in officers' salaries in reviewing respondents' net operating incomes. From 1938 to 1942, the wages and salaries of employees, excluding general officers, of all class I motor common carriers in New England increased from an average of $1,477 in 1938 to $2,081 in 1942. From 1938 to 1942, the average compensation of general officers almost doubled. In 1938, the average was $5,581, and, in 1942, it was $10,529. In 1938, the compensation of employees, excluding general officers, was 36.6 percent of the carriers' gross revenues and 36.6 percent of their total expenses. In 1942, the compensation of the same classes of employee was 43.9 percent of the carriers' gross revenues and 46.7 percent of their total expenses. The salaries of general officers of the companies were 3.6 percent of their total expenses in 1938 and 4.9 percent in 1942. The officers' salaries of 76 class I New England carriers were $235,500 more in 1942 than in 1941, an increase of 17.6 percent. Had these increases in salaries not been made, the net operating income of the 76 carriers in the first quarter of 1943 would have been increased from 4.2 to 4.9 percent of their gross revenues. It is well established that the stock of many motor-carrier corporations is closely held by the officers of the corporations and their families. It is possible, as the protestants seem to believe, that the salaries of some of the officers of the respondent corporations, and the salaries paid by carriers not corporations to officers who are owners or part owners may exceed a reasonable amount. The percentage by which the officers' salaries in 1942 exceeded those in 1941 of 17.6 percent is the same as that by which the direct labor cost per vehicle-mile during the first quarter of 1943 exceeded that in the first quarter of 1942. We do not consider that an examination of the possibility that some officers are receiving exorbitant salaries is necessary before a decision can be made in the instant proceeding.

It is the opinion of the Secretary of Agriculture and the War Food Administrator that only a small part of respondents' traffic consists of agricultural products and respondents would not suffer if their rates on agricultural products were exempted from any general increase which might be justified. Motor carriers transport a substantial quantity of agricultural commodities in the area, but the amounts transported by respondents, by motor contract carriers, and by motor carriers whose rates are not subject to regulation by us are not known. Nor do we know the proportions of respondents' traffic in agricultural commodities which are transported by class I, class II, and class III carriers.

The Secretary of Agriculture and the War Food Administrator believe that the class II and class III respondents participate to a greater extent in the transportation of agricultural commodities than the class

Sometime after June 6, 1940, the receiver, pursuant to leave granted by order of the bankruptcy court on that date, destroyed practically all of Topsfields's books and records. The sole documentary evidence remaining comprises the following: (1) Tabulated shipments for the period June 6. 1934 to June 3, 1936, filed with the application, (2) tabulated shipments for the period July 13 to December 30, 1938, based on manifests made available at the hearing for protestants' inspection, and (3) abstracts of shipments for the period July 18, 1939 to June 17, 1941. based on Shawmut's bills of lading also available at the hearing for protestants' inspection. The tabulated shipments covering the first period, which were made a part of the record, were based on original shipping papers heretofore examined by one of the supervisors of the Bureau of Motor Carriers in connection with informal proceedings, but since destroyed by the receiver. In the circumstances, consideration will be given to the tabulated shipments covering the first as well as the other two periods.

Philadelphia operations.-Applicant claims 2 routes, 1 in each direction between New York City and Philadelphia, with service at all intermediate and at certain off-route points more specifically described in appendix B. The documentary evidence discloses that operations over these routes to and from Philadelphia were rather limited and infrequent. The commodities transported need not be set forth in view of the conclusions reached herein. Prior to the statutory date, 10 shipments are shown south-bound to Philadelphia, namely, 5 from Boston, Mass., 2 from Peabody, Mass., and one each from Lowell, Chelsea, and Malden, Mass. Eleven shipments are shown north-bound from Philadelphia, 9 of which are destined to Boston and 2 to Everett, Mass. A single shipment is shown from Chester, Pa., to Boston. The documentary evidence discloses no shipments whatsoever to or from Philadelphia between June 1, 1935, and July 18, 1939, at which time Shawmut assumed the operation. Eleven shipments are shown between Philadelphia and Boston during 1939 for the period subsequent to July 18 of that year. No shipments whatsoever are shown northbound from Philadelphia during 1940, and only 8 shipments are disclosed south-bound for that year to Philadelphia, all from Boston. During 1941, a dozen shipments are shown between Philadelphia and Boston and a few scattered shipments are shown north-bound from Philadelphia to points near Boston and to Providence, R. I. No substantial service has been shown at any intermediate or off-route points in connection with the above routes beyond the scope of the authority which applicant now holds.

Four witnesses testified with reference to the Philadelphia operation. Topsfield never owned or operated a terminal at Philadelphia. There were only occasional shipments to Philadelphia subsequent to

the statutory date, and many of these were interchanged at Newark and delivered by a connecting carrier to Philadelphia. Topsfield rarely obtained return movements from Philadelphia. One witness appearing in applicant's behalf could not remember any shipments transported by Topsfield to or from Philadelphia between October 1938 and February 1939, at which time he left Topsfield's employment. Two former employees and officers of Topsfield since employed by protestant, M. & M. Transportation Co., could recall no shipments transported directly by applicant to or from Philadelphia for a period of 18 months or longer preceding the appointment of the receiver May 3, 1939.

Before we may grant a certificate under the "grandfather" clause of the act to applicant, we are directed to find as a condition precedent that it and its predecessor have been in bona fide operation on and continuously since the statutory date. While applicant has shown an operation by its predecessor, Topsfield, to and from Philadelphia on and prior to the statutory date, nevertheless, it has failed to establish that this operation has been continuous and substantial. The documentary evidence discloses no shipments to or from Philadelphia between June 1, 1935, and May 3, 1939, despite the fact that representative tabulated shipments covering more than a year of operation during this period were presented. As stated, the oral testimony indicates that shipments during this same period were occasional in character, and that in many instances they were interchanged by Topsfield at Newark and transported by a connecting carrier to or from Philadelphia. It is well settled that "grandfather" rights do not accrue to an applicant on the basis of the operations of a connecting carrier. Furthermore, uncontroverted testimony of record discloses an extended lapse in service to or from Philadelphia prior to the appointment of the receiver, and this interruption of service has not been shown to have been beyond the control of the applicant. Such a substantial interruption of service prior to May 12, 1939, is in itself fatal to applicant's "grandfather" claim to the Philadelphia operation. Even assuming that no such cessation occurred, the service since the statutory date to or from Philadelphia still has been plainly occasional, sporadic, and infrequent. Considering the size and commercial importance of Philadelphia and the well-known fact that traffic of great volume and diversity is regularly made available to and from that city, the showing made is clearly insufficient to establish that a substantial operation has been conducted to and from Philadelphia or any nearby points on and continuously since the statutory date. In the circumstances, this phase of the application must necessarily be denied.

Sometime after June 6, 1940, the receiver, pursuant to leave granted by order of the bankruptcy court on that date, destroyed practically all of Topsfields's books and records. The sole documentary evidence remaining comprises the following: (1) Tabulated shipments for the period June 6, 1934 to June 3, 1936, filed with the application, (2) tabulated shipments for the period July 13 to December 30, 1938, based on manifests made available at the hearing for protestants' inspection, and (3) abstracts of shipments for the period July 18, 1939 to June 17, 1941, based on Shawmut's bills of lading also available at the hearing for protestants' inspection. The tabulated shipments covering the first period, which were made a part of the record, were based on original shipping papers heretofore examined by one of the supervisors of the Bureau of Motor Carriers in connection with informal proceedings, but since destroyed by the receiver. In the circumstances, consideration will be given to the tabulated shipments covering the first as well as the other two periods.

Philadelphia operations.-Applicant claims 2 routes, 1 in each direction between New York City and Philadelphia, with service at all intermediate and at certain off-route points more specifically described in appendix B. The documentary evidence discloses that operations over these routes to and from Philadelphia were rather limited and infrequent. The commodities transported need not be set forth in view of the conclusions reached herein. Prior to the statutory date, 10 shipments are shown south-bound to Philadelphia, namely, 5 from Boston, Mass., 2 from Peabody, Mass., and one each from Lowell, Chelsea, and Malden, Mass. Eleven shipments are shown north-bound from Philadelphia, 9 of which are destined to Boston and 2 to Everett, Mass. A single shipment is shown from Chester, Pa., to Boston. The documentary evidence discloses no shipments whatsoever to or from Philadelphia between June 1, 1935, and July 18, 1939, at which time Shawmut assumed the operation. Eleven shipments are shown between Philadelphia and Boston during 1939 for the period subsequent to July 18 of that year. No shipments whatsoever are shown northbound from Philadelphia during 1940, and only 8 shipments are disclosed south-bound for that year to Philadelphia, all from Boston. During 1941, a dozen shipments are shown between Philadelphia and Boston and a few scattered shipments are shown north-bound from Philadelphia to points near Boston and to Providence, R. I. No substantial service has been shown at any intermediate or off-route points in connection with the above routes beyond the scope of the authority which applicant now holds.

Four witnesses testified with reference to the Philadelphia operation. Topsfield never owned or operated a terminal at Philadelphia. There were only occasional shipments to Philadelphia subsequent to

the statutory date, and many of these were interchanged at Newark and delivered by a connecting carrier to Philadelphia. Topsfield rarely obtained return movements from Philadelphia. One witness appearing in applicant's behalf could not remember any shipments transported by Topsfield to or from Philadelphia between October 1938 and February 1939, at which time he left Topsfield's employTwo former employees and officers of Topsfield since employed by protestant, M. & M. Transportation Co., could recall no shipments transported directly by applicant to or from Philadelphia for a period of 18 months or longer preceding the appointment of the receiver May 3, 1939.

Before we may grant a certificate under the "grandfather" clause of the act to applicant, we are directed to find as a condition precedent that it and its predecessor have been in bona fide operation on and continuously since the statutory date. While applicant has shown an operation by its predecessor, Topsfield, to and from Philadelphia on and prior to the statutory date, nevertheless, it has failed. to establish that this operation has been continuous and substantial. The documentary evidence discloses no shipments to or from Philadelphia between June 1, 1935, and May 3, 1939, despite the fact that representative tabulated shipments covering more than a year of operation during this period were presented. As stated, the oral testimony indicates that shipments during this same period were occasional in character, and that in many instances they were interchanged by Topsfield at Newark and transported by a connecting carrier to or from Philadelphia. It is well settled that "grandfather" rights do not accrue to an applicant on the basis of the operations of a connecting carrier. Furthermore, uncontroverted testimony of record discloses an extended lapse in service to or from Philadelphia prior to the appointment of the receiver, and this interruption of service has not been shown to have been beyond the control of the applicant. Such a substantial interruption of service prior to May 12, 1939, is in itself fatal to applicant's "grandfather" claim to the Philadelphia operation. Even assuming that no such cessation occurred, the service since the statutory date to or from Philadelphia still has been plainly occasional, sporadic, and infrequent. Considering the size and commercial importance of Philadelphia and the well-known fact that traffic of great volume and diversity is regularly made available to and from that city, the showing made is clearly insufficient to establish that a substantial operation has been conducted to and from Philadelphia or any nearby points on and continuously since the statutory date. In the circumstances, this phase of the application must necessarily be denied.