Final value reports have been issued in 715 cases, covering 79,314 miles of road, of which 423, covering 70,847 miles, were decided after hearings on protests of the tentative valuations. The remaining cases, 292 in number and representing 8,467 miles, were concluded and reported in default of protest within the statutory period of 30 days. The reports in 13 other cases, covering 4,516 miles, are in process of issue. Final valuations have therefore been reached in 735 cases, covering 83,830 miles, or 34.45 per cent of the total mileage. The work is far advanced, however, on other carriers and it is our hope to complete the issue of final reports in this fiscal year. In addition to the above progress, we have issued final valuation reports in 7 telegraph and telephone cases.

RECAPTURE PROCEEDINGS

Pending the Supreme Court's decision in the O'Fallon case, no recapture hearings have been conducted during the past year. That decision is expected before the end of the current fiscal year.

VALUATION ORDER NO. 3

As explained in earlier reports, this is one of our valuation orders issued in connection with the requirements of paragraph (f) of section 19a under the act, as follows:

Upon the completion of the valuation herein provided for the Commission shall thereafter in like manner keep itself informed of all extensions and improvements or other changes in the condition and value of the property of all common carriers, and shall ascertain the value thereof, and shall from time to time, revise and correct its valuations * * *

On June 12, 1928, Supplements Nos. 4 and 5 to Valuation Order No. 3 were issued. These supplements put into effect plans for bringing valuations to the new date, December 31, 1927, and require recording and reporting property changes under the provisions of the original order and in conformity with the detail requirements as set out in the supplements.

As a preliminary to bringing valuations to a new date the section engaged in Valuation Order No. 3 work has been enlarged. The present force assigned to the field work is about double the average number in such service during the year covered by our last report. Preliminary examinations for the purpose of ascertaining the general condition of the carriers' records have been made in the offices of 618 companies. General examinations have been completed on 470 operating systems whose mileage aggregates about 155,000 miles of road. These examinations cover an average period of 6.8 years subsequent to the various dates of valuation and represent about 1,054,000 mile-years. There still remains an average of approximately 1,486,400 mile-years.

General examinations are now in progress on 99 operating systems whose mileage aggregates about 88,000 miles of road. These examinations cover an average period of 8.7 years subsequent to the various dates of valuation which represents 696,000 mile-years. These examinations are considered to be approximately 60 per cent complete, an equivalent of 48,000 miles or 417,600 mile-years completed.

BRINGING VALUATIONS DOWN TO A LATER DATE

For the purpose of giving general notice to the carriers of the procedure to be followed in bringing the valuations heretofore established down to later dates, we have recently adopted and served upon 1,041 operating carriers, supplement 5 to Valuation Order No. 3, Valuation Order No. 25, and an outline of plan for bringing land valuations to December 31, 1927. Specific requests have been made upon 223 carriers for the engineering and accounting data called for by the orders. We expect in the near future to extend this notification to other carriers.

CLASS-RATE READJUSTMENTS

In our two last reports mention was made of the comprehensive investigations of class rates which have been in progress during the past few years in various parts of the country. Investigations of this character so far undertaken, either upon our own motion or as a result of formal complaints filed by shippers, embrace practically all of the all-rail class rates in the territory east of the Rocky Mountains as well as lake-and-rail rates between eastern States and the Middle West, and ocean-rail and rail-ocean-rail rates between trunk-line and New England territories and the South and Southwest.

Heretofore we have been able to do no more than report progress made in such investigations. We now report actual readjustment in a considerable part of the territory embraced by these investigations. Readjusted class rates, constructed in accordance with our findings in No. 13494, Southern Class Rate Investigation, 100 I. C. C. 513, 109 I. C. C. 300, 113 I. C. C. 200, and 128 I. C. C. 567, became effective January 15, 1928, on interstate traffic within southern territory and between southern and official territories. Pursuant to applications filed subsequent to that date by the carriers with the State authorities in the Southern States, a similar readjustment has been made effective on intrastate traffic in most of such States, resulting in a rate structure of far greater uniformity and simplicity than that theretofore existing.

Revised class rates and commodity rates on a number of important commodities, became effective within the Southwest and between the

Southwest and States east of the Rocky Mountains via all-rail routes July 14, 1928, as a result of our reports in Consolidated Southwestern Cases, 123 I. C. C. 203, 139, I. C. C. 535, 144 I. C. C. 630, 147 I. C. C. 165. Revised ocean-rail class and commodity rates between the middle Atlantic and New England States and the Southwest via routes through south Atlantic and Gulf ports were also prescribed in this proceeding, but upon petitions from interested shippers and ocean carriers the effective date of the findings with respect to such rates was indefinitely postponed pending further hearings. These hearings were completed October 16. Following the filing of briefs, a proposed report will be issued, after which interested parties will be allowed opportunity to file exceptions and make arguments before decision is made.

In addition to the commodities upon which the southwestern all-rail rates were revised on July 14, our decisions in the Southwestern Cases lay down general principles under which rates on most other articles, other than so-called basic commodities such as coal, grain, lumber, and petroleum, are to be revised. Further hearings are being conducted with respect to a number of details but the readjustment already accomplished represents a distinct improvement in the rate structure.

No. 15879, Eastern Class Rate Investigation, embraces all the interstate class rates within official territory. Hearings with respect to such rates have been completed, briefs have been filed, and the examiner's proposed report served upon the parties. A comprehensive traffic test for the purpose of indicating the revenue results of his recommendations is in process. Thereafter, following the filing of exceptions to the proposed report and argument, the proceeding will be taken up for disposition.

A similar proceeding, Western Trunk Line Class Rates, No. 17000, part 2, involves the class rates within western trunk-line territory, which roughly embraces the territory west of the Indiana-Illinois State line, north of Oklahoma and Arkansas and east of the Rocky Mountains, also between that territory and official and southern territories. The present status of this proceeding is described in the separate chapter of this report under the heading "Hoch-Smith Resolution."

We feel warranted in saying that while modifications of the readjustments of southern and southwestern rates which became effective during the year will in all probability be necessary in the light of actual experience, such readjustments represent the most important step yet accomplished in the direction of a more systematic rate structure.

COMPILATION AND ANNOTATION OF STATUTES

In our last report we pointed out that it was obviously not possible to prepare and transmit the manuscript requested by S. R. 334, adopted January 25 (calendar date, January 28), 1927, by the date specified, and that the labor and expense involved as to certain of the matters contemplated by the resolution probably would not be warranted by the result. By S. R. 17, adopted January 14, 1928, we were requested to prepare and transmit, "as soon as is practicable" and in lieu of the manscript requested by S. R. 334

* * * a manuscript, in form suitable to be printed, covering the text of those provisions of law which (1) are administered by the commission, (2) affect the commission's work, powers, or duties, and (3) the commission decides should be included so as to make available a comprehensive publication of the Federal laws relating to the regulation of carriers subject to the Interstate Commerce Act, suitably annotated as the commission deems to be of public interest and value with digests, following each section or paragraph, of pertinent decisions of the Federal courts and the commission, together with an index, the text of general rules and regulations, or appropriate reference thereto, promulgated by the commission under authority of any of said provisions of law, and such tables as may be necessary *

Except for the addition from time to time of raw material obtained from recent decisions, all of the work has reached the stage of preparing the annotations and editing and verifying copy. We have a large part of the manuscript in tentative final form, and anticipate that all will be transmitted within a few months.

The existing resolution provides that the manuscript shall be printed as transmitted as a Senate document, but makes no provision for the publication or distribution of sufficient copies for the use of the Federal judiciary, the Department of Justice, the commission, and other interested governmental departments and agencies. We suggest the desirability of making adequate provision to supply the needs of those departments and tribunals, and to meet their certain demand for copies.

CONSOLIDATION OF RAILROADS

In our report of 1925 we called attention to a letter addressed to the chairman of the Senate Committee on Interstate Commerce, dated February 4, 1925, to which was attached a proposed amendment to section 5 of the interstate commerce act. One of the principal things to be accomplished by the proposed amendment was to relieve the commission from its present duty of adopting a complete plan of consolidation, which was deemed desirable by a majority of the commission as then constituted.

These proposed amendments were again called to the attention of Congress in our report of 1926. It was stated that the need for

amendment had been developed in hearings before the appropriate committees of both Houses of Congress, and that pending action thereon, we had deferred adoption and publication of a complete plan.

In our last report we renewed our suggestion of needed legislation. We made known that in the meantime the process of unification through acquisition of control by carriers of other carriers under paragraph (2) of section 5 was being continued. This process of unification has continued during the past year as described elsewhere in this report.

COOPERATION OF FEDERAL AND STATE COMMISSIONS

Since our last report the proceedings involving interstate-intrastate rate relationships in which there has been cooperation between this commission and the several State commissions numbered 28, the same number as reported in our last report. Of these, 20 were complaints filed with us in respect of rates in effect and 8 were investigation and suspension proceedings arising out of orders issued by us and by State commissions suspending the effective dates of rates proposed by carriers. A check of our records discloses that 15 State commissions have cooperated with us in these cases, 6 of which have cooperated in more than one case. In addition there has been continued active cooperation in the various inquiries conducted under No. 17000, Rate Structure Investigation. State commissions have also cooperated in 38 cases involving the construction of new or the abandonment of old railroad lines. No occasion has arisen for cooperative action in car-service cases during this period.

EFFICIENCY RATINGS

In our thirty-ninth annual report, 1925, we commented upon this subject as follows:

In compliance with the directions contained in section 9 of the classification act of 1923, the employees of this commission have twice been rated under the system devised by the Bureau of Efficiency. The results have been unsatisfactory and we respectfully request that all persons in our organization be exempted from these requirements.

At the outset we desire to state that our recommendation should not be construed as a criticism of the Bureau of Efficiency and others charged with the administration of these matters. On the contrary, we wish to state expressly that they have cooperated with us to the fullest extent possible and have done everything within their power to make the new requirements a

success.

Our present organization has been built up through many years. We believe that from the standpoint of ability to do the work, enthusiasm and devotion to duty, and from any other standpoint, our organization compares favorably with any other organization in the country, public or private. A splendid spirit has prevailed among its members. They appreciate the importance of the 14548-28-5