These suspensions of private operations were occasioned by the substantial losses incurred therein.

Applicant contends that the unprofitable character of the agency operations was not due to a lack of sufficient traffic within the HoustonGalveston area to support the operations of several break-bulk carriers. It asserts that the agency services were not patronized by the shipping public because (a) the operations were temporary and there was no assurance that they would be continued for any definite length of time; (b) during the war, or for a period of approximately 4 years, the shippers were compelled to utilize all-rail transportation and they were reluctant to divert their traffic to water routes when the water service was on a temporary basis; (c) the pent-up demand for merchandise and materials brought on by wartime restrictions was continued into the immediate postwar period and when goods to overcome the shortages first became available the shippers' preference was for the relatively fast deliveries offered by the rail carriers, rather than the cheaper but slower service of the water carriers; and (d) stevedore strikes and the fear of such strikes tended to disrupt the operations of the agent-operators and discouraged shipper patronage of the service. Newtex and Seatrain, the principal protestants, insist that the difficulties of the agency operations were due to the fact that there was not, and still is not, enough traffic within the Houston-Galveston district and the tributary territory to support more than one break-bulk carrier.

Applicant's position is that the service provided by Newtex, the only break-bulk carrier serving this area, is inferior and inadequate because the sailings of its vessels have been and still are infrequent, irregular, and undependable; that the shipping public needs more and better break-bulk service between North Atlantic ports and Houston than it is now receiving; that the volume of traffic now being handled by Newtex is small, not because the traffic is not available, but because many shippers cannot, and will not, use a service of the type offered by Newtex; and that the traffic available within the Houston-Galveston district and surrounding territory is more than enough to support the existing water services and an additional break-bulk carrier.

On the basis of a survey made prior to the hearing, applicant estimates that if the application is granted, it will handle 595,000 tons of cargo per year to and from Houston and Galveston and that the revenue derived therefrom will aggregate $9,870,290. In addition to the estimated freight revenue, applicant estimates that it will receive approximately $120,000 per year from the transportation of passengers. The tonnage estimates are limited to traffic on which the rates

are said to be differentially under the corresponding all-rail rates and they do not include items which do not move by water at the present time, although there was a substantial water movement of such items prior to the war. Among the important commodities excluded from the estimates for this reason are grain, flour, and salt. There is no coastwise movement of grain and flour at the present time and the water movement of salt is limited to shipments in bulk. The estimated tonnage, plus the actual tonnage handled by Newtex and Seatrain to and from Texas ports during 1949 results in a figure more than 200,000 tons less than the tonnage actually transported by coastwise carriers to and from Houston and Galveston during 1939.

As to certain commodities the tonnage estimates appear to be high. The estimate includes 20,000 tons of wool. In 1949 Newtex and Seatrain carried a total of 24.219 tons of wool which would increase the estimated wool total to 44,219 tons, whereas the total wool production in Texas and New Mexico in 1949 was only 38,654 tons. The estimate included 13,000 tons of cotton. The evidence suggests that New England is probably the only territory to which the rates are adjusted to attract the movement of this traffic by water. The cotton carried by Newtex and Seatrain in 1949 aggregated 22 tons. The estimate also includes 8,500 tons of paper and 60,000 tons of copper, the rates on both being unfavorable to shipment by water.

The estimated revenue which is equivalent to $19.76 per ton, also appears excessive when compared with the average revenue from the total tonnage handled during 1949 by Newtex and Seatrain of $13.98 per ton. This figure includes revenue from tonnage handled to and from New Orleans by Seatrain but the rates to and from that port are comparable to those to and from Texas ports. During 1949, the New Orleans tonnage handled by Pan-Atlantic yielded average revenue of $13.85 per ton and during the same year its average revenue from all traffic was $13.84 per ton.

To show that it has the ability to develop traffic to and from the Texas ports, the applicant refers to the substantial annual increases in the tonnage which it has handled in the postwar period. The figures are as follows: 149,000 tons in 1946; 440,000 in 1947; 550,000 in 1948; and 861,000 in 1949. Applicant's traffic to and from New York was increased from 209,000 tons in 1947 to 463,000 tons in 1949.

Applicant's contentions with respect to the availability of traffic within the affected area and the public need for additional break-bulk water service are supported by the Boston Port Authority, Chamber of Commerce of Philadelphia, Rochester Chamber of Commerce, Shippers' Conference of Greater New York, Associated Industries of New York State, Inc., Houston Port and Traffic Bureau, Inc., Houston

Chamber of Commerce, Galveston Cotton Exchange and Board of Trade, Galveston Chamber of Commerce, Board of Trustees of the Galveston Wharves, Fort Worth Chamber of Commerce, Forth Worth Grain & Cotton Exchange, Southwestern Peanut Shellers Association, Texas Cotton Seed Crushers Association, Texas Industrial Traffic League, and other shipper groups and individual shippers. The supporting evidence consists in part of statistical data bearing upon the economic and industrial development of the Houston-Galveston district and the southwestern territory tributary thereto during the last decade.

In 1939 Houston, with a population of 384,000, had 9 coastwise sailings per week. In 1950 its population had increased to 594,321, while the coastwise service consisted of 1 sailing per week southbound and 1 sailing every 2 weeks north-bound. During the period 1942-49 the number of Houston factories increased by 348 and the number of independent wholesalers or jobbers by 227. Since 1945 more than $400,000,000 has been invested in new or expanded industrial facilities at Houston. The rail freight received and forwarded at Houston aggregated 6,000,000 tons in 1939 and 14,800,000 tons in 1949.

Galveston had a population of 60,862 in 1940 and 65,898 in 1950. The total building permits at Galveston were $2,086,568 in 1940 and $7,939,542 in 1949, an increase of 280 percent. The volume of wholesale business was increased from $33,245,000 in 1947 to $60,000,000 in 1948, or by 80 percent.

In 1940 the population of Texas was 6,414,824, the population for 1950 being 7,677,832, an increase of 19.7 percent. The average increase for the United States as a whole was 14.3 percent. From July 1940 to the end of the war, 610 manufacturing plants, costing $1,470,000,000 were constructed in the Eleventh Federal Reserve District, consisting of Texas, New Mexico and parts of Arizona, Oklahoma, and Louisiana. The class I rail carriers of Texas originated 25,307,234 tons of revenue freight in carloads during 1940, and during the same year they terminated 25,709,046 tons. During 1948 they originated 61,352,378 tons and terminated 60,675,571 tons, the percentage increases being 142.4 and 136, respectively.

In 1939, four coastwise carriers provided an average of 11 sailings per month between Boston and Texas ports. The coastwise traffic during that year comprised 44.7 percent of the general cargo tonnage of the port of Boston. The Port of Boston Authority witness expressed the opinion that traffic to and from interior New England points which formerly moved or could now move through Boston is moving instead through New York Harbor via Seatrain. Emphasiz

ing the disparity between the quantum of prewar and present day service, the authority supports the application in the belief that the proposed service would improve the competitive position of the port of Boston.

Boston is the largest wool market in the world. Texas is the largest producer of wool and mohair in the United States, of which at least 30,000 tons move annually to Boston and New England. The Boston Wool Trade Association comprises 702 merchants engaged in the purchase and the sale of wool and mohair, 90 percent of its members being located in Boston. Seatrain's services is used by them and found to be satisfactory for carload shipments, but is considered undesirable for split deliveries to two or more consignees. During the period when Newtex' service to Boston was suspended, wool shipments moved through Port Newark, and the lighterage in New York Harbor with rail movement beyond resulted in misdirected or confused shipments and dissatisfaction to consignees. With the resumption of direct service to Boston in May 1950, this reason for complaint apparently disappeared, but the dissatisfaction of some consignees with the Newtex service through Newark resulted in their unwillingness to route any traffic whatsoever by that carrier. Aside from this aspect, however, the association's witness is of the view that during the wool shipping season-May through August-there should be 8 or 10 vessels available to handle the traffic, and he asserts that Newtex cannot meet this requirement. Referring to the several carriers operating prewar between Boston and Texas, this witness contends that an additional carrier is needed and that the available traffic will support two lines. In contrast to the views of the association witness, Joe Almond, of Lampasas, Tex., who ships between 3,700 and 5,000 tons annually by water—principally by Newtex but some also by Seatrain-has found those carrier's services satisfactory. He does not oppose applicant's proposed operation but is apprehensive of its jeopardizing the existing service.

Shipper witnesses testifying in support of the application represent some 35 concerns. They ship a wide variety of commodities to the Southwest, particularly Texas, from origins along the Atlantic seaboard from Virginia to Canada; also rice and byproducts, copper, and textiles, from Texas to North Atlantic ports and New England. With few exceptions they used coast wise service prior to the war, some of them extensively, and now ship by that means to the extent

Including boilers and boiler tubes; burlap, cotton, and urn bags; canned foods, cleaning compounds, condiments, cordage, floor coverings, general and department-store merchandise, insecticides, iron and steel pipe, oil-well outfits and supplies, packaged petroleum products, paints, paper and paper products, siding, soups, varnish, wallboard, and wax.

that the services of existing carriers are suited to their needs. For various reasons, discussed below, they find the existing coastwise services inadequate. Many of them have shipped by applicant between ports covered by its certificate, found its service regular, dependable, and otherwise satisfactory for their purposes, and desire its extension to include Houston and Galveston.

The witnesses for these shippers agree that Seatrain's service is regular, dependable, and expeditious, and that damage to shipments is minimized by the fact that transfer of lading is obviated by its mode of operation. They complain, on the other hand, of various shortcomings encountered in the services of both Seatrain and Newtex.

As stated, Seatrain functions under a permit system. That system serves two principal purposes. It contributes to operating efficiency in that it avoids the operation of some vessels only partially loaded while others depart fully laden, with excess tonnage left on the dock. Also the shipper is assured a "reserved seat" for his shipment on the specific sailing indicated in the permit. On the other hand, it appears that Seatrain has enjoyed a large volume of business, and for lack of space frequently has been unable to issue permits as requested. This situation seems to have been quite common prior to the fall of 1949. With the increase of from one to two Texas sailings per week in September 1949, the situation was much improved. Two additional Seatrain vessels are under construction, to be completed sometime in 1951. One of them is to be placed in service between Edgewater and Texas City. When that is done this carrier will have three sailings to Texas City one week and two the following week.

Other considerations than lack of space, however, have interfered with the free and unhampered booking of freight, for a number of shippers and receivers have encountered delay in obtaining permits because their shipments consist of either low-grade or comparatively light-loading commodities, a carrier practice which has been characterized as a "selectivity."

A number of witnesses interested in shipments from points on the Pennsylvania complain that Seatrain does not have joint rail-water rates with that carrier. Of this matter it is necessary only to point out that the act requires the establishment of through routes and joint rates between rail and water carriers and provides a means for obtaining them where they are not established voluntarily. Rate matters are not proper considerations, however, in proceedings under section 309 (c) of the act.

Seatrain serves no Atlantic coast port except New York. Shippers at or adjacent to Boston, Philadelphia, or Baltimore desire to ship or receive traffic through the port where their plants are located or to

285 I. C. C.