Midcontinent Oil Rates, 1925, 112 I. C. C. 421, specific rates were prescribed on petroleum products from the several origin groups to representative destinations. Defendants in that proceeding were directed to adjust the rates to other destinations, including points in Wisconsin, Minnesota, and Michigan, in proper relation to those prescribed to key points. In complying with that decision the carriers divided the destination territory into groups which are described in Waupun Oil Co. v. Abilene & S. Ry. Co., 218 I. C. C. 310, on page 312. The northernmost group embraces a large part of the northern peninsula of Michigan, Bessemer being in the western part, and Gladstone in the eastern part, of that group. Escanaba is in a small group southeast of the former.

Tulsa is typical of the group 3 origins, and Milwaukee, Wis., and St. Paul, Minn., are typical key-point destinations. From Tulsa to Milwaukee and St. Paul the applicable rates are respectively 39.5 and 42 cents. Respective distances shown by complainants are 742 and 718 miles. From the same origin, to Escanaba, Gladstone, and Bessemer, the applicable rates here assailed are 56.5, 57, and 57 cents, and the rates sought are 52, 52, and 54.5 cents, respectively. Distances to the latter points shown by complainants are respectively 947, 962, and 917 miles. According to the distances shown, Escanaba is 205 miles and Gladstone 220 miles more distant from Tulsa than Milwaukee, and Bessemer is 199 miles more distant from Tulsa than St. Paul. The rate differences, Escanaba and Gladstone over Milwaukee, are 17 and 17.5 cents, and Bessemer over St. Paul 15 cents. These are alleged to be unreasonable and unduly prejudicial to the extent that they exceed 12.5 cents. The rates to Milwaukee, St. Paul, or other key points are not assailed.

The 12.5-cent differences over Milwaukee are arrived at by adding to the rate to the key point 2.5 cents for each 50 miles of distance between it and the considered destinations. On the same basis, using the distance shown above, the differential over St. Paul would be 10 cents, but complainants only ask for 12.5 cents.

Complainants show that the rates on refined petroleum from Tulsa to some points in Wisconsin range from 20 to 21.8 percent, while the rates from the same origin to Escanaba, Gladstone, and Bessemer, respectively, are 22.5, 23.7, and 22.3 percent of the first-class rates. Rates to points in Wisconsin and Michigan generally range from 19.8 to 25.9 percent of first class. Such comparisons mean but little, for the extensive petroleum-rate groups do not coincide with the classrate groups, and varying percentage relations of the petroleum rates to the first-class rates are inevitable. Complainants disclaim any desire to have the rates on petroleum and its products made fixed

percentages of the class rates or to have the origin or destination groups disturbed, except to the extent necessary to give them the relief sought. They rely solely upon the findings in Cook & Brown Lime Co. v. Abilene & S. Ry. Co., 222 I. C. C. 739, decided June 28, 1937.

In that proceeding, division 2 followed Waupun Oil Co. v. Abilene & S. Ry. Co., supra, and found the rates from points in the Southwest to specified points in Wisconsin not unreasonable. On further consideration of the relation of the petroleum rates to one another, it expressed the view that the maximum spread suggested in Waupun Oil Co. v. Abilene & S. Ry. Co., supra, of 4 cents for each additional haul of 50 miles or fraction thereof was too great, and found that the assailed rates were unduly prejudicial to the extent that the spread was more than 2.5 cents for each additional haul of 50 miles or fraction thereof beyond the preferred points. The preferred points were St. Paul and Red Wing, Minn., and Milwaukee, Beaver Dam, Horicon, and other Wisconsin points.

Notwithstanding the finding in that proceeding that the rates there assailed were not unreasonable, and irrespective of traffic conditions, complainants contend that the rates assailed are unreasonable, because, using Milwaukee and St. Paul as base points, they are higher than they would be if made on the formula there prescribed to remove undue prejudice. The statement of their contention is sufficient in itself to show its unsoundness. They make the equally meritless contention that the same facts show that the rates assailed are unduly prejudicial. We have repeatedly said that undue prejudice and preference are facts to be proven by competent evidence and that a showing of a maladjustment of rates is not alone sufficient. Yet complainants do not show that there is any actual or even potential competition between them and dealers at Milwaukee, St. Paul, or Menominee, which are casually named as preferred points, or show any other fact which we have in numerous decisions stated to be necessary to establish undue preference and prejudice.

Defendants maintain that transportation conditions in the northern peninsula justify relatively higher rates than those prescribed to points in Wisconsin. In the northern peninsula the population is relatively sparse, the traffic consisting principally of the products of mines and forests, and the demand for petroleum products is correspondingly small. Weather conditions are unusually severe in the winter months. As a consequence, operating costs are substantially higher, and the traffic volume considerably less, in the northern peninsula than in Wisconsin.

Authority for the distances used by complainants, and the manner of computing them, are left uncertain by the evidence. For example,

the basic distance from Tulsa to Milwaukee, represented as the average ascertained in Midcontinent Oil Rates, 1925, supra, and used in computing the through distances to Escanaba and Gladstone, is shown to be roundly 742 miles. The average distance from group 3 origins to Milwaukee, however, ascertained in the proceeding last cited and used as the acceptable measure in Cook & Brown Lime Co. v. Abilene & S. Ry. co., supra, at page 742, was 852 miles. The distance of 205 miles from Milwaukee to Escanaba, as shown by the complainants, is the short-line distance from the northern edge of the Milwaukee destination group. The distance over the short tariff route from Milwaukee to Escanaba is 244 miles. Gladstone is 15 miles farther, or 259 miles from Milwaukee. Thus, from group 3, including Tulsa, to Escanaba and Gladstone the average distances, respectively, are 1,096 and 1,111 miles. Based on routes between Chicago, the average distance from group 3 to Bessemer is 1,175 miles, and over the routes through Kansas City, Mo., and St. Paul, 1,072 miles. For average distances from group 3 to Detroit, Mich., of 987 miles, and to Cleveland, Ohio, of 1,040 miles, a maximum reasonable rate of 58 cents was prescribed in Petroleum and its Products, 171 I. C. C. 286, 364.

The key-point rate of 39.5 cents at present maintained from group 3 to Milwaukee, is 2 cents less than the maximum reasonable rate prescribed in Midcontinent Oil Rates, 1925, supra. In the supplemental report in that proceeding, 132 I. C. C. 103, a rate of 38.5 cents was prescribed from group 3 to Chicago, and a rate of 41.5 cents to Milwaukee. But, because of pipe-line competition, the carriers continued in effect a lower rate of 36 cents to Chicago, observing a 3.5cent differential to Milwaukee. Pipe-line competition is not shown to be encountered in reaching destinations in the Upper Peninsula of Michigan.

By use of the 41.5-cent rate prescribed from group 3 to Milwaukee, plus 2.5 cents for each additional 50 miles beyond, and using the distances from Milwaukee to Escanaba, Gladstone, and Bessemer, the differences over the rate to Milwaukee would be 12.5 cents to Escanaba, 15 cents to Gladstone, and 17.5 cents to Bessemer, resulting in through rates of 54, 56.5, and 59 cents, respectively. Thus, the assailed rates to all three destinations in Upper Michigan, despite the less favorable transportation conditions there encountered, are closely within the range of rate progression form the key-point destinations in Wisconsin prescribed in Cook & Brown Lime Co. v. Abilene & S. Ry. Co., supra, upon which the complainants are here relying.

We find that the assailed rates have not been shown to be unreasonable or unduly prejudicial. The complaint will be dismissed.

FOURTH SECTION APPLICATION No. 15834 AUTOMOBILES AND CHASSIS TO CHICAGO, ILL.

Submitted January 5, 1988. Decided April 4, 1938

Grant of authority in prior report, 215 I. C. C. 495, required for the establishment and maintenance of reduced rates on automobiles, passenger or freight, and on chassis, set up, in straight or mixed carloads, from Detroit, Lansing, Pontiac, and Flint, Mich., to Chicago, Ill., and the maintenance of through rates on like traffic to destinations beyond Chicago, without the observance of the aggregate-of-intermediates provision of section 4 of the Interstate Commerce Act, affirmed upon further hearing.

Additional appearances: R. P. Paterson, Chas. A. Skog, and K. A. Moore for applicants.

George S. Dixon and Kenneth W. Munsert for interveners.

REPORT OF THE COMMISSION ON FURTHER HEARING

BY THE COMMISSION:

Exceptions to the proposed report of the examiner were filed by applicants and Automobile Manufacturers Association and the issues were orally argued. Our conclusions differ from those recommended by the examiner.

In Automobiles and Chassis to Chicago, Ill., 215 I. C. C. 495, division 2 granted authority to applicants, on conditions, to establish and maintain a rate of 50 cents per 100 pounds on automobiles, passenger or freight, and on chassis, set up, in straight or mixed carloads, from Detroit, Flint, Lansing, and Pontiac, Mich., to Chicago, Ill., and to maintain through rates on like traffic to destinations beyond Chicago, without observing the aggregate-of-intermediates provision of section 4 of the Interstate Commerce Act. On motions of interveners who are transporters of automobiles by highway and additional motions of applicants, we reopened the proceeding for further hearing.

The notice of further hearing stated that applicants should be prepared to furnish information as outlined in rule XVIII of the Rules of Practice. At the opening of the hearing applicants stated that the record contains such evidence and they had nothing further of that nature to present, and that such evidence as they desired to offer would be presented as rebuttal of interveners' evidence. The latter thereupon moved the dismissal of the application on the record as made. The motion is denied.

76405m-39-vol. 227—17

Interveners contend that the granting of the application is a violation of the policy laid down in section 202 of the Motor Carrier Act, 1935, and that the 50-cent rate is not reasonably compensatory to the rail carriers. Section 4 of the act contains no provision relating to the compensatory character of an intermediate rate, but we may, as provided in section 15, prescribe just and reasonable minimum rates. Facts of record as stated below are relied upon. When applicants lost this traffic to other forms of transportation they endeavored to ascertain what rate would restore some of the traffic to the rails. A vice president of the New York Central Railroad Company called upon the head of the Chrysler Corporation and inquired whether a rate of 50 cents, Detroit to Chicago, would get some of the traffic. He was advised that it would. The rate was published effective April 15, 1935, and down to June 30, 1937, 19,949 carloads of automobiles, all of Chrysler make, were moved over tracks of the Michigan Central Railroad Company, operated by the New York Central Railroad Company, lessee, from Detroit to Porter, Ind., thence New York Central to Chicago. However, none of the other railroads that joined in the application or filed supplemental applications have handled any substantial amount of traffic under this rate. The Grand Trunk Railway Company, since the 50-cent rate was published, has handled approximately 100 carloads of automobiles from Flint and 25 or 30 carloads from Pontiac, to Chicago. It handled no traffic under this rate in the six or seven months preceding the further hearing, in July 1937. Prior to 1935 the Grand Trunk did not handle automobiles to Chicago from any origin, but did so to points beyond Chicago. The Pere Marquette Railway Company has handled little or no business under the 50-cent rate, from Detroit, Lansing, and Flint. The Wabash Railway Company had made no investigation to determine whether it handled any traffic from Detroit under this rate. After the rate was published, carriers of automobiles by truck reduced their rates and so held the business, except for automobiles of Chrysler manufacture. The Tracy Baker Automobile Forwarding Company, which transports only Chrysler-made cars and a few Packards, during the first four months of 1935 carried 2,007 automobiles from Detroit to Chicago and during the remaining eight months 209 automobiles; during 1936 it moved 226; and during six months of 1937 it moved 70. When the publication of the 50-cent rate resulted in the loss of traffic to Chicago, this trucker put the released equipment into service from Detroit to Washington, D. C., Peoria, Ill., and other places. The number of automobiles trucked to Washington was thereby increased from approximately 100 per month to approxi