ordinated service; but that, if we sustain the action of division 5 in granting the applications, the conditions imposed should all be retained.

Our action here is governed by the provisions of section 207 (a) of part II of the Interstate Commerce Act, which provides that a certificate shall be issued to any qualified applicant if it is found, among other things, that the proposed service is or will be required by the present or future public convenience and necessity. This, therefore, is the primary question to be determined.

Except for the representative of the Brotherhood of Railroad Trainmen, no one at the oral argument questioned the finding in the prior reports that public convenience and necessity, in the circumstances disclosed of record, require a coordinated rail-motor service in the movement of less-than-carload traffic, and his expression of opinion to the contrary has no support in the evidence. We are persuaded that the finding of division 5 in this respect was justified, and also its further finding, upon the records in those cases, that the motor portion of such coordinated service could most efficiently and effectively be supplied either by the rail carriers themselves or by motor carriers under their control rather than by existing independent motor carriers. As stated, the representatives of the latter urge that, if the railroads would cooperate with them, the desired coordinated service could be adequately provided by the use of existing facilities and without the grant of any new operating authority. This contention was sufficiently discussed by division 5 in the prior reports. As pointed out in the leading case, 10 M. C. C. 221, we are without jurisdiction to compel coordinated service between carriers by rail and carriers by motor vehicle; it could only be accomplished through the medium of through routes and joint rates; we have no power to require their establishment, and accordingly any such plan of coordination must depend upon voluntary cooperation; and the protesting motor carriers had not developed any such plan nor indicated what general form it might take. It was found that coordinated service through the voluntary cooperation of all or some of the existing motor carriers would not be practicable, for reasons amply stated, and that the useful public purpose which the proposed operations of applicant would serve could not be achieved effectively through the use of existing facilities. It was further found, and properly we think, that the development of the coordinated service would not seriously endanger the operations of existing motor carriers, but that, in any event, the public ought not to be deprived of the benefit of an improved service merely because it might divert some traffic from other carriers, pointing out that had that principle been followed no motor-carrier service could have been developed.

The traffic under consideration, which is chiefly so-called package or merchandise freight in less-than-carload quantities, is, of course, traffic which the railroads are and have been under an obligation to transport and which they will continue to transport whether we grant or deny the applications. So far as such traffic can be moved in well-loaded cars on through trains which serve only the larger points, it can be handled efficiently by rail, and the railroads have no need to substitute truck service for such rail service. The wayfreight train service which is used in serving the smaller stations is, however, uneconomical and inefficient, and trucks can be used in substitution therefor to much advantage both to the railroads and to the public served. Division 5 found in 10 M. C. C. 221, and we agree, that reduction in the cost and increase in the efficiency of transportation service inure to the benefit of the general public and are required by public convenience and necessity. Texas v. United States, 292 U. S. 522, and New York Central Securities Corp. v. United States, 287 U. S. 12.

The division at page 238 went on to say this:

However, while it has been shown that public convenience and necessity require the establishment of a service by applicant which will be coordinated with that of the railway, the record is devoid of proof that there is any need for the institution of service by applicant which is not required in such coordinated operations. In other words, there are plenty of motor carriers in this territory and it has not been shown that there is any need whatever for another motor carrier to furnish service such as the existing carriers furnish and having no close relation to rail operations. It follows that the certificate to be granted to applicant should be limited accordingly. Following out this line of thought, it stated the underlying reason for condition 3, at page 239, as follows:

Applicant's evidence, as well as that of the shippers who appeared, as to the need for improved service between the stations on the lines of the two rail carriers, relates almost entirely to the movement of shipments partly by rail and partly by motor vehicle. With the possible exception of some small stations, it is clear that the present facilities for the movement of freight wholly by motor vehicle between stations on the two rail carriers' lines are adequate. Consequently, we are of the opinion that applicant should be limited to the transportation of shipments which it receives from or delivers to either one of the two rail carriers under a through bill of lading covering, in addition to movement by applicant, a prior or subsequent movement by rail. Applicants now point out that condition 3 prevents the full accomplishment of the purpose which the substituted truck service is intended to serve, because the terms of that condition make it necessary to continue to maintain way-freight train service for the handling of traffic between various stations. Under condition 3, truck service may be used between such stations in connection with a prior or

subsequent movement by rail, but not otherwise, notwithstanding that the truck service could readily accommodate all the traffic. Manifestly, this seriously limits the benefits in economy and efficiency of service which the substitution of trucks is intended to produce. As the above quotations indicate, the thought of division 5 in regard to this matter was that public convenience and necessity required a coordinated rail-and-truck service, which, upon the records of the cases before it, could only be furnished efficiently and effectively by conducting the two forms of transportation under a single control, but that there was adequate independent motor-carrier service between all stations, generally speaking, so that public convenience and necessity did not require the institution between the stations of new motor-carrier service under railroad control which is not coordinated with prior or subsequent rail service. Hence condition 3. Upon further consideration, we are of the opinion that the division. gave insufficient weight to the fact that the railroad, as well as the independent motor carriers, has been and is furnishing service between the stations, but that between many of them the present means of railroad service, the way-freight train, is uneconomical and inefficient. This is the reason for coordinating truck service with the rail service, and, as we have found (and as division 5 also found), public convenience and necessity require the increased economy and efficiency which will result from such substituted use of trucks. By the same reasoning, however, public convenience and necessity require the substitution of trucks for way-freight train service regardless of whether there is a prior or subsequent movement by rail. Such substitution is a part of the plan of coordination, and unless it can be accomplished, the full benefits in increased economy and efficiency which the public interest demands cannot be secured.

It must be borne in mind, as above indicated, that in all of these cases the railroad has been and is transporting the traffic in question between its stations and is under obligation to continue to do so. What it is seeking is not to enter a new field of service but to substitute a more efficient for a less efficient means of service. In both its direct and its indirect effect such substitution is in the public interest. An illustration which will come readily to mind is the widespread substitution in recent years of busses for rail service by local transit companies. One competitive carrier has no vested right in the continuation by another of an inefficient method of operation, and we believe it to be neither the policy of Congress nor the proper function of this Commission to retard any form of progress in transportation which will serve the public interest.

It does not follow, however, that public convenience and necessity require in these cases a grant of operating authority to provide motor

carrier service between all the stations. There are certain larger points on the lines of the respective railroads here involved between which through freight trains are operated. Such trains include package or merchandise cars which are set out at the principal points, commonly referred to as key or break-bulk points. These cars contain merchandise destined, not only to the key points, but to way stations located between such points as well. The distribution of the waystation freight is effected by means of local way-freight trains. As previously stated, applicants desire, at least so far as the package or merchandise traffic is concerned, to discontinue the latter service and substitute in lieu thereof truck service.

Applicants admit that rail service by through trains is economical and efficient for these longer hauls and that the operation of through package or merchandise cars transporting less-than-carload freight between key points will be maintained. In the circumstances, there is no need of substituting truck service, and public convenience and necessity do not require the establishment between such points of truck service under railroad control. An appropriate condition will therefore be imposed prohibiting the transportation of shipments by motor vehicle between key points. It is noted that in some instances through train service is maintained between key points, whereas in others such service is maintained in only one direction, or the key points served in one direction may differ from those served in the opposite direction. Our findings will take account of such circumstances. While the restriction will prohibit applicants from transporting shipments as a common carrier by motor vehicle between key points, it will not prevent such transportation between points intermediate to the key points which does not involve movement between key points, or between a key point and an intermediate point.

Some difficulties have been encountered, however, in determining which points are actually the key points in all instances in view of the limited record with respect thereto. We recognize also that these points may change from time to time. Consequently, applicants may file appropriate petitions requesting us to amend the order herein so as to reflect any changes in the location of such points. Our attention may also be directed to any key points which may have been omitted. In the event any present modification is required in the designation of the key points, it should be brought to our attention by appropriate petitions filed within 30 days after the service of this report. We should also be advised by appropriate petitions of any changes in key points which may occur in the future. Such petitions should set forth fully the facts relative to the necessity for any such change.

No. MC-89811.-We now come to the application of the Louisville and Nashville Railroad Company. As previously stated, exceptions were filed by this applicant to the recommended order of the joint board denying the application, and upon petition of the American Trucking Associations, Inc., the matter was reopened for oral argument before us along with the other applications herein considered.

This applicant, a corporation, with headquarters at Louisville, Ky., by application filed November 15, 1938, as amended, seeks a certificate of public convenience and necessity authorizing operation as a common carrier by motor vehicle, in interstate or foreign commerce, of general commodities, between Elizabethtown and Madisonville, Ky., and between Nashville, Tenn., and Hopkinsville, Ky., over the two routes shown in appendix A hereto, serving the termini and the intermediate and off-route points therein shown, all of which are stations on its rail lines. A number of motor carriers and motor-carrier associations oppose the application. The Railway Labor Executives' Association, the Birmingham, Ala., Traffic Association, and the Louisville Board of Trade intervened.

Applicant proposes to establish truck service between the stations specified as a substitute for less-than-carload rail service. Less-thancarload shipments destined to the points involved will be consolidated at such principal shipping points as St. Louis, Mo., East St. Louis, Ill., Evansville, Ind., Cincinnati, Ohio, and Louisville, Ky., and then be moved in carload lots to convenient key points on the proposed routes, such as Elizabethtown, Bowling Green, Hopkinsville, Guthrie, and Madisonville, Ky., at which points they will be transferred to motortrucks for delivery to rail stations at destinations Conversely, freight is to be collected at applicant's various stations and transported by truck to the key points, where it will be consolidated and forwarded by rail.

If a certificate is granted, applicant will conduct its operations with leased equipment. Under date of January 26, 1939, it entered into an agreement with the Railway Express Agency, Incorporated, whereby the latter will furnish it with all the vehicles that may be required. As compensation for use thereof applicant will pay 14.35 cents per truck-mile operated over route 1, and 12.5 cents per truck-mile operated over route 2. The plan contemplates the use initially of two trucks on route 1 able to carry from 4 to 5 tons each and of one truck on route 2 able to carry from 3 to 4 tons. Truck service will be rendered daily except Sunday, on regular schedules in both directions, over both routes. All traffic will be loaded and unloaded at applicant's depots, and drivers will be furnished with keys to the depots which may not be open at the times specified for the pick-up and delivery of the freight.