The number of special applications received was 299, a decrease of 225 as compared with the preceding year. During the same period 713 fourth section orders were entered, of which 551 were permanent in character and 162 for temporary relief. Of the 713 orders, 452 were entered in response to applications included among the original 5,030 for authority to continue then existing fourth section departures, while 261 were entered in response to the special applications. Applications withdrawn after correspondence with carriers number 21. This is a decrease of 27 applications as compared with the number disposed of during the preceding year. Orders issued granting relief in whole or in part total 283; orders denying relief, 430.

RATE SCHEDULES.

Tariff publications numbering 166,810 and containing freight and express rates, passenger fares, and classification ratings were received. These figures would indicate an increase in the number of rate changes established during this period as compared with the previous year. The figures stated include more than 35,000 schedules naming proposed increases in rates which were suspended and also a like number of suspension supplements, none of which resulted in the establishment of rates, so that, in fact, the number of rates becoming effective during the period named did not exceed that of previous years.

During this period 2,196 schedules that were tendered for filing were rejected.

Reference by shippers and the public in general to our tariff files has increased to such extent as to seriously interfere with the regular work of the bureau of tariffs, and to meet this situation a duplicate tariff file has been established and equipped for the use of the public.

APPLICATIONS TO INCREASE RATES.

Since the amendment of August 9, 1917, carriers have filed 1,400 applications for authority to file tariffs making increases in rates. Prior to November 1, 1917, 59 applications were approved and 4 denied. The approved applications were for the most part for the purpose of correcting errors in tariffs. It required some time to perfect an organization for the handling of matters arising under this amendment, and this accounts for the small number of applications passed upon. Daily conferences have been held with shippers and carriers since the change in the act concerning such applications and the procedure necessary to acquaint the public with the contents thereof.

CLASSIFICATION OF FREIGHT.

During the year the southern classification committee has been reorganized along the lines previously adopted by the official and western classification committees, and it now consists of a permanent committee of three, which will sit in practically continuous session

dealing with classification matters. The plan of organization, like that in official classification territory, does not vest this committee with final authority; its recommendations must be submitted for approval to the roads represented by the committee. In this respect it differs from the authority conferred upon the western classification committee. The three territorial committees, as well as the uniform classification committee, are now in practically continuous session, which should insure more prompt hearing and disposition of classification matters.

Some progress has been made in the direction of uniformity in the three classifications, although, as heretofore, it has been slow. Including about 830 items which are in accordance with the recommendations of the uniform classification committee, except that no carload rating is assigned, the southern classification committee has accepted about 72 per cent of the uniform classification committee's recommendations, and the southern classification is now about 73 per cent uniform. This is lower than the percentage of uniformity in the western and official classifications.

The western classification committee has accepted without change 91 per cent of the recommendations reported by the uniform committee, and 87 per cent of the current western classification is in accordance with uniform recommendations.

The official classification committee has accepted about 87 per cent of the recommendations of the uniform classification committee and the official classification is uniform to the extent of 81.81 per cent. It has refrained from adopting 363 specific carload mixtures recommended by the uniform classification committee because the official classification carries, and for a long time has carried, a general rule authorizing shipment in mixed carload lots of all commodities which are accorded carload ratings, subject to the rating and minimum weight applicable to the highest rated commodity in the mixture.

Early in the present year the uniform classification committee, which was organized about 10 years ago and which previously consisted of nine members, three from each classification territory, was reduced to one representative from each classification territory and a chairman. We are assured by the carriers' representative that this reduction in the membership of this committee is not indicative of indifference on part of the carriers with respect to uniformity in classification, but is in line with the reorganization of the several territorial classification committees. Increased activity in the direction of uniformity is promised as a result of these changes. The work performed by the uniform classification committee has been carefully done. We recently called upon the carriers for a statement of the status of the work and invited a conference to consider that statement. At that conference the committees were brought into agreement as to many items upon which there had been differences, and as to a limited number of those questions formal hearing and

decision by the Commission apparently will be necessary. Further conferences of the same nature will be called if and when it appears necessary or desirable. We have requested the territorial classification committees to notify us when for any reason they can not in the future accept the recommendations of the uniform classification committee. Important items which are awaiting action by the uniform classification committee are household goods, live stock, returned containers, chairs, and furniture parts. A number of miscellaneous items have not yet been dealt with.

The uniform classification committee a long time ago referred to the executive committee to which it reports the question of a uniform rule throughout the three territories in the matter of minimum weights, upon which, so far as we are advised, the executive committee has not acted.

The following table, made up from figures submitted from time to time by the classification committees, shows the extent to which recommendations of the uniform classification committee have been carried into the territorial classifications:

Total items in uniform Report 4 and Supplement 1 as reported by each committee. (Discrepancies in totals are due to different methods of counting). 67, 666 100.00 7,386 100.00 October, 1917..

187.00

773.00

8 81.81

1 Represents uniform items accepted without change.

2 Includes uniform items whether modified or not.

3 Includes all uniform items accepted whether changed or not. Compare this with December, 1916, percentages of 57.85, which is exclusive of modified items, and 72.59, which includes items accepted with and without changes.

The total of this group is 700 items, as there are duplications account of some items containing changes of two kinds.

5 This figure was increased to 90.36 per cent by a new classification issued in December, 1916, to take effect Feb. 1, 1917.

6 Western committee included 66 eliminations in its count of uniform items.

7 Includes 830 items with carload rating not assigned; excluding these the percentage would be 63.76. 8 Includes 363 specific carload mixtures not published on account of Rule 10; excluding these the percentage would be 77.48.

EXPRESS COMPANIES.

The block system of stating express rates, which has proven to be generally satisfactory, has, during the year, been adopted for intrastate traffic in one additional state and is now effective in 43 states and parts of Canada. Negotiations are in progress looking to its adoption in the remaining states.

The system is not so readily adaptable in stating commodity rates. After numerous conferences the express companies recently submitted for approval modified schedules of rates for the transportation of fruits and vegetables produced in 10 of the southern states. The schedules would be applicable from all express offices in the territory of production to all express offices in 38 states which may be described as east of Rocky Mountain territory. The uniform application of these rates at all points of origin and destination would remove any discrimination that may exist. The present schedules generally favor large centers or distributing points, whereas the proposed schedules would provide a uniform basis of rates at all places, thereby facilitating direct movement from point of origin to point of consumption without the intervention of a distributor.

The method employed in stating the rates follows the plan prescribed by us for stating class rates, is simplified, and the rates may easily be ascertained. A further advantage would flow from the fact that some 20 tariffs would be replaced by 1 tariff. The proposal is under consideration.

Numerous informal complaints of delays in transportation or delivery, especially of articles of food, have been received. Copies of the complaints are forwarded to the carriers, and they have shown a cordial disposition to guard against and avoid the delays complained of where possible to do so under the present abnormal transportation conditions. Sometimes foodstuffs are entirely lost because of delays which might have been prevented, and it is confidently hoped that extraordinary efforts will be put forth to avoid such losses to the shippers, the carriers, and the country.

CONFLICT OF FEDERAL AND STATE RATES.

In 1914 this Commission established throughout the United States a uniform zone and block system of interstate express rates. Forty states adopted the system for intrastate express transportation, but South Dakota adhered to a schedule of maximum express charges, known as distance rates, promulgated by its railroad commissioners in 1911, which, on weighted average, is about 40 per cent lower than the zone and block system. Shippers at Sioux City, Iowa, complained that the difference between these interstate and intrastate rates resulted in undue and unreasonable prejudice and disadvantage

to Sioux City. In May, 1916, this Commission, after hearing upon this complaint, found that the lower state-made rates did create undue prejudice and disadvantage to the merchants and shippers of Sioux City, Iowa, and gave unlawful preference and advantage to Sioux Falls and five other South Dakota cities. An order was entered, effective, as extended, September 15, 1916, requiring the interstate carriers, American Express Company and Wells Fargo & Company, to cease and desist from applying rates which created the unlawful preference stated. The express companies prepared and filed with the Commission tariffs raising the intrastate rates to the level of the interstate rates, effective September 15, 1916, to comply with said order.

The Brown Drug Company and others, of Sioux Falls, and the other five South Dakota cities commenced a suit against the United States, in which this Commission intervened as defendant, in the District Court of the United States for the Northern District of Iowa, to enjoin and set aside said order. Arguments were had before the court upon an application for a preliminary injunction, and the court denied the injunction. Thereupon the state of South Dakota, by its attorney general and railroad commission, filed a bill in the supreme court of the state of South Dakota to enjoin the American Express Company and Wells Fargo & Company from putting the higher intrastate rates into effect within the state. The controversy centered around the question whether the state court had jurisdiction to enjoin the carriers from obeying the order of this Commission. The state court took jurisdiction and held that the order of this Commission was an unlawful interference with the state's power to fix intrastate rates, and issued an injunction against the express companies enjoining them from putting in or collecting intrastate rates that were higher than those fixed by the state com mission. In its opinion the supreme court of South Dakota said:

If the purported order of the Commission does, in any respect, regulate intrastate commerce, it is to that extent void owing to the Commission's want of jurisdiction over the subject matter.

Unreasonable rates being the cause and unjust discrimination the effect, the authority to remove unjust discrimination is to be measured by the authority to prescribe reasonable rates. Every appeal to a commission seeking determination is, in effect, a prayer for the establishment of reasonable rates. Such an appeal can not be effective unless made to those having authority to prescribe rates.

The court held that Congress had no power to prescribe intrastate rates and therefore the order of this Commission was unauthorized and void.

The case was taken on writ of error to the Supreme Court of the United States. The Commission, by leave of the court, filed a brief,