(34) In 1937, reductions in import sugar rates down to 341⁄2 cents per hundred, New Orleans, to Dallas, so as to put the ports of Houston and New Orleans on a parity, were prevented.

(35) In 1937, 30-percent reductions in rates on pulpwood, Louisiana & Arkansas stations to Spring Hill, and on wood pulp, Spring Hill to New Orleans, and reductions in rates on wood pulp, Advance, La., to New Orleans, for export, were prevented.

(36) In 1937, reductions in rates on bananas, New Orleans to Shreveport, from 63 to 40 cents, were prevented, according to the Commission's letter of January 3, 1938.

(37) In 1937, Frisco freight schedules, St. Louis to Fort Smith, were fixed by the Commissioner so as to speed up delivery of less-than-carload freight at Fort Smith subject to the condition that delivery of carload freight would not be speeded up to the same extent. The committee of directors was unable to induce the Frisco to follow the decision.

(38) In 1937, the Commissioner prevented the Wabash from establishing a week-end round-trip excursion fare of $3.65, Decatur to Chicago, and return. (39) In 1937, reduced winter passenger rates to Mexico City from points on the Alton, Chicago & Eastern Illinois, Missouri Pacific, and Wabash were held up to $90.30, the same as the fare from the same points to California.

(40) In 1937, the Commissioner prevented the transporting of passengers going to San Antonio from points on the Wabash and Missouri Pacific on special fast trains carrying persons traveling from Chicago and St. Louis to Old Mexico under the so-called "escorted tours" contracts of carriage.

(41) In 1938, a reduction in rates on potatoes, onions, and other root vegetables, moving out of Colorado and related rate groups was limited and curtailed by the Commissioner's decision which was not satisfactory to the proponents, Union Pacific, Missouri Pacific, and the "Katy." The matter, after being reported to the Committee of Directors, was sent back to the underlying rate bureau for a compromise adjustment. The final result is not definitely shown although it is to be inferred that the reduction was limited or curtailed.

(42) In 1938, the efforts of the Missouri Pacific to speed up into St. Louis the "Colton" perishable traffic originating in California failed on the grounds that the proposal, in the opinion of the Commissioner, violated a pre-existing agreement of December 15, 1937. The proponent was dissatisfied with the decision but Committeeman Allen P. Green persuaded President Baldwin, of the Missouri Pacific, to follow it.

(43) In 1938, efforts of the "Katy," Texas and Pacific, and the Missouri Pacific to speed up freight trains carrying livestock and packing house products from Fort Worth, going to St. Louis and beyond, were successful after the Commissioner and the Committee of Directors vigorously tried to stop the fast service.

(44) In 1938, the efforts of the Rock Island to substitute tourist cars for standard sleepers between Memphis and Los Angeles failed when the Missouri Pacific took the position that the proposal would break down the passenger-fare structure and make it necessary for other lines to put on tourist cars.

(45) Efforts of the Wabash to establish week-end reduced excursion fares between a number of important western cities failed when Committeeman Allen P. Green put the pressure on the Wabash to desist.

(46) Efforts of the Wabash to establish a $6 round-trip excursion fare for the Kiwanis from St. Louis to Kansas City and return evidently failed because Committeeman Brown advised the Commissioner that the matter was being held in abeyance.

(47) Efforts of the Rock Island to establish a week-end excursion fare of 110 cents per mile from Iowa and Illinois points to Chicago were held to be satisfactory subject to the condition that the Wabash would not use the case as a precedent for making other reductions between other points.

(48) Efforts of the Chicago, Milwaukee, St. Paul & Pacific and the Chicago, Burlington & Quincy to speed up passenger schedules between Chicago and the Twin Cities were disapproved by the Commissioner unless the minimum time was 6 hours and 30 minutes. The proponents refused to follow the decision and were turned in the committee of directors; whereupon the matter was compromised; the details of the agreement not being shown.

(49) In 1939, efforts of various western lines to reduce rates on petroleum and its products between Kansas points and Colorado points were only partly successful.

(50) Efforts in 1939 of the Union Pacific to reduce rates on newsprint paper moving, International Falls and other northern mills to Colorado common points

were possibly unsuccessful. The Union Pacific refused to follow the Commissioner's decision disaproving of the reduction. However, he reported this refusal to the committee of directors which approved of his decision.

(51) In 1939, the efforts of the Denver & Rio Grande Western to reduce rates on western slope Colorado peaches were unsuccessful notwithstanding efforts by - the Governor of Colorado, United States Senators, the Public Service Commission of Utah, and the United States Department of Agriculture to induce the Commissioner to approve the reduction in the interest of the distressed producers. There is some evidence that the proponent finally, in the face of terrific agitation, decided to act contrary to the decision, but there is also evidence that the proponent's connections refused to concur.

(52) In 1939, the efforts of the Chicago, Burlington & Quincy to reduce rates on cattle and hogs in carloads moving from Illinois points and Mississippi River points in Iowa were only successful in part.

(53) In 1939, the efforts of the Katy and Illinois Terminal Railroad to reduce rates on pulpboard moving, Alton and Federal, Ill., to Kansas City were successful when they refused to follow the Commissioner's adverse decision.

(54) In 1939, the efforts of Texas Lines to assume the cost of loading carload lots of cotton were unsuccessful but they were successful in obtaining permission to load l. c. 1. cotton free, all under a decision calling for strict area limitations on free loading and for further careful nonspreading reductions in cotton rates, c. 1. and 1. c. I., only where required to meet truck competition. This brought a complaint from the Oklahoma Commission to the Interstate Commerce Commission that Oklahoma shippers had to pay for loading their cotton. The Texas Lines fought the Interstate Commerce Commission case and lost.

(55) In 1939, efforts of the Kansas City Southern to reduce sugar rates, New Orleans to Texarkana and Ashdown, Ark., were unsuccessful before the Commissioner. A. F. Cleveland, of the Association of American Railroads, got into the case and W. Averell Harriman was also active when the Kansas City Southern and the Katy, which had joined as a proponent, refused the decision. Paul P. Hastings, of the Santa Fe, was interested in killing the proposal which seems to have finally been made effective as a result of the persistence of Matthew S. Sloan, of the Katy, who refused to desist.

(56) In 1939, the efforts of the Katy to reduce soap rates, Kansas City_and St. Louis to southwestern points, were successful despite the efforts of the Commissioner, W. Averell Harriman, and other committeemen to stop the proposal. Mr. Sloan again persisted.

(57) In 1939, the efforts of the Katy to establish fourth-class rates as a maximum on all 1. c. 1. freight, in Texas, both intra-and inter-state were unsuccessful. (58) In 1939, the efforts of the Great Northern, Union Pacific, and the Milwaukee to reduce rates 15 to 25 percent on apples and pears were successful in part despite the Commissioner's adverse decision.

(59) In 1939, a controversy arose respecting the Santa Fe's freight schedules from Kansas City to Fort Worth and Dallas, Tex. It was settled by an agreement of July 31, 1939, which possibly involves a slow-down.

(60) In 1939, the question of the Santa Fe's freight schedules from Chicago to Dallas, Fort Worth, Houston, Galveston, and Beaumont via Kansas City and Oklahoma City was given consideration and was settled in an agreement of January 18, 1940, which possibly involves a slow-down.

(61) In 1939, the question of speeding up freight schedules from Chicago and Kansas City to Texas points and vice versa, over the Rock Island was considered. The matter was settled by agreement on March 7, 1940. This agreement involved delays to, and holding of, "Colton Block" California perishables at Kansas City and Fort Worth. It also involved a slow-down on "Colton Block" in St. Louis. (62) Efforts in 1939 to extend return time limit on round-trip excursion tickets generally to 6 months were unsuccessful.

(63) In 1940, the efforts of the Katy of Texas to reduce rates on crude oil between the Shreveport group points and Texas points were unsuccessful when the Commissioner disapproved.

(64) In 1940, the efforts of the Missouri Pacific to reduce rates on crude oil moving from the midcontinent field and southwestern points were disapproved by the Commissioner, who suggested, however, that all southwestern lines get together and work out a limited and curtailed reduction which they seem to have done by agreeing to reductions as between Missouri Pacific points only with the other lines cooperating to keep the reductions from spreading.

(65) In 1940, the efforts of the Rock Island, Missouri Pacific, and Cotton Belt to stop the Frisco from establishing through rates and transit arrangements

with common-carrier truck lines were successful. The files show that the suit of the Department of Justice against the railroads was discussed in connection with this matter.

(66) Ffforts of the Milwaukee to establish a reduced rate of 18 cents on crude oil, Cut Bank, Mont., to Spokane, were successful but the Commissioner required that the proponent assist in certain litigation in which the validity of certain orders of regulatory bodies was involved. These orders made the reduction necessary, according to the proponent.

(67) In 1940, the efforts of the Katy to reduce interstate rates to 11 cents on crude oil, Wichita Falls and Luedens, Tex., to Houston, Galveston, and Texas City, were successful subject to the condition, among others, that the oil be used at destination for bunkerage purposes only.

(68) In 1940 the efforts of the Santa Fe, Katv, and Missouri Pacific to reduce intrastate rates on refined petroleum products in Texas were partly successful when the Commissioner neither approved nor disapproved the proposal, but affirmatively suggested a compromise scale on a restricted and limited basis.

(69) In 1940 efforts by the Burlington to make reduced rates on loaded trailers and semitrailers mounted on flat cars moving Chicago to' Kansas City were disapproved by the Commissioner. The proponent filed the tariff with the Interstate Commerce Commission which would not accept it, hodling that a tariff was unnecessary; whereupon the plan was fixed by contract between the Burlington and the trucker.

(70) In 1940 the Commissioner, without any protest, took over the task of preventing reduced rates on bananas moving from Texas Gulf and Rio Grande crossings to Texas points and to Colorado common points. He disapproved the reductions on movements to Texas points but affirmatively suggested a scale to Colorado common points, which was followed.

(71) In 1940, efforts of the Missouri Pacific and Kansas City Southern Louisiana & Arkansas to reduce rates on sand and gravel moving intrastate in Louisiana and interstate Texas to Louisiana, and vice versa, were delayed, not on protest of any line, but on the initiative of the chairman of the lower rate bureau who merely wanted the Commissioner to hold up the reduction while the Texas Commission had a rate structure under consideration so that the roads would not be in an inconsistent position before the Texas Commission by having made this reduction while, at the same time, resisting reductions before that commission. The Commissioner dismissed this case when the Texas Commission learned that he was holding it.

(72) In 1940, the Commission urged railroads which were willing to comply with an order of the Interstate Commerce Commission not to do so but to fight it. The fight was successfully made. The question involved was the validity of rail-ocean rates on flour from points in Oklahoma, Texas, southern Kansas, southeastern Colorado, and New Mexico to. north Atlantic ports and into interior points in trunk line and New England territories. The Interstate Commerce Commission had ordered a 15-percent reduction to north Atlantic ports.

(73) In 1940, the efforts of the Frisco to speed up deliveries of goods on arrival at Fort Worth and Dallas from the St. Louis-East St. Louis switching district were partly successful under an agreement of about June 12, 1940, which involved a slow-down.

(74) In 1940, the Katy failed in its efforts to establish a reduced round trip excursion fare of $5.90 from Fort Worth and Dallas to Galveston and return. (75) In 1940, the Union Pacific failed in its efforts to establish reduced intermediate class fares in Western Territory east of Ogden or Salt Lake City, Utah, and Pocatello, Idaho, on a basis of 75 percent of the one way first-class fares of 24 cents per mile one way and on the basis of 180 percent of the one way intermediate-class fares for the round trip.

(76) In 1940, the efforts of the Illinois Central failed to establish the use of credit cards good for railroad tickets, Pullman tickets, dining and buffet service, all-expense tours and baggage charges.

(77) In 1940 the Union Pacific succeeded in speeding up deliveries at California Pacific coast cities of goods coming from St. Louis and Chicago by an hour and a half under an agreement of May 28, 1940.

(78) In 1940, the vigorous efforts of L. W. Baldwin, of the Missouri Pacific, and of the Katy to reduce rates temporarily on citrus fruit moving from the Rio Grande Valley in Texas to Chicago, St. Louis, and Kansas City, and to destinations in Central Freight Association Territory were successful notwithstanding the efforts of the Commissioner and the Association of American Railroads to stop them.

(79) In 1941, the efforts of the Kansas City Southern to disregard rate bureau procedure in making rates applicable to the Kansas City Southern and its subsidiary truck line were unsuccessful.

(80) In 1941, the Missouri Pacific, by agreement of March 28, 1941, agreed to a slow-down in delivery of carloads of goods at Wichita coming from St. Louis and points east and northeast thereof.

(81) The efforts, in 1942, of the Missouri Pacific and the Denver & Rio Grande Western to establish "Colorado Eagle" as a streamline train between St. Louis and Denver were successful.

EXHIBIT DOFJK-4

THE ASSOCIATION OF AMERICAN RAILROADS

The set-ups in the South, East, and West are tied into the Association of American Railroads. In discussion the written plan of the Association of American Railroads, we discuss it as it existed prior to changes made in it after the Department of Justice started litigation.

There is a conflict of view among the present litigants as to the place, importance, and power of this association taken in connection with all of the railroad rate bureaus in the Nation. Our view of it, we are convinced, is supported by substantial evidence, including testimony given in the Georgia case by the late Mr. John J. Pelley, president of the Association of American Railroads.

Each important road is a member of the Association of American Railroads and each of them upon becoming a member agreed to be bound by its written plan of organization and its rules, resolutions, and decisions. The preamble to the written plan of the association, which fixes the jurisdictional limits, provides: "In order to promote trade and commerce in the public interest, further improve railroad service, and maintain the integrity and credit of the industry, the railroad companies of the United States do hereby establish an authoritative national organization which shall be adequately qualified and empowered in every lawful way to accomplish said ends where concert of policy and action are required. For the purpose of facilitating the realization of this constructive object, the members do hereby declare that these announced policies shall be authoritative and will be supported.

As supreme authority in the hierarchy of rate bureaus created by the national combination, the Association of American Railroads has sought to prevent erosion of their private rate structure by maintaining complete and arbitrary domination and control over all freight rates. To fortify and perpetuate this domination and control, the Association of American Railroads coordinates and supervises the activities of all of the rate bureaus in the East, West, and South, and constitutes the ultimate sanction compelling compliance on the part of individual carriers with the decisions, articles of organization, resolutions, rules, and regulations of such agencies. These articles, resolutions, rules, and regulations are designed to prevent individual carriers from initiating or modifying freight rates, in accordance with the provisions of the Interstate Commerce Act, or from protesting to the Interstate Commerce Commission against rates inequitable to the roads in a given region, in accordance with the provisions of the Interstate Commerce Act, without, as a condition of filing such rates and protests with the Interstate Commerce Commission, first obtaining the approval of such proposed rates or protests by the various rate bureaus. The articles, resolutions, rules, and regulations of these bureaus provide various modes of appeal from decisions at various levels in the hierarchy of rate bureaus in such fashion that such decisions are subject to review and protest within the agencies in pursuance of a paramount objective. But this private system, including provisions for limited reviews, culminates in the Association of American Railroads, the plan of organization, rules, regulations, and resolutions of which provide that the board of directors of such association shall be the ultimate arbiter in all controversies between members of the association. It is further provided in the plan of organization of the Association of American Railroads that the members will accept and carry out any decision of the board of directors, or failing which, they will submit the matter to arbitration, and it is agreed that the award of the arbitrators shall be conclusive and binding upon the parties to the controversy. The contract of membership between the individual carrier and the association provides that the carrier shall be bound by the provisions of the plan of the association so long as it remains a member. Failure on the part of any carrier to abide by such contract and these rules and regulations would necessitate its automatic withdrawal from the Asso

ciation of American Railroads and would result in a crippling isolation of, and the institution and carrying on of a practical boycott against, such offending member, The words "isolation" and "practical boycott" are taken from letters written by a railroad man who participated in the formation of the association.

Among other rules and regulations, the Association of American Railroads has promulgated a resolution, dated May 17, 1935, providing that no rail carrier will ask the Interstate Commerce Commission to suspend rates of another rail carrier until representatives of both parties shall have first conferred with the representatives of the Association of American Railroads, and that where one group of lines knows of contemplated publication of rates by another group "believed to be harmful to it," there must be a conference with the representatives of the Association of American Railroads in advance of filing such tariffs.

As a result of the means and methods adopted to effectuate the unlawful purposes of the combination, without the sanction of the Interstate Commerce Act and in violation of the antitrust laws, a private government has been established for the railroad industry. The words "private government" are likewise based on written statements of those who were active in creating the association. An organization, a process of administration, a system of police-all unknown to the law has been endowed with a power of self-regulation comparable to the Government. The words "self-regulation" are similarly based. Every important railroad, as a practical matter, must have membership in the Association of American Railroads. Every member of the association, as a condition of membership, agrees to submit to control by the association and, in all its rate activities, to conform to the procedures and to employ the bureaus established by concert of action. To obtain and to maintain its membership, the individual railroad must, in respect to all that has to do with rate making, surrender its liberty of action. Mr. Pelley, in effect, admitted as much. It thus surrenders to the government of the industry practically all the privileges in respect to the initiation and revision of its rates and all the privileges in respect to protesting to the Commission against rates proposed by other carriers, all being privileges accorded it by the Interstate Commerce Act. It surrenders even the right to complain to the Interstate Commerce Commission against the rates of other carriers and against a veto imposed on its proposals somewhere within the hierarchy of controls. The Bangor and Aroostook Railroad tried to join the AAR with a reservation of its right to act independently of the association in rate matters. Its membership was not accepted on such a basis. It is, thus, through a private rate-making process unknown to the law, that a decision is made as to what rate changes are to be filed with, and what are to be withheld from, the official regulatory authority. Such concert of action, constituting, as we view it, an unlawful conspiracy in restraint of trade, interferes with and disrupts the regulatory scheme established by Congress. Such conspiracy restrains, prevents, and hinders the initiation and maintenance of rates which are just and reasonable and leaves the interests of the States and the people of the States without the protection the law was designed to afford them.

The railroads, in creating and employing the process of rate determina iɔn set forth above, in our opinion, violated the antitrust laws and flouted the procedures provided for in the Interstate Commerce Act. The rate bureaus were so arranged, and were intended to be so arranged, as to give rate-making power into the hands of the Official Territory's carriers and to accord a relative advantage to the shippers and to the economic interests in Official Territory, and to discriminate against the South and West, their ports, and people. The rate bureaus were so arranged, and were intended to be so arranged, as to take away or impair the power of individual carriers or of connecting carriers, acting independently and in competition, to propose single or joint rates to the Interstate Commerce Commission and to protest to the Commission against rates proposed by other carriers, and thus to deny to some of the States and to their people the use of due process established by law through which their interests were to be served in the making of rates. We think that documents in existence show that the railroads willfully and in full knowledge of the consequences of their acts organized and utilized a system of rate-making by which power over rates was lodged with the conspirators and rates fixed by them were intended to serve, and did serve, the paramount interests of the Official Territory to the injury and detriment of other parts of the Nation

For instance, documents show that any controversy arising out of a failure to adjust to the satisfaction of the carriers in Official Territory any rate dispute affecting the carriage of freight between the South and the North, or between the West and Official Territory, may be referred to the joint conference of contact committees. In this conference, there are seven votes, one of which is controlled