-Pocket Costs: Notwithstanding severity of unregulated water com-
petition via Canadian ports on St. Lawrence River and via New York State
Barge Canal on ex-lake export grain, and the facts that such traffic represented
added traffic for rail lines and that ton-mile cost of hauling added traffic is gener-
ally less than the average for all traffic, protested competitive reductions from
Buffalo and Oswego, N. Y., to north Atlantic ports were found to be below reason-
able minimum when they would yield no more then 3.1 mills per ton-mile and
16.86 cents per car-mile. Minimum reasonable basis yielding not greatly in
excess of out-of-pocket costs, determined. Ex-Lake Grain to North Atlantic
Ports, 415.

In special cases it may be proper for rail carriers, in order to share in the move-
ment of traffic which they might not otherwise obtain, to establish rates lower
than gross cost, including overhead, but yielding something more than out-of-
pocket costs. Id. (429).