pension were entered. We shall expect the respondents promptly to restore the rates which they changed during the pendency of these proceedings.

We find that the proposed rule providing for minimum weights on shipments at two-factor rates, and the proposed cancelation of the exception rating on net cotton bags will be just and reasonable. We further find that all other proposed schedules considered in these proceedings have not been shown to be just and reasonable.

An order will be entered requiring the respondents to cancel the schedules found unlawful, and discontinuing the proceedings.

1 Based on loads of 20,000 pounds.

Lower class rates are published, but lowest rating maintained by respondents is class 20. 'Lowest two-factor rate proposed.

43 M. C. C.

1 Data compiled from exhibits of record. Based on minimum weight.

43 M. C. C.

INVESTIGATION AND SUSPENSION DOCKET No. M-2333
INCREASED RATES, HAYES FREIGHT LINES

Submitted December 16, 1934. Decided February 24, 1944

Proposal of respondent motor common carrier to increase its local class rates on shipments weighing less than 10,000 pounds and to cancel certain joint class rates, resulting in the application of combination rates, found unjust and unreasonable. Suspended schedules ordered canceled, and proceeding discontinued without prejudice to the filing of new schedules in conformity with the findings.

J. R. Turney and David Axelrod for respondent.

Carl Giessow, James P. Haynes, R. A. Ellison, Leslie Lacroix, J. N. Strickler, and H. R. Fritz for protestants.

G. W. Orewiler, William R. Noorlag, Jr., and T. W. Mackey for others.

REPORT OF THE COMMISSION

DIVISION 3, COMMISSIONERS MILLER, PATTERSON, AND JOHNSON BY DIVISION 3:

By schedules filed to become effective on November 23, 1943, and to expire June 30, 1944, respondent, Hayes Freight Lines, Inc., proposed to increase its local class rates applicable between points in central territory on shipments weighing less than 10,000 pounds, and to cancel its participation in joint class rates applicable in central territory on shipmets weighing less than 10,000 pounds in instances where it serves both the points of origin and destination, resulting in the application of combination rates on such traffic. Upon protest of certain shippers, shipper organizations, and a motor common carrier, the operation of the proposed schedules was suspended until June 26, 1944. Rates will be stated in amounts per 100 pounds.

At the hearing, appearances were entered and evidence was introduced by the respondent, the St. Louis Chamber of Commerce on behalf of its shipper members, the Cincinnati Chamber of Commerce, the Louisville Board of Trade, the Evansville Chamber of Commerce, Sears, Roebuck and Co., and Montgomery Ward & Co. These parties, other than the respondent, will be referred to as the protestants.

Appearances were entered for certain other parties who took no active part in the proceeding.

The respondent is a class I motor common carrier of property operating over a large number of regular routes principally between points in central and southern territories. It has 44 terminals and serves more than 1,500 points on its routes. It owns and operates approximately 600 tractors, 700 trailers, and 100 trucks, and in addition, utilizes leased vehicles when additional equipment is needed. In central territory, it conducts extensive interstate and intrastate operations in Illinois and Indiana, and interstate operations in Ohio. Six points in Iowa, along the Illinois boundary, and 1 point in Missouri, St. Louis, are served in interstate commerce only. In southern territory, interstate and intrastate operations are conducted in the central and western portions of Kentucky and in the western part of Tennessee. The respondent is a participant in the agency tariffs published by the Central States Motor Freight Bureau, Inc., hereinafter called the Bureau, which contain rates applicable within central territory. The suspended schedules were issued by the Bureau for the individual account of the respondent. The present rates of the respondent and other Bureau members are those prescribed as reasonable minima by division 5 in Central Territory Motor Carrier Rates, 8 M. C. C. 233, and subsequent reports, increased by 6 percent pursuant to the general increase of 1942. The respondent maintains no less-than- truckload commodity rates. By the suspended schedules, it would increase its local class rates between points in central territory on shipments weighing less than 10,000 pounds by approximately 20 percent. It is also proposed to cancel all joint class rates between points in central territory on shipments weighing less than 10,000 pounds originating at and consigned to points served by the respodent, resulting in the application of combination rates on such joint-line traffic. No increase in rates is proposed on shipments weighing 10,000 pounds or more between any points; in local or joint rates on shipments weighing less than 10,000 pounds between points in southern territory or between points in central territory, on the one hand, and southern territory, on the other; or in joint rates within central territory where the respondent does not serve both the origin and destination. If the suspended schedules became effective, the respondent's rates on the traffic here considered would be about 20 percent higher than the rates of competing Bureau carriers and 26 percent higher than the rail rates on similar traffic.

The service of the respondent is principally that of a so-called distribution carrier. Approximately 60 percent of its total volume of

traffic consists of less-than-truckload shipments weighing under 10,000 pounds and about 70 percent of its total revenue is derived from such shipments. The average weight of these shipments is 418 pounds, the average haul, 133 miles, and about 40 percent moves at the respondent's minimum charges. In its distribution service, the respondent transports small shipments from the points of origin to its nearest terminal where they are consolidated with other shipments for transportation in line-haul trucks to other terminals from which distribution is made in a so-called peddler operation. In a large system such as that of the respondent, four or more terminal handlings of shipments are frequently required before delivery to the consignee is effected.

The respondent's volume rates, in which no increase is here proposed, are subject to minimum weights of 12,000, 16,000 and 20,000 pounds. Most shipments weighing over 10,000 pounds move at rates subject to minima of 16,000 or 20,000 pounds. All shipments weighing 10,000 pounds or more are considered truckload shipments. During September 1943, the average weight of the respondent's truckload shipments was 19,778 pounds.

As of December 31, 1937, there was a deficit in the surplus account of the respondent of $39,064. During the period from December 31, 1937, to December 31, 1942, the deficit was eliminated, and a surplus of $213,370 was built up. Respondent's common stock has a par value of $5 a share. No preferred stock has been issued. The value of common stock outstanding on December 31, 1937, was $361,435 and on December 31, 1942, it was $449,670. During the 5-year period from December 31, 1937, to December 31, 1942, the book value of the respondent's tangible property, less approved depreciation, increased from $321,719 to $1,096,978. During 1938 it paid a total of $16,575 to its three general officers. In 1941 it had two general officers to whom it paid a combined compensation of $33,906. The number of general officers increased to six in 1942, and these six received a combined compensation of $50,061. Dividends of 6 percent on the par value of the stock were paid in 1939, 1941, and 1942. Although respondents capitalization increased only slightly over the 5-year period, its operations grew to the extent shown in the following table: