It requires no great profundity to appreciate that our findings in this proceeding will have ramifications far beyond the scope of the particular issues herein and the comparatively small volume of traffic involved. In this connection, therefore, it seems appropriate to reiterate the following portion of the original report, which is quoted at page 454 of the second report:

It is a matter of common knowledge that transit arrangements of wide variety are authorized on a substantial portion of the traffic transported by the railroads in this country and that through rates, either voluntarily established by the carriers or prescribed by us, apply on this traffic. These rates and transit practices are an integral part of the rate structure of the country. If this traffic may not be regarded as through traffic, then unavoidable implications are that these rates, or at least a good part of them, are without warrant in law, that the carriers are at liberty to cancel them and to establish in lieu thereof rates made by combination on the transit points; a course of action so inconsistent with long-established practices and understandings, and so far reaching in effects upon the commerce of the country, as to be not readily conceivable. The service accorded complainants' traffic at Cadosia is essentially no different in principle than encountered in innumerable other instances.

MILLER, Commissioner, dissenting:

I am in accord with the view of the majority that, without resort to fiction, the movements into and out of Cadosia may not properly be considered as through transportation, that being precisely the premise on which our prior administrative action in this case was enjoined.

My difficulty lies with the conclusion that inherent in a tariff transit rule is the right to transform intrastate transportation into interstate transportation solely for the purpose of Federal regulation, under which the carriers may be compelled, as the majority here undertakes, to combine two or more separate transportation transactions into a theoretical single movement and thus be denied their right to charge maximum reasonable rates for the services they perform in accomplishing each separate transportation transaction.

The conclusions attaching to the majority view in this case, that while the wood-alcohol products are at rest in free possession of the owners at Cadosia, and there at their disposal, they are nevertheless "in transit" and consequently may be said to be through transportation, seem to me to lack support. Quite the opposite, I think, is definitely established by the evidence of record. Long before the New York, Ontario & Western Railway Company was persuaded to authorize refining in transit at Cadosia, that location had been selected and used, under a pooling arrangement, as a sales depot and warehouse where the pooled products could be assembled and held as stock in trade until buyers were found. That was, and in

my judgment still is, the dominant purpose in shipping the methanol there, the third distillation which it was found convenient to accomplish at that point being merely incidental.

At the further hearing much emphasis was given to a form of billing adopted after the tariff transit rule was established, apparently in an effort to fit the rule. At least that is the logical inference in the absence of a showing that outbound shipments ever were made from Cadosia-to the consignees and destinations specified in the inbound billing. The courts have repeatedly held that the nature of a shipment and the question of whether transportation is continuous is determined by the essential character of the commerce and is not dependent upon the form of billing or transportation contract. See Illinois Central R. Co. v. Louisiana R. Comm., 236 U. S. 157, 163; Ohio R. Comm. v. Worthington, 225 U. S. 101, 110; United States v. Union Stock Yard, 226 U. S. 286, 304; Louisiana R. Comm. v. Texas & P. Ry. Co., 229 U. S. 336, 341; Southern Pac. Term. Co. v. Interstate Commerce Commission, 219 U. S. 498, 527. As heretofore pointed out, I think it clear that the facts in this case preclude a finding that the movements in and out of Cadosia constitute through transportation.

I am quite unable to construe either Central R. Co. of New Jersey v. United States, 257 U. S. 247, or Baltimore & O. S. W. R. Co. v. Settle, 260 U. S. 166, cited in the majority report, as authority for transforming intrastate transportation into interstate transporta tion for the purpose of compelling, as here attempted, the Federal regulation of that which is expressly excluded by the statute we administer.

Moreover, I am unable to distinguish, as the majority attempts to do, between the factual circumstances of material weight here and those in Arkadelphia Milling Co. v. St. Louis S. W. Ry. Co., 249 U. S. 134, relied upon by the statutory court. Concededly there is a difference in the form of the governing tariff provisions, but in substance and ultimate effect, as well as the purpose in contemplation, there are no material differences.

Nothing of material bearing, it seems to me, is added to the record on further hearing in this case which was not previously before us and before the court.

COMMISSIONER MAHAFFIE dissents.

COMMISSIONER MEYER did not participate in the disposition of this proceeding.

APPENDIX A

Points of origin.—Marvindale, Gilson, Hallton, Custer City, Genesee, Roulette, Crosby, Morrison, Coneville, Sergeant, Coryville, Mayburg, Westline, and Port Allegany, Pa., and Corbett, Hazel, Long Eddy, Maryland, Peakville, Livingston Manor, and Cooks Falls, N. Y.

Points of destination.-Stamford, Bridgeport, and West Haven, Conn., Portland Maine, Boston, Everett, Lawrence, Leominster, Peabody, Reading, Somerset, South Cambridge, South Weymouth, Beverly, Charlestown, Lowell, Somerville, Springfield, Stoneham, Chicopee, East Weymouth, Forest Hills, Haverhill, and Holyoke, Mass., East Providence, R. I., Baltimore and Curtis Bay, Md., Arlington, Carney's Point, East Orange, Garfield, Hoboken, Jersey City, Kingsland, Newark, New Brunswick, Nixon, North Arlington, Parlin, Paterson, Perth Amboy, Port Newark, Rahway, Camden, Edgewater, and Ridgefield Park, N. J., Albany, Buffalo, Elmira, Gloversville, Mechanicville, New York, Niagara Falls, Oneida, Rochester, Syracuse, Utica, Watertown, Yonkers, Binghamton, Brooklyn, Hudson, Lockport, Maspeth, Rensselaer, and Staten Island, N. Y., Altoona, Bradford, Custer City, Philadelphia, Verona, Warren, Wilkes-Barre, Allentown, Chester, Harrisburg, Holmesburg Junction, Mount Joy, Pittsburgh, York, and Scranton, Pa., Portsmouth, Va., Chicago, Pekin, and Peoria, Ill., Lawrenceburg, Ind., Louisville, Ky., Detroit, Bay City, and Grand Rapids, Mich., and South Charleston, W. Va.

APPENDIX B

The pertinent portions of the transit arrangement which became effective December 1, 1933, are as follows:

Privilege

This tariff authorizes the stopping in transit of Crude Methanol (Crude Wood Alcohol) in tank cars, carloads, and reforwarding the refined carload product in tank cars or iron or steel drums to final destination

Transit Charge

The transit charge shall be two and one-half (2%) cents per 100 pounds, on the inbound weight (minimum $6.30 per car) which shall be in addition to the through rate or combination through rate to be applied on the outbound shipment.

Rates

Shipments handled under these rules must be consigned to the transit station shown herein at rates applicable from point of shipment to such transit station and when reshipped therefrom via the New York, Ontario and Western Railway, the rate from point of origin plus the transit charge as shown in Rule 55. In no case shall the aggregate rate be less than the rate from point of origin to the transit station plus the transit charge as shown in Rule 55, nor less than the rate from the transit station to ultimate destination plus the transit charge, whichever is higher.

Substitution Not Permissible

It is not expected that the identity of each carload of methanol can or will be preserved in the process of refining, but it is not permissible to make any substitution that impairs the integrity of the through tariff rate.

Substitution, however, is not accomplished when methanol originating in different territories is combined at the transit point, and in-bound paid freight bills covering carloads of methanol entering into the combination is surrendered in the aggregate, in the same ratio as was observed in the combining process.

No. 27749

FULTON BAG & COTTON MILLS v. ATCHISON, TOPEKA & SANTA FE RAILWAY COMPANY ET AL.

Submitted December 31, 1937 Decided March 1, 1938

Rates on woven paper-fabric bags, in less than carloads, from Atlanta, Ga., to Rocky Ford, Colo., Caldwell, Idaho, and Yakima and Wapato, Wash., not shown to have been unreasonable. Complaint dismissed.

C. L. Denk, Jr., for complainant.

Conrad Olson for defendants.

REPORT OF THE COMMISSION

DIVISION 4, COMMISSIONERS MEYER, PORTER, AND MAHAFFIE

BY DIVISION 4:

The shortened procedure was followed. Complainant filed exceptions to the examiner's report.

Complainant corporation alleges that the rates on woven paperfabric bags, in less than carloads, shipped between September 26, 1933, and January 16, 1934, inclusive, from Atlanta, Ga., to Rocky Ford, Colo., Caldwell, Idaho, and Yakima and Wapato, Wash., were unreasonable. Rates are per 100 pounds and do not include emergency charges.

These bags are used as containers for various vegetables and fruits and are rated second class, in less than carloads. The shipments, ranging from 395 to 4,428 pounds, were in machine-pressed bales. They moved over defendant's lines, 1,686 to 2,910 miles. The applicable class rates, ranging from $3.33 to $4.41, were ultimately charged. The claimed commodity rate is $2.41.

Rocky Ford is in transcontinental group J, and the other destinations are in north Pacific coast territory to which rate bases 1 and 2 applied. When the shipments moved there were three less-than-carload commodity rates in effect on numerous paper and paper articles from Atlanta to bases 1 and 2. A rate of $2.95 applied on such

articles as crinkled paper bags, magazines or periodicals, and stencil paper. On paper bags n. o. i. b. n., oiled or waxed, printed or not printed, shopping bags, paper cups, paper dishes, and wallpaper samples, the rate was $2.71, and on paper bags n. o. i. b. n., other than oiled or waxed, printed or not printed, newsprint, plain roofing, and writing paper the rate was $2.41. Complainant contends that the instant shipments compared favorably with the articles embraced in the group taking the rate of $2.41.

The commodity rates mentioned did not apply on these shipments, because the article shipped was not embraced in the groups of articles taking the rates of $2.95 and $2.71, and the $2.41 rate on bags n. o. i. b. n., did not apply, due to the explanation of n. o. i. b. n., as "not otherwise indexed by name" in current western classification. Woven paper-fabric bags were specifically indexed in the western classification. Effective November 15, 1934, these fabric bags were added to the description of the articles taking the rate of $2.71 and the emergency charge at that time was 11 cents. The emergency charge was canceled and the rate was increased to $2.82 on December 24, 1936.

Complainant cites Cleveland Akron Bag Co. v. Wheeling & L. E. Ry. Co., 93 I. C. C. 694, wherein division 4 awarded reparation on two carloads of woven paper-fabric bags shipped during February 1922 from Cleveland, Ohio, to San Francisco and Los Angeles, Calif. The fact that reparation was awarded on carload shipments does not condemn the less-than-carload assailed rates. Defendants assert that the less-than-carload commodity rates were established to meet the competition of the intercoastal water carriers operating through the Panama Canal and they state that woven paper-fabric bags were added to the group of commodities taking the rate of $2.71 because the rate from an Indiana point by rail to Baltimore, Md., and intercoastal water lines to Pacific coast terminals was $2.43.

In Terre Haute Chamber of Commerce v. Ahnapee & W. Ry. Co., 147 I. C. C. 247, 249, it was said:

A commodity rate applicable to less-than-carload traffic is a pronounced departure from the usual practice, and its establishment should be required only upon a clear showing of compelling reasons.

In the original report in the southern class-rate revision the Commission said, in 100 I. C. C. at page 642:

Shipments in less-than-carload quantities, however, ordinarily move in a way which causes relatively high cost of operation, and they are seldom far down in the scale of value. Given a reasonable level of class rates, it seems that under few, if any, circumstances will we be justified in requiring the maintenance or establishment of less-than-carload commodity rates. Provided that no undue preference results, the carriers may establish them voluntarily for