propriety of alternative rates and minima can be made. In some cases we have recognized that there are certain objections to this method of rate publication, Consolidated Southwestern Cases, 194 I. C. C. 381, 386-387; Armour & Co. v. Atchison, T. & S. F. Ry. Co., 190 I. C. C. 379; Container Service, 182 I. C. C. 653, 661-662; while in other cases, to meet the needs of particular traffic we have approved or prescribed alternative rates and minima. Complainants submit a long list of the latter cases. Some of them are cited at page 71 of our report in Eastern Brick Rates, 218 I. C. C. 59. Alternative rates and minima are in effect in the Southwest and elsewhere on numerous commodities, and on scrap in other parts of the country, except possibly official territory. The record clearly shows that rates on scrap on this basis are proper and necessary in the territory here considered.

As to the reasonableness of the present rates, complainants show that the rates on scrap in effect in the territory between the Missouri River and the Pacific coast, a territory with difficult operating and unfavorable transportation conditions, are generally below the column 15 rates which the carriers desire as the sole southwestern basis. It is shown that up to 600 miles the southwestern scale with minimum of 50,000 pounds averages 115 percent of the southern scale with the same minimum. For the same distance the southwestern scale, minimum 75,000 pounds, averages 116 percent of the southern scale, minimum 80,000 pounds. Comparison is also made with the rates on various other commodities. For example, it is shown that the scale III rates on cement, minimum weight 50,000 pounds, are slightly less than the present rates on scrap under the same minimum, although cement is a manufactured commodity which must be transported in watertight equipment.

Defendants refer to the so-called Kokomo scale prescribed by division 2 in Continental Steel Corp v. Akron, C. & Y. Ry. Co., 168 I. C. C. 371, in which it was found that rates on scrap would be unreasonable to the extent that they exceeded rates per ton of 2,240 pounds made 70 percent of the basic scale of rates prescribed in Iron and Steel Articles, 155 I. C. C. 517. The rates found reasonable in that decision, which were applicable in central territory, have been approved in several subsequent proceedings. Beyond 25 miles the Kokomo scale is somewhat higher than the 12.5-percent basis in the Southwest, but the column 15 southwestern basis is slightly higher than the Kokomo scale. Defendants conclude that as rates generally are on a higher level in the Southwest than in central territory they could reasonably expect us to prescribe higher rates on scrap than in official territory.

The general basis for rates on scrap in official territory as well as in other parts of the country is set forth at page 702 of our report in

General Commodity Rate Increases, 1937, 223 I. C. C. 657, decided October 19, 1937, subsequent to the last hearing herein. It is there shown that in official territory scrap generally takes the rates applying on billets, but that there are exceptional rates both higher and lower and, as above indicated, in a number of cases rates on the basis of 70 percent of the eastern iron and steel scale have been prescribed. It is there further shown that within western trunk-line territory, and between that territory and other territories, the general basis of rates on scrap is 15 percent of first class, minimum 50,000 pounds, and 12.5 percent of first class, minimum 75,000 pounds, the same as in effect within, from, and to the Southwest. In that case the railroads proposed and we approved an increase in these rates of 20 percent subject to a maximum of 40 cents per ton, which was twice as great as the increase proposed and approved within official territory. The justification offered by the railroads for the difference in the proposed increases was that the western rates were generally lower than the 70-percent basis in official territory. The minimum in connection with the latter rates is 44,800 pounds.

The secretary of the Waste Material Dealers Association of Arkansas testified chiefly regarding truck and water competition. It was stated that the greater portion of Arkansas scrap moved to Memphis by rail, but that considerable tonnage was moved by truck. There is a direct barge service from Memphis to the Pittsburgh district and boats operate on regular schedules. There is now an advantage of 50 cents per net ton in the rail-water rate to Pittsburgh, as compared with the all-rail rate, but should the column 12.5 rate be canceled the advantage in the rail-water rate via Memphis would be $1.68 per ton. As in normal times no dealer has a profit of as much as $1 per ton in handling scrap, the dealer could not afford to ship by rail under a difference of $1.68 per ton, and the traffic would move to Memphis by truck and via water beyond. Should the column 12.5 rates be canceled, it was intimated, sufficient truck equipment would be purchased to handle shipments not only to Memphis but to St. Louis.

In the last previous report herein, 164 I. C. C. 587, it was indicated that scrap would not move by rail at the then prevailing rate basis. At page 599 we said:

"The utilization of waste materials is of economic value to the country." Reduced Rates, 1922, 68 I. C. C. 676, 720. We have found also that the rate level necessary to move a commodity is an element to be weighed in determining a reasonable rate thereon. Penick & Ford v. Director General, 80 I. C. C. 152 It is clear from the more comprehensive record now before us that a large part of the scrap accumulating in the Southwest will not move at the present basis of rates. Lying in the fields, it is without value; transported to concentration points and there sorted and conditioned, it becomes highly desirable traffic. As

stated, it loads heavily, in open equipment, and is not susceptible to loss or damage in transit.

In the prescription of just and reasonable rates we are directed by section 15a of the act as amended June 16, 1933, to give due consideration, among other factors, "to the effect of rates on the movement of traffic." The evidence adduced at this last hearing is convincing that the rates prescribed in 164 I. C. C. 587, as modified by our subsequent general authorizations of increases, are proper and are as high as the traffic can bear. The findings in said report are affirmed.

226 I. C. C.

No. 27412

FITZGERALD MANUFACTURING COMPANY v. NEW YORK, NEW HAVEN & HARTFORD RAILROAD COMPANY ET AL.

Submitted December 14, 1937. Decided March 16, 1938

Upon rehearing, findings in prior report, 220 I. C. C. 15, that the rate charged on asbestos scrap, in carloads, from Torrington, Conn., to Lockland, Ohio, was applicable and not shown to have been unreasonable, affirmed. Leo Tessler and Abner Pollack for complainant.

H. D. Boynton for defendants.

REPORT OF THE COMMISSION ON REHEARING

BY THE COMMISSION:

No exceptions were filed to the report proposed by the examiner. Our conclusions differ from those recommended by him.

In the prior report, 220 I. C. C. 15, division 3 found that the fifthclass rate of 48 cents charged for the transportation of asbestos scrap, in carloads, from Torrington, Conn., to Lockland, Ohio, was applicable and not shown to have been unreasonable and dismissed the complaint. A petition of complainant for reconsideration on the record as made, and a second one for reopening and further hearing, were denied. On our own motion, however, we reopened the proceeding for rehearing. The prior report fully sets forth the evidence introduced at the first hearing, which will be repeated herein only to the extent necessary for a clear understanding of the facts. Rates are stated in cents per 100 pounds and do not include any emergency charges.

The commodity here concerned consisted of the scraps or cuttings remaining after gaskets for automobiles were stamped out of new material shipped to complainant at Torrington from a concern at Lockland, to which the scraps or cuttings were later shipped by complainant. When the considered shipments moved, a fifth-class rate of 48 cents, minimum 30,000 pounds, was applicable over the route of movement from and to the points concerned, on asbestos scrap. From and to the same points and over the same route a commodity rate of 34 cents was applicable prior to February 15, 1933, on asbestos building, roofing, or sheathing paper, or felt. On that date this rate was increased to 35 cents.

Complainant described the commodity in the bills of lading as "asbestos scrap". The shipments were so billed and the applicable fifth-class rate of 48 cents was charged. Complainant now contends that the shipments were misbilled, that they actually consisted of stampings, cuttings, strips, or scraps from asbestos building paper, and that the rates applicable on the latter should have been applied. The main question for determination is whether the commodity actually shipped was asbestos scrap or the scraps of asbestos building paper. If it was the latter the claimed applicable rates were 34 and 35 cents. Complainant further contends however that, even if applicable, the 48-cent rate was unreasonable to the extent it exceeded the lower commodity rates contemporaneously applicable on asbestos building paper. Reparation to that basis is sought. In the prior report, division 3 expressed the opinion that complainant failed to prove either that the commodity considered was not asbestos scrap, as described on the bills of lading, or that the applicable rate charged thereon was unreasonable.

The governing classification, which provides a rating of fifth class on asbestos scrap, states specifically that the rating applies "only on asbestos scrap from the manufacture of asbestos articles or on articles made of asbestos which have been scrapped." Articles manufactured partly from asbestos and partly from other materials are not expressly included in or excluded from that description. The pure asbestos content necessary to constitute "asbestos articles" or "articles made of asbestos” is not defined in the classification.

As previously indicated, the commodity here considered is stated to have consisted of cuttings or scraps that remained after gaskets for automobiles were stamped out of a material which, when shipped to Torrington, was described in the bills of lading and freight bills covering the movement as "asbestos building paper not saturated or coated."

On rehearing, exhibits were introduced in evidence establishing that the purchase orders placed by complainant for the new material used in the manufacture of the automobile gaskets, and the vendor's invoices covering the shipment of that material, described the commodity ordered and shipped as "asbestos gasket paper". Thus there is a discrepancy between the description under which the new material (of which, it is stated, the commodity here considered is scraps or cuttings) was billed for transportation purposes and the description contained in the purchase orders and invoices covering that material. Complainant's witness testified that, even though the new material were described in complainant's purchase orders and ven