The number of special applications received was 265, a decrease of 34 as compared with the preceding year. During the same period 453 fourth section orders were entered, of which 355 were permanent in character and 98 were for temporary relief. Of the 453 orders entered, 299 were in response to applications included among the original 5,030 applications for authority to continue then existing fourth section departures, while 154 were in response to special applications. Applications withdrawn after correspondence with carriers number 13. This is a decrease of 8 as compared with the preceding year. Orders granting relief in whole or in part total 208; orders denying relief, 245.

The complaint in Johnston v. A., T. & S. F. Ry. Co., decided November 11, 1918, 51 I. C. C., 356, alleged that the rates charged by the defendants on various less-than-carload shipments of hides, wool, and tallow from certain points in Oklahoma and Texas to Wichita, Kans., were unreasonable, unjustly discriminatory, unduly prejudicial, and in violation of the fourth section of the act. The Director General was not made a party to the proceeding.

Portions of various fourth-section applications were heard in connection with the complaint, among them that of the Chicago, Rock Island & Pacific Railway Company seeking authority to continue rates on the commodities mentioned from stations Ardmore to Olney, Okla., both inclusive, to Wichita, lower than the rates from intermediate points. The distance from Ardmore to Wichita via the Rock Island is 434 miles, or 159 per cent of the short-line distance of 273 miles by way of Atchison, Topeka & Santa Fe Railway. In passing upon these applications we said:

Question has been raised as to our power to consider at this time applications filed by carriers for relief from the provisions of the fourth section of the act to regulate commerce. It is suggested that those provisions are inconsistent with the purpose of the Federal-control act of March 21, 1918, and the full exercise of power conferred thereby. That act expressly provides that rates initiated by the President "shall be reasonable and just." Under section 4 of the act to regulate commerce certain widely prevalent forms of unjust, unreasonable, and unduly prejudicial charges are condemned and the burden is placed upon the carriers of showing that the situations apparently within the scope of the prohibition are in reality "special cases," justifying the exercise by us of a sound, legal discretion in authorizing departures from the general rules laid down. It is difficult to see how the enforcement of this section can interfere with a unified, coordinated national control, or in any wise hinder the prosecution of the war. As the situations covered by the fourth section can be reached by orders under the first three sections of the act to regulate commerce, the suggestion is equivalent to saying that we can not do in form what it is lawful to do in substance. These applications were filed by the carriers in accordance with the provisions of the act to regulate commerce. During their pendency they extended a protection to those carriers in maintaining rates that would otherwise have been unlawful. The applications were not withdrawn by the Director General when he assumed control of the railroads and he has obtained the benefit of whatever protection those applications

may have afforded. In this connection it may be remarked that the Director General sought and obtained from us fourth-section relief as an incident to the rates, fares, and charges initiated by him in his general order No. 28.

The act to regulate commerce remains in full force and effect except in so far as it may be inconsistent with the provisions of t he Federal control act or other acts appli cable to Federal control or with any order of the President. There has been no order of the President in the exercise of his war powers declaring that the enforcement of section 4 interferes with the efficient operation of railroads and systems of transportation under Federal control. Clearly no such declaration is contained in the act itself and any contention to that effect must be based upon a process of deduction. As to this it is sufficient to say that had the Congress intended to change the effect of section 4 it must be presumed that language appropriate to that end would have been used as was done with the power of suspension under section 15.

Authority was granted the Rock Island to maintain rates on hides, wool, and tallow, in less-than-carloads, from Ardmore to Wichita the same as the rates contemporaneously in effect over the Santa Fe, and to maintain higher rates from intermediate points east and south of Stuart, provided that rates from intermediate points do not exceed the corresponding rates in effect for like distances via the direct route of the Santa Fe, do not exceed the lowest available combination of rates subject to the act, and do not exceed the present maximum rates from intermediate points so long as the rates from Ardmore are not increased. Other fourth-section relief sought was denied.

In Rice Potato Co. v. B. & O. R. R. Co., decided November 15, 1918, 51 I. C. C., 364, where relief from the provisions of the fourth section was sought, the Director General was a party defendant. Following Johnston v. A., T. & S. F. Ry. Co., supra, relief was denied.

RATE SCHEDULES.

There were filed 141,254 tariff publications containing changes in freight, express and pipe line rates, passenger fares and classification ratings. These figures indicate a decrease in the number of rate changes during this period as compared with recent years, notwithstanding the large number of schedules filed to establish the 15 per cent increases authorized by us in eastern territory and the 25 per cent increases ordered by the Director General. This reduction in the number of rate changes may be attributed in part to the operation of the amendment of August 9, 1917, to section 15 of the act, which requires carriers to secure the approval of a proposed increase before the tariff containing it is filed.

During this period 2,891 schedules tendered for filing were rejected for failure to give lawful notice, and 556 schedules containing increased rates or fares tendered for filing were refused by us because the carrier had not secured the approval required under the amended fifteenth section.

Our Bureau of Tariffs receives and responds to continually increasing demands for rate information from shippers, from the Railroad Administration, and from departments and bureaus of the Government, including those chiefly interested in the transportation of troops and war materials.

APPLICATIONS TO INCREASE RATES UNDER THE AMENDED FIFTEENTH SECTION.

During the year carriers have filed 5,202 applications for authority to file tariffs making increases in rates: The total number of such applications filed since the amendment of August 9, 1917, is 6,682. One thousand two hundred and forty-two applications have been approved, 83 denied in full, 116 denied in part, 3,897 withdrawn by the applicant carriers, 168 assigned to docket for formal hearings, and 1,237 are now pending.

CLASSIFICATION.

Following the policy outlined in our previous reports, we have endeavored to stimulate the work in the direction of uniformity in freight classification. At a conference of the classification committees, called on our suggestion, it appeared that the work that had been undertaken by the carriers' uniform classification committee, and which did not include fixing of ratings, might be brought to a conclusion at a not distant date. We addressed an inquiry to the carriers as to why they could not, by January 1, 1919, or earlier, effect an assimilation or consolidation of the three general freight classifications into one volume containing one set of uniform commodity descriptions with three rating columns, one for each territory, subtended, and with one set of general rules. Shortly after this communication was sent, the director of traffic of the United States Railroad Administration took up the question, and after conferences with us he appointed a small committee, of which our classification agent was a member, to take up the unfinished work of the uniform classification committee and bring forward a suggested consolidated classification carrying uniform rules and regulations and with three columns of ratings, one each for the official, western, and southern classification territories. It was understood that the report of this committee in the form suggested would, upon request of the Director General, be made the subject of an investigation by us. Under section 8 of the federal control act request for such an investigation and advice to the Director General based thereon was made upon us. Copies of the proposed consolidated classification, together with copies of our order instituting the investigation and specifying the places and times at which hearings would be had, were sent to the shipping public generally. Hearings have been held in

important commercial centers throughout the country, but have not been concluded.

It was not intended that this committee's work or its report should contemplate making the consolidated classification a source of additional revenue. Without forecasting anything with regard to the report which we will make after the hearings and arguments are closed, it seems not inappropriate to say that the individual representatives of the several classification territories injected numerous proposed increased ratings in the proposed consolidated classification. These were especially numerous in the southeast. Objections have been voiced to various features of the proposed classification, mainly with respect to the increased ratings and the rule relating to mixed carload ratings.

Uniformity in classification ratings will necessitate a great many changes. A change in rating automatically effects a change in rate, to say nothing of the effect on commercial competition between competitive articles or commodities. No two of the existing classifications have the same number of classes.

The ideal situation would be complete uniformity in ratings and a definite relationship in percentages of the rates on the several classes to the rate on the first class. Some progress has been made in the direction of more uniformity in the relationship of the rates on the several classes to the first-class rate, but conditions have created numerous and widely varying relationships, which have long existed, and now exist.

EXPRESS COMPANIES.

The block system of stating express rates has been adopted for intrastate business in all but three of the states, and these three are now, as we understand, preparing schedules substantially in accordance with that system. The completion and adoption of these schedules will remove the conflict between state and interstate express rates mentioned in our last report.

Effective July 1, 1918, the principal express companies were merged into one company, which is operating under a contract with the United States Railroad Administration. It is expected that this consolidation will permit of substantial economies in operation and bring about improvement in the service. The character of the express service rendered during the past year has been complained of frequently as inferior and inadequate. The cause of these complaints has been attributed by the express company to extraordinary demands upon the service and insufficient and inefficient labor, due to war conditions.

Informal complaints of delays in service and in adjustment of loss or damage claims and lack of pick-up and delivery service have been

received. These have been brought to the attention of the carriers and a disposition to dispose of them properly has been shown, although in some instances the process of adjustment has been slow. Informal complaints of overcharges resulting from separation of several parcels comprising one shipment and of delays in remitting C. O. D. collections have also been received and handled in the same manner.

In November, 1917, the principal express companies petitioned for approval of a 10 per cent increase in express rates, alleging that the revenues from existing rates were inadequate to meet the necessarily increased costs of operation. We held public hearings on this application and concluded that the increase was justified by the facts developed on the record. Proposed Increase in Express Rates, 50 I. C. C., 385.

nues.

In September, 1918, the Director General of Railroads, acting under section 8 of the federal control act, requested us to advise him with regard to a proposal of the express company to increase its rates because its expenses of operation were exceeding its reveHe asked that we consider the plan proposed by the express company, ascertain whether or not its adoption would yield the revenue estimated, and whether it or some other plan was preferable. We held public hearings, at which we invited criticism of the proposed plan and suggestions for a better one, and after investigation of the subject made report to the Director General. Increase in Express Rates, 51 I. C. C., 263. By General Order No. 56 of the Director General increased express rates are made effective Jan. 1, 1919.

On November 16, 1918, the President by proclamation took over possession, control and operation of the express company, and placed it under the charge of the Director General of Railroads.

BUREAU OF INQUIRY.

Forty-six indictments were returned for violations of the act to regulate commerce and acts supplementary thereto. Twelve of these indictments were against carriers or carriers' agents and 32 against shippers, passengers, or interested parties other than carriers. Two indictments, for conspiracy, were against carriers and shippers jointly.

During the year 34 cases were concluded. In 20 of these cases pleas of guilty were offered by the defendants. In 4 cases verdicts of guilty were rendered, in 4 cases verdicts of not guilty were rendered, and in one case the jury disagreed. In one case a demurrer to an indictment was sustained. In 5 other cases indictments were dismissed upon motion of the Government, deaths of defendants necessitating such action in 2 instances.

The prosecutions begun and concluded during the past year were distributed over the following states: Alabama, California, Idaho,

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