Petitioners estimate that not less than 50 percent of the traffic subject to class rates would be affected by the proposed increases, and that the gross revenue on this traffic would be increased by 3 to 4 percent. As the appendix shows, some rates would be increased by greater percentages than others, but in no case by more than 10 percent. Although petitioners stated that it is not their intention to exceed the third-class rail rates on truck fifth-class shipments weighing under 6,000 pounds, this maximum has not been observed in all instances. For example, on such shipments the proposed rate between Bridgeport, Conn., and Worcester, Mass., is 52 cents and the rail third-class rate is 50 cents, and between Manchester, N. H., and Portland, Maine, the proposed rate is 50 cents and the rail third-class rate is 46 cents. In numerous instances the proposed fifth-class truck rates on shipments under 6,000 pounds are considerably less than the rail third-class rates. Between Providence and Worcester and between Providence and Springfield, Mass., the proposed truck fifth-class rates on shipments under 6,000 pounds are 30 and 40 cents, respectively, whereas the rail third-class rates are 34 and 46 cents, respectively.

The appendix discloses numerous instances in which no increases are proposed on motor fifth-class shipments weighing from 12,000 to 19,999 pounds, although the rates are not equal to 55 percent of the rail first-class rates, which petitioners indicate they desire to observe as maxima. For example, between Bridgeport and Fall River, Mass., the motor fifth-class rate on such shipments is 38 cents and the rail rate, 55 percent of first class, is 42 cents, yet no increase is proposed in the motor class rate.

Petitioners did not disclose why they desire to maintain truck fifth-class rates on shipments under 6,000 pounds no higher than the rail third-class rates and at the same time observe rail rates 55 percent of first class on truck fifth-class shipments weighing from 6,000 to 19,999 pounds. Most of the commodities rated fifth class in the New England classifications are accorded less-than-carload ratings of third class or 55 percent of first class by the rail carriers. If from a competitive standpoint rail third-class rates should be observed as maxima on truck fifth-class shipments weighing under 6,000 pounds, there appears to be no good reason for a lower basis on the same commodities when shipped in quantities from 6,000 to 19,999 pounds.

Petitioners contend that the volume of traffic subject to ratings higher than third class is relatively small and that such traffic could not bear increased rates.

The following table, based on computations made from the rates in the appendix, shows the average percentages by which the less-thantruckload fifth-class rates would be increased:

It is apparent from the foregoing table that the average increase would be far less than the 10 percent which petitioners state they seek on shipments under 150 miles, and the increase on shipments over 150 miles would be negligible.

In his proposed report, the examiner recommended that respondents be required to increase their third-class, fourth-class, and fifthclass rates throughout the entire territory, both truckload and lessthan-truckload, by at least 10 percent, and that we should call upon respondents for a statement of all commodity rates lower than the corresponding rail rates to be accompanied by any reasons they may have for the continued maintenance of such commodity rates lower than the rates of their competitors. The New England Bureau, one of the joint petitioners, excepted to this proposed finding on the grounds (1) that the territory in which the 10-percent increase was recommended is more extensive than that in which an increase was sought by petitioners; (2) that although an increase was sought in the class rates to Maine and New Hampshire points, "subsequently to the hearing this Commission legalized proposed rates of the Boston and Maine Railroad and Maine Central Railroad with respect to Massachusetts, Maine, and New Hampshire points, making necessary the withdrawal of such affected territory from any class rate increase as prayed for to the extent that it is subject to competition of the rail rates described;" (3) that the examiner erred in recommending any increase in truckload class rates; and (4) that the recommendation with respect to commodity rates should not be adopted for the reason that "the test recommended by the examiner as being that of the rail competitive level is too restrictive to form the proper basis for an order."

The only exception to the proposed report filed by the Eastern Conference is that the examiner did not recommend a specific time limit within which respondents should file a statement of commodity

rates lower than the competitive rail rates, accompanied by any reasons they may have for their continued maintenance. This petitioner suggests that more detailed instructions be given respondents respecting the justification of commodity rates lower than rail rates. The Stamford Chamber of Commerce contends in its exceptions that no increase in class rates should be required, as the present class rates were prescribed as minimum reasonable rates and it is within the power of the carriers individually or jointly to increase their rates on their own initiative.

Joint exceptions were filed by the Manufacturers Association of Connecticut, the Boston Chamber of Commerce, and other shippers' associations. They contend that we should find that the petitioners have failed to establish that any emergency requiring an increase in rates exists at the present time or that increased labor costs have not been more than offset by increased revenues brought about by improved business conditions. These shippers' associations ask that the petition be denied.

The rates between points in Massachusetts and Rhode Island petitioners ask be excluded from any increase because, they contend, the Railway Express Agency, Inc., has in effect commodity rates between the points designed to be competitive with the present truck class rates. The only proof of the competitive express rates is a reference to an express tariff. It is too much to expect us to check the rates in the express tariff to determine how they compare with the prescribed class rates between Rhode Island and Massachusetts and whether the competition between points in these States differs from that prevailing generally in the territory.

The exceptions of the New England Bureau contain the first and only indication that any of the respondents no longer desire an increase in the class rates to and from Maine and New Hampshire. This request for elimination of the increase to and from points in these States is based on the approval by division 2 of certain lessthan-carload all-commodity rates in All Commodities, L. C. L., Between Maine, Mass., and N. H., 237 I. C. C. 391. The proceedings embraced therein have been reopened for rehearing and reconsideration. The New England Bureau has not asked for a further hearing in this proceeding to submit evidence with respect to the effect that the approval of the rail carriers' all-commodity rates has had on the traffic of motor carriers.

No reason was advanced to justify the exclusion of certain other points from the increases sought. From the record we are unable to conclude that the cost of operation of motor carriers has increased any more in the territory in which petitioners ask advanced rates

than in the territory which they ask to be excluded from their proposal, or that the carriers' operating ratio in the territory sought to be excluded is any better than in the territory in which increased rates are asked. The proposal, if granted in the form presented in the petition, would have the effect of requiring shippers between points in the territory generally to assume the burden of increased costs in the excluded territory, and we have been presented with no valid justification for such exclusion.

The exception of the New England Bureau to the examiner's proposal that truckload class rates be increased 10 percent is based mainly on the argument that an increase in these rates would not necessarily result in an increase in the respondents' net revenues. There may be some merit in this contention, although the Eastern Conference, by not filing any exception to the examiner's proposal respecting truckload class rates, apparently does not share the view of the New England Bureau.

No sound reason was advanced by petitioners for observing rail class rates as maxima in applying the percentage increase sought. Granted that an increase in motor-carrier rates between points in the treated territory appears necessary, the plan for obtaining this increase on class-rate traffic does not appear to have been well conceived. The haphazard method proposed of subjecting some rates and not others to an increase, as shown by the appendix, of increasing some rates by greater percentages than others, and of observing rail rates as maxima in some cases and not in others, would tend to destroy completely whatever consistency the present motor-carrier lessthan-truckload class-rate structure possesses, and would place more than a just share of the burden of increased transportation costs upon the shipments which move the shortest distances.

There is considerable merit in the contention of certain shipper associations that the proposal is inconsistent with sound rate-making principles. The Stamford Chamber of Commerce points out that although class I motor carriers in New England as a whole operated at a loss during the first half of 1938, some of the individual carriers operated at a profit. To some extent, the Stamford Chamber of Commerce feels that the present plight of some of the carriers is due to inefficient management. It contends that the inherent advantages of motor-carrier transportation cannot be preserved by arbitrarily increasing rates to a level at which all carriers can operate profitably irrespective of proper management. No inference of inefficient management can be drawn from the mere fact that some motor carriers operate at a loss while other carriers operate at a profit. Some motor carriers give a complete service to shippers, carrying all classes of property, less than truckload and truckload,

from and to the small communities on the routes they serve as well as from and to their larger terminal points. Other carriers confine their operations to serving large communities. The load factors of some carriers are lower than the average because traffic does not move in so large a volume in the sections they serve as it does in others. There may be factors other than these which would contribute to unprofitable operations by efficiently managed carriers while other carriers operate at a profit on the same general level of rates. Our task under section 216 (i) of the Interstate Commerce Act is to prescribe just and reasonable rates and charges for the transportation of property by motor common carriers giving "due consideration, among other factors, to the inherent advantages of transportation by such carriers; to the effect of rates upon the movement of traffic by the carrier or carriers for which the rates are prescribed; to the need, in the public interest, of adequate and efficient transportation service by such carriers at the lowest cost consistent with the furnishing of such service; and to the need of revenues sufficient to enable such carriers, under honest, economical, and efficient management, to provide such service."

Petitioners ask us to take some action to increase the motor carriers' present revenues. They ask that this be effected by increasing some of their less-than-truckload class rates, and have presented to us not a comprehensive, integrated adjustment, but a plan under which the inconsistencies in the present class rates, referred to in the original report herein, would be accentuated.

If, as contended by petitioners, additional revenue is necessary to insure conditions of reasonable financial stability for the New England carriers, petitioners have not shown that this should be accomplished by an increase in some of the less-than-truckload class rates. It was pointed out in the original report that there were numerous commodity rates in the territory which were established at the level of the rail rates to meet rail competition. We also pointed out that subsequent to the establishment of these commodity rates the competitive rail rates were increased under authority of the general increase proceeding of 1937-38, and we recommended to respondents that they reexamine immediately their commodity rates and increase those originally established to meet rail competition which were then below the level of their competitors. In some instances this has been done, but in general there has been little change upwards in the commodity-rate structure. Special circumstances justify the maintenance of commodity rates lower than the class-rate basis on much of the traffic transported by the New England motor carriers. The system of class rates of motor common carriers in New England is based primarily on what they believed were their

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