Memphis, should be no greater than 4 cents for the longer hauls, as to Macon, Greensboro, and Richmond, 6 cents for hauls of intermediate lengths as to western Tennessee and northern Alabama, and 7 cents for short hauls as to central Tennessee and northern Mississippi. The validity of these contentions depends necessarily upon the correctness of the premises from which they are drawn, namely, that the column 27.5 and column 25 rates, respectively, are maximum reasonable bases within the South and from the Southwest to the South. As several of the complaints contain allegations that the rates on clean rice and rice byproducts are generally at an unreasonably high level, it may be well to determine the facts in this respect.

The 27.5-percent rates were not prescribed as a maximum reasonable basis in the South; they were merely approved in a suspension proceeding as not in excess of that maximum. As before observed, rates the equivalent of 30 percent of first class have been prescribed as maximum on clean rice in the Southwest in several cases of limited scope. Moreover, the class rates from the Southwest to the Southeast are presently to be revised on a basis which gives greater recognition than formerly to the lower rate level within the South, in conformity with our decision on further hearing in Consolidated Southwestern Cases, supra. Under that decision the arbitraries which have heretofore been added to the interterritorial class rates to cover the expense of crossing the Mississippi River are to be abolished. In Southwestern Rates, 167 I. C. C. 119, we found 27.5 percent of first class to be a maximum reasonable basis for cowpeas, velvetbeans and soyabeans, in carloads, to, from, and within the Southwest. Those commodities, like clean rice, are agricultural products, and they are also closely similar to clean rice in value, loading, and general transportation characteristics.

The Texas complainants in opposing a basis of rates on clean rice as high as column 27.5 contend that, in relation to column 17.5 on rough rice, it gives the miller located at or near the consuming markets for clean rice an undue advantage over the miller located in the country districts where the rice is grown. To illustrate: The freight charges on a 100,000-pound carload of rough rice from A to B at a rate of 17.5 cents would be $175, but if this rice were milled into 68,000 pounds of clean rice at A and shipped to B the freight charges at a rate of 27.5 cents would be $187. Moreover, the country miller at A would probably have to pay more freight charges than his competitor at B in disposing of the 11,000 pounds of bran and polish incident to the milling of the rough rice, which each would have on hand. The practical answer seems to be that, while the spread between the rough-rice and clean-rice rates has

always been as great as or greater than that represented by the relation of 17.5 to 27.5, rice mills within the several growing areas have increased, while those located at points outside of those areas have decreased. Throughout these hearings the most insistent complaints of inability to compete have come from millers who are obliged to transport their rough rice considerable distances. The average price of clean rice was from 4.5 to 5 cents in 1930, 2.3 cents in 1932 and 1933, and 3.85 cents in 1934. The average carloading was from 40,000 to 45,000 pounds. During that same period the average price of rough rice was $18 per 2,000 pounds, or 0.9 cents per pound, and the average loading was 66,800 pounds. Considering that clean rice is approximately four times as valuable per unit of weight as rough rice, and that on the average a carload of rough rice weighs about 40 per cent more than a carload of clean rice, we are of the opinion that the column 27.5 rates for clean rice are not unreasonably high in comparison with the column 17.5 rates for rough rice.

There appear to have been no prior decisions dealing with rates on rice bran and rice polish in the Southwest, but in Rice and Rice Products in Southern Territory, supra, a basis of twelfth class, or column 17.5, was approved for both commodities in the Southeast. At the time of the hearing in that proceeding bran and polish were selling for about $25 and $35 per ton, respectively. For the succeeding crop years, 1930-31 to 1933-34, inclusive, the average prices per ton received by southwestern millers were approximately $10 for bran and $17 for polish. In 1933-34 the price of bran was higher than in the two preceding years, but the price of polish was lower than for a number of years past. In the proceeding last referred to the carriers proposed for bran and polish a minimum of 30,000 pounds, coupled with the column 22.5 rates. In finding that the carriers had failed to justify higher rates than column 17.5, division 4 approved a minimum of 40,000 pounds, certain shippers having stated at the hearing that that minimum would be acceptable if the rates were made sufficiently low. Rice bran and rice polish are both comparatively light commodities and the evidence here indicates that a 40,000-pound minimum is difficult or impossible of loading. A witness for the Rock Island testified that the average loading of bran and polish was 36,900 pounds. The Texas & New Orleans Railroad in 1931 originated 396 carloads of rice bran, 29 carloads of rice polish, and 101 mixed carloads of bran and polish, the average weights of which were 38,584, 34,128, and 34,155 pounds, respectively. The size of the cars in which these shipments were loaded is not shown, nor does it appear how many of the cars were loaded to capacity. If a flat minimum is to be maintained for cars of all

sizes, as the parties would probably prefer, the minimum should be no more than can reasonably be loaded in a 36-foot car, which is the smallest car ordinarily found in service. On exceptions no one objected to the proposed prescription of a 36,000-pound minimum.

The following table shows the present rates from Stuttgart and Memphis to certain points in Alabama which are typical of the destinations to which Arkansas interests believe their rates to be unreasonably high. For comparison, rates from Stuttgart on the basis of the column 27.5 rates on clean rice and the column 17.5 rates on rice bran and polish are also shown. The applicable rates from Memphis are 27.5 percent of first class on clean rice and 17.5 percent on bran and polish.

As will be seen from the table, the clean-rice rates from Stuttgart to destinations in Alabama are at present from 10 to 12 cents higher than those from Memphis, whereas under a common basis of 27.5 percent of first class from both points the spread would range from 6 to 8 cents. Establishment of 17.5 percent of first class on bran and polish from Stuttgart would reduce the spread over Memphis to 4 cents to certain of these points and 5 cents to others. The present spread is uniformly 15.5 cents.

To destinations in the South involving the longer hauls to which the group rates now apply on clean rice, establishment of the 27.5percent basis from Arkansas would substantially continue the present 8-cent differential over Memphis. On short-haul traffic to points in central Tennessee and northern Mississippi the rates from Arkansas exceed those from Memphis by greater amounts than appear to be warranted by the difference in distance and transportation conditions, but the rates from Memphis are affected by truck competition which does not exist in appreciable degree from Arkansas.

Finding 5.-We find that the rates from Arkansas to the Southeast on clean rice are, and for the future will be, unreasonable to the ex

tent they exceed the column 27.5 rates, subject to a minimum not exceeding 40,000 pounds, and that those for rice bran and rice polish are, and for the future will be, unreasonable to the extent they exceed the column 17.5 or class E rates from and to the same points, subject to a carload minimum of not more than 36,000 pounds.

Arkansas interests also allege that a recent reduction of the rates on clean rice from New Orleans to a number of points in Mississippi without corresponding reduction of the rates from Arkansas resulted in undue prejudice to Arkansas and preference of New Orleans. The reduced rates from New Orleans approximate 17.5 percent of first class, whereas those from Arkansas are a higher percentage of first class. Defendants explain that the reductions in the rates from New Orleans were forced on them by truck competition. The average distance to the Mississippi points in question is nearly twice as great from Arkansas as from New Orleans and there is no evidence that there is or was any truck competition to these points from Arkansas.

Arkansas interests also contend that the long-haul rates to the Southeast are too high in comparison with those available from Louisiana and Texas. For example, they point out that the water rate of 20 cents from Beaumont and Lake Charles to Wilmington, plus rail rates from Wilmington to interior North Carolina points ranging from 7.5 to 20 cents, produce combinations of from 27.5 to 40 cents, as contrasted with all-rail rates from Arkansas of 41 and 45 cents. From New Orleans to Raleigh, N. C., for example, the rail rate is 40 cents and the barge-and-rail rate 35 cents, from Beaumont and Lake Charles the water-and-rail rate is 40 cents, and from Arkansas the rail rate, the only one available, is 45 cents. Witnesses for the Arkansas interests conceded that the disadvantage of Arkansas in reaching Raleigh may be less than the foregoing figures indicate by reason of accessorial charges at the Gulf and south Atlantic ports with which they were not familiar, but they insisted that the disadvantage is sufficient to make the sale of Arkansas rice at points in that territory difficult. Suffice it to say that water transportation to the Southeast is available from Texas and Louisiana, but not from Arkansas, and that when water competition forced a reduction in the rail rates from the two former States substantial reductions were also made from Arkansas. The reductions, however, were less than the Arkansas and Memphis shippers would have liked, but those shippers do not indicate under what principle of law the carriers could have been compelled to reduce the Arkansas and Memphis rates at all. It was testified that truck competition from Arkansas and Memphis to the south Atlantic seaboard played a part in the reduction of the rail rates, but the manner in which the rates were changed,

with the greatest reductions for the longest hauls, indicates that considerations other than truck competition influenced the reductions.

The interior Louisiana and Texas complainants contend that, since water competition from Beaumont and Lake Charles caused the disruption of the former rates to the Southeast, the rail carriers should have met this competition where they found it and should not have reduced the rates from New Orleans, Arkansas, or Memphis. The interior Louisiana shippers point out, as typical of the existing situation, that Memphis, without actual truck or water competition, has been given a rate of 33 cents to Charleston, which is 10 cents less than the all-rail rate from Crowley and Lake Charles. This illustration is not impressive, because under the normal basis the all-rail rate from Memphis was 15 cents lower than from interior Louisiana. Moreover the water rate from Lake Charles to Charleston is 23.5 cents and the rail-water rate from Crowley is 29 cents, or 9.5 and 4 cents less, respectively, than the rail rate from Memphis.

Interior Louisiana complainants point out also that to Macon the water-and-rail rate from Lake Charles is 46 cents and the rail-waterrail rate from Crowley 51.5 cents, whereas New Orleans has available to Macon a rail rate of 33 cents and a barge-rail rate of 28 cents. Presumably shipments from both Crowley and Lake Charles move to Macon under the all-rail rate of 43 cents, and there is no contention that the barge-rail rate from New Orleans is not made with proper relation to the all-rail rate from Lake Charles. Before water transportation became available from Lake Charles to the Southeast the all-rail rate from interior Louisiana to Macon was 15 cents over the all-rail rate and 21 cents 3 over the barge-rail rate from New Orleans. These differences have now been reduced to 10 and 15 cents, respectively, and the differentials, Texas over New Orleans, have been correspondingly narrowed. Therefore, since relation is all that is complained of, it is apparent that interior Louisiana and Texas have gained by the disruption of the former rate structure.

3

These complainants contend, however, that they have not gained as much as they should have, that no reductions whatever should have been made from other shipping points and territories. When water competition forced a reduction of the rates to the Southeast from interior Louisiana and Texas, it is probable that as a matter of law New Orleans, Memphis, and Arkansas could not have compelled commensurate reductions in their rates, but it by no means follows that the action of the carriers in revising those rates and permitting New Orleans, Memphis, and Arkansas to retain a limited access to the southeastern markets was unlawful.

*Assuming that the barge-and-rail rate from New Orleans was then, as now, 85 percent of the all-rail rate.

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